Uneven U.S. broadband deployment distorts market perceptions, drives digital downturn

The uneven, hodge podge deployment of last mile broadband infrastructure in the United States in the current decade has affected market demand by distorting perceptions about broadband availability. In areas that still don't have wireline-based broadband access in 2008, some inhabitants have apparently concluded that if they don't have service now they aren't likely to in the foreseeable. The practice of cable companies and telcos of not giving residents time frames as to when broadband will be offerred only reinforces that perception.

Commenting on the recently released Home Broadband Adoption report by the Pew Internet and American Life Project, the National Rural Telecommunications Cooperative (NRTC) observes in its July 2008 Update newsletter that the perception ironically persists even when broadband services are actually available. That naturally drives down demand, known as "take rate" among providers.

Cost and lack of availability were the main reasons rural consumer gave for not subscribing to broadband. Twenty-four percent of the rural dial-up users in the Pew survey said they would take broadband if it were available. This might indicate that rural consumer perceptions in some areas do not match the actual amount of service available from rural broadband providers. For years, NTCA broadband surveys have shown that rural providers have been building out broadband services, but that there have been very low take rates.

This market phenomenom isn't confined to rural areas since broadband black holes can be found in all areas of the U.S.: urban, surburban, quasi-rural and rural.

Low take rates understandably make providers reluctant to invest in broadband infrastructure, particularly in higher cost areas. The end result of this depressed dynamic is self perpetuating and highly persistent broadband black holes in those areas where there are in fact no wireline-based broadband services. Providers in turn can justify the existence of these black holes, fearing low take rates. It's the equivalent of an economic downturn: a lack of confidence on the part of both sellers and buyers.

This is primarily a supply side problem given that the supply of broadband services in these areas has been nonexistent over a period of many years. The way out of this digital downturn is for providers to drive demand by both aggressively deploying services and advertising their availabilty. The latter element is key to overcoming entrenched market perceptions in long-established broadband black holes that broadband isn't available and isn't coming any time soon.

On Sept. 8, 2008, the Broadband Stakeholder Group (BSG), the British government’s advisory group on broadband, issued what it termed "the most comprehensive analysis produced to date on the costs of deploying fibre in the UK."

This report supports the notion that ISPs must proactively drive up demand for advanced services in order to support the business case for fiber-based broadband infrastructure deployment in costlier, less densely populated areas instead of passively writing them off as unservicable as all too many are wont to do. “If operators could achieve a higher than expected level of take-up in rural areas, then the business case for deployment in those areas could improve significantly”, said the BSG's CEO, Antony Walker.

U.S. at "critical juncture," in danger of becoming second class broadband state

Yet another organization is sounding the alarm over the pathetic state of U.S. broadband telecommunications infrastructure. This time it's the National Association of Telecommunications Officers & Advisors (NATOA), which today adopted and released formal Broadband Principles encouraging the immediate development of a national broadband strategy.

"Today, the United States is at a critical juncture," the organization states. "Economic and social development increasingly depend on advanced communications infrastructure. However, there is no strategy in place for widespread deployment of next-generation broadband networks. Our failure to take immediate action threatens to relegate our country to second-class status in the broadband age."

Forget about studies, broadband demand aggregation surveys and pretty maps of broadband black holes and other delaying tactics, well meaning or otherwise. The situation is so dire, NATOA asserts, it requires urgent action rather than contemplation: the immediate deployment of advanced broadband infrastructure -- preferably over open access fiber optic cable systems -- providing synchronous connections.

The NATOA's statement also shuns a search for magic bullets to speed broadband deployment. "Different methods may be preferable in different communities," it reads. "For example, networks may be financed by private investment, by government investment, by public-private partnerships, by tax incentives, or by other means. None of these approaches should be prohibited by law or burdened by special restrictions (such as laws that forbid cross-subsidy by governments but allow it for private entities)."

Aside from the need for immediate action, another theme strongly emerges from the NATOA's statement: that local government play a key role and the current model of that concentrates ownership of telecommunications infrastructure in the hands of just a few private owners is part of the problem.

That makes sense given that the U.S. broadband crisis is really a local crisis over the so-called last mile connection. Consider roads and highways to which the telecommunications system has often been compared. The big telecom players may own and operate the interstates and major highways. Local governments have traditionally had responsibilty for providing roads and streets and NATOA argues they should also play a critical role in upgrading the nation's inadequate broadband infrastructure.

Vexed in Vermont over slow progress on broadband access

Considering that broadband has been likened to an information interstate highway, Vermont is settling for just a two lane blacktop, laments Lawrence Keyes in a op-ed in the Rutland, Vermont Herald.

Keyes, who chairs Vermont's Software Developer's Alliance outreach committee, says Vermont's E-State initiative "is largely an exercise to convince ourselves that 'something is being done, and 'we've got it covered' as broadband black holes remain numerous.

What worries me is that with E-State we're going to get people barely off dialup. By going with wireless Internet connections, we believe that we have a state-of-the-art high-tech infrastructure superior to other states. That is how it is being sold. But, we're really just paving the dirt roads.

Keyes suggests investment in broadband infrastructure should be given the highest priority by all candidates for governor.

Schwarzenegger signs legislation allowing some California local governments to construct broadband infrastructure

Gov. Arnold Schwarzenegger has implemented one of the several recommendations issued by his Broadband Task Force earlier this year by approving legislation that would allow California's 320 community services districts (CSDs) to construct and operate telecommunications infrastructure to deliver broadband within their jurisdictions. CSDs are part of a category of limited purpose local governments known as special districts.

Under Senate Bill 1191, CSDs would serve as stopgap providers until a private sector provider opts to serve their areas with services of comparable cost and quality. CSDs would then have to sell or lease the plant to the private provider at fair market value under the legislation.

Notably, the measure was not opposed by telephone or cable companies, which suggests lawmakers might come back in 2009 with new legislation expanding the concept to other types of local government.

Here's a link to the text of SB 1191 and a news release issued by Schwarzenegger's Press Office.

EE Times: European firms engaged in R&D consortium to drive down cost of fiber optic infrastructure

LONDON — Optical components specialist Ignis Photonyx AS (Birkeröd, Denmark) is leading a European R&D project dubbed GigaWaM, that will tackle one of the biggest barriers to the uptake of next-generation broadband access technology Wavelength Division Multiplexing (WDM) PON -– the current high cost of the components needed to deliver a wavelength to each customer's home.

One of the major partners in the project — which is being funded by the European Commission by approximately $4.7 million — is Ericsson AB.

The GigaWaM (Gigabit access passive optical network using wavelength division multiplexing) team also includes two German firms, component manufacturer FiconTEC GmbH and laser diode vendor VertiLas GmbH , and focuses on developing "application specific optical components... with a high level of integration in addition to new manufacturing processes" with a view to enabling a WDM-PON system cost per subscriber tha is lower than current GPON systems can manage.

Palo Alto fiber project represents important test of open access concept

Here's an update from the Palo Alto Daily News on Palo Alto, California's efforts to put in place an open access fiber optic network. If the city council gives the OK to this project -- which doesn't require the municipality to fund or operate the system -- it will be a renewed test case of the open access network concept .

The open access model is emerging as a public/private initiative to build out broadband faster than the proprietary infrastructure owned and operated by telcos and cable companies which are unable and/or unwilling to invest in upgrading their plants. The latter have resisted open access initiatives by local governments, arguing they represent unfair competition and in some cases have gone to the courts to seek to halt the projects.

That's a poor strategy because the telcos and cable companies would benefit from open access fiber projects since they could sell customers improved IP-based services faster than they might otherwise could since it would take far longer for them to build their own proprietary fiber infrastructures. By going to court to block or slow these projects, the telcos and cable companies are shooting themselves in the foot. They also risk provoking local governments to counter with eminent domain actions to take over aging and increasingly obsolete metal-wire based systems in the name of economic development.

Vint Cerf: Single purpose phone, cable systems and legacy regulation impede broadband expansion

Some observations from World Wide Web creator Vint Cerf. They show that we're in a transition period between yesterday's single purpose, proprietary analog-based telco and cable systems and an evolving digital Internet Protocol-based platform that can deliver the Web, voice and video. Cerf's observations suggest this transition explains why many broadband black holes persist in the U.S. since the nation's current infrastructure was not designed and built to deliver universally accessible IP-based services. Nor is the current regulatory scheme that treats the Internet as an afterthought -- an optional "information sevice" -- rather than an essential telecommunications service.

Cerf also pays homage to the notion that IP-based infrastructure is a natural monopoly like publicly owned roads and highways that by its nature does not lend itself to market competition:

You don't have multiple roads going to your house for example. Instead, it is a common resource. I said something like "maybe we should treat the Internet more like the road system."

Cerf correctly notes that competition to deliver IP-based services isn't likely to develop among the legacy telco and cable providers since the old regulatory framework isn't designed to foster competition for them. He posits that like the early telephone system, subsidies will be needed to ensure universal access.

If broadband service is essential to the national economy and to citizens, given the present means by which it is implemented, and given that it appears unlikely that the usual competitive pressures will lead to discipline among the competitors, perhaps we need new national rules to assure that the service is openly and equally accessible to any application provider and to all users. Equal does not mean that everyone pays the same amount. In particular, higher capacity might be priced at a higher rate. Provision needs to be made, however, to deal with high cost (to the provider) areas using a new form of Universal Service or some other subsidy.

Palo Alto moves forward with open access fiber

After more starts and stops than a dial-up connection, ultra-high-speed broadband Internet may soon be feasible in Palo Alto.

In a new business plan recently submitted to city staff, a group of companies proposed funding and constructing an open network capable of delivering cutting-edge communications, including voice, data and video services.

The city council will review the plan at a study session on Monday and will direct staff later this month whether to move forward with the project.

The new network would have the capability of delivering Internet to residents at a speed of 100 megabits per second. In contrast, a regular broadband service sends out information at a speed of two-tenths of a megabit per second, said Palo Alto resident Bob Harrington, one of three council-appointed citizens advising on the project.

This is the kind of thing I like to see: solid steps toward actually building broadband infrastructure in a public private partnership instead of useless projects by telco-funded nonprofits to study broadband black holes and aggregate demand, as if the latter activity is going to have any influence whatsoever on telcos' broadband depolyment plans. It doesn't as shown by numerous petition drives directed at telcos and cable companies over the past several years by folks who are still waiting in vain for high speed Internet.

Funding these nonprofits are merely cynical PR efforts by the telcos to paper over their sprawling broadband black holes and give the impression they are "concerned" about the lack of broadband access, costing them very little money relative to the real dollars they would have to invest to bring their infrastructures into the modern digital age.