Coalition calls on next U.S. administration to adopt broadband expansion strategy

Two weeks after the National Association of Telecommunications Officers & Advisors (NATOA) declared the U.S. is at a crisis point on the future of its telecommunications infrastructure, another organization is calling for the next administration to make broadband access an "early and high-level priority."

As with the NATOA, the nternet Innovation Alliance (IIA) advcocates a national broadband strategy it says should be comprised of a "coherent set of policies and goals to accelerate universal adoption of high speed Internet." The IIA calls on the next administration to provide investment incentives and encourage public-private partnerships to expand broadband infrastructure and availability.

“We are at a critical moment in our nation’s history,” said Bruce Mehlman, co-chair of the IIA, which describes itself as a broad-based coalition of business and non-profit organizations. “To compete and win in the 21^st century, we must ensure the United States capitalizes on the extraordinary economic, technological and societal opportunities presented by broadband. The benefits are undeniable and compelling.”

Ironically, one of IIA's members is AT&T, whose failure to invest in upgrading its infrastructure, particularly over the last mile to homes and businesses, is a major cause of the pathetic state of U.S. broadband access.

Self perpetuating broadband black holes a product of telcos' cynical digital redlining strategy

Since late 2006 and again this week, there have been reports of slowing growth in U.S. wireline broadband subscribers and particularly those using telco-provided Digital Subscriber Line (DSL) service. Analysts and other observers have blamed the demand side of the market, attributing the decline to a slowing economy and market saturation.

There's likely a better explanation -- and it's on the supply side of the equation. Since 2006, DSL deployments by the tier 1 telcos such as AT&T and Verizon have been slowing and are now all but halted as the companies concentrate on building out their triple play (U-Verse and FiOS, respectively) infrastructures in a relative few selected markets.

For those unfortunate enough to reside or do business in these companies' service territories where they don't offer wireline broadband connections, there's another factor at work: the self perpetuating broadband black hole. They're the natural product of the telcos' digital redlining strategy.

Since the big telcos don't do market research, they rely on what they term as "pent up demand" for services. As the broadband boom unfolded at the start of the decade, pent up demand grew. Right around the time of the first reports of a broadband "slowdown" began appearing, that pent up demand had likely recently peaked. Folks who have been asking for wireline broadband connections over a period of 5-7 years and have yet to obtain them by mid-2008 have likely concluded they never will. So they stop asking for service, ignore misguided ads for telco broadband, and pent up demand for broadband falls away. The telcos can then cynically point to the falling demand to justify their continued failure to deploy broadband infrastructure to these redlined neighborhoods.

AT&T seeks regulatory roadblocks to wider broadband access

AT&T is notorious for incomplete wireline infrastructure in its 22-state service area. That produces sprawling broadband black holes that belie its motto of "Your World Delivered."

Now the big telco wants the Federal Communications Commission to block a joint venture between Sprint and Clearwire that would deploy WiMAX wireless broadband that could fill in many of AT&T's broadband black holes. AT&T's current strategy seems to have the perverse goal of preserving as many of its digital dark spots as possible for as long as possible. In some areas, AT&T is already under competitive pressure from Verizon Wireless Broadband, which has been harvesting customers who can't get wireline broadband from Ma Bell. Since it would likely offer faster thoughput speeds, the Sprint/Clearwire WiMAX venture would present an even greater threat to AT&T's dark territorial hegemony.

Virginia governor links broadband buildout to reduced transportation infrastructure demand

Virginia Gov. Tim Kaine believes building out broadband infrastructure can reduce the strain on transportation infrastructure by allowing more information workers -- many of whom live in Northern Virginia and commute to Washington -- to telecommute.

Kaine's observation, contained in a report on a panel discussion last week coinciding with the release of papers by the Brookings Institution, has broad implications given that many of nation's roads and highways are deteriorating at the same time oil prices have sent gasoline above $4 a gallon.

Read the full report by Drew Clark of BroadbandCensus.com here, which includes links to the Brookings Institution papers.

"Copper cartel" of telcos has anti-competitive stranglehold over U.S. last mile telecom infrastructure, CLEC complains

U.S. telcos such as AT&T and Verizon comprise a "copper cartel" that maintain an anti-competitive stranglehold over the nation's last mile telecommunications infrastructure, the head of one of the largest competitive local exchange carriers created under the federal Telecommunications Act of 1996 told Congress this week.

“The predominant issue of 21st century telecommunications is broadband choice and options for businesses and consumers which allow them to choose their broadband provider based on customer need," XO Communications CEO Carl J. Grivner told the U.S. House Telecommunications Subcommittee on Telecommunications and the Internet, according to a news release issued by the CLEC. "But we continually face incumbents’ efforts to restrict access to essential last mile links that are critical to competitive broadband offerings.”

Griver complained telcos are using provisions of the 1996 law to get around rules requiring them to sell last mile connections at wholesale rates.

Monopoly power of U.S. telcos harms national interest, Internet protocol developer Vint Cerf says

Internet protocol developer and Google Internet evangelist Vint Cerf warns the existing structure of U.S. telecommunications providers impedes Internet access and harms the national interest. Cerf criticizes the monopolistic market power of the telcos, which allows them to hold out for regulatory concessions before investing in their infrastructure -- infrastructure he says is as vital as roads and highways.

While not calling on the government to bust up the monopoly, Cerf says providers need to be restructured, according to a Canadian account of a recent interview Cerf gave to a Silicon Valley blog:

Cerf said large internet service providers (ISPs) need to be split into two entities — one wholesale arm that sells access to the company's network to other firms, and one retail arm that sells internet access to customers. The wholesale arm would have to sell access to other service providers at the same rate that it charges itself.

The model has been adopted in the United Kingdom and New Zealand, where Cerf said it is working.

U.S. should regard broadband as information utility and ensure universal access, congressman says

This from the Pittsburgh Post-Gazette on the Federal Communications Commission's July 21 hearing held in Pittsburgh, PA:

U.S. Representative Mike Doyle, D-Forest Hills, who help to organize the event, said the hearing was intended to address two major concerns -- the so-called "digital divide" between those who have broadband access and those who don't, and "net neutrality," or the openness of the Internet.

Rep. Doyle favors a "guarantee of universal service" similar to telephone service, that views the Internet as a type of information utility. Making broadband Internet service available to all "has to be a joint effort by the federal government and the private sector," he said.

Along with universal service, he said, the United States needs "a policy that establishes basic core principles for the Internet" to ensure that service providers do not become "gatekeepers" who can restrict users access.

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.