Cable company capitalizes on AT&T's failure to deploy DSL, inability of telco's aged copper cable plant to support bundled services

Two years ago, South Lake Tahoe was one of El Dorado County, California's most puzzling and persistent broadband black holes. Neither incumbent telco AT&T nor the incumbent cable provider, Charter Communications, offered broadband to many of the area's neighborhoods, leaving residents with the dreary Hobson's choice of antiquated mid-1990s era dialup technology or costly, substandard satellite Internet connections.

Patti Handal was fed up with the situation and went door to door with some of her neighbors, collecting signatures of nearly 700 residents of the affected neighborhoods petitioning AT&T to deploy DSL and do so ASAP. Then several months later in June 2007, the Angora Fire incinerated some of these neighborhoods along with portions of AT&T's aerial copper cable serving them. AT&T's replacement of the fire damaged infrastructure enabled the telco roll out DSL to Handal's and some -- but not all -- of the Tahoe neighborhoods stranded on the dark side of the digital divide.

In retrospect, Handal believes the petition campaign to show AT&T demand was there for DSL had no meaningful impact despite the encouragement of the effort by AT&T and local elected officials. Instead, it was the Angora Fire's destruction of AT&T infrastructure that altered the dial up status quo.

Now Handal reports Charter is about to roll out service to much of Montgomery Estates, all of Echo View Estates, all of Angora Highlands, and all of Mountain View Estates with Christmas Valley and all of Montgomery Estates in the near future.

Charter officials were likely motivated by a report in the Tahoe Tribune that AT&T decided in January 2008 not to expand DSL service in the area in the foreseeable future, seizing an opportunity to take and hold market share since in a duopolistic market, whichever provider deploys first enjoys initial customer appreciation and loyalty for bringing them out of dial up purgatory and into the modern era of telecommunications.

Notably, AT&T isn't matching Charter's bundled services including video. According to Handal, an AT&T representative told a South Lake Tahoe Chamber of Commerce meeting two months ago that it would not be offering its bundled U-Verse service. Instead, AT&T has chosen to deploy DSL in some but not all of the areas served by Charter in a limited response to Charter's deployment initiative.

The likely explanation for AT&T's decision to select a partial DSL deployment strategy is going head to head with Charter for bundled services would require AT&T to replace most of its aged copper cable plant that can support only slower DSL speeds but cannot carry the higher bandwidth VDSL signal used by U-Verse.

Despite the expectation that AT&T introduced U-Verse in order to compete with cable companies, the scenario playing out in some South Lake Tahoe communities is likely to be mirrored throughout much of the United States where telcos' aged copper cable plant precludes them from offering bundled services and higher speeds to effectively compete with cable providers.

Netflix Tivo deal still not ready for prime time

SAN FRANCISCO - Home entertainment trendsetters Netflix Inc. and TiVo Inc. are finally joining forces to deliver more movies and old TV episodes to their mutual subscribers, consummating a relationship that was supposed to come together four years ago.

This deal is still four years too early and not yet ready for prime time given the pathetic state of America's broadband telecommunications infrastructure. The throughput speeds for downloading movies simply don't hack it in much of the nation and many homes are still unable to get even basic broadband connections.

Fairpoint chooses WiMAX where DSL fails

Fairpoint Communications, the successor to Verizon in much of New England, has opted to deploy fixed terrestrial broadband to make up the shortcomings of underpowered DSL. Fairpoint has selected WiMAX technology based on equipment provided by Nortel Networks Corp. and Airspan Networks that will provide throughput of 1 to 3 Mbs.

Telcos cynically cite demographic data to justify failure to invest in broadband infrastructure

Here's some typical telco funded propaganda on broadband. It's designed to shift and downplay the focus away from the lack of broadband availability due to inadequate telco infrastructure to broadband adoption rates. Once that's accomplished, it's time to play the socioeconomic card and decry low computer literacy among certain demographic groups.

Bottom line, the telcos are looking to justify their failure to upgrade their plants over the last mile to support broadband by blaming poor, older and less educated people who say they don't use computers and don't need broadband. In other words, we don't need to deploy broadband because you're simply too ignorant to use it even if we did.

California PUC considering expanding eligibility for broadband build out subsidies

The California Public Utilities Commission is soliciting comment on potentially expanding eligibility for 40 percent grant funding from its California Advanced Services Fund (CASF) to build out broadband infrastructure in unserved and underserved areas of the Golden State. The commission has set aside $100 million for qualifying projects to be funded over a two-year period, paid for by a 0.25 percent surcharge on end-users’ intrastate telephone bills.

Proposals to serve unserved areas were due July 24 and underserved areas by Aug. 25. Only entities with a certificate of public convenience and necessity to offer telecommunications services or those registered with the CPUC provider of wireless telecommunications services were eligible to submit project proposals by those dates. The CPUC is now considering accepting proposals from municipalities, community-based cooperatives, Native American tribes as well as funding economic development corporations to issue loans to finance projects.

"We further anticipate significant unserved and underserved areas will remain after grant of the current pending applications," CPUC's Oct. 15 ruling states. "During our first round of applications we received significant interest from serious potential applicants who were uncertificated internet service providers in areas geographically close to unserved or underserved areas."

Survey suggests telcos should channel CAPEX to wireline -- and not wireless -- broadband

While mobile broadband has been much ballyhooed over the past few years, the vast majority of those with mobile devices don't utilize their Internet capabilities to watch videos, play games or even send email. That's according to a Accenture Research survey out this week picked up here by Telephony Online.

This survey strongly implies people want broadband at home much more than they do outside the home. For telcos, that means investing more in wireline -- and particularly fiber optic infrastructure -- and less in wireless broadband. The demand for home-based wireline broadband services is also likely to grow as people spend less time and money outside of the home and cocoon during the economic downturn.

Telco market segmentation has shrunk U.S. residential wireline service area map, setting stage for locals to take over last mile

The widespread prevalence of broadband black holes throughout the United States — which can be found in urban, suburban, semi-rural and rural areas — has brought to light a major change in the landscape of residential telecommunications service. In modern times, residential telecommunications has meant near universal service to all but the most remote areas.

With the advent of high speed Internet, the residential wireline market is no longer a single one but has been segmented by the telcos who maintain monopolistic control over their markets. Over the past 2-3 years, the boundaries of broadband black holes have hardened and delineate the two segments.

The more accurate description is the residential market hasn’t been so much segmented but rather shrunk. One only need compare the telcos’ maps of where they provide Plain Old Telephone Service (POTS) and areas where advanced Internet protocol-based services are offered to graphically see the shrinkage.

This is a permanent alteration of America’s telecommunications map. Despite telcos’ promises to “turn up” advanced services to these areas over the past decade, it’s now apparent that these statements are a time buying PR ploy to keep regulators and politicians at bay. Now the residential wireline telecommunications map is posed to shrink even further with the limited rollout of fiber to the home service by Verizon and AT&T’s technologically constrained deployment of its fiber to the node Project Lightspeed as both companies migrate from DSL.

This redrawing of America’s telecommunications map has major implications for so-called “last mile” residential wireline. Where they don’t provide last mile IP-based access, the telcos will instead serve as first and middle mile telecom providers. Small local telcos and the residents themselves will become the default last mile providers. Where it makes business sense, smaller telcos that specialize in serving communities will deploy fiber to the node and fiber to the home. Where the numbers don’t pencil out for the small telcos, the residents will deploy their own fiber and fund it though voluntary cooperatives and special taxing districts.

Over the next several years, fiber will come to be viewed as a utility not unlike electric power and water and will appear on residential MLS real estate listings. Properties that lack fiber optic access will be at a distinct disadvantage to those that have fiber, creating a strong incentive for property owners to work together to bring fiber to their neighborhoods to better capitalize on recovering real estate values following the current market downturn.