Why telcos drag their feet on residential broadband

In the fall of 2007, Ralph de la Vega, AT&T's group president for regional telecommunications and entertainment made a pronouncement with profound implications that were largely overlooked in the mainsream media.

de la Vega told Investor's Business Daily that AT&T would ultimately shut down its existing voice network and replace it with a VOIP (Voice Over Internet Protocol) system in metro areas where U-Verse is being deployed.

Since U-Verse deployment has been delayed and scaled back, it calls into question the future of AT&T's wireline residential market segment. Essentially de la Vega pronounced the beginning of the end of the Publicly Switched Telephone Network (PSTN) and its replacement by the Internet with Next Generation Telephony.

That also means telcos' proprietary central office switches are on a fast track to obsolesence, destined to be replaced with Internet servers and field-based fiber optic distribution equipment. Industry observers like Bob Frankston are right to accuse telcos of foot dragging by creating artificial bandwidth scarcity and restricting broadband access in order to live in the copper-bound PSTN world for as long as possible. This is the unspoken subtext to the larger Strum und Drang on this blog and elsewhere over the pathetically poor state of broadband availability in much of the United States. It's typically explained as a simple return on investment problem, but there's more to it than that.

As the Internet wreaks massive disruption in mass media, it also threatens an end to the days of Plain Old Telephone Service (POTS) delivered over twisted copper. Just as people are canceling their newspaper subscriptions, they are also ditching their residential land lines. And who can blame them when all they can get over them is POTS and perhaps DSL (an acronym that should mean Doesn't Serve Lots)?

It also explains why first tier telcos like AT&T are redefining the residential wireline segment as "personal wireless" services since this segment can remain proprietary if residential wireline moves out of the old proprietary, closed system scheme and into one where last and some middle mile infrastructure is owned and operated by small local providers, local governmental entities and telecom cooperatives.

Private market failure limits U.S. broadband reach

Market failure has constrained the ability of America's privately owned telecom infrastructure to deliver universally accessible broadband-based services, requiring government to fill the gap, said Jim Kohlenberger, chief of staff for the White House’s Office of Science and Technology at this week's Broadband Stimulus National Town Hall held in Washington. Kohlenberger's remarks were reported by BroabandCensus.com in a story posted today.

“Today’s broadband networks are far from ubiquitous,” Kohlenberger is quoted as saying, noting only 57 percent of Americans have broadband at home, "and even that isn’t homogenous.” The nation, he said, is "at a juncture where we can and must do more to bridge this opportunity gap.”

More signs of trouble for AT&T's U-Verse

AT&T continues to emphasize wireless as its future while deemphasizing the wire line market segment. As evidence, gigaom cites a June 4 report by UBS Research analyst John Hodulik that the big telco has slowed by nearly half deployment of its premier wire line product, U-Verse.

Hodulik projects AT&T's U-Verse buildout to reach an additional 4 to 5 million premises this year, down from 9 million new premises passed by the service -- which offers Internet connectivity, IPTV, and VOIP -- in 2008.

As predicted last September, I continue to expect AT&T to pull the plug on U-Verse sometime in the first half of 2010 as part of a general retreat out of residential wire line service in favor of more profitable wireless service. The Dallas-based company will likely blame unanticipated cost, technological and competitive market challenges for the move. In the residential and small business wire line segment, AT&T's future role will be a middle mile and particularly a long haul provider.

How to acheive a true digital economy

The Associated Press has issued a weekend thumb sucker largely based on Richard Florida's piece in the March issue of Atlantic Monthly titled How the Crash Will Reshape America.

Summed up, the AP article posits America has undergone a boom and bust cycle in the Sunbelt, creating "an obsolescent model of economic life" based on cheap real estate that encouraged low-density sprawl and created a work force 'stuck in place' and tied to homes cannot be profitably sold.

This is in large part because the Sunbelt migration boom of the 1980s and 1990s has ended and Americans are moving far less frequently than in the past. That's hardly surprising given the mega demographic group of the Baby Boomers is aging and less inclined to move every 6 to 8 years.

To replace this obsolete economic model, the AP article quotes Florida as proposing a "digital age" alternative in which jobs will cluster in what some have called super metro regions such as the Boston-New York-Washington and Los Angeles-Orange-San Diego corridors. Florida argues that these areas will concentrate highly educated professionals and creative thinkers who can drive future economic growth.

I appreciate Florida's view that these creative processes flourish best when these creative types interact and collaborate. But Florida's digital age sounds more to me like a throwback to the industrial age that saw people migrate from the countryside and concentrate in cities that in turn became today's metro areas.

In a true digital economy, population and information-based work would be more evenly distributed, mitigating the need for people to concentrate in congested, high cost metro areas. Moreover, socio-economist Jack Lessinger predicted in his 1990 book Penturbia that Americans will opt out of these areas in search of slower paced, less crowded and improved quality of life in less populated regions of the nation. And true community instead of the shallow, enforced faux community of privately governed homeowner associations that have proliferated in the Sunbelt states over the past two decades. I believe Lessinger will ultimately be proven prescient.

To achieve a true digitally-based (and incidentally, less petroleum-based) economy, the United States must ensure the near universal deployment of fiber optic telecommunications infrastructure capable of supporting symmetric, business class Internet-protocol-based applications including video conferencing. This is the best way to avoid future real estate bust and boom cycles of the kind Florida describes. As some have simply put it, move bytes, not bodies.

BBC study finds broadband "not spots" not confined to rural areas

People tend to stereotype broadband black holes as a rural issue both in the U.S. and elsewhere. The assumption is often inaccurate and apparently so in the U.K, according to a study commissioned by the BBC:

The research revealed that so-called notspots are not limited to rural communities, with many in suburban areas and even streets in major towns.

The government has pledged a range of technologies to fill the gaps.

"We had assumed that these notspots were in remote parts of the countryside. That may be where the most vocal campaigners are but there is a high incidence of them in commuter belts," said Alex Salter, co-founder of broadband website SamKnows.

Maryland local governments team up for broadband stimulus funding

Several Maryland local government entities are pooling their efforts to get "shovel ready" to get dibs on about $100 million of the $7.2 billion earmarked for broadband telecommunications infrastructure buildout in the federal economic stimulus package, the Baltimore Sun reports:

One team, the One Maryland Broadband Plan, has been working at this for over a year. It includes Baltimore, Carroll, Frederick, Howard, Anne Arundel, Prince George's and Montgomery counties, plus Baltimore City and Annapolis

Another group of rural counties covering the Eastern Shore, Southern and Western Maryland is also preparing to apply for money through the Salisbury-based Maryland Broadband Co-operative, a private nonprofit created three years ago by the Maryland General Assembly and funded by state and federal funds.

"I personally feel we're one of the few states in the country shovel-ready," said Patrick Mitchell, the co-op's president and CEO, who said he hopes for 250 miles of cable in rural areas where companies like Verizon are loath to go.

Obama official: Half full broadband glass "will guarantee economic stagnation and decline."

This quote is from Susan Crawford, a member of President Barack Obama's National Economic Council, via internetnews.com:

"I assure you that the administration at the highest levels really is interested in broadband and cares about this national broadband plan," Crawford said.

"It's true that access to broadband doesn't guarantee economic success, but lack of access to broadband will guarantee economic stagnation and decline."