Australian blogger offers bearish view on U.S. broadband stimulus

Here's what Australian Paul Budde has to say on the U.S. government's rules on broadband stimulus funding released this week:

With countries like Australia and New Zealand implementing infrastructure that can deliver 100Mb/s for their next generation broadband—and with most Europeans not too far behind this—it is quite shocking to see that the $7.2 billion economic stimulus package in the USA (under the RUS Broadband Initiatives Program (BIP) and the NTIA Broadband Technology Opportunities Program (BTOP)) requires nothing more than 768 kilobits per second (kb/s) downstream and 200 kb/s upstream.

I am sure that some of you will think that I have misread this but, no, that is indeed the case.

In 2003 Hong Kong decided not to classify as broadband any service that didn't provide 2Mb/s!

The sad part of the story is that, as this money will mainly be deployed in rural America, this guarantees an enormous digital divide in the USA. AT&T and Verizon already offer FttH services in some of the more affluent suburbs, and they are currently extending these services guaranteeing a progressive increase in the quality of broadband services provided to these markets; however, for the foreseeable future there is little hope of seeing such service quality increase (speed) beyond the major cities.

So far, however, our interpretation, and the comments that I have received from my American colleagues, raises very serious concerns, and represents a massive setback for the deployment of broadband in regional and rural America.

U.S. government formally recognizes broadband "underserved"

One of the notable aspects of the U.S. government's changing policy vis broadband is the formal recognition that much of the nation is served by incomplete telecommunications infrastructure, incapable of delivering advanced telecommunications services.

We're not necessarily talking about remote or deep rural areas of the nation where population density is very low. Rather, it's large areas of the U.S. that can be found in metropolitan areas where service from existing wireline providers goes only so far into a community or down a street or road, creating highly arbitrary pools of broadband winners and losers. Exhibit A: Lots of folks have stumbled across this blog via online searches looking to solve the vexing riddle of why they can't order service while a nearby neighbor can.

The rules governing the disbursement of $7.2 billion in economic stimulus funding to build out broadband infrastructure to unserved and "underserved" areas issued by the federal govenment this week embody the formal recognition of this sad state of affairs:

"The term 'underserved' is not a common term in telecommunications, although it is commonly applied in other fields, such as healthcare, education, social services and retail, to denote populations lacking access to critical services," the rules note.

Newly installed Federal Communications Commission Chairman Julius Genachowski also referred to the problem of the broadband "underserved" before the Senate Commerce, Science and Transportation Committee at his confirmation hearing. The term, he testified, encompasses areas where there are pockets of unserved areas in places that generally have broadband (such as where one neighbor has service while another doesn't).

That's a tacit recognition of the incomplete nature of the nation's telecommunications infrastructure that in too many places is like a half built highway or bridge or at best, a rutted dirt road. Bringing America's telecommunications infrastructure to where it should have been a decade ago and where it needs to be in the future requires a clear recognition that broadband black holes aren't confined to rural areas. Unfortunately, they are comprised largely of Genachowski's "pockets" that are scattered all across the nation and can be found most anywhere and not just in rural areas.

Much anticipated broadband economic stimulus rules released

The U.S. Department of Agriculture's Rural Utilities Service and the Department of Commerce's National Telecommunications and Information Administration's much anticipated regulations governing disbursement of $7.2 billion allocated for broadband telecommunications infrastructure in the federal economic stimulus bill enacted in late February were issued today.

At 121 pages, the rules are mind numbingly complex. They're also certain to disappoint many by adopting the Federal Communications Commission's wimpy standard of broadband of just 768 Kbps downstream and 200 Kbps upstream that's inadequate to deliver even low quality video.

"RUS and NTIA favor this broadband speed threshold because it leverages the FCC’s expertise, utilizes an established standard, facilitates the use of many currently common broadband applications (e.g., web browsing, VOIP, and one-way video), allows for consideration of cost-effective solutions for difficult-to-serve areas, and is the most technology-neutral option because it encompasses all major wired and wireless technologies," the two agencies explain in an appendix to the rules. "For these same reasons, RUS and NTIA decline to impose a latency requirement or technology-specific definitions."

That's quite a step down from the speeds Congress contemplated in a January draft version of the American Recovery and Reinvestment Act as minimally defining wireline broadband of at least 5 Mbs download and 1 Mbs uploads and 45 Mbs on the downside and 20 Mbs up for "advanced" wireline broadband. Wireless providers would have had to provide connectivity of 3 Mbs down and 1 Mbs up under the draft legislation that set off howls of protest from both incumbent wireline providers as well as wireless broadband providers complaining those standards were simply too tough to meet. The good news is the RUS and NTIA will give bonus points to projects that will offer higher speeds and an upgrade path to them. And point demerits are given for high latency.

The rules also define another controversial aspect of where the funds will go: areas considered unserved for broadband and underserved. The former is defined as one or more contiguous census blocks where at least 90 percent of households lack access to facilities-based, terrestrial broadband service, either fixed or mobile.

Underserved gets a bit more complex. The rules define it as one or more contiguous census blocks where one or more conditions exist: 1) No more than 50 percent of the households in the proposed funded service area have access to facilities-based, terrestrial broadband service (presumably including fixed terrestrial wireless); 2) No fixed or mobile broadband service provider advertises (yes, advertises, believe it or not) broadband speeds of at least 3 Mbs down and; 3) The rate of broadband subscribership is 40 percent of households or less.

Buried deep inside the rules at page 72 is a troubling broadband black hole preservation provision. It essentially gives incumbent providers (read the telco/cable duopoly) the power to effectively veto or at least delay the award of grants and loans for broadband infrastructure projects proposed by smaller players, local governments and telecom consumer cooperatives. Proposed project areas are publicly disclosed under the regulations. If an incumbent provider doesn't like what it sees, it can file its own application and challenge the upstarts by claiming their project proposes to serve an area that's neither unserved nor underserved.

"If the information submitted by an existing service provider establishes that the applicant’s proposed funded service area is not underserved, both RUS and NTIA may reject the application," the rules state. Moreover, the rules exempt existing providers from the requirement they publicly disclose the area to be served by their projects as well as the tight application timeframe governing other proposed deployments.

The window for this first round of applications is narrow indeed: just one month between July 14 and Aug. 14 after which the bulk of the funding --$4 billion of the $7.2 billion total -- will be awarded. The balance will be disbursed in two follow on rounds of funding with all $7.2 billion due out the door by Sept. 30, 2010. That means those seeking the funds will have to act very quickly to get their applications in order and gather the large amount of information required under the highly data driven, two-step application process.

Municipalities, telco coops essential players in fiber to premises deployment

Verizon issued a news release Monday pointing to a study commissioned by the Fiber to the Home Council suggesting that once the U.S. housing market begins to thaw, homebuyers will be hot for fiber. Or as another study issued last November by Google described them, "Homes with Tails."

As the only telco committed to a full fiber to the premises strategy for both brownfields and greenfields with its FiOS product, Verizon clearly has an interest in promoting the concept. The problem is Verizon like other big telcos as well as cable companies have segmented their markets such that locales where fiber would be most the desirable real estate amenity -- such as those that are home to exurban and semi-rural telecommuters and small businesses -- are least likely to see it. The only way these places can expect to get fiber to the premises in the foreseeable future is to start municipal fiber projects and fiber telecommunications cooperatives.

Both types of entities are also good candidates for some of the $7.2 billion in broadband infrastructure subsidies contained in the American Recovery and Reinvestment Act signed into law in February as well as likely follow on funding promised by the Obama administration.

Cableco's wireless rollout targets urban mobile market -- not wireline coverage gaps

Here's a CNET article on Comcast's addition of wireless "High-Speed 2go” Internet service. The rollout shows that the nation's biggest cable company sees this offering as a mobile adjunct to its existing premises oriented wireline services -- and not a means to fill in gaps where its cable network isn't fully deployed.

Telco wireless broadband's role is mobile, not premises solution

Here's a great article that ran a couple of days ago at App-Rising putting wireless broadband into proper perspective. Namely that its primary role is to serve as a mobile form of connectivity. Technologically when it comes to delivering bandwidth, it currently cannot come close to competing with wireline and particularly fiber optic for premises service.

The article also links to recent household survey results showing that mobile broadband is viewed more as a luxury whereas premises broadband as a necessity with few willing to cut the cord but far more willing to forgo mobile broadband to save money.

Finally, the piece points up where the real inadequacies lie in the U.S. telecommunications: its wireline infrastructure. These inadequacies have themselves hampered mobile broadband services such as those offered with the iPhone that become saturated due to insufficient wireline backhaul capacity.

While the App-Rising article is written in the context of telco delivered mobile broadband, it should be mentioned that fixed terrestrial wireless broadband provided by Wireless Internet Service Providers (WISPs) plays an important role in serving premises as an interim solution. It provides connectivity to those located in unserved areas where no wireline broadband exists and will likely continue to do so until fiber is extended to these premises. But like telco mobile broadband providers, WISPs also suffer from technological and cost limitations for their wireline backhaul, making it difficult for them to offer appealing price points and a range of robust throughput tiers.

British broadband deployment strategy stuck in the self limiting box of DSL

When it comes to ensuring universal broadband access for its citizens, the biggest challenge facing the Brits is thinking outside of box of DSL as this Telegraph story today illustrates.

The UK government is bumbling by setting the bar way too low (prescribing a minimum download speed of 2Mbs) and basing its broadband deployment strategy on DSL over copper, a technology intended to serve only as an interim solution from the 1990s and to the middle of the current decade until fiber optic to the premises is build out. It's a vastly underpowered and arguably obsolete technology that itself is responsible for the formation of gaping broadband "black spots" as they are called in Britian. That's because DSL signals attenuate and quickly fade not far from central telephone exchanges, meaning those just a few miles away are left without service.

Our friends across the Big Pond should consult with American broadband experts like Tim Nulty, who is working to bring fiber to the premises in that part of the U.S. known -- ironically -- as New England. Nulty served as director of a publicly owned broadband system serving the city of Burlington, Vermont and now runs ValleyFiber, a nonprofit organization focused on bringing municipal fiber to nearly two dozen Vermont towns.

The underlying conflict driving muni, coop fiber

The saga of the planned City of Monticello, Minnesota municipal fiber network clearly points up the fundamental conflict between privately run advanced telecommunications providers and municipal fiber projects such as Monticello, which as this story reports successfully withstood a lawsuit by TDS Telecommunications aimed at blocking the project.

Privately held providers are primarily accountable to their investors and shareholders. In the case of costly telecommunications infrastructure requiring extensive capital expenditures that can crimp investor returns over the short term, their interests are directly at odds with those of consumers and businesses desiring more and better value services necessitating those capital expenditures.

Given these starkly conflicting agendas, it's no wonder we're seeing alternative models of constructing advanced telecom infrastructure emerge such as muni and cooperative fiber projects that are accountable to their constituents and members. These alternative models will be particularly viable in areas where existing providers have built incomplete local access networks that leave numerous broadband coverage gaps -- which describes much of the United States.

Thanks to Ron Britvich for the link to the story.