There's an increasing amount of speculation in cyberspace that incumbent telcos and cable companies could opt to exercise a broadband black hole preservation provision in the rules governing the first round of federal broadband stimulus funding applications due Aug. 14. The provision allows incumbent providers to challenge proposed projects in their territories as not meeting the criteria of "unserved" or "underserved" areas under the rules.
Already law firms are warning incumbents that these projects could infringe on their footprints in thinly veiled inducements to challenge or litigate against them. As with lawsuits by incumbents against local governments that have proposed their own fiber to the premises deployments, the goal isn't to prevail on the merits but rather to delay and buy time. Moreover, while the rules place the burden of proof on incumbents to demonstrate a proposed project encompasses census blocks that aren't unserved or underserved, it's likely to be very difficult for project proponents to rebut the incumbents since the rules don't require incumbents to make their own deployment data publicly available.
The problem for the incumbents is that buying more time won't help them since their infrastructures are already built out to the extent their business models permit. Challenging proposed broadband stimulus projects has little upside and significant downside risk: fueling negative public perception and increased scrutiny from regulators likely to view such conduct as monopolistic and contrary to current federal policy to expand broadband access.
Wednesday, August 05, 2009
New FCC chair must consider alternative business models for telecom infrastructure
Newly minted Federal Communications Commission Chairman Julius Genachowski has kicked off a major initiative to get the United States' telecommunications infrastructure upgraded so that it can deliver broadband to all Americans.
In meetings with newspaper editorial boards, Genachowski noted 40 percent of U.S. households don't subscribe to broadband. "That's not where you want to be on something that we think is a core infrastructure for the United States," he told reporters and editors of the San Jose Mercury News this week. "And I think it is. Broadband will be our platform for commerce, for democratic engagement, and for addressing a whole series of vital national priorities."
To accomplish his goal of full build out of advanced telecommunications infrastructure, Genachowski, who is to present a plan to Congress in February to make it happen, will clearly have to consider alternative business models. The current model in which most telecom infrastructure is held by large publicly traded corporations cannot because it lacks sufficient patient capital to make the necessary investment. These companies can play an important role in providing long haul Internet backbone and much of the middle mile infrastructure. But to ensure last mile access, nonprofit telecommunications cooperatives, small local providers and local governments will have to play the same role they did in the early part of the 20th century where they provided electrical, water and telecommunications infrastructure where shareholder-held companies could not profitably do so.
Genachowski should also recommend Congress put in place incentives to help bridge the last mile gap such as tax breaks allowing property owners to deduct initial costs they would pay to join telecom cooperatives offering fiber connections to their properties.
In meetings with newspaper editorial boards, Genachowski noted 40 percent of U.S. households don't subscribe to broadband. "That's not where you want to be on something that we think is a core infrastructure for the United States," he told reporters and editors of the San Jose Mercury News this week. "And I think it is. Broadband will be our platform for commerce, for democratic engagement, and for addressing a whole series of vital national priorities."
To accomplish his goal of full build out of advanced telecommunications infrastructure, Genachowski, who is to present a plan to Congress in February to make it happen, will clearly have to consider alternative business models. The current model in which most telecom infrastructure is held by large publicly traded corporations cannot because it lacks sufficient patient capital to make the necessary investment. These companies can play an important role in providing long haul Internet backbone and much of the middle mile infrastructure. But to ensure last mile access, nonprofit telecommunications cooperatives, small local providers and local governments will have to play the same role they did in the early part of the 20th century where they provided electrical, water and telecommunications infrastructure where shareholder-held companies could not profitably do so.
Genachowski should also recommend Congress put in place incentives to help bridge the last mile gap such as tax breaks allowing property owners to deduct initial costs they would pay to join telecom cooperatives offering fiber connections to their properties.
Thursday, July 30, 2009
California local governments, nonprofits eligible for 90% broadband stimulus subsidization
California local governments and nonprofit entities that can successfully navigate the complex, 121-page set of rules governing the first round of grants providing up to 80 percent subsidization of broadband infrastructure build outs under the National Telecommunications and Information Administration's Broadband Technology Opportunities Program -- and do so in the just two weeks remaining before the Aug. 14 application deadline -- could get as much as 90 percent of their project costs subsidized.
To leverage the federal broadband stimulus funds, the California Public Utilities Commission had previously approved an order expanding its subsidy program for broadband infrastructure, the California Advanced Services Fund, to provide up to half of the 20 percent match required of regulated telecom providers proposing BTOP projects.
Expanding the CASF funding to include local governments, telecom cooperatives and other non commercial providers required legislative authorization. Gov. Arnold Schwarzenegger signed the legislation, AB 1555, into law July 29. An urgency measure, the bill takes effect immediately.
It remains to be seen if any such projects will be proposed given BTOP rules that make it difficult to qualify projects and give incumbent providers effective veto power, particularly in areas deemed "underserved" under the guidelines.
To leverage the federal broadband stimulus funds, the California Public Utilities Commission had previously approved an order expanding its subsidy program for broadband infrastructure, the California Advanced Services Fund, to provide up to half of the 20 percent match required of regulated telecom providers proposing BTOP projects.
Expanding the CASF funding to include local governments, telecom cooperatives and other non commercial providers required legislative authorization. Gov. Arnold Schwarzenegger signed the legislation, AB 1555, into law July 29. An urgency measure, the bill takes effect immediately.
It remains to be seen if any such projects will be proposed given BTOP rules that make it difficult to qualify projects and give incumbent providers effective veto power, particularly in areas deemed "underserved" under the guidelines.
Jump in online video calls for higher FCC minimum broadband definition
PC Magazine reports this week on a survey by the Pew Internet & American Life Project that found the percentage of adults who watch video online has nearly doubled since 2006, up to 62 percent versus 33 percent in December 2006.
The item underscores the inadequacy of the current minimum definition of broadband of at leasat 768 Kbs download standard adopted by the U.S. Federal Communications Commission, which has also been written into the rules governing the disbursement of $7.2 billion in federal economic stimulus funds for broadband infrastructure. That speed isn't going to hack it for video, which most observers agree is the fastest growing form of online content.
The 768 Kbs standard also represents a huge 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.
Under the stimulus legislation, the FCC is required to develop a national broadband plan and present it to Congress next February. The agency should dispose of its outdated definition of broadband and instead adopt the minimum standards outlined in the draft stimulus legislation as they are better matched to meet the growing bandwidth requirements of online video.
The item underscores the inadequacy of the current minimum definition of broadband of at leasat 768 Kbs download standard adopted by the U.S. Federal Communications Commission, which has also been written into the rules governing the disbursement of $7.2 billion in federal economic stimulus funds for broadband infrastructure. That speed isn't going to hack it for video, which most observers agree is the fastest growing form of online content.
The 768 Kbs standard also represents a huge 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.
Under the stimulus legislation, the FCC is required to develop a national broadband plan and present it to Congress next February. The agency should dispose of its outdated definition of broadband and instead adopt the minimum standards outlined in the draft stimulus legislation as they are better matched to meet the growing bandwidth requirements of online video.
Wednesday, July 29, 2009
U.S. broadband stimulus rules favor telco/cable duopoly, turn back clock to 1998
Take a look at Christopher Mitchell's critique of the Notice of Funds Availability (NOFA) issued at the beginning of the month by the National Telecommunications and Information Administration (NTIA) for the first round of grants and loans to subsidize broadband infrastructure allocated in the American Recovery and Reinvestment Act (ARRA).
Mitchell's complaint is rather than getting the United States on a path toward upgrading its obsolete copper-based telecommunications infrastructure to modern fiber optic-based networks owned by local governments and community-based organizations, the rules instead instead favor incumbent private sector providers and effectively revert to the status quo of a decade ago. That's directly at odds with the intent and language of the ARRA, Mitchell asserts, suggesting the rules will require additional future government subsidies since they encourage construction of on the cheap, technologically obsolete telecom infrastructure in a race to the bottom rather than the top.
Here's an excerpt from Mitchell's How the NTIA Dismantled the Public Interest Provisions of the Broadband Stimulus Package:
Mitchell's complaint is rather than getting the United States on a path toward upgrading its obsolete copper-based telecommunications infrastructure to modern fiber optic-based networks owned by local governments and community-based organizations, the rules instead instead favor incumbent private sector providers and effectively revert to the status quo of a decade ago. That's directly at odds with the intent and language of the ARRA, Mitchell asserts, suggesting the rules will require additional future government subsidies since they encourage construction of on the cheap, technologically obsolete telecom infrastructure in a race to the bottom rather than the top.
Here's an excerpt from Mitchell's How the NTIA Dismantled the Public Interest Provisions of the Broadband Stimulus Package:
NTIA has charted a path to bring the slowest networks to people who live in areas that are the most uneconomical to reach. Rather than doing it right the first time (i.e. a strategy that starts with modern speeds and identifies an upgrade path moving forward), NTIA’s path will likely expand 1998-era networks, certainly requiring future appropriations to bring residents to networks with contemporary speeds.
Tuesday, July 28, 2009
Mixed messages inside a broadband black hole
Life can be odd inside a broadband black hole where the normal laws of logic and common sense get twisted and break down.
Consider, for example, today's mail delivery. It contained the contradictory mix of 1) A letter soliciting Comcast Business Class service, a $79/month bundle of "business class Internet up to 4 times faster than DSL." (Query: how can it be compared to a nonexistent service -- no DSL here) and 2) A big postcard from HughesNet addressed to "DIAL UP INTERNET HOUSEHOLD" inviting me to suck a satellite to get speeds "50X FASTER than dialup." (Thanks but I'll pass).
Two direct mail solicitations: One from a provider that can't deliver what it pitches (Comcast) and another selling a costly, latency larded service (HughesNet) that could be more aptly dubbed MolassesNet.
Somehow these companies don't have their marketing campaigns straight. It's no wonder the government wants to map broadband availability because apparently the providers themselves are confused.
After 13 months, persistent Firefox/My Yahoo! bug finally squashed
After nearly 13 months -- longer than the lifespan of most biological insects -- a persistent bug in the interaction of the Firefox browser and the My Yahoo! home page has finally been squashed. This blog first wrote about the issue last September, which surfaced when Yahoo did a forced upgrade to a new home page.
The problem: when Firefox users clicked on an article on the home back and then attempted to navigate back to their My Yahoo! home page, they would lose their place on the home page which would reset to the top of the page. They then had to scroll down the page to find where they left off, making for a very kludgy browsing experience.
With the recent release of the latest version of the browser, Firefox 3.5, the problem appears to have been finally resolved.
The problem: when Firefox users clicked on an article on the home back and then attempted to navigate back to their My Yahoo! home page, they would lose their place on the home page which would reset to the top of the page. They then had to scroll down the page to find where they left off, making for a very kludgy browsing experience.
With the recent release of the latest version of the browser, Firefox 3.5, the problem appears to have been finally resolved.
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