This Rollcall article by think tankers Robert Shapiro of the Georgetown Center for Business and Public Policy and Kevin Hassett of the American Enterprise Institute implies that broadband black holes are caused by a lack of Internet bandwidth. To fill in the holes, Shapiro and Hassett suggest, simply charge large bandwidth users more.
The problem with their analysis is that it assumes broadband black holes are a pricing problem. Wrong answer. It's an infrastructure problem. The holes are there because the business models of the incumbent telco and cable providers don't allow them to fill them. The investor-owned incumbents must earn a return on their capital expenditures within five years but they can only do so in selected parts of their service areas. Hence, limited availability of the advanced telecommunications infrastructure necessary to deliver Internet protocol-based advanced telecommunications services. The telco/cable duopoly has long charged business users higher prices to subsidize services to lower revenue residential customers. That pricing differential has done nothing to spur investment in investor-owned advanced telecommunications infrastructure.
What's needed to fill in the broadband black holes are alternative business models such as nonprofit consumer-owned telecom cooperatives formed a century ago when the investor owned telcos were unable to profitably provide telephone service to large parts of the nation. Local governments can play a similar role.
Thursday, November 19, 2009
Saturday, November 14, 2009
Report: Flood of comments on broadband stimulus requests indicate "significant incumbent challenges"
Telecompetitor is reporting Mary Campanola, outreach coordinator for the Rural Utilities Service, told a panel at the Telco TV annual conference and expo Nov. 12 that the agency has received 11,000 comments for the 2,200 applications it received for funding through its Broadband Initiatives Program (BIP). BIP provides grants and low cost loans as part of $7.2 billion set aside for broadband infrastructure subsidies in the American Recovery and Reinvestment Act of 2009.
Telecompetitor quotes Campanola as saying 80 percent of all applications received at least one comment, which according to the interactive blog reveal "significant incumbent challenges" of proposed deployments aimed at providing broadband to areas designated as unserved or underserved.
Since RUS must check out each incumbent challenge, the BIP stimulus dollars will flow slowly. Campanola reportedly said just 18 applications that were due three months ago made it past the initial review phase. Those projects selected for funding will be announced starting in December with award notifications made on a rolling basis well into 2010, Campanola was quoted as saying.
Telecompetitor quotes Campanola as saying 80 percent of all applications received at least one comment, which according to the interactive blog reveal "significant incumbent challenges" of proposed deployments aimed at providing broadband to areas designated as unserved or underserved.
Since RUS must check out each incumbent challenge, the BIP stimulus dollars will flow slowly. Campanola reportedly said just 18 applications that were due three months ago made it past the initial review phase. Those projects selected for funding will be announced starting in December with award notifications made on a rolling basis well into 2010, Campanola was quoted as saying.
Monday, November 09, 2009
Broadband demand vs. supply siders: Real debate or a diversion?
As in macroeconomics, an ideological split appears to be developing among supply siders and demand siders over government policy designed to make broadband available to all Americans.
The demand siders tend to hail from the telco/cable duopoly such as Kyle McSlarrow, the president and CEO of the National Cable and Telecommunications Association (NCTA). Policy should focus on the demand side, McSlarrow told a conference hosted by the Family Online Safety Institute. "[T]he way we need to think about this is to think about this in terms of broadband adoption. We have it a little backwards right now."
Demand siders got a boost last week with the release of a study by the Information Technology and Innovation Foundation concluding the U.S. should create several programs to address demand for broadband in addition to subsidizing deployment of advanced telecommunications infrastructure.
Supply siders however question the need for government programs to stimulate broadband demand. IDG News Service reported at a recent California forum, some speakers suggested broadband adoption would continue to rise in the U.S. without significant help from the government. Connecting to broadband will eventually be like electricity, easy and inexpensive, Google cofounder Sergey Brin was quoted as saying.
I question whether the supply/demand side debate is real or contrived. The fact that the demand siders tend to be in the telco/cable camp raises my suspicion that their pushing the issue of adoption is more of a tactical move than substantial policy difference, aimed at diverting attention away from the problem of numerous broadband black holes. Last month, the Yankee Group issued a report noting about 12 percent of U.S. households, including those in some major metropolitan areas, have no access to broadband service, landing the U.S. at a dismal 15th in broadband penetration worldwide.
Even if we were to give the telco/cable duopoly the benefit of the doubt and accept a true policy split exists, I'd have to lean toward the supply siders. Unlike the far slower rate of adoption for basic telephone service, demand for and adoption of broadband has been explosive by comparison.
We also have to be careful not to frame the issue too narrowly. It's not just about high speed Internet connectivity but rather the larger migration to next generation, Internet Protocol-based telecommunications infrastructure than can provide not just fast Internet connections but also voice communication and TV/video -- both services that have very high rates of adoption in the United States.
The demand siders tend to hail from the telco/cable duopoly such as Kyle McSlarrow, the president and CEO of the National Cable and Telecommunications Association (NCTA). Policy should focus on the demand side, McSlarrow told a conference hosted by the Family Online Safety Institute. "[T]he way we need to think about this is to think about this in terms of broadband adoption. We have it a little backwards right now."
Demand siders got a boost last week with the release of a study by the Information Technology and Innovation Foundation concluding the U.S. should create several programs to address demand for broadband in addition to subsidizing deployment of advanced telecommunications infrastructure.
Supply siders however question the need for government programs to stimulate broadband demand. IDG News Service reported at a recent California forum, some speakers suggested broadband adoption would continue to rise in the U.S. without significant help from the government. Connecting to broadband will eventually be like electricity, easy and inexpensive, Google cofounder Sergey Brin was quoted as saying.
I question whether the supply/demand side debate is real or contrived. The fact that the demand siders tend to be in the telco/cable camp raises my suspicion that their pushing the issue of adoption is more of a tactical move than substantial policy difference, aimed at diverting attention away from the problem of numerous broadband black holes. Last month, the Yankee Group issued a report noting about 12 percent of U.S. households, including those in some major metropolitan areas, have no access to broadband service, landing the U.S. at a dismal 15th in broadband penetration worldwide.
Even if we were to give the telco/cable duopoly the benefit of the doubt and accept a true policy split exists, I'd have to lean toward the supply siders. Unlike the far slower rate of adoption for basic telephone service, demand for and adoption of broadband has been explosive by comparison.
We also have to be careful not to frame the issue too narrowly. It's not just about high speed Internet connectivity but rather the larger migration to next generation, Internet Protocol-based telecommunications infrastructure than can provide not just fast Internet connections but also voice communication and TV/video -- both services that have very high rates of adoption in the United States.
Saturday, November 07, 2009
Shifting telecom paradigm poses challenge as FCC crafts broadband plan
The U.S. Federal Communications Commission is drafting recommendations due to Congress in a little more than three month's time on a national policy to ensure universal broadband access.
It's no easy task. The reason? We're in the midst of a paradigm shift away from yesterday's proprietary, closed single purpose telephone and cable systems to an open Internet-based system that can deliver everything these systems provided and so much more.
In fact, yesterday's closed telco/cable paradigm is itself the major impediment to universal broadband because its business model cannot easily accommodate that goal. Subsidizing it to expand broadband access using old models designed to expand access to the basic telephone service of yesteryear isn't likely to accomplish the goal of universal broadband access. The subsidies will prove to be too little, too late (such as this legislative proposal to expand the Universal Service Fund to include broadband defined as the soon to be obsolete speed of 1.5 Mbs), unable to keep up with the rapid advance of IP-based applications and their accompanying demand for ever greater speeds and bandwidth. It's like like subsidizing mainframe computing and keypunch machines in a new distributed computing age of powerful servers and microcomputers.
It is therefore essential that the FCC think outside of the box of the legacy telco/cable duopoly and look to innovative approaches and alternative business models as it prepares its recommendations. At the top of the list should be locally owned and operated open access fiber to the premises infrastructure. Whether these systems are operated by local governments, cooperatives or public/private partnerships, they can be more rapidly deployed and are thus more likely to expediently meet the goal of expanding broadband access to all Americans while simultaneously providing protection against technological obsolescence.
It's no easy task. The reason? We're in the midst of a paradigm shift away from yesterday's proprietary, closed single purpose telephone and cable systems to an open Internet-based system that can deliver everything these systems provided and so much more.
In fact, yesterday's closed telco/cable paradigm is itself the major impediment to universal broadband because its business model cannot easily accommodate that goal. Subsidizing it to expand broadband access using old models designed to expand access to the basic telephone service of yesteryear isn't likely to accomplish the goal of universal broadband access. The subsidies will prove to be too little, too late (such as this legislative proposal to expand the Universal Service Fund to include broadband defined as the soon to be obsolete speed of 1.5 Mbs), unable to keep up with the rapid advance of IP-based applications and their accompanying demand for ever greater speeds and bandwidth. It's like like subsidizing mainframe computing and keypunch machines in a new distributed computing age of powerful servers and microcomputers.
It is therefore essential that the FCC think outside of the box of the legacy telco/cable duopoly and look to innovative approaches and alternative business models as it prepares its recommendations. At the top of the list should be locally owned and operated open access fiber to the premises infrastructure. Whether these systems are operated by local governments, cooperatives or public/private partnerships, they can be more rapidly deployed and are thus more likely to expediently meet the goal of expanding broadband access to all Americans while simultaneously providing protection against technological obsolescence.
Wednesday, October 28, 2009
White paper highlights role of muni fiber as U.S. develops national broadband plan
Here's an excellent white paper on the status of U.S. municipal fiber to the premises systems issued this month by the Fiber to the Home Council.
The report lists 57 muni fiber networks that serve both homes and businesses operating as of October 2009 (it adds at least 15 more serve businesses only), noting that "a growing number of municipal governments are taking it upon themselves to build FTTH networks – much in the way that they have previously built roads, sewers and/or electrical systems – as a means of ensuring that local residents have access to necessary services, in this case, Internet connectivity for the 21st Century."
These muni fiber systems typically spring up after private service providers have declined to upgrade their networks or build such systems, the report notes. As such, the white paper concludes, these networks are an important component of the U.S. telecommunications infrastructure and should be encouraged.
That conclusion should be given due consideration by the Federal Communications Communications Commission as it develops a recommendation due to Congress in February 2010 on a national broadband deployment plan.
The report lists 57 muni fiber networks that serve both homes and businesses operating as of October 2009 (it adds at least 15 more serve businesses only), noting that "a growing number of municipal governments are taking it upon themselves to build FTTH networks – much in the way that they have previously built roads, sewers and/or electrical systems – as a means of ensuring that local residents have access to necessary services, in this case, Internet connectivity for the 21st Century."
These muni fiber systems typically spring up after private service providers have declined to upgrade their networks or build such systems, the report notes. As such, the white paper concludes, these networks are an important component of the U.S. telecommunications infrastructure and should be encouraged.
That conclusion should be given due consideration by the Federal Communications Communications Commission as it develops a recommendation due to Congress in February 2010 on a national broadband deployment plan.
Wednesday, October 21, 2009
Broadband stimulus funds insufficient -- but agreement ends there
It seems everyone agrees that the $7.2 billion in subsidies set aside in the American Recovery and Reinvestment Act of 2009 for broadband infrastructure construction aren't anywhere close to what's needed to overhaul the U.S. telecommunications infrastructure to allow it to support ubiquitous next generation, Internet-Protocol-based telecommunications.
Blair Levin, the Federal Communications Commission's broadband czar, described the stimulus subsidies just days before President Barack Obama took office in January as a down payment, representing only a portion of the new administration's planned efforts.
This week, the Boston-based Yankee Group concurred, issuing a summary of a study concluding the $7.2 billion figure is woefully inadequate, representing less than a third of the needed investment.
The Yankee Group study also reinforces the FCC's own findings. In a Sept. 29 news release, the FCC declared $7.2 billion in grants and loan subsidies contained in the economic stimulus package "are insufficient to achieve national purposes." The FCC said $20 billion would be the price of a minimum "basic" broadband that would be quickly outmoded.
The Yankee Group put the minimum figure close to the FCC's: $24 billion. Either of these figures would represent a wasteful investment in technology that would soon be obsolete. The FCC's $20 billion would achieve connectivity ranging between 768 Kbs -- already outmoded -- and 3 Mbs, which is on the verge of obsolescence given the growing amount of high bandwidth video content. To bring the U.S. where it needs to be for the future -- fiber to the premises providing throughput of 100 Mbs or better -- the FCC puts the number at $350 billion.
Behind the consensus that more money is needed beyond the $7.2 in the stimulus package is disagreement over where it will come from and under what terms. Splits exist even within the Obama administration. Earlier this month Levin was quoted in Multichannel News telling an FCC meeting that private investment -- and not by implication federal subsidies -- would foot the bill. But just four months earlier, Jim Kohlenberger, chief of staff for the White House’s Office of Science and Technology, said private market failure has hamstrung telecom infrastructure investment.
The private sector -- largely represented by the legacy telco/cable duopoly and their astroturf groups -- is firing warning shots across the bow of the FCC as it readies a major regulatory policy recommendation due to Congress in February. They are sending the message that unless they can invest in infrastructure on their own terms and retain control over it, further investment will be jeopardized. That will lead to a reverse stimulus, eliminating rather than creating jobs, the Internet Innovation Alliance warned Oct. 20.
Blair Levin, the Federal Communications Commission's broadband czar, described the stimulus subsidies just days before President Barack Obama took office in January as a down payment, representing only a portion of the new administration's planned efforts.
This week, the Boston-based Yankee Group concurred, issuing a summary of a study concluding the $7.2 billion figure is woefully inadequate, representing less than a third of the needed investment.
The Yankee Group study also reinforces the FCC's own findings. In a Sept. 29 news release, the FCC declared $7.2 billion in grants and loan subsidies contained in the economic stimulus package "are insufficient to achieve national purposes." The FCC said $20 billion would be the price of a minimum "basic" broadband that would be quickly outmoded.
The Yankee Group put the minimum figure close to the FCC's: $24 billion. Either of these figures would represent a wasteful investment in technology that would soon be obsolete. The FCC's $20 billion would achieve connectivity ranging between 768 Kbs -- already outmoded -- and 3 Mbs, which is on the verge of obsolescence given the growing amount of high bandwidth video content. To bring the U.S. where it needs to be for the future -- fiber to the premises providing throughput of 100 Mbs or better -- the FCC puts the number at $350 billion.
Behind the consensus that more money is needed beyond the $7.2 in the stimulus package is disagreement over where it will come from and under what terms. Splits exist even within the Obama administration. Earlier this month Levin was quoted in Multichannel News telling an FCC meeting that private investment -- and not by implication federal subsidies -- would foot the bill. But just four months earlier, Jim Kohlenberger, chief of staff for the White House’s Office of Science and Technology, said private market failure has hamstrung telecom infrastructure investment.
The private sector -- largely represented by the legacy telco/cable duopoly and their astroturf groups -- is firing warning shots across the bow of the FCC as it readies a major regulatory policy recommendation due to Congress in February. They are sending the message that unless they can invest in infrastructure on their own terms and retain control over it, further investment will be jeopardized. That will lead to a reverse stimulus, eliminating rather than creating jobs, the Internet Innovation Alliance warned Oct. 20.
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