Preliminary FCC broadband policy report ducks issue of incomplete telecom infrastructure

For the millions of Americans who live and work in broadband black holes, a preview released this week of a forthcoming Federal Communications Commission policy recommendation to Congress offers practically no hope their situations will improve over the foreseeable.

The FCC's National Broadband Plan: National Purposes Update released Feb. 18 contains 56 pages of bullet points, charts and graphs that cover just about every topic related to broadband except for the nation's most pressing broadband problem: incomplete and inadequate advanced telecommunications infrastructure that's necessary to deliver broadband to all Americans.

The final report is due to Congress by March 17. If the report doesn't address this critical issue in a substantive manner and instead dances all around it as this week's preview suggests, it will be seen as a whitewash of platitudes that will quickly be shelved and forgotten.

Google's fiber foray: Likely goal is to test alternative business model

Google's demonstration of concept fiber to the premises "experiment" announced last week could represent the start of a major transformation of how consumers receive information in an age where information is increasingly delivered via Internet protocol.

The potential transformation: from the telco/cable business model that brings the bulk of Americans Internet access that due to CAPEX constraints cannot reach about 12 percent of U.S households to the advertising-based business model used for decades by mass broadcasters. Investors provide much of the funding needed for costly transmitters and other broadcast equipment. But advertisers provide another deep and ongoing source of cash to invest in the necessary broadcast equipment to reach consumers.

Google's experiment isn't likely about testing fiber to the premises technology. Fiber is a well demonstrated means of getting lots of bits and bytes to the doorstep with plenty of capacity to spare. Rather, I suspect it's to explore an alternative business model to bring Internet protocol-based services to homes that is to a large degree based on the network broadcasting business model.

Notably, Google's announcement comes as the U.S. government struggles with the inherent conflict of implementing policies to expand advanced telecommunications infrastructure to all Americans while paying homage to the privately owned telco/cable dominated Internet "ecosystem" that makes doing so impossible without substantial subsidies in a time of economic penury.

In the 1960's, mass communications theorist Marshall McLuhan predicted an electronic global village linked together by a broadcast television -- a medium so powerful that the medium itself would be as important as its content. "The medium is the message,” he famously declared. While McLuhan's observation was about TV, in retrospect it applies even more so to the Internet. Google's foray into fiber may well have been undertaken with McLuhan firmly in mind.

Google's fiber to the premise "experiment" a would be broadband game changer

Nearly three years ago, I predicted Internet-protocol content providers and aggregators fed up with trying to pump their product over legacy telecommunications infrastructure dominated by telcos and cable companies would acquire or build their own infrastructure to reach consumers. It's an expected outcome of a conflict between the content providers' needs for ever increasing bandwidth and the telco/cable companies' need to conserve capital expenditures and place incremental limits on bandwidth consistent with their service offerings in which consumers pay increasingly higher rates for more bandwidth. The content providers want unlimited bandwidth delivered over big pipes. But the business model of the telco/cable duopoly is based on making bandwidth a restricted scarce commodity delivered over little pipes.

So it was no surprise when Google -- which has reportedly been quietly buying up fiber left dark after the dot com bust of a decade ago -- announced this week it would build an experimental alternative business model that would bring advanced telecommunications to consumers over a really big pipe: fiber optic infrastructure to the premises capable of throughput of 1 gigabyte per second.

Google is also clearly holding itself as an alternative to the Obama administration's program to build out open access broadband infrastructure subsidized by more than $4 billion set aside in the American Recovery and Reinvestment Act (ARRA) President Obama signed into law nearly one year ago.

The timing of Google's announcement of its fiber infrastructure test program is also worth noting and shows the company is looking to make a statement. The window for applications for the second round of ARRA broadband infrastructure subsidies opens less than a week after Google's announcement. The deadline set by Google for local governments and communities to nominate themselves for Google's experimental fiber build closes the week after the ARRA funding round application window closes as well the deadline for the Federal Communications Commission to submit a plan to Congress to achieve universal U.S. broadband access as required by the ARRA.

While the federal agencies that will hand out the ARRA infrastructure subsidies have made assurances the money will soon begin flowing in earnest, doubts have emerged due to numerous challenges filed against proposed projects by the same incumbent providers Google wants to go around. Google likely figured amid that uncertainty, the timing was right to make its announcement.

With its self described "experimental" fiber to the premises model, Google may also be trying to debunk skeptics who believe fiber to the premises simply costs too much to deploy. That high cost has been cited as the main impediment standing in the way of investment in the fiber to the premises infrastructure that was to have been at the doorstep of every American home by 2006. If Google can show the cost assumptions upon which the business models of the incumbent legacy providers are based are wrong, then the entire game is changed overnight. That potentially puts America on course to catch up to where it should have been four years ago and where it needs to be for the future.

Public policy collides with business interests of telco/cable duopoly

According to Oakland, Calif.-based consultant Craig Settles, the Obama administration's stated policy goal of broadband access for all Americans is colliding with the narrower economic interest of the legacy telephone and cable companies. That conflict is playing out within the context of the administration's economic stimulus legislation that was signed into law almost one year ago.

Settles points to an estimated 9,000 challenges and protests the incumbents brought against proposed projects seeking more than $4 billion in infrastructure subsidies set aside in the American Recovery and Reinvestment Act of 2009. The challenges are being raised under a broadband black hole preservation clause in rules two federal agencies wrote to govern allocation of the subsidies that allows incumbents to protest proposed projects on the grounds they already provide advanced telecommunications services in the area proposed to be served.

The telcos and cable companies want to preserve what they regard as their exclusive franchises for a given "service territory" even though their business models don't allow them to construct the infrastructure necessary to bring advanced telecommunications services to all homes and businesses that need (and try to order) them.

This is the crux of the clash between the business interests of the telco/cable duopoly and public policy that will clearly have to be expeditiously resolved by the Obama administration and Congress if the subsidies are to function as intended. As Settles put it in an article appearing earlier this week in USA Today: "We're at a point where it's the general public's interest vs. the entrenched incumbents."

A broadband farce in the UK countryside

Here's an appalling story from the British countryside that has some parallels in America where folks stuck on dial up or forced to suck a satellite have been given similar stratospheric broadband price quotes (and no stock or options) from incumbent telcos and cable providers. This story also illustrates the need for the UK to ditch its outmoded, copper cable plant that relies on highly constrained "little broadband" DSL.

Looks like the village of Dufton is a representative outpost deep in the UK "broadband desert" recently lamented by Prince Charles.

Last mile fiber project lands broadband stimulus award, sparks strong interest from other rural electric coops

Telecommunications equipment manufacturer Pulse is reportedly getting deluged with inquiries from rural electric cooperatives after it successfully partnered with a rural electric cooperative in Northeast Missouri to score $19 million in last mile broadband stimulus funding from the USDA's Rural Utilities Service (RUS) Broadband Initiatives Program (BIP).

What's sparking (pun intended) interest in the Ralls County Electric Cooperative project is its fiber to the premises design that utilizes "distributed tap architecture" for easy deployment of drops that's cost effective at population densities of as few as four homes per mile, reports Light Reading's Cable Digital News.

The take away from this story isn't about the technology alone. It shows there is tremendous interest in the cooperative business model to bring advanced telecommunications services to unserved and underserved areas of the United States just as coops did a century ago when rural electric and other utility cooperatives were first formed.

U-Verse won't bail AT&T out of its residential wireline woes

Here's a notable report by Todd Spangler of Multichannel News on AT&T's revenues from its hybrid fiber/copper VDSL triple play U-Verse service that suggests while posting increases in customers and revenue, they may be too little and too late to offset a dramatic decline in AT&T's residential wireline market segment. In a Dec. 21, 2009 filing with the U.S. Federal Communications Commission, AT&T in unusually blunt language called the downward trend a "death spiral."

Spangler reports that while AT&T's U-verse revenue nearly tripled over 2009 (despite a sharp economic downturn) and is approaching an annualized rate of $3 billion, it nevertheless represents less than five percent of total wireline segment revenue. Spangler notes even that strong growth isn't sufficient to offset flagging wireline segment revenues, which fell six percent in 2009 to $65.7 billion.

Meanwhile, AT&T disclosed this week it would spend $2 billion on its wireless infrastructure -- money that won't be going into wireline CAPEX to build out the U-Verse footprint. Doing that is a costly proposition given U-Verse involves expensive field distribution equipment that can deliver service only 3,000 feet over existing copper cable plant -- plant that often requires even more money to bring it up to technical standards to reliably carry VDSL signals. That's not an issue in new neighborhoods, where U-Verse is delivered over fiber to the premises. But few such locales are being developed with new home construction at its lowest level in decades.

In sum, U-Verse isn't likely going to bail AT&T out of its troubles in residential wireline and may ultimately lead to the big telco pulling out of the market segment to concentrate on wireless in the retail market as I predicted in September 2008.

App-Rising: As U.S. copper telecom infrastructure ages, no national consensus on next step

Check out this dreary assessment of the state of U.S. telecommunications infrastructure from App-Rising:

In particular, look at Kentucky. They showed a 40% decrease in measured connection speeds just in the last quarter. Numbers like this have me worried that perhaps the century-old copper telephone wire is rapidly deteriorating and impacting DSL performance, or perhaps the cable providers' shared networks are overwhelmed with demand, or maybe wireless broadband is constrained by insufficient backhaul.

What makes Kentucky even more troubling is that they're supposed to be a leader in encouraging the deployment and adoption of broadband. What does that say about the health of the country if a state that's been seen as a leader is falling off this badly.

It makes me start to wonder if we might have a national emergency on our hands in states like Kentucky and others where broadband speeds are dropping. It leads me to think that perhaps we need a national commission to study these issues in depth and get to the bottom of what's happening as no state should be slowing down ten years into the 21st century.