Telecom coops offer much needed alternative to build out U.S. Internet infrastructure

This Wall Street Journal article explores the Faustian bargain AT&T, America's largest wireline telecom provider, struck with the U.S. Federal Communications Commission to begin winding down its obsolete copper Publicly Switched Telephone Network (PSTN):

Mr. Stephenson himself has made it clear that AT&T would rather just sell off its regulated phone territories the way rival Verizon has done. But those sales haven't worked out swimmingly for the buyers, so now buyers can't be found, and neither would regulators likely bless further sales.  AT&T's plan, then, amounts to a compromise: AT&T will spend several billion dollars making undesirable investments if Washington will relieve it of the unsustainable regulatory burdens associated with the old copper voice network.

This is not an optimal solution for either AT&T's shareholders or for the many Americans who despite AT&T's expansion plans would remain disconnected from the Internet and the Voice Over Internet Protocol (VOIP) service it could provide to replace voice telephone service delivered over the nation's aging copper Publicly Switched Telephone Network (PSTN).  An alternative is clearly needed.

The good news is one exists as does its funding mechanism: cooperatives.  In the 1930s, the U.S. Department of Agriculture's Rural Utilities Service (RUS) made funding available to coops to build the needed infrastructure to deliver electric power and phone service.  The RUS remains in place today.  Given the problems investor-owned telcos like AT&T face deploying needed Internet infrastructure as shown in the WSJ story, the RUS should be given a higher profile and adequately funded to facilitate the much needed telecom coop alternative for the construction and operation of Internet infrastructure.

Telecom infrastructure demands competing business models

The Salt Lake Tribune has published a set of articles on UTOPIA, a public open access fiber network.  For other publicly owned and operated telecommunications infrastructure, the take away is they are like building and financing toll highway systems over a period of many years.  A prudent, long term financial plan is essential and their success can't be measured in isolation over the short term.

That's why investor owned incumbent telco and cable providers haven't built out fiber to the premise infrastructure. Their shareholders expect a certain return on investment within five years or less as well as hefty dividends.  Infrastructure projects have long term time horizons that aren't compatible with their business models.

Some of those interviewed in the articles assert that UTOPIA and other publicly operated telecommunications networks shouldn't be competing with incumbent, investor owned telcos and cablecos.  I disagree.  The challenges of constructing and operating telecommunications infrastructure demand competition to produce the best business models demonstrating the greatest potential for long term viability.  It's not an easy task.  The incumbent providers been unable to produce one.  That has led to extensive market failure in wireline telecommunications services, leaving millions of Americans without premises Internet access.  UTOPIA and other non-incumbent operators despite their shortcomings are to be commended for making the effort to develop alternatives to build and construct this essential infrastructure for the 21st Century.

Broadband delayed again� - News - The Charleston Gazette - West Virginia News and Sports -

Broadband delayed again� - News - The Charleston Gazette - West Virginia News and Sports -

This sickening story highlights the pathetic, on the cheap state of today's U.S. telecommunications infrastructure. Providers battle over subsidies that would be better invested in fiber to the premise infrastructure rather than stopgap, obsolescence-prone DSL and terrestrial wireless.

And the DSL provider (Frontier) has the temerity to suggest since it offers its West Virginia customers satellite Internet service -- a national disgrace that should only be serving locales north of the Arctic Circle -- it is therefore providing sufficient service.

AT&T forced to invest in wireline plant to stem residential cord cutting

This item from Bloomberg/Businessweek helps explain why AT&T is opting to invest $6 billion in its wireline infrastructure.  The telco has been bleeding residential connections for years as these customers have dropped landline service and migrated to mobile wireless.  This is particularly true for those residential customers not offered wireline Internet service and thus had no reason to keep their landline account active.

AT&T is apparently now hoping to win those customers back and retain those thinking of cutting the cord by providing them Internet service via its proprietary, VDSL-based U-verse IPDSLAM service.  According to an AT&T news release today announcing its 3-year, $14 billion CAPex plan, U-verse IPDSLAM will provide Internet access and Voice Over Internet Protocol (VoIP) to 24 million customer premises in AT&T's wireline service area by year-end 2013.

California PUC rectifies its mischaracterization of Internet infrastructure subsidy fund

Several months ago, this blog called out the California Public Utilities Commission (CPUC) for incorrectly asserting the public policy goal of its program to subsidize the build out of Internet infrastructure in the Golden State was instead to encourage “the adoption of broadband.”

To its credit, the CPUC has rectified its gross misstatement of the law authorizing its $100 million plus California Advanced Service Fund (CASF). It did so this week, buried 18 pages deep into a proposed order that would loosen eligibility for CASF infrastructure loan and grant funding to include entities not holding a Certificate of Public Convenience and Necessity (CPCN) or a Wireless Identification Registration (WIR):

“We wish to make clear that although we propose to modify the CASF eligibility requirements to include both for profit and nonprofit broadband infrastructure providers, it is not our intent to change the focus of the CASF program. The CASF was created to fund the deployment of broadband infrastructure in unserved and underserved areas of the state, rather than the adoption of broadband services.” (Emphasis added)

The CPUC should also make it easier for consumer owned, community-based providers such as telecom cooperatives to access CASF funding for last mile (to the premises) Internet infrastructure construction – a critical infrastructure link singled out for attention in the proposed order. A key need of these providers is technical assistance grant funding to retain engineers and expert consultants to develop preliminary network designs and business case analyses. These deliverables would help ensure that the contemplated projects pencil out and would generate sufficient revenues to justify the prudent investment of CASF funds.

The CPUC should also revisit its unworkable, hair splitting exercise in futility of attempting to map out what neighborhoods are considered “unserved” and “underserved” based on throughput speed and census block groups. The inherent variation of legacy telco infrastructure Internet service from one address to the next doesn’t lend itself to these broad brush delineations. Internet service available at a given premise can be entirely different from another one just a quarter mile or a half block away.  Some overlap or "overbuilding" as it is called by incumbent providers will the inevitable consequence of progress.  But it must occur if the United States is to remedy what President Barack Obama decried in his State of the Union speech at the beginning of this year as the nation's "incomplete" Internet telecommunications infrastructure.  A network filled with holes does not a network make.

Increased adoption of telework offers low cost means of alleviating California's transportation congestion

Dan Walters: Study of exodus from California doesn't prove its point - Dan Walters - The Sacramento Bee: [t]here are legitimate doubts about California's ability to attract the job-creating investment capital we need to emerge from recession because of the aforementioned regulatory climate, high taxes and other factors, such as poor-performing schools and congested transportation. (Emphasis added)

California's transportation congestion problem has a low cost means of mitigation: increased adoption of working from a home office -- known as telework -- that eliminates commute trips and peak hour traffic.  A U.S. Census Bureau report issued earlier this month suggests that's the trend.  According to the Survey of Income and Program Participation, the number of people who worked at home at least one day per week increased from 9.5 million in 1999 to 13.4 million in 2010, increasing from 7.0 percent to 9.5 percent of all workers. The largest increase occurred between 2005 and 2010, when the share grew from 7.8 percent to 9.5 percent of all workers, an increase of more than 2 million.

As home to Silicon Valley and companies that have innovated telecommunications and information technologies that make remote work and virtual organizations possible, the Golden State should lead the way on telework adoption. Especially since raising billions to maintain its aging, decades-old system of roads and highways is proving fiscally challenging.

AT&T likely to upgrade only small portion of residential wireline plant, analyst predicts

AT&T is likely to upgrade only a fraction of its residential wireline plant to deliver premises Internet to residences that it doesn't currently provide Internet service, according to an analysis by George Notter of Jefferies & Company discussed in this Telecompetitor article.  The telco's strategy is stated to be unveiled next month.

Notter's analysis predicts AT&T will upgrade only about 15 percent of its wireline plant to support its hybrid fiber/copper U-Verse triple play offering.  Some of the remaining premises may be offered AT&T's version of Verizon's LTE-based HomeFusion product, according to Notter.