Saturday, February 22, 2014

How Google Fiber is revolutionary -- and how it's not


Google Fiber is revolutionary with the medium of its infrastructure: fiber all the way to the customer premise and the enormous headroom it offers to accommodate future bandwidth growth and new, high bandwidth services. This will allow Google Fiber to leap past the big incumbent national telephone and cable companies bogged down by their existing investment in wire cable infrastructure designed for a pre-Internet era. As Marshall McLuhan put it, the medium is the message. And the medium is fiber to the premise.

Google Fiber also has a revolutionary business model that lessens the pressure to get customer premises to subscribe in order to make the network economics pencil out. It allows customers to sign up for a low cost, multi-year, flat rate connection designed to cover the cost of connecting the premise. The big telcos and cablecos, by comparison, typically charge many thousands of dollars to connect a premise lacking access to a connection, with cablecos charging about $65,000 per mile.

Where Google Fiber's business model is not revolutionary is that like the big legacy incumbents, it is a closed "walled garden" that seeks to own the customer rather than an open access network that sells access to customer premises on a wholesale basis to those wanting to market services over it. This imposes major marketing costs to acquire subscribers one at at time, limiting Google Fiber to those areas where it can get a good return for its marketing and infrastructure investment.

Critics of this business model such as Michael Elling (featured in this video) contend it degrades the value of the network by limiting its ability to scale, invoking Metcalfe's Law -- that implies a network is only as valuable as the number of subscribers on it. Since fewer subscribers can connect to a limited, closed network, it becomes less lucrative in the larger scheme for those at the core providing Internet delivered services such as Netflix, Amazon and ironically, Google itself.

Wednesday, February 19, 2014

The rainbow rabbit leaps over incumbents: Google Fiber in diligence for expansion in 9 metro areas of U.S.


Google Fiber's announcement today that it is in diligence with local governments in nine metro areas of the United States for possible expansion of its proprietary fiber to the premise (FTTP) telecommunications infrastructure illustrates how a company that has been in the Internet business from the beginning can nimbly hop over legacy incumbent telephone and cable companies. The incumbents are weighed down by large investments in metal wire-based infrastructure and outmoded pricing structures that rely on creating artificial bandwidth scarcity and unit-based consumption. They must also satisfy shareholders who favor big dividends over capital investment in FTTP networks -- which explains why Verizon halted its FiOS FTTP product expansion in 2012. Finally, incumbents have sowed sour relationships with local governments that have asked for better service for their residents for years, making them likely to heartily welcome the Googlers.

What's also evident from today's announcement is Google Fiber's colorful hare won't likely be running to areas of the U.S. where it's needed most -- locales where homes and businesses lack wireline premises Internet service due to redlining by the incumbent providers.

Those areas will likely have to rely on municipal and cooperative fiber builds, although some investor-owned players could potentially offer them FTTP as in this rather counterintuitive circumstance in Mississippi. They can, however, benefit from Google Fiber's experience, adopting principles and techniques that lower costs and improve the economics of FTTP. These include prioritizing construction based on interest from potential subscribers and differential pricing models that include an option for basic, flat rate service at low cost for a limited period of time.

Thursday, February 13, 2014

Netflix performance on Verizon and Comcast has been dropping for months | Ars Technica

It wouldn't be at all surprising if Netflix and Amazon stood in the way of government approval of today's announced deal for Comcast to acquire Time Warner Cable without a pledge from Comcast to treat all network traffic equally along with meaningful regulatory enforcement. This story graphically shows why:
Netflix performance on Verizon and Comcast has been dropping for months | Ars Technica

Monday, February 10, 2014

The major causes of U.S. premise Internet service policy quagmire


U.S. telecommunications policy for premises Internet connectivity is in need of reassessment and revamping. It severely limits the nation’s ability to ensure all homes and businesses have fiber to the premise Internet connectivity capable of serving both current and future needs as bandwidth demand continues to grow exponentially.
 
Call it the Levin quagmire, named after former U.S. Federal Communications Commission official Blair Levin. In 2012, Levin predicted little change in the status quo, noting for most Americans over the near term, the best wireline network available to them will be the same one they have now. According to the FCC, for about 19 million Americans that’s dialup, state of the art technology in the early 1990s when Bill Clinton was starting his first term as president.

Summed up, these are the circumstances and policies that have produced the current quagmire:
  • There is an insufficient business case for legacy incumbent telephone and cable companies to invest in building out their networks to serve all premises in their service areas or to upgrade existing infrastructure to fiber to the premise service. Nevertheless, these providers generally don’t avail themselves of federal and state subsidy programs aimed at capitalizing the cost of Internet infrastructure.
  • Federal subsidy programs such as the Connect America Fund are only available to telephone companies and not cable companies that are becoming the dominant premises Internet service providers over telephone companies that are instead concentrating their capital investments on mobile wireless markets.
  • Legacy incumbent telephone and cable providers view their service territories as proprietary franchises. Consequently, they oppose the award of subsidies to alternative providers and lobby for subsidy program eligibility rules inappropriately based on mobile wireless service and outmoded and changing standards of Internet service. They also lobby for state laws that bar local governments from building and operating fiber to the premise networks or make it impractical to do so.

Saturday, February 08, 2014

California should invest in modern telecommunications infrastructure, not high speed rail















Stanford University public policy professor Joe Nation makes an excellent point in this article on transportation infrastructure. Nation, a former California state legislator, notes high-speed trains work in densely populated areas (like the Boston-New York-Washington corridor, for example) and not states like California with large rural, quasi-rural and exurban areas.

In the evolving digital, information-based socio-economy (much of it innovated in Silicon Valley), the Golden State would likely be better off  investing in fiber to the premise telecommunications infrastructure. Particularly since market forces don't tend to produce meaningful private investment in premise telecommunications infrastructure in less densely populated areas that are in danger of becoming neglected backwaters left off the Internet. Putting this infrastructure in place would also enable these areas to more fully participate in the digital economy, reduce the need for commutes to metro areas and benefit from services such as telehealth and distance learning.

High speed rail might have been a suitable project had it been proposed three or four decades ago. What's needed today is ubiquitous, high speed Internet.

Wednesday, February 05, 2014

IP Transition Must Advance, CES Panel Says | USTelecom

IP Transition Must Advance, CES Panel Says | USTelecom: Meanwhile, AT&T has been eager to begin moving forward with the IP transition and last year proposed that the Federal Communications Commission begin trials to test the effects of a full network transition, said Bob Quinn, AT&T senior vice president-federal regulatory. The role for FCC is to oversee the "turning off" of the old network, Quinn said. "There will be an enormous amount of policy concerns involved in doing this, and we need to figure out what this new world will look like."

"We've reached the point where the IP network is superior to the old switched network," said Internet analyst and author Larry Downes. "The policy issue is what do we do about people who have not yet made the switch?"

There's also the issue of telephone companies that have not yet changed out their old POTS copper cable plants to fiber optic capable of supporting data and video as well as voice services using voice over Internet protocol (VOIP). This isn't only about consumers who haven't made the transition off wireline POTS for premises service. For many, they don't really have a choice for wireline-delivered voice service.

AT&T and other telcos are hoping consumers will be satisfied with using mobile wireless service for both voice and Internet access since they don't plan to invest in fiber to the premise (FTTP) infrastructure to replace their obsolete copper networks that cannot serve many homes and businesses due to technological limitations. Communities can offer their residents a far better option by building municipal or consumer telecommunications cooperative owned and operated FTTP networks instead of leaving their residents relegated to supbar mobile wireless services that can't provide adequate bandwidth and value.

Monday, February 03, 2014

Kan. bill would outlaw public broadband service - Washington Times

Kan. bill would outlaw public broadband service - Washington Times: Officials in the southeast Kansas city of Chanute, population 9,100, say they’re the primary target of the proposed legislation. As part of its public utility system, the city runs an ultra-high-speed broadband network that now serves schools, city buildings, the town hospital, banks and other key businesses.

On Nov. 23, the City Commission voted to work toward “fiber to home,” which would extend access to all residents and businesses within about a three-mile radius around the city, said Larry Gates, Chanute utilities director.

“This bill is an attack on competition, an attack on municipal government,” Gates said. “It takes away our local control and local decision making. It will hurt our efforts in economic development,” he said. (Emphasis added)

I respectfully disagree with Mr. Gates' characterization of the bill as an "attack on competition." Utility infrastructure by nature isn't a competitive market. It's really an attack on progress that threatens the incumbent telephone and cable providers backing the measure.

Upgrading the nation's telecommunications infrastructure to fiber to the premise to support new Internet protocol-based networks represents progress in the digital age just as interstate highways did in the 1950s. No one would describe paved roads as "competition" to dirt roads. By bullying local governments to get their way, the incumbents are on the wrong side of this issue. Americans like progress and they hate bullies. If they keep it up, local governments should respond by exercising their redevelopment and inverse condemnation powers to take over incumbent assets and upgrade them to fiber to the premise.