Verizon exec: We'll continue to invest in FiOS and mobile wireless under Title II common carrier regulation

Verizon: Actually, strong net neutrality rules won’t affect our network investment - The Washington Post: Francis J. Shammo - EVP and CFO I mean to be real clear, I mean this does not influence the way we invest. I mean we're going to continue to invest in our networks and our platforms, both in Wireless and Wireline FiOS and where we need to. So nothing will influence that. I mean if you think about it, look, I mean we were born out of a highly regulated company, so we know how this operates. But related to this discussion around Net Neutrality, the FCC has the right to regulate under 765, they do not need to go to Title II, and why would you go to a 1930 piece of literature to try to regulate something that is a 21st-century technology.

This is newsworthly insofar as it signals that Verizon intends to end its 3-year-old moratorium on new fiber to the premise infrastructure CAPEX, even if the U.S. Federal Communications Commission (FCC) subjects Internet service providers to common carrier regulation under Title II of the Communications Act.

A common carrier mandate that providers serve all customers without discrimination would bar Verizon and other Internet service providers from their current practice of redlining neighborhoods and streets within their service territories. Under Title II, they'd have to invest in upgrading and building out their infrastructures to serve these areas, but on a faster schedule than they would like. That's why Verizon and other legacy incumbents plan to attempt to delay the mandate by taking the FCC to court if it adopts a Title II common carrier regulatory regime.

As to Shammo's reference to the 1930s when the Communications Act was first enacted, the law's common carrier requirements brought all Americans telephone service in the 20th century. There's nothing outdated about the principle of universal telecommunications service. It only needs updating to encompass IP-enabled telecommunications services in the 21st century.

Incumbent misapprehensions and myths: Time to get real

Fiber fight: Broadening broadband Gig City touted as model in broadband debate | Mobile TFP: In its filing with the FCC, AT&T notes that many municipal broadband networks never got off the drawing board, putting taxpayers are risk, while others have pre-empted private investment.

"Although many government owned networks (GONs) have failed, or at least failed to live up to expectations, GONs can nonetheless discourage private sector investment because of understandable concerns by private sector entities of a non-level playing field," AT&T attorney Christopher Meimann said.

A natural monopoly like telecommunications infrastructure cannot and will not ever be a "level playing field." Whoever is on the field holds a monopoly advantage. Incumbents have used that advantage to pick winners and losers by building Internet telecommunications infrastructure to serve some neighborhoods but not others.

"Any policy that risks diminishing private sector investment would be short-sighted and unwise."

AT&T wants incumbent, private telecom providers to have a "right of first refusal" to deploy high-speed broadband before a government utility starts such a competitive service.

It's entirely appropriate for government to construct telecommunications infrastructure given market forces alone cannot ensure all homes and businesses have access to modern fiber optic telecommunications service. Private sector investment has already been substantially diminished insofar as millions of U.S. premises remain unserved by landline-delivered Internet connections even under current U.S. "light touch" regulatory policy. 

Where service is not available, phone companies and cable providers suggest broadband can be subsidized through the FCC's Connect America Fund, which is targeted at the 18 million Americans living in rural areas with no access to robust broadband infrastructure.

In theory yes. But legacy incumbent telephone and cable companies have largely shunned the Connect America Fund subsidies because they are incompatible with their market segmentation strategies that concentrate their capital investment in high density, metro areas.

Trash bags and electrical tape: The train wreck of a botched transition to fiber

Over the course of the last three decades, legacy incumbent telephone companies totally botched any semblance of an orderly transition to fiber optic connections to customer premises to support modern Internet enabled services. The resulting train wreck of aging, decades old copper cable telecommunications infrastructure designed to provide analog voice telephone service referred to as POTS (Plain Old Telephone Service) that cannot support even first generation DSL is painfully on display throughout much the telcos' service territories. It's literally being held together with trash bags and electrical tape.

Steve Blum's blog reports the U.S. Federal Communications Commission is seeking to determine if telcos are neglecting copper to the point where it is no longer reliably usable and what should be done with all the aging copper infrastructure that's been left to rot on the poles.

U.S. Internet needs radical reorientation toward value-based, future edge demand

Legacy incumbent telephone and cable companies are fighting a fiber future for telecommunications infrastructure. People don’t need fast fiber connections, they maintain. Two legacy telcos, AT&T and Verizon, have urged the U.S. Federal Communications Commission to maintain its outdated definition of “broadband” at its current asymmetric 4/1 Mbps. (Not that it matters much anyway since the telcos have largely spurned federal subsidies to help them cover the cost of building out their limited footprints to serve premises lacking even that pokey standard of service.) Their stance reflects the incumbents’ decidedly retrospective philosophy, driven by their highly CAPex risk averse business models that are unlikely to change even though demand for Internet connectivity has grown substantially over the past decade. This retrograde view of Internet demand and infrastructure planning is largely responsible for the current dismal state of American Internet service where many homes and neighborhoods are unserved and those that are pay too much for sub-par service.

Industry expert Michael Elling argues rather than managing the economics of Internet infrastructure with an ex post, cost-based pricing model, instead it should be based on an ex ante, value-based pricing that takes into account the potentially enormous future demand for high bandwidth. The growth of bandwidth demand emulates Moore’s Law for microprocessors, roughly doubling every 2-3 years. It will continue to explode with applications such as 4k video streaming and two-way, HD videoconferencing.

Moreover, Elling astutely observes, contrary to the current market segmentation strategies where providers cherry pick discrete neighborhoods in densely populated metro areas, Elling sees the greatest demand growth for premise Internet service coming from less densely populated areas where residents obtain relatively higher value via its enabling remote work and e-commerce, distance learning and telehealth.

Elling also sees an ex ante perspective that anticipates future demand rather than focusing on past and present demand as mooting the current regulatory policy debate over net neutrality. The net neutrality issue has come about because providers at the core, transport and edge network layers don’t share a unified view of how prices for their services should be set. While those at the core and the transport layers might be inclined to work out a pricing scheme with the edge providers based on ex ante demand at the edge, it’s impossible to do so as long as the edge providers hang onto their ultra risk averse, cost-based ex post demand perspectives. If all the layers agreed to adopt an ex ante perspective, Elling believes, it would bring about a unified pricing scheme based on balanced settlements and price signals that would provide incentives for rapid investment and ubiquitous upgrades at all network layers.

Elling’s concept deserves serious consideration by Internet providers at all network layers as well as public policymakers and regulators. If the United States – the nation that invented the Internet – is to realize the Internet’s full potential and benefit for all Americans, it must first make an attitude adjustment. To an attitude that forsakes a retrospective orientation of bandwidth poverty and embraces a forward thinking outlook based on bandwidth abundance and prosperity.

Title II common carrier regulation would be problematic for Google Fiber

If the U.S. Federal Communications Commission takes President Obama's advice and decides to impose Title II Common Carrier regulation on the Internet (and thereby mandate Internet service providers serve all premises in their service areas), it would throw a monkey wrench not only in the business models of legacy incumbent telephone and cable companies that are based on serving only selected neighborhoods, but that of Google Fiber as well.

Christopher Mitchell of Institute for Local Self-Reliance opines in this piece on Google Fiber in The Kernel suggesting that Google's walled garden strategy is actually reinforcing the digital divide that plagues much of the United States.

“Google is popularizing the idea of building essential infrastructure with a market-driven approach. We don’t build roads like that—if we did, there’d be no roads in rural areas. We don’t build electricity like that—if we did, our economy could be far weaker. We recognize that those things are essential infrastructure.”

Incumbent telcos warn feds: Let us have our way, or the consumer gets it

New Study Projects Investment Declines under Title II | USTelecom

Incumbent telephone companies have warned the U.S. Federal Communications Commission (and indirectly, the Obama administration) that they will tie up in the courts for years any move to regulate Internet services as a Title II common carrier telecommunications service available to all customer premises without discrimination.

Now they are citing a study to back up their threat that they will also significantly pare back construction of new infrastructure. In other words, if you don't let us pick and choose which neighborhoods we want to serve, we'll leave the 19 million premises the FCC estimates are not served by landline Internet service twisting in the wind. Ditto those on increasingly obsolete, legacy DSL service provided over aging copper cables.

That's monopolist speak for if you don't leave us alone, the consumer gets it.