Big incumbent telcos, cablecos should stop the zero sum game, partner with the public sector on open access infrastructure

Steven S. Ross of Broadband Communities magazine opines in the January/February 2015 issue that legacy incumbent telephone and cable companies should abandon their win/lose, zero sum, all or nothing attitudes toward telecommunications infrastructure and partner with the public sector on open access infrastructure:

"A well-built municipal system (or access to public assets in a public/private partnership) should be open to all carriers and to all content and service providers. They would get a chance to sell products and services with vastly higher revenue potential and much greater reliability than they would by nursing ancient infrastructure to drain a few extra years of cash out of hapless, captive customers."

Indeed.

Click here to read the full article.

On telecom infrastructure, policymakers must choose between sanctioning market failure or serving their constituents

Rural Tennesseans limited in Internet choices

As time goes on, it’s going to grow increasingly difficult for policymakers to continue to provide protection to legacy telephone and cable companies that want to preserve their partial service area infrastructure footprints. Such protectionist policies amount to government sanctioned market failure.

In the face of market failure, naturally those who live outside the boundaries of those limited footprints are looking to the public sector for help to get landline telecommunications service -- just as they did nearly a century ago for electrical distribution infrastructure. 

If their elected representatives fail to support them, they will face growing political risk come election time, particularly as more stories like this one show they’ve sold out their constituents by taking campaign contributions from the legacy providers.

Sell fiber enabled services, not “gigabit.”

There’s a well-established maxim in the sales of information and communications technology (ICT) products and services: Don’t sell bits and bytes, feeds and speeds. Instead, sell features and benefits. There’s a good reason for this selling principle. Most consumers aren’t interested in technology. They’re interested in what it can do to benefit them and its value for the money invested.

The same rule applies in telecommunications. But it has been violated in the marketing of fiber to the premise (FTTP) services, where Internet Service Providers have defined FTTP by its speed – its ability to deliver bandwidths of 1 gigabit or more. Problem is, only a small percentage of consumers really know what the term “gigabit” means, according to a survey by Pivot Group spotlighted in the January/February issue of Broadband Communities magazine. (Sell Services, Not Speed)

“Service providers spend an awful lot of time and marketing spend emphasizing speed, but this research reveals consumers are confused regarding speed references and perceive that their current speed package is sufficient,” Dave Nieuwstraten, president of Pivot Group and co-author of the study, observes.

The takeaway: What really matters isn’t gigabit bandwidth per se but rather the services FTTP can enable in the home where people have high definition televisions, desktop and laptop computers and personal devices such as tablets and smartphones all being supported by the home’s Internet connection. FTTP will play an increasingly important role in the delivery of video content as more is delivered via the Internet, enhancing its value to consumers sensitive to high price points for Internet service used to support only web browsing and email. That will increasingly be so as live sports migrates to Internet streaming.

In the era of FTTP, it’s really no longer useful to market bandwidth or brand it with a speed-based term such as "gigabit” or “broadband” -- a now obsolete term used in the 1990s to distinguish narrowband dialup Internet access from first generation ADSL services. Similarly, marketing Internet services with speed/bandwidth price tiers is no longer truly relevant for premise services. Without benefits described, consumers will naturally tend toward lower cost options.

Emphasizing the utility and benefits of a FTTP connection also fits well with the open access, wholesale model where the owner of the FTTP infrastructure sells access to ISPs who in turn sell retail services delivered over it. Including new ones mentioned in the Broadband Communities article such as installing and supporting the next generation of more robust home Wi-Fi needed to enable all of those wireless devices being used in today’s homes and home-based businesses.

Disparate Internet access likely to continue in US without comprehensive policy, strategies

Want Fiber? Do more to get it, Google exec tells cities | Gigaom: The upshot for the foreseeable future is a patchwork of different broadband speeds across the country as competitors flock to easy-access markets, while leaving many millions of others (including me in Brooklyn) stuck with monopoly service.

According to Cogent CEO Dave Schaeffer, who also spoke on the panel, this situation will require a future wave of policy inducements to produce more broadband offerings.

Lacking comprehensive policy inducements and strategy to further the construction of fiber optic telecommunications infrastructure to reach all homes and businesses and updating outmoded metal wire infrastructure operated by incumbent telephone and cable companies, the United States does indeed face a less than bright future of disparate Internet access in both metro and rural areas.

Today's adoption of rules by the U.S. Federal Communications Commission only partially implementing Title II of the Communications Act subjecting the Internet to common carrier utility regulation will serve to reinforce the disparity without a solid universal service obligation. More in depth analysis of the FCC's action will follow here once the final rulemaking is published in the Federal Register.

Google Fiber's business model emulates -- and shares same downsides -- as incumbents'

Google Fiber: Make It Easier For Us Or Enjoy Time Warner Cable | DSLReports, ISP Information: Numerous cities have been so eager to get Google Fiber, they've signed rather sweetheart deals that, for example, allow Google to simply walk away from builds should TV subscriber uptake numbers not be met. Perks also include the right to redline and cherry pick deployment neighborhoods...

This illustrates how closely Google Fiber's triple play business model emulates that of legacy incumbent telephone and cable companies. And also how vulnerable it is to TV programming costs that are squeezing all but the biggest players such as Comcast and Time Warner.

What's ironic is localities across the United States have literally begged Google Fiber for relief from the legacy incumbents. Google has adopted much of the incumbents' triple play business model but utilizes fiber to the premise plant instead of wire or cable. And since it's such a high cost model, it naturally leads to market segmentation (cherry picking and redlining neighborhoods based on expected revenue) that reinforces an entrenched infrastructure gap that leaves one in five American homes unable to order landline Internet service.

AEI overlooks lack of investment in aging telecom infrastructure

Don't make the Internet a public utility AEI: The result is that public utilities are among our least innovative, worst-performing industries. Search the phrase “America’s aging infrastructure” and you will find dozens of articles and studies detailing lack of adequate investment in our bridges, gas pipelines, electricity transmission systems and other utilities. Sixty-two percent of the gas mains in Washington, for example, are more than 50 years old.

Similarly, one can do a search and find plenty of references to America's aging metal wire telecommunications infrastructure where market forces alone fail to provide sufficient incentive for investment to replace it with fiber.



 

Ellsworth, Maine exemplifies local efforts to address U.S. telecom infrastructure deficit -- and need for federal assistance

Council backs broadband Internet project - The Ellsworth American: Lili Pew, a real estate agent who heads the EBDC broadband committee, pointed out many people have home-based jobs or businesses. She said the number one question she hears from her clients looking at Ellsworth is, “Do I have access to high-speed broadband?”

Running fiber lines to every residence in Ellsworth would be cost-prohibitive — in the range of $8 million to $12 million, according to Tilson — but there are other ways to reach parts of the city that Pew said are “in the black hole of technology right now.”

Paul said service that is “five, 10, 20 times faster” than what customers have currently can be provided wirelessly using the same type of service cell phone users have. Hamilton said Ellsworth “is blessed by having good towers in place already.”

This account out of Ellsworth, Maine illustrates the American can do spirit of meeting and responding to a challenge -- in this case constructing fiber optic telecommunications infrastructure to enable the locality to participate in the digital 21st century economy.

This story is playing out all over the United States as cities and towns like Ellsworth take their telecommunications destiny into their own hands. It also shows these localities will need significant funding assistance from the federal government to ensure all homes and businesses have fiber connections. Ellsworth's economic development TIF (tax-increment financing) program won't provide enough funding to ensure all of its residents will have fiber connections.

The Federal Communications Commission's Connect America Fund isn't up to the task and hasn't been sufficiently tapped by providers to build needed telecom infrastructure in areas where it's not quickly profitable. What's needed is a far more robust federal program to provide funding to states and localities on a scale like that of the Rural Electric Administration in the 1930s to bridge the gap in Ellsworth and other places like it.