UTOPIA holdout cities should adopt broader view of economic benefit of UTOPIA-Macquarie PPP

Orem, Utah and four other cities that have opted out of a public-private partnership between the Utah Telecommunication Open Infrastructure Agency (UTOPIA) and Macquarie Capital Group are now grappling with a fundamental question as to how to finance the future operation of fiber to the premise (FTTP) telecommunications infrastructure to serve their residents. The question: support the partnership’s public works approach to the increasingly essential infrastructure or default to legacy incumbent telephone and cable companies and the poor value and customer service and disparate access they typically offer as monopoly providers.

Six of the 11 cities comprising UTOPIA agreed in concept in 2014 to assess a parcel utility fee to help offset the cost and mitigate the business risk associated the pure subscription-based model used by incumbent providers. They mitigate their business risk by cherry picking neighborhoods believed to have the greatest profit potential for their proprietary network investments while redlining those that don’t.

The utility parcel fee is a key sticking point in negotiations between UTOPIA and the five hold out cities including Orem. A Daily Herald dispatch cites from a memorandum to the Orem mayor and council from Orem City Manager Jamie Davidson:

"There is a concern that Orem is unpredictable and not easy to work with," Davidson said. "It's concerning to me to see new options entering the market [UTOPIA] with a stranded investment for the future."

“However, bottom line, the proposal remains a utility fee-based model,” Davidson said. “If, as a council, you cannot wrap your arms around the assessment of a monthly utility fee to all customers (with potentially a few exceptions, for example, the indigent), nothing else matters.”

Davidson’s right. The parcel fee is essential to making the UTOPIA partnership with Macquarie pencil out by mitigating the business risk of relying solely on customer subscription revenues. UTOPIA operates an open access fiber network, enabling competition among ISPs that want to offer customer premises services delivered over the network. In that regard, the UTOPIA network is like a road or other public works project that benefits and enhances the value of the properties it passes. The UTOPIA cities benefit because these properties can support higher levels of economic activity as well as boosting their market value and, by extension, their ad valorem property tax revenue potential to fund other municipal services.

New Homeowner Has To Sell House Because Of Comcast’s Incompetence, Lack Of Competition – Consumerist

New Homeowner Has To Sell House Because Of Comcast’s Incompetence, Lack Of Competition – Consumerist

A sad tale of a consumer jerked around by incumbents and misled by the U.S. government's "broadband map" -- a major and useless component of the Federal Communications Commission's 2010 "National Broadband Plan."

And the consumer might find it hard to sell his home since not having an Internet connection is increasingly becoming like living off the grid.

Let's hope the FCC's recent policy deeming Internet as a common carrier telecommunications service requiring providers to universally serve all premises can help avoid these kinds of unfortunate circumstances that leave consumers high and dry.

Opinion: Internet infrastructure can't be built in a reasonable time frame with limited, incremental funding

Want to boost rural tourism in Maine? Raise Internet speeds — Opinion — Bangor Daily News — BDN Maine: The catch is that corporate providers, like Time Warner Cable and FairPoint Communications, see no profit in extending fiber optics to remote, sparsely populated areas. So the state must be involved, and several remedies are being explored at the State House. Most of these approaches are “incrementalist”; that is, focused on giving slightly more funding to the ConnectME Authority. One proposal would authorize ConnectME to provide more grants so additional communities can plan for extending fiber-optic networks, creating wireless nodes and boosting connection speeds. Other bills propose small bonds to boost ConnectME’s funding.

Incrementalism, however, has fundamental limitations: Few rural communities are prepared to compete for limited ConnectME funds, and few low-density, low-income communities can afford broadband investment on their own. With incrementalism, it will take years, perhaps decades, to connect all of Maine.

Some progress is better than none, but ultimately rural Maine needs a “big push,” analogous to the New Deal’s Rural Electrification program that transformed life in rural America. The big push strategy’s basic premise is that broadband is critical for rural economic competitiveness and also a public good to which all should have access. Rural electrification relied on community-level planning, but it was also backed by massive public investment.

The author of this op-ed nails it. Internet infrastructure like any infrastructure is costly and can't be put in place in a reasonable time frame with limited, incremental funding. The states can't do it alone. The United States needs a national Internet initiative on the scale that built today's highway and electrical distribution infrastructures.

The medium is the message: Google Fiber is primarily an advertising platform

Lest anyone forget that notwithstanding Google's construction of proprietary closed access fiber to the premise networks in a few metro areas of the United States, Google's core business is and remains advertising. FTTP is simply a better way to put ads on more screens and in front of more eyeballs, albeit an expensive one -- hence the limited deployment of Google Fiber.

And what better way than the leading advertising medium: high (and super high) definition TV. Over the next few weeks, Google Fiber will test targeted TV ads over its Kansas City build. The ads will run during existing ad breaks, along with national ads, on live TV and DVR-recorded programs and will be matched to the viewer based on geography, the type of program being shown or viewing history, according to a March 20 post by Google Fiber. Subscribers will be able to opt out of seeing ads based on viewing history, according to the post.

In addition to generating advertising revenue, the TV ads will also help offset operating costs, particularly the rising costs of TV programming. Google recently increased the monthly price of its TV and Internet bundle to $130 a month, according to a report in the Kansas City Star.

Advertising on large screen devices is critical to Google's business according to this analysis which notes online stores that advertise via Google are not optimized for small smartphone displays.

US federal government will have to provide substantial funding for Internet infrastructure construction

Obama: This federal council will jumpstart broadband - CNET: Obama first introduced this idea in January, when he traveled to Cedar Falls, Iowa to announce his plan to promote "Broadband that Works," a public-private effort to help more Americans get access to speedier broadband.

As part of this new push, he urged the FCC to strike down state laws to ensure communities could build or expand their own 1 gigabit-per-second networks, which offer downloads 100 times faster than conventional connections.

The new council will include 25 federal agencies and departments that will work with private industry to understand how the federal government can help communities increase broadband investment and reduce barriers to deployment. The council will be co-chaired by the U.S. Commerce and Agriculture departments. The council will report back to Obama, within 150 days, with the steps each agency will take to advance these goals, including specific regulatory actions or budget proposals.

The biggest barrier to Internet infrastructure investment is private market failure on the sell side. That's been patently obvious for more than a decade; it doesn't take more than two dozen federal agencies and departments to ascertain that. The existing dominant U.S. commercial model for providing telecommunications services is based on selling "subscriptions" to and "owning" the customer, consistent with the natural monopoly market that favors large vertically integrated legacy telephone and cable TV providers.

Its primary weakness is it is wholly dependent on ARPU and ROI which don't easily pencil out in much of the nation and aren't likely to given that labor costs that make up about 70 percent of network deployment and maintenance expense are not declining and don't benefit from economies of scale. This produces an all or nothing scenario and lots of winners and losers -- with millions of premises stuck in the latter category for nearly two decades.

If the United States is to have modern telecommunications infrastructure in the 21st century that serves all Americans wherever they live or operate their businesses, the federal government must commit big as it did for electrification, water, telephone and highways in the 20th century. The states don't have the funding to do the job on their own such as Maine, for example, where the state has appropriated only $1 million to fund Internet infrastructure projects that won't go very far when billions are needed. In New York, $500 million in matching public funds isn't attracting much interest as legacy incumbent providers stand warily on the sidelines.

What will be truly interesting is what regulatory actions and budget proposals will be recommended by the newly created federal council. On the regulatory front, the Federal Communications Commission has already acted by deeming the Internet as a common carrier telecommunications service. That leaves it up to fiscal strategies, which should include substantial technical assistance and infrastructure funding for the states along the lines of existing block grant and federal highway programs. Or in recognition that the nation is a generation behind on construction progress, the federal government could built it directly on a crash program basis with early completion bonuses for contractors. Then operate the network on an open access basis, contracting for operations and maintenance and leasing out access to providers under long term contracts.

Obama administration continues to ignore US need for ubiquitous FTTP

The Obama administration continues to ignore the need for ubiquitous fiber to the premise infrastructure serving all American homes and small businesses.

The administration instead is pursuing a PR campaign to shift attention to mobile wireless service that can't accommodate growing premise bandwidth demand as well as pointless activities such as "broadband mapping" and measuring "broadband speeds" that will do nothing to construct the FTTP infrastructure the nation should have been putting in place a generation ago.