The bankruptcy of Obama administration's telecom policy

Continuing the Broadband Dialogue with States: This week, broadband leaders from across the country convened at the Schools, Health and Libraries Broadband Coalition’s annual conference to discuss key broadband policy issues important to communities and community anchor institutions such as schools, hospitals and libraries. NTIA had the opportunity to participate in several sessions at the conference to discuss our continued efforts to implement Obama Administration initiatives aimed at promoting broadband access, adoption and digital inclusion. We also had the chance to meet with about two dozen officials from 15 states who work on broadband initiatives. The meeting was part of our efforts to keep an ongoing dialogue with state broadband leaders to sustain their peer network as a valuable vehicle for knowledge sharing. Many of these state officials helped run programs that received funding through NTIA’s State Broadband Initiative (SBI). The SBI grants provided funding to each state, territory and the District of Columbia to collect the broadband availability data that helped power the National Broadband Map. In addition, SBI grantees used some of the funding to identify and address obstacles to broadband deployment and adoption in their states or territories.
While the SBI grant program is finished, 41 of the 56 states and territories that received SBI funding are continuing their state broadband programs in some fashion using their own funds. Several states continue collecting data for their own broadband maps, including Minnesota, Wisconsin, Virginia and Utah.

More meetings, more talk and more busy work on useless "broadband maps" that taken as a whole, are not meaningfully deploying fiber to modernize America's rapidly aging, obsolete and spotty telecommunications infrastructure. This is an urgent national problem that grows increasingly so by the month and year. It's one that can't be addressed by shifting it to the states. Strong federal leadership and support are needed.

This National Telecommunications and Information Administration update illustrates the bankruptcy of the Obama administration's telecom policy. It's unfortunate given nearly eight years ago, the Obama administration came into office with the promise of rapid, aggressive action to move the nation forward. Instead, it settled for half hearted efforts that left undisturbed a major obstacle to progress -- incumbent legacy telephone and cable companies.

U.S. telecom infrastructure modernization an interstate and not urban issue

Great presentation by Susan Crawford on America's telecommunications infrastructure shortfalls and challenges. However, I am disappointed by what I view as Crawford's (and others' such as Next Century Cities) near exclusive focus on cities. Particularly given Crawford's observation that 20 percent of American homes are off the Internet and unable to purchase access at any price -- a situation that has existed for at least a decade. These homes are not in cities but in the exurbs, quasi-rural and rural areas where legacy telephone and cable companies have not modernized their infrastructures to reach them. They need fiber connections just as much if not more so than urban dwellings, especially so given the ability of fiber to bridge the greater distances between them and economic and educational opportunities and health care.

In the last analysis, the United States is a nation of states, not of cities. Telecommunications infrastructure is fundamentally interstate, connecting cities and states to each other and the nation to the world. It would be a mistake to view it too narrowly as an urban matter.

Selling vertically integrated "gigabit" service inefficient, reinforces disparate access

What it's like to take on Google Fiber in Nashville: One firm's take - Nashville Business Journal: For more than two years, Nashvillians have salivated over the eventual arrival of Google Fiber, super high-speed internet courtesy of one of the world's most idolized tech companies. But while Google has yet to share specifics on when that network will officially launch in Music City, other players have made their own moves. Most notably, legacy telecoms AT&T and Comcast have launched their own networks, but smaller players like Shelbyville-based Athena Broadband are also getting in on the gigabit game.

This is a disturbing pattern that reinforces America's crazy quilt, disparate access to advanced telecommunications service. Given the high cost of constructing telecommunications infrastructure, it would be far more efficient to have a single entity build it and allow various Internet service providers to offer services over it. Instead, the U.S. continues to emulate the failed monopolistic vertically integrated business model of the legacy telephone and cable companies with its neighborhood cherry picking and redlining that have led to the nation's widespread access disparities.

Consquences of flawed U.S. telecommuncations infrastructure modernization policy manifest in Minnesota

Complicated Minn. rules help create broadband haves and have-nots - StarTribune.com: The underground fiber wires that deliver high-speed broadband access have been laid in fits and starts throughout Minnesota, creating a hierarchy of haves and have-nots around a technology that’s increasingly essential to doing business in the modern economy. Thanks to complicated eligibility rules and overlapping private interests, download speeds available in one community or part of a county are often not yet available in directly adjacent areas — or only at absurdly high prices.

Many have compared America's checkerboard, crazy quilt modernization of its telecommunications infrastructure to the deployment of electrical power distribution infrastructure early in the 20th century. But it's not directly comparable because in Minnesota as throughout the nation, it's highly granular with major access disparities between areas in close geographical proximity. By contrast, electrical distribution infrastructure initially served urban areas, leaving entire rural regions -- and not just parts of neighborhoods and streets and roads -- without power. As mentioned in this story, another difference is huge variations in what people pay for modern telecommunications service from one community to another based on the services offered.

The tax dollar tap is about to start flowing more freely. If Dayton and lawmakers can agree on broadband spending this year — a big “if” given the low expectations at the Capitol for the final work product of the politically divided Legislature — then it’s likely to fall somewhere between the $40 million sought by the House GOP and the $100 million that Dayton wants. It could end up as one of the single biggest state expenditures this year.

Even so, it's nowhere near the funding needed to ensure all Minnesotans have access to modern fiber to the premise connections. The situation on the ground in Minnesota repeats in major aspects all over America. Single states simply don't have the funding to adequately address this. It's a national problem that requires serious national funding. 

But there’s not universal agreement about the best way to spend all the broadband money. At the Legislature’s direction, the Office of Broadband has put its emphasis on connecting what it has labeled “unserved” areas. That leaves home and business owners and elected officials in many areas with the official designation of “underserved” wondering how much longer they have to wait to get a piece of the action.

Policymakers have been misled by incumbent legacy telephone and cable companies to define modern telecommunications service based on throughput speed rather that what's truly important -- fiber to the premise infrastructure. Hence, policymakers have found themselves bogged down for at least the past decade playing a variation of "how many angels can dance on the head of a pin" when taking on telecommunications modernization. The incumbents love it because it creates complexity and delay that serve their goal of postponing the future.

U.S. telecom infrastructure modernization a great infrastructure investment, Mr. President

Obama articulates why Americans are so unhappy: Obama said he hopes going forward there will be a focus on additional steps that can be taken to make a difference. “Why aren't we investing in infrastructure that would put people back to work and strengthen our competitiveness over the long-term?

Indeed, Mr. President. With some 34 million Americans are unable to obtain telecommunications service capable of delivering high-quality voice, data, graphics and video according to FCC data released earlier this year, an ideal infrastructure project for the 21st century would be modernizing and building out America's telecommunications infrastructure.

Such a project would offer both direct and indirect economic benefit and would generate future tax revenues from increased economic activity powered by fast Internet services delivered over fiber connections serving all American homes, businesses and schools. I've offered just such a proposal in my recently issued eBook Service Unavailable: America's Telecommunications Infrastructure Crisis.

Key U.S. telecom issue is market failure, not market competition

Verizon FiOS finally coming to Boston as mayor announces $300M fiber network - The Boston Globe: “Today, 90 percent of Boston residents have only one option for broadband,” said Jascha Franklin-Hodge, Boston chief information officer. “The free market only works for consumers when companies compete for their business. And when this project is complete, the majority of Boston residents will have real choice for the very first time.”

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In a report on high-speed Internet access last year, the Federal Communications Commission said 45 percent of American households have only one provider for such access.“We have seen first-hand that competition does in fact encourage other providers to build-out or upgrade broadband services,” the commission wrote. A good example of that dynamic is Google Fiber, the Internet giant’s push to install high-speed Internet in select US cities, said Deb Socia, executive director of Next Century Cities, an Internet advocacy group.

This is a parochial misconceptualization of America's telecommunications infrastructure crisis. It's not about competition or the lack thereof in a "free market." Telecommunications infrastructure has never been and will never be a competitive market offering in a market with many sellers and buyers. There cannot be many sellers because the microeconomics simply don't support it. In telecom infrastructure, the "free market" isn't so free -- it's highly constrained by large CAPEX and OPEX costs. The desire for competition is driven by the tendency of many to view "broadband" as other consumer services where consumers are accustomed to having the ability to choose among many vendors. That thinking is flawed insofar as it neglects the underlying infrastructure necessary to deliver it.

The real issue for the United States isn't market competition. It's market failure and the disparate infrastructure access that leaves 34 million Americans unable to obtain telecommunications service capable of delivering high-quality voice, data, graphics and video, according to figures released by the U.S. Federal Communications Commission earlier this year.

Fat lady singing on AT&T residential landline service; big telco going out with a whimper

New AT&T Plans Guarantee Pricing for 2 Years; Customers Can Save More Than 40% on on TV, Home Internet and Voice | AT&T: Choose DIRECTV You’ll get our DIRECTV SELECT™ All Included package for $50 a month, guaranteed for two years when you add it to an eligible new or existing AT&T service, like wireless or home Internet. The monthly equipment fees for up to four TV receivers are now built into the cost and guaranteed for two years. Taxes are still separate, since those vary based on where you live.

Add in High-Speed Internet and Voice

When you have DIRECTV you can add home Internet service with speeds up to 6 megabits per second for an additional $30 a month. And you’ll get a Wi-Fi gateway included at no extra charge. All guaranteed for two years. Also, when you pay for both services on a single bill you’ll automatically receive unlimited home Internet data – a value worth $30 a month.

The above excerpt from an AT&T news release issued April 11, 2016 shows AT&T retreating from its VDSL-based U-Verse product that offered Internet throughput that could marginally -- with ample data compression -- support video offerings. It's now offloading its video TV programming to DBS via its recent acquisition of DirecTV and dialing back Internet to first generation ADSL with "up to" speed of 6 Mbs (A fine print footnote tamps that down further, noting "Actual speeds are not guaranteed.")

The fat lady is singing. This latest product bundle marks AT&T's final landline offering in the residential premise market. The big telco is going out with a whimper. Legacy class DSL service isn't going to be able to support growing consumer preference for OTT and on demand video delivered via Internet versus TV programming packages offered over AT&T's DirecTV holding. Nor does it even measure up what the U.S. Federal Communications Commission defines as minimum standard Internet service of 25 Mbs. Moreover, AT&T's announced plans in 2015 to deploy fixed "wireless local loop" Internet service to about 13 million residential premises in its service territory not offered landline Internet service appears to have been a head fake, with no reported deployments.

AT&T seeks state sanction to exit residential premise service, transition customers to mobile wireless

Fellow blogger Steve Blum of Tellus Venture Associates calls bullshit on AT&T for sponsoring California legislation that would relieve it from its premise landline universal service obligations under Title II of the federal Communications Act. Blum has the same problem with the bill as I do. It's dressed up as enabling AT&T to transition from copper POTS service to Internet protocol-based service. As Blum points out, AT&T can do that without the need for enabling legislation. It has chosen not to make an orderly transition over the past two decades. That's a business issue, not one of regulatory policy.

The bill is essentially seeking state sanction to transition AT&T residential landline customers to its mobile wireless service. The thing is, that's not premise service under Title II's universal service obligation. However, with the U.S. Federal Communications Commission not enforcing its 2015 Open Internet rulemaking bringing IP-based services under Title II's universal service requirement, AT&T faces no regulatory consequence for "mobilizing the world" of its residential customers with service not engineered or priced for residential premise service.

AT&T miscasts telecom infrastructure as competitive market requiring level playing field

AT&T GigaPower Ready to RSVP | Light Reading: AT&T has been known for taking action, politically and in the courts, to fight municipalities that want to build and operate their own networks, but Harrison insisted her company does not oppose government-owned networks. "We only want to have a level playing field for all competitors, so everyone works by the same rules and regulations," she said. That means a municipality can't favor its own network when it comes to using public rights of way or issuing permits in a more timely fashion.

Translated, that means we (AT&T) want to control the rules on our terms, not the public's. That's an overreach on AT&T's part. The government and the private sector are not equal partners and cannot be because unlike a private company, the government is obligated to act in the public interest. If the government wants to provide telecommunications as a common carrier utility consistent with the U.S. Federal Communications Commission's Open Internet rules (and accordingly serve all properties unlike AT&T's rampant redlining and cherry picking), it can do so regardless of what AT&T or any other legacy incumbent desires.

Finally, AT&T as a monopoly market player knows better than to cast telecommunications infrastructure as a competitive market of many sellers where a level playing field is necessary to ensure fair competition. It is not.

Service Unavailable: The Failure of Competition - Community Broadband Bits Podcast 196 | community broadband networks

Service Unavailable: The Failure of Competition - Community Broadband Bits Podcast 196 | community broadband networks: If you are paying close attention to discussions about broadband policy, you may have come across Fred Pilot's reminders that competition is not a cure-all for our Internet access woes across the United States. The blogger and author joins us for episode 196 of Community Broadband Bits.

Fred Pilot's new book, Service Unavailable: America's Telecommunications Infrastructure Crisis, discusses some of the history behind our current challenges and proposes a solution centered around federal funding and cooperatives.

We discuss the switch from telecommunications as a regulated utility, to which everyone was guaranteed access, to a system relying on competition, in which some people have many choices but others have no options. We also discuss the merits of a national solution vs encouraging more local approaches with federal financial assistance.

Christopher Mitchell interviews me for his Community Broadband Networks podcast. Give it a listen.

Barring ambitious federal program, state & local government P3s with legacy providers not a solution for U.S. telecom infrastructure deficits

CenturyLink, Frontier and TDS mull public, private fiber network partnerships - FierceTelecom: CenturyLink (NYSE: CTL), Frontier Communications and TDS are amongst a growing group of service providers that are considering partnering with local communities to build out and upgrade their networks to support higher speed residential and business services. Jennifer M. Fritzsche, senior analyst for Telecommunication Services - Wireless/Wireline at Wells Fargo, said that while CenturyLink, Frontier and TDS are looking at working with local communities, the one remaining barrier is who will oversee and operate these networks.

Actually, the bigger -- and biggest barrier -- is funding. These legacy players lack business models to generate adequate funding to build out fiber to the premise infrastructure serving all premises within their service territories within a reasonable time frame. But so do state and local governments. Especially as they continue to cope with the aftermath of the Great Recession and many competing needs for public funding such as deteriorated roads and highways and other infrastructure and enormous public pension obligations.

Some local governments and particularly those with pre-existing telecom or electric power infrastructure such as those mentioned in this article are the sole viable candidates for these P3 arrangements. That could change if the federal government launched an ambitious program appropriating the many billions needed to ensure every American home, business and institution has a fiber connection.

Affordability only part of the solution to #homeworkgap; lifeline goes hand in hand with universal service

Boost the homework connection - Times Union: But more can be done. For starters, on Thursday, the FCC is expected to vote on a proposal to modernize a program called Lifeline. Lifeline began more than three decades ago, when President Ronald Reagan was in the White House and rotary phones were still in style. Then and now, this program provides a discount for basic phone service. But broadband is the essential technology of our time. So it's time for the FCC to take steps to make this program broadband-capable and use it to help close the homework gap.

It should be recalled that when lifeline was implemented in 1985, the United States had achieved universal or near universal access for telephone service. Unlike today when according to the FCC's figures released earlier this year, 34 million Americans are unable to obtain telecommunications service capable of delivering high-quality voice, data, graphics and video.

Universal service is an essential component and not separate and distinct from lifeline subsidies for low income households. Another difference from 1985 is telephone service rates were tightly regulated in order to keep them affordable, unlike Internet service today. Notwithstanding the fact the FCC classified Internet service as a common carrier telecommunications utility in 2015 with its Open Internet rulemaking. Prices will naturally tend to be unaffordable for low income households in a price unregulated natural monopoly market.

Why the privatized, vertically integrated business model of telecom produces market failure and disparate access

Australian telecom strategist Malcolm Moore posted in a LinkedIn discussion forum one of the best and most succinct explanations I've read of why market failure and disparate access results from regarding telecommunications infrastructure as privately held, vertically integrated and highly localized service. According to Moore, this is a "diametrically incorrect business model for infrastructure (that) focuses on every wrong economic aspect." Moore adds its widespread adoption explains why fiber to the premise technology "was developed about 20 years ago but never rolled out."

Moore elaborates on the economics and makes a case for policymakers to regard telecommunications as essential public infrastructure and to stop thinking of it as a private "broadband" service offering:

The primary focus of (privately held telecom infrastructure) is very short term maximised ROI (minimised service delivery, maximised end user cost) - perfect for retail reselling / product bundling.

For Infrastructure Business: e.g. Telecomms / FTTP / Mobiles, Electricity Power Stations / Distribution, Transport / Roads / Rail / Ports, etc., the primary focus is long-term, minimum cost, maximised service delivery.

Why states fall short, kick the can on telecom infrastructure modernization

Minnesota to Expand Its Broadband Grant Program: Broadband Internet access has been one of the main policy discussions in Minnesota for the past few years. Governor Dayton’s Broadband Task Force has recommended the state use public dollars to jumpstart broadband infrastructure investment. For FY2016-2017, Governor Dayton and Lt. Governor Smith propose a $100 million in their supplemental budget for this issue, while the Minnesota House’s bill proposes $35 million.

Back in 2010, Minnesota set its broadband development goal: that every resident and business have access to high-speed broadband with minimum download speeds of ten to 20 megabits per second and minimum upload speeds of five to ten megabits per second by 2015 at the latest. As we recently reported, the state failed to achieve its goal, but recently updated its goal to match the FCC’s latest definition of broadband Internet with minimum download speed of 25 megabits per second and minimum upload speed of three megabits per second.

This item points up the futility of state "broadband" initiatives. Instead of setting an infrastructure-based goal of universal service, they use throughput speeds as a benchmark. In doing so, they fall into the speed trap set by the incumbents who've framed the issue of modern telecommunications service as being all about "broadband speeds." That promotes a "how many angels can dance on the head of a pin" and "what's fast enough?" debate that by cynical design shifts the focus away from infrastructure. Then when the "broadband speed" goal isn't met, states kick the can and set a new "broadband speed" goal.

Why do states end up kicking the can? Because they are endeavoring to build the 21st century's information highways that cost billions with mere millions -- and without the federal funding that was available for the blacktops and interstates of the 20th century. “This is not a million-dollar problem," Fletcher Kittredge, CEO of Maine's Great Works Internet astutely observed in 2015. "It is far larger.”

Local government Internet infrastructure efforts spurred by FCC's non-enforcement of Title II, encourgement of "competition"

EPB Lays Out Plans To Provide All Of Bradley County With High-Speed Internet, TV Service; Cost Is Up To $60 Million - Chattanoogan.com: State Rep. Dan Howell, the former executive assistant to the county mayor of Bradley County, was in attendance and called broadband a “necessity” as he offered his full support to helping EPB, as did Tennessee State Senator Todd Gardenhire. “We can finally get something done,” Senator Gardenhire said. “The major carriers, Charter, Comcast and AT&T, have an exclusive right to the area and they haven’t done anything about it.”

The "exclusive right" mentioned here isn't generally a government-granted or regulated license or franchise to offer Internet service. It's actually a de facto duopoly market of legacy telephone and cable companies. Title II of the federal Communications Act recognizes that telecommunications infrastructure due to its high cost of construction and operation tends to function as a natural monopoly. In accordance with this, the Federal Communications Commission classified Internet as a telecommunications utility under Title II by adopting its Open Internet rules in 2015. But the FCC is currently not enforcing the universal service and anti-redlining provisions of Title II.

It's therefore unsurprising that barring such enforcement, local governments will attempt to fill in the gaps in unserved or poorly served areas in response to their citizens' complaints. When those living and operating businesses in landline unserved areas attempt to order Internet service, without FCC enforcement of Title II the incumbent telephone and cable companies can summarily turn them down without consequence. That leaves them little recourse other than to demand their local elected officials do something to help. The FCC's non-enforcement of these Title II provisions correlates with its current policy position advocating local government "competition" with incumbent telcos and cablecos -- in conflict with its Open Internet rules predicated on a monopolistic and non-competitive market.

Another year, another U.S. "broadband" conference & same conclusion: Great need for fiber infrastructure -- but no funding

Mayor Murray: Municipal broadband too costly; public-private deal is way to go | The Seattle Times: The best way to expand Internet access in Seattle is through public-private partnerships, (Seattle) Mayor Ed Murray said at a regional broadband conference Monday. The mayor reiterated the position he formed after a city-commissioned study released last summer showed it would cost between $480 million and $665 million to build out a municipal-broadband network across the city. That price tag is less than previously estimated, but the mayor said it was still too much to be feasible.
“When I came into office, I was very excited about the possibility of municipal broadband until the study came back and indicated it would be literally the largest tax increase in Seattle,” Murray said Monday at the conference, co-hosted by the nonprofit Next Century Cities and the National Telecommunications and Information Administration, an agency of the U.S. Department of Commerce.

And so it goes across the United States as it has at these "broadband" confabs for the past decade like a never ending season of Seinfeld reruns. Municipalities can't ante up their own dollars to build telecommunications infrastructure, particularly with so many other needs such as transportation infrastructure, public buildings and skyrocketing employee pension obligations all competing for big bucks. Don't look to the states either. They're dealing with similar financial challenges on a larger scale in the slow economic recovery in the years since the 2008 recession. Billions of dollars are needed to fund America's long overdue replacement of its legacy metallic telecom infrastructure with fiber -- now a generation late. Only the federal government can step up with that level of funding. But don't expect much from the current federal government as the Seattle Times story reports:

The federal government did finance about 230 broadband projects nationwide through the 2009 American Recovery and Reinvestment Act. Those funds are now spent, but municipalities can apply for smaller grants through other federal agencies, said Lawrence E. Strickling,assistant secretary of commerce for communications and information.
Strickling said Monday the federal government helps municipalities by providing guides to funding and other technical expertise.

Vermont lawmaker: "No adequate ongoing resource" to fund telecom infrastructure

Deerfield Valley News - VTel House at odds over Internet access info: Guite also said that some Vermonters may have been misled into believing covering every person in the state was possible. “That could require a billion dollars,” he said. He also said that he has been making this comment publicly for at least five years. “I made that statement at a meeting that Bernie Sanders organized in 2010.” H. 870 also calls for an increase of 0.5% in the universal service charge. Sibilia said that this was to help create a vitally needed program. “There is no adequate ongoing resource for expanding Internet or cell,” she said. Her hope, she said was this increase would help create that resource. She also said it would be an inadequate amount.

Bernie Sanders should paraphrase the late Illinois Senator Everett Dirksen: "A billion here, a billion there, and pretty soon you're talking about real access."