Monday, April 17, 2017

A concise summary of poor state of American telecom

The FCC Is Leading Us Toward Catastrophe – Backchannel: Adding a little internet-y flavor to basic, physical telecommunications lines makes zero difference to the economics of building these essential connections. Because the upfront costs of building communications lines — very physical things, lots of labor costs involved — are high, because no one needs two lines to their house, and because it was cheaper to upgrade the cable systems to higher speeds than to dig up copper wires and replace them with fiber, we have ended up with a country subject to geographically divided markets, private, unconstrained monopolies, and big holes where internet access is rare and expensive where it exists at all. In urban areas, local cable monopolies generally wield tremendous power and charge as much as they like. Rural places, meanwhile, are often relegated to inadequate connections over copper phone lines.

Susan Crawford provides an concise summary of the poor state of American telecommunications borne out of misguided and excessive reliance on market forces to modernize and build out the nation's telecom infrastructure in a natural monopoly market where market forces don't work.

Saturday, April 15, 2017

Robert W. Taylor, a pioneer of the modern computer, dies at 85 - LA Times

Robert W. Taylor, a pioneer of the modern computer, dies at 85 - LA Times: Robert W. Taylor, one of the most important figures in the creation of the modern computer and the Internet, has died. He was 85. According to his son Kurt Taylor, the scientist died Thursday at his home in Woodside. He suffered from Parkinson’s disease and other ailments. Taylor’s name was not known to the public, but it was a byword in computer science and networking, where he was a key innovator who transformed the world of technology. Taylor was a Pentagon researcher in the 1960s when he launched Arpanet, which evolved into what we know today as the Internet.
Presaging the concern in our current time over disparate access to advanced Internet-based telecommunications, Taylor wrote the following in a paper he co-authored, The Computer as a Communication Device published in April 1968 in Science and Society:
For the society, the impact will be good or bad, depending mainly on the question: Will "to be on line" be a privilege or a right? If only a favored segment of the population gets a chance to enjoy the advantage of "intelligence amplification," the network may exaggerate the discontinuity in the spectrum of intellectual opportunity.

USTelecom is right -- and wrong -- on public telecom infrastructure

Survey: Most Americans cities to build, sell Internet plans: Proponents of independent Internet networks argue that a "public option" for Internet access could help drive down the price of broadband and increase speeds. Opponents say the expense of building new networks represents an unacceptable financial risk for many local governments. "Municipal broadband networks too often end up failing and costing taxpayers millions," said USTelecom, a trade association representing Internet providers and telecom companies.

USTelecom is right. Modernizing telecommunications infrastructure rapidly enough to meet the nation's needs in an era of Internet protocol-based services will indeed cost tax dollars. It simply has to because infrastructure costs billions to build. That high price is not compatible with the short term business models of private investor owned legacy telephone and cable companies. That's why they're confined to piecemeal build outs and bandwidth rationing that leave many existing and putative customers in their service territories unserved and undeserved and complaining about lousy, poor value service. Even conservatives are waking up to the fact of this market failure, recognizing that market forces don't work well when it comes to high cost infrastructure. And it's about time.

USTelecom is also correct that local governments face significant financial risk due to the large sums involved. That's why I propose in my eBook Service Unavailable: America’s Telecommunications Infrastructure Crisis a federal "public option" since only the federal government -- and not state and local government -- can shoulder the burden.

Where USTelecom as well as those who support local government telecom infrastructure modernization projects are wrong is claiming these projects represent market competition with legacy incumbent telephone and cable companies. They do not and cannot. Local governments are responding to market failure, not any desire to compete in the telecommunications industry. They are looking to meet their needs to support economic development in the digital economy and address their citizens' complaints about crappy service from the incumbents. That situation has occurred because telecommunications infrastructure by definition is a natural monopoly and not a competitive market characterized by many sellers and buyers. Thus market forces fail, too weak to provide incentive for incumbent telephone and cable companies to provide better service.

Monday, April 10, 2017

U.S. at crossroads on telecom infrastructure modernization. The choice is to look to the past -- or to the future.

The United States stands at a crossroads when it comes to modernizing its telecommunications infrastructure. Many observers including Susan Crawford and this writer believe that modernization must be future-focused, providing an infrastructure that’s sufficiently robust and able to accommodate the rapidly growing demand for bandwidth that comes with the transition to digital, Internet-protocol based telecommunications. That means replacing the legacy metallic infrastructure that worked well for telephone and cable TV service in the 20th century with the infrastructure of the 21st: fiber optic connections serving every American doorstep. The future is big and it demands big thinking.

Others such as Doug Brake of the Information Technology & Innovation Foundation argue for a retrogressive approach that encourages us to think small. It proposes incremental fixes, prioritizing those areas worst impacted by market failure borne out of the misguided heavy reliance on investor-owned infrastructure. Instead of producing a future of bandwidth abundance where the term “broadband speed” is obsoleted, Brake’s incremental outlook would condemn Americans to a future of ongoing bandwidth poverty and its adverse effects for the larger socio-economy.

Saturday, April 08, 2017

Competition isn't the answer for better premise telecom service

California lawmakers give cable utility perks, without utility obligations: Historically, there was a difference between telephone companies, which have been state regulated utilities for more than a century, and cable companies, which were originally franchised by local governments but managed to escape that oversight ten years ago. At least in California. Today, the differences are diminishingly small, particularly in urban and suburban markets where cable and telephone companies sell the same services and enjoy a comfortable, unregulated duopoly.

The distinguishing characteristics of a natural monopoly are high initial capital costs, usually related to infrastructure construction, and powerful economies of scale, both of which give the first mover in the market insurmountable advantages over would be competitors. In the old analog world, telephone and television service were completely different businesses, linked only by a common dependence on wireline networks. Now, both offer voice and video, and face competition in those segments from wireless providers. But they are also almost always the only wireline broadband option and wireless service is not a credible substitute, in either practical or microeconomic terms.

This is an excellent and much needed microeconomic description of the dominant privately owned telecommunications infrastructure that dominates in the United States that is all too often absent from the current policy discussion. Many ask why there isn’t competition in the telecommunications industry like exists in most consumer products and services. If it works there, then it must work in telecommunications also. More competition is the answer for better choice and consumer value, they conclude.

But as Steve Blum explains in his blog post, that reasoning is fatally flawed. More competition isn’t possible in a natural monopoly market where high cost barriers and the power of incumbency deter would be competitors. (Just ask Google how its flagging Google Fiber venture worked out) Telecommunications infrastructure will never be a robustly competitive market, defined as one with many sellers and buyers offering consumers many choices, enabling market forces that allow consumers to choose the best value and force out uncompetitive players.

When it comes to landline premise telecommunications service, most Americans can select from no more than two providers. And sadly for millions, none at all since the business model of vertically integrated investor owned providers must naturally redline and cherry pick among neighborhoods, creating winners and losers among consumers. As long as the nation relies on this broken model, it
will continue to lag when it comes to building the world class telecom infrastructure it needs to accommodate the explosion in digital communications.

Wednesday, March 29, 2017

The latest telco FTTP CapEx avoidance strategy: "wireless fiber"

Handcuffing Cities to Help Telecom Giants – Backchannel

This piece by Susan Crawford describes the latest large incumbent legacy telephone company strategy to avoid capital expenditures on fiber to the premise (FTTP): radio. Or as some incumbent voices term it, "wireless fiber." It follows the first CapEx avoidance strategy employed by AT&T a decade ago: running fiber to neighborhood nodes and serving customer premises via existing twisted pair copper designed for analog voice service. Naturally, there were lots of technology and service problems with that approach mixing old and new technology. And like the wireless everywhere strategy, it doesn't serve large portions of telco service territories where population density is lower.

As Crawford points out, wireless infrastructure no matter how fast can't offer the carrying capacity of fiber to accommodate inevitable future increases in bandwidth demand. It requires radios -- many of them -- mounted on utility poles and backhauled by lots of fiber. Running so much fiber into neighborhoods, Crawford begs the question of why not extend it all the way to customer premises (FTTP)? Anticipating resident push back against ubiquitous, unsightly field equipment installations in local government approval processes, the incumbents are aiming to preempt the locals while telling them "wireless fiber" will solve their telecom needs.

Sunday, March 12, 2017

West Virginia telecom infrastructure initiative embodies 3 fatal public policy flaws

Charleston Gazette-Mail | Groups push for broadband expansion in WV: Senate President Mitch Carmichael, R-Jackson, said Tuesday that at least two broadband-related bills are in the works, and lawmakers expect to introduce legislation in the coming days. The Senate bill would offer tax credits for companies to help recoup costs of bringing internet to remote areas, said Carmichael, an executive with internet provider Frontier Communications. The bill also may authorize the state to provide loan guarantees to internet firms that plan to expand broadband service. Carmichael said some internet providers want legislation designed to bring internet service to households that don’t currently have it, while other companies support measures that would increase internet speeds.

“We want to [encourage] competition,” Carmichael said. “If we’re going to do investment of any type, it should go to the areas that have no service.” Generation West Virginia, AARP West Virginia and the state Broadband Enhancement Council held a press conference at the state Capitol Tuesday to raise awareness about the importance of high-speed internet service and to unveil a plan — called Gig Ready — to bolster support for broadband expansion.

This West Virginia effort although well intended contains three fatal flaws that are unfortunately frequently embraced by other states and by federal policymakers.
  1. Offering loan guarantees and tax credits to legacy telephone and cable companies to invest in advanced telecommunications infrastructure in the belief that will help achieve universal service. It will not. The incumbents' short term business models are designed to extract maximum cash flow from current assets and do not allow them to make significant long term capital investments in new infrastructure. Tax credits and loan guarantees can't overcome that hard economic reality.
  2. The belief that the role of government vis telecommunications infrastructure is to promote market competition. Telecom infrastructure is a natural monopoly and cannot and never will be a competitive market. Promoting market competition in telecom infrastructure is like promoting water skiing in the arctic.
  3. Sloganeering. Call it Game of Gigs or Gig Ready, slogans can't construct telecom infrastructure. They are not so much aspirations for the future but rather reflect a poverty of action and commitment (harder) relative to a surplus of talk (far easier).

Thursday, March 09, 2017

Net neutrality hurts health care and helps porn, Republican senator claims | Ars Technica

Net neutrality hurts health care and helps porn, Republican senator claims | Ars Technica: Sen. Ron Johnson (R-Wisc.) agreed that net neutrality rules harm ISP investment and offered a lengthy analogy to explain why. Johnson said he wants to cut through the “rhetoric, slogans, and buzzwords,” before saying that enforcing net neutrality rules is like letting too many people use a bridge and ruin people’s lawns. Net neutrality rules, he said, also give pornography the same level of network access as remote medical services.

This is an unfortunate outcome of the misplaced obsession with the "net neutrality" aspect of the U.S. Federal Communications Commission's 2015 Open Internet rulemaking that erased the line between legacy and advanced telecommunications services by reclassifying Internet service as a common carrier telecommunications utility under Title II of the Communications Act. The obsession with net neutrality is so exaggerated that the term has become synonymous with the rulemaking.

The Open Internet rulemaking does properly require ISPs to treat all telecommunications traffic equally and without preference as to content. But with millions of Americans left offline and many still using circa 1994 dialup access that was state of the art when Bill Clinton was serving his first term as president, the higher value of the rulemaking is bringing Internet service under the universal service and anti-redlining requirements of Title II that have governed telephone service for decades -- and not debating whether the network should give priority to porn or any other information. Those requirements also comport with Metcalfe's Law, which holds a network is only as valuable as the number of subscribers on it.