U.S. policymakers continue to engage in misguided, wishful thinking on telecom infrastructure modernization

North Georgia featured in CBS report on rural broadband [VIDEO] - Now Habersham: Millions of Americans today lack access to effective broadband service and many rural Georgians are among them. It’s an issue that’s grabbed the attention of state politicians and, now, the national media. CBS This Morning on Friday reported on the economic struggles facing Northeast Georgians and others who live in communities that lack broadband infrastructure.The Federal Communications Commission (FCC) this week committed over $2B in subsidies over the next decade to help telecom companies expand rural broadband.

Congress also is considering legislation that would incentivize broadband infrastructure investment and foster market competition. Georgia’s 9th District Congressman Doug Collins recently introduced the Gigabit Opportunity Act or GO Act. It would allow companies to defer certain capital gains taxes when they convert those gains to long-term investments in broadband infrastructure within state-designated “Gigabit Opportunity Zones.” Companies also would be allowed to expense the cost of expansion on the front end in ‘GO Zones’.

American policymakers continue to engage in misguided, wishful thinking when it comes to badly needed modernization of the nation's outdated telecommunications infrastructure to fast, reliable fiber to the premise (FTTP) technology for the 21st century. Two billion dollars will barely make a dent in the estimated $300 billion needed for job.

Offering tax incentives is similarly wishful, unrealistic thinking. What's needed is an aggressive federal initiative to build FTTP and treat it like a common carrier public asset. Tax incentives are the wrong approach. They are not national infrastructure initiatives; they are limited scope economic development tools.

Small cells not seen as viable replacement for retiring copper landline telecom infrastructure

Better cell phone service could come at a cost for California cities | The Sacramento Bee: Humboldt County Supervisor Rex Bohn said he doesn’t see telecom companies rushing into rural communities that have no or low connectivity, either. The small cells need to be close together to work most efficiently, and there isn’t enough demand in such areas to attract the companies.

Various observers have pointed to legacy incumbent telephone company plans to retire aging copper cable landline infrastructure in less densely populated areas and replace it with wireless service. Their business models that demand rapid return on investment do not permit its replacement with fiber to the premise (FTTP) infrastructure. However, the same business model constraints apply to wireless infrastructure as well as this Northern California county supervisor notes. Especially since those small cells will need a lot of fiber backhaul to be constructed to support them.

"Middle mile" and America's incomplete, balkanized telecom infrastructure

On broadband internet availability | Kenbridge Victoria Dispatch: Mid-Atlantic Broadband was created with an investment by the Tobacco Commission and a matching investment from the federal government 15 years ago. It was created as a non-profit company to connect the tobacco region to the major internet centers around the world. It has been extremely successful in providing connections for the data centers in Mecklenburg (H-P Enterprises and Microsoft) as well as other companies in the region. Mid-Atlantic was not established to provide services to households, but rather to be a partner with providers who would hopefully provide the “last mile” to your house or business. Regrettably, those last-mile providers have not been as aggressive as we had hoped. (Emphasis added)

That last sentence illustrates the usually unfounded belief that building advanced telecommunications fiber trunk lines will stimulate the deployment of infrastructure to customer premises. Even though the logical purpose of so-called "middle mile" infrastructure is to feed infrastructure serving those very premises.

Sell side market failure typically results when hopes for those connections are based on a vertically integrated, investor owned business model. The return on investment for such entities is too long to make the business case for connecting premises other than so-called "anchors" such as schools, libraries and business parks. It's part and parcel of America's widespread pattern of balkanized, incomplete telecom infrastructure and disparate access.

Outdated 1998 "going online" perceptions persist, hold back progress

Technology Is Improving, So Why Is Rural Broadband Access Still a Problem? | National News | US News: It is still worth noting, however, that even if rural broadband infrastructure were exactly the same as in urban areas, there would still be a "digital divide" in adoption rates, because rural populations are older, less educated and have lower income.

Had this been asserted in 1998-2000, it would have been mostly true since Americans were "going online" via dialup modem (and DSL for some fortunate households) to access email and websites. But it's badly outdated and uninformed in 2017. Fiber optic to the premise telecommunications infrastructure can deliver not only email and web content, but also voice communications via Voice Over Internet Protocol (VOIP), videoconferencing (older folks love to see their grandkids), online education, telemedicine and of course streaming video content.

U.S. policy should support technological progress in telecom, not protect interests of legacy telephone and cable companies

The Town That Had Free Gigabit Internet - Motherboard: But just as Wilson was preparing to expand the program in 2011, North Carolina passed House Bill 129: the "Level Playing Field" act, which was supported by Big Telecom lobbyists. This put tight restrictions on any town hoping to start its own municipal broadband, and reined in existing systems under the thinking that it was unfair for the government to compete in the open market with private businesses. After the law was passed, Wilson was not allowed to bring high-speed internet to Pinetops. "From our perspective, municipal broadband networks do not create competition in the long run," a spokesperson for CenturyLink, one of the ISPs that provided some service in the area, told me via email. "Rather, they replace it because public investment in government-owned networks drives out private sector investment and undermines an already-challenging business case for bringing broadband to certain areas." But locals argued the current providers weren't really competing at all, with many people unable to get access or stuck with expensive, slow connections.

This needs some unpacking. First some basic microeconomics. Infrastructure tends to function as a natural monopoly due to high cost barriers that protect incumbents and deter potential sellers from entering the market. Case in point: Google Fiber. It tried to take on the incumbents in a small number of U.S. metro areas and retreated in 2016 -- due to those high costs of entry. They proved to be too much, even for a very deep pocketed, tech savvy enterprise like Google.

In functional markets, sellers and buyers are able to get together on mutually agreeable terms. That's often not the case when it comes to advanced telecommunications infrastructure since those high cost barriers creating a natural monopoly typically mean only one seller -- or two at best. And if they offer poor value service -- or none at all -- consumers are stuck.

Naturally, CenturyLink as other rent seeking legacy incumbent telephone and cable companies wish to be that one seller and want their natural monopoly franchise protected by government policy, even as they struggle with a "challenging business case" as CenturyLink concedes. But U.S. government policy should not be to protect the interests of these players who must operate on very extended, uncertain timetables for modernizing their infrastructures for the digital age due to the aforesaid business case difficulties. Instead, it should be to ensure the rapid deployment of public sector-owned fiber connections to every American doorstep like roads and highways.

AT&T's 4G LTE premise service bolt on could fall short of bandwidth demand

AT&T plans to use cell towers to bring internet access to thousands in rural South Carolina | Business | postandcourier.com: AT&T is planning to use cell towers across South Carolina to bring high-speed broadband to rural areas where internet access is slow to nonexistent. The telecom giant says it's in the process of installing antennas capable of connecting thousands of people in sparsely populated corners of the state. (Emphasis added) Roughly 12,000 homes and businesses will have access to the new service by the end of the year. The work covers some 20 counties in South Carolina under a Federal Communications Commission initiative to boost access in underserved areas. Company spokesman Daniel Hayes declined to say which areas would get service.

The problem is those thousands of people will need a lot of cells backhauled with fiber as bandwidth demand continues its inexorable march upward. Since this technology -- essentially a bolt on to existing 4G LTE mobile network -- is being deployed as a lower cost alternative to fiber to the premise, deploying lots of tower equipment and fiber backhaul would work against the CAPex cost saving objective.

The likely upshot is there will be too many household competing for too little shared bandwidth, particularly in peak evening times when video entertainment streaming and remote learning is done. For example, there have been reports within the past week that Verizon Wireless has throttled video streaming to reduce bandwidth demand.

Until America musters will to fund crash program to build modern, government owned fiber telecommunications infrastructure to every doorstep

Until America musters the national will to fund a crash program to build modern, government owned fiber optic telecommunications infrastructure to every doorstep, it will continue to experience:

• Neighborhood infrastructure redlining and unregulated pricing by legacy incumbent telephone and cable companies exploiting the natural monopoly that is telecom infrastructure; 

• Poor connectivity and customer service;  

• Underfunded, incremental efforts by states and localities to build fiber to the premise telecom infrastructure.