Asking for meaningful competition in telecom infrastructure is asking for the impossible

These Minnesotans Are Fed Up With Frontier | community broadband networks: Speaker after speaker pointed out that they recognize the root of the problem is lack of competition. In addition to their description of specific issues, almost every attendee expressed a desire to give their business to some other company but they had no other option for Internet access provider — none. Folks in Wyoming feel they’ve been mistreated because Frontier doesn’t have to worry about losing their business. The people in Wyoming are right and Frontier isn’t the only company with the same attitude. Big cable and telecom companies have divided up America’s geography in to slices of monopoly pie, creating an environment in which subscribers can be neglected or even abused. With no other option for Internet access and our dependence on connectivity, subscribers face a tough choice between paying for horrible Internet access or having no connection at all.

It's natural for consumers to want more competition and choice when the market isn't providing the service, value and choice they expect. The problem is asking for more competition in telecom infrastructure is asking for the impossible. There can be no meaningful market competition because telecom infrastructure is very costly to build and maintain. Those high costs typically torpedo the business case for a new player to offer services -- something Google Fiber found out the hard way.

Consequently, the economics of telecom premise landline infrastructure make it feasible for only one or two providers. And as this post points out, providers can gouge and provide poor value service because they can. Consumers have no real alternative. This is the unfortunate consequence of telecom policy that has left advanced telecom infrastructure largely to investor owned providers whose first loyalty is to their shareholders, not their customers. Only public ownership of telecom infrastructure can serve the public interest and provides a needed solution to the failure of market forces in a natural monopoly market. That's not to say there's no role for the private sector. Investor owned companies have the know how and experience to build and operate advanced telecom infrastructure and deliver services over it.

Fiber to the prem renders issue of "broadband speed" largely irrelevant

Why are kids doing their homework in McDonald's parking lot?: An area of northwest Alabama is already seeing some benefit to that federal money, of course. Aderholt announced in May that Tombigbee Communications had received $3 million as it expands online connectivity services in Marion, Winston, Fayette and Lamar counties.

The meeting last week in Guntersville included business and elected leaders who gathered in a roundtable discussion to talk about the specifics of expanding broadband in northeast Alabama. Steve Foshee, the president and CEO of Tombigbee Communications, was among those in attendance.

That conversation, Aderholt said, got as focused as what internet speed would be best - not too slow to be useless but not too fast as to be cost-prohibitive.

The question posed in the last sentence reflects the misguided notion that regards advanced telecommunications infrastructure like water pipes. The bigger the pipe, the higher the cost. It's a false tradeoff, largely put forth by incumbent telephone and cable companies reluctant to modernize their legacy metallic infrastructures to fiber to the premise. Fiber has such abundant carrying capacity it renders the "broadband speed" issue largely irrelevant.

Tennessee U.S. Senate race offers sharp policy debate over public vs. private ownership of telecom infrastructure

Bredesen wants TVA mission expanded to provide rural broadband service | Times Free Press

A Tennessee U.S. Senate contest provides a sharp policy contrast between public versus private ownership of advanced telecommunications infrastructure. Former Tennessee Gov. Phil Bredesen favors public ownership via the Tennessee Valley Authority (TVA), formed in the 1930s to provide electric service in areas avoided by investor owned providers. U.S. Rep. Marsha Blackburn on the other hand opposes public ownership of telecommunications infrastructure, contending that unleasing market forces and reduced regulation will encourage investor owned providers to build the necessary infrastructure.

The history that led to the creation of the TVA however suggests market forces aren't up to the challenge. Then as now, if the return on investment isn't sufficient, the market fails on the sell side. Providers cannot earn enough profit in a reasonable timeframe to justify the capital expenditure on infrastructure. In that regard, Bredesen is on the right side of history.

That's not to say however that investor owned players and market forces cannot play a role. Privately owned providers can make money building and operating advanced telecom infrastructure and providing services over it -- and with far less risk than they would face as both owner and operator. Competition can take place in these realms. For example, Ammon Idaho is building publicly owned fiber to the premise telecom infrastructure that allows end users to select among competing ISPs.

FCC chairman: Connectivity main obstacle of telemedicine | Western Colorado | gjsentinel.com

FCC chairman: Connectivity main obstacle of telemedicine | Western Colorado | gjsentinel.com: Speaking to reporters after the meeting, Pai said, from the FCC's viewpoint, connectivity remains the biggest hurdle to a serious move toward widespread use of telemedicine. "The telemedicine application is only as strong as the digital connections between communities," said Pai, a 2012 Obama appointee who was designated director of the commission by President Trump, and a noted free-market advocate. Pai pointed to his agency's recent infusion of funds into its Rural Health Care Program, which provides funds to some health care providers for broadband and telecommunications services. He also said he is aiming to eliminate outdated FCC rules and encourage competition among internet service providers. "We want to make sure these companies have a strong incentive to upgrade to fiber, especially in these rural communities that need high-capacity internet access," Pai said.

The FCC chairman is right when he says America needs more fiber advanced telecommunications infrastructure deployment as medical care increasingly utilizes it. But it won't happen with Pai's prescriptions. Limited purpose funding such as the Rural Health Care Program will hardly make a dent in the nation's enormous accumulated telecommunications infrastructure deficit where FTTP is the exception rather than the norm it should be.

Nor can regulatory reforms address the fundamental business problem facing investor owned ISPs. Building new fiber infrastructure under their current business models cannot yield positive net present value within the limited patience of their investors' capital looking for rapid returns. And encouraging competition in a natural monopoly market that is telecommunications infrastructure is like expecting ice cream plants to grow in the desert. No meaningful competition can ever occur.

ISPs want to be hotels because luxury accomodations aren't meant for the masses

Net neutrality activists, state officials are taking the FCC to court. Here's how they'll argue the case. | National and International | napavalleyregister.com: But tech companies and consumer groups told the court Monday that third-party services routinely carry out those same functions, and that ISPs cannot lay claim to lighter regulation just because a portion of their business is involved in performing them. "The FCC could not have reasonably concluded that a drop of DNS and caching in a sea of transmission transformed the service into something that could properly be called an information service," the brief said. The overall impression, the group said, is that of trying to deregulate all roads that lead to hotels by simply reclassifying the roads themselves as hotels.

Hotels are often seen as luxury accommodations compared to say Motel 6. The analogy here fits nicely with the legacy incumbent telephone and cable company opposition to being regulated as a common carrier telecommunication utility -- and thus barred under the now repealed FCC Title II rulemaking from redlining and discriminating against neighborhoods they choose not to serve.

Will forthcoming FCC rule on pole attachments and enhanced PON technology lead to reboot of Google Fiber?

Google Fiber Blog: FCC Supports OTMR - Faster and Fairer Rules for Pole Attachments: Fortunately, there is a better way. It is called One Touch Make Ready (OTMR), which is a system where a new attacher does much of the make ready work itself, all at one time. OTMR is a common sense policy that will dramatically improve the ability of new broadband providers to enter the market and offer competitive service, reducing delays and lowering costs by allowing the necessary work on utility poles to be done much more efficiently. This also means fewer crews coming through neighborhoods and disrupting traffic, making it safer for both workers and residents.That’s why we’re so excited by the news that the FCC is poised to pass a rule that would institute a national One Touch Make Ready system, with the goal of significantly increasing the deployment of high-speed broadband across the United States. As the FCC stated, “OTMR speeds and reduces the cost of broadband deployment by allowing the party with the strongest incentive — the new attacher — to prepare the pole quickly to perform all of the work itself, rather than spreading the work across multiple parties.”

The big question here is whether this will spur a serious reboot of Google Fiber as an aerial fiber overbuilder, forsaking its originally preferred buried conduit deployment architecture and its attendant construction delay and high cost burdens.

Along with liberalized pole attachment rules, another factor is enhanced Passive Optical Network (PON) technology that could reduce deployment costs and allow Google Fiber to move beyond the urban and suburban areas it initially targeted to exurban and possibly rural areas. In these areas, Google Fiber would more rapidly capture market share since incumbent telephone and cable companies tend to have partially deployed networks that leave many premises unconnected.

Selling data consumption tiers rather than connectivity

Net neutrality makes comeback in California; lawmakers agree to strict rules | Ars Technica: Wiener's office told Ars that the compromise version will remove a ban on "application-specific differential pricing," which the bill defined as "charging different prices for Internet traffic to customers on the basis of Internet content, application, service, or device, or class of Internet content, application, service, or device, but does not include zero-rating." That means an ISP could sell add-ons to data plans that let customers buy extra data just for a certain type of website or online service. A customer's base data plan would still allow browsing to any kind of website or service in this scenario, but the package of extra data could be restricted just to social media sites, or some other category, Wiener's office explained. The effect would be similar to zero-rating, but Wiener's office said it wouldn't involve exempting any traffic from the customer's base data plan. (Emphasis added)

Mobile device users are familiar with their carriers' business models: selling tiered plans based on the amount of data consumed. The more consumed, the higher the price tier. As well as functional costs such as throughput being throttled back once a certain consumption threshold is exceeded.

This story suggests the expansion of this pricing model to landline-based service. And that the development likely motivated providers of advanced telecom service providers to successfully lobby the U.S Federal Communications Commission to recently scuttle its 2015 Open Internet rulemaking that would have made doing so problematic. If landline like mobile providers can sell finite "bandwidth by the bucket" (or scoop of ice cream to use the Verizon Wireless analogy), that provides them a pricing rationale to offer discounted or better service to end users accessing their proprietary content -- the "walled garden" consumer facing model that characterized the early days of the Internet with ISPs like CompuServe and AOL. And telephone service for decades before, when calls were billed based on minutes used and distance of the call.

The real policy issue here is whether providers of advanced telecommunications services should be able to maintain vertically integrated business structures and product offerings based on those business models of the past and whether doing so is good for consumers. At a time when Internet protocol-based telecommunications can provide so much more than the bill per unit voice phone call of legacy POTS (Plain Old Telephone Service) or distant TV channels of the legacy CATV model.

Comcast to build FTTP telecom infrastructure in 2 Michigan townships after tax measure fails

According to the Holland (Michigan) Sentinel, Comcast cites lower deployment costs due to improved carrying of fiber vs. COAX cable:

As Laketown finally gets internet, rural access still a prevalent issue elsewhere: Traditional coaxial cables use radio frequencies as the medium to transmit data, which means there is a larger amount of signal loss compared to fiber technology. This loss of signal that comes with traditional coax has made it difficult to serve Laketown and Saugatuck townships in the past because of large-size properties and widespread homes.
Now Comcast can build fiber to each home without building or extending main facilities to each one at about the same cost as using traditional coax cables to build the network out, Gilbert said.