Lauren K. Ohnesorge
Staff Writer-Triangle Business Journal
The City of Raleigh officially put its stamp of approval on AT&T’s (NYSE: T) plan to bring its “GigaPower” fiber-based internet service here.
Gail Roper, Raleigh’s chief information officer, says the timing is still up in the air. “That would be dependent upon when we finish out all the legal negotiations,” she says, adding that the hope is that things get rolling before the end of the year.
And no, this will have no impact on the city’s ongoing plan to entice Google and its Google Fiber service.
[Image credit: Getty]
Editorial: I should write a new blog based on all of the recent activities around Netflix. I applaud Reed Hastings for bringing this issue back to the forefront of policy discussion. The access providers or ISP are providing Internet access based on certain speeds that are generally much higher than a typical HD video stream, but subscribers received a reduced quality of experience (QoE) at peak periods of the day. If the ISP is a cable company their video streams are not impacted because they are delivered outside the ISP pipe. There is a bit of conflict of interest here. Setting that aside for a moment.
The ISP provide a best-effort service so if they can prove that they are providing the advertised bandwidth and not directly blocking any site, then they have met their terms of service. The problem is that customers are not being served because they cannot fully enjoy the services that they purchase from other service providers. In a competitive market, consumers would purchase Internet access from a competing provider that could deliver over-the-top (OTT) services properly, but we are stuck with a duopoly in most markets in the United States.
The congestion happens at peering points when one provider interconnects with another provider. Increasing bandwidth at peering points costs real money, but it is a cost borne by both the ISP and interconnection company. The interconnection company builds that cost into their costs to their customers like Netflix. This sharing of the burden is one of the major principles of the Internet. The ISP benefits from providing a better quality service, but that argument works best in a competitive environment. In our duopoly, the ISP act like cartels and band together to reduce their costs and protect their competing services. Customers can’t walk because the other provider is no better than their current provider.
True last-mile competition is the ultimate answer, but that is the long-term solution. In the meantime the Thomas Wheeler and the FCC Commissioners have to wrestle with this issue while being heavily influenced by lobbyists. I like Reed Hastings’ proposal and do not feel that it is an undue burden on the ISP because the cost per bit is continually rapidly decreasing. As a way to recoup some of these charges ISP should be allowed to sell managed services (i.e. QoS) to OTT providers like Netflix. As I said at the beginning of this article, I should really write out the full proposal with cost-based arguments.
AT&T’s swinging back at Netflix CEO Reed Hastings’ recent assertion that ISPs (internet service providers) should shoulder the cost of increased bandwidth demands. In a post on AT&T’s Public Policy Blog, Senior EVP Jim Cicconi denounced Hastings’ desire for a “cost-free delivery” agreement with ISPs, saying that it unfairly shifts the burden of infrastructure cost to AT&T and its subscribers rather than to Netflix’s own customer base. As Cicconi views it, that subscriber base is the very one responsible for the increased traffic demands and resulting need to build out additional facilities, and should therefore bear the brunt of a fee hike.
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EPB, the Chattanooga, Tenn.-based service provider known for its 1 Gbps service, and its supporters have decided to put on mothballs a new bill that would enable municipal broadband operators to expand outside of their service areas.
If the “Broadband Infrastructure for Regional Economic Development Act of 2011” bill had gone through, municipal-run broadband providers like EPB would have been able to extend service up to 30 miles outside their service areas. One of EPB’s motivating factors to have the bill was to bring service to Bradley County, where Amazon.com is building a second distribution center.
Last-mile access is about to become a bit more expensive for businesses and wireless carriers. The real solution here is not more regulation, but competition. Allow cities and service providers to build their own infrastructure. Frankly I agree with Frank Simone’s question asking why service providers are not building more fiber access to customers. The answer is simple. It is cost prohibitive in most cases. A carrier could spend more than $10,000 pulling a fiber pair to a building. They have two options, charge an up-front fee or try to amortize it over a few years. Most customers will stick with an incumbent carrier rather than pay an up-front fee, and if the carrier amortizes the costs they have no guarantee that the customer will stick with them long enough to make laying the fiber profitable.
I have asked several Tier 2 service providers whether they support municipal broadband networks and they typically state that telecommunications is not a governmental function. I agree with them, but there is an important difference here. First of all the government is just leasing last-mile access to the service provider in my model. They are not actually selling services to customers. Second I only see these carriers pulling fiber to only the most profitable buildings because of the dilemma I mentioned above. What about the small independent insurance agent or rural physician that has broadband needs as well? A few years ago, I worked for a public company with 125 people in a facility and no carrier would bring fiber to our building without a $35,000 initial payment even though fiber ran right down the street we were located. Perhaps letting the price-cap expire will initiate the deployment of more fiber.
WASHINGTON, June 30, 2010 – AT&T’s special access lines are set for price hikes, and the NoChokePoints Coalition says FCC regulation of this “is essential to the health of our information economy.”
The coalition held a teleconference panel discussion Tuesday to call on the FCC to take action and regulate what it says is a rapidly developing monopoly.
Let the games begin. Mr. Stephenson makes this idle threat without articulating the reasons why AT&T’s U-verse service would be harmed by Title II regulation. I will state the reasons why it is bad for the industry for him. First of all AT&T is worried that changing the regulatory structure will not allow them the pricing flexibility to compete with other providers such as the cablecos. Secondly, the FCC may mandate that AT&T unbundles its infrastructure to competitors. If I were AT&T’s CEO, I would be worried about these things. True, Chairman Genachowski stated that the FCC would not do these things, but politicians and bureaucrats are always making promises they do not keep. The picture is not any better for competitors entering these markets, the regulatory hurdles may provide barriers to entry for them. If the FCC is to promote broadband competition (not sure this is their goal), then converting broadband services to a quasi-Title II managed service is going to have the opposite effect.
Back when Google announced it was looking for cities to test its fiber-to-the-home trial network, we profiled a host of municipalities that tried every possible publicity stunt in the book to get the search engine giant’s attention. These included a North Carolina city council member who promised to name his offspring after Google’s co-founders, along with the mayor of Topeka… who tried to rename his town “Google, Kansas.”
This is a familiar time of year for TV fans. It’s the end of the season for original programs and the start of summer reruns for many. Some shows are better the second time around, but some lose their punch, or should, if you see them again and again.
For the Federal Communications Commission (FCC), this summer’s big rerun is being brought to you by AT&T, which first broadcast its blockbuster “shock and awe” show last fall. Now AT&T is doing it again. While the FCC may have been spooked by this exercise in intimidation the first time around, there’s no excuse for the Commission panicking, screaming, or getting weak in the knees again.
Whenever they actually get a network built…
04:15PM Thursday Apr 22 2010 by Karl Bode
We already knew that Google’s plan to deploy 1 Gbps fiber to the home to a limited area was going to operate as a wholesale operation — with open access allowing ISPs to come in and compete on top of the network (whenever it’s finally built). Part of the reason Google’s deploying the network is so they can show how open access and competition can help keep prices down, service quality up and carriers on their best behavior. The company this week reiterated their dedication to open access, inviting companies like Comcast and AT&T to offer service over the network when it’s finally built: