NoChokePoints Coalition Slams AT&T for Rate Hikes

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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.

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Pew Center on the States Highlights Importance of State Agencies in Broadband

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The Pew Center on the States has it right that the implementation of broadband networks is more of a local issue than a national issue even though as a fact the U.S. has fallen behind as a country.  The federal government’s involvement should be to create policies that encourage the building of broadband networks and to remove any impediments that may be erected at state and local levels.  The BIP and BTOP funding should serve as a catalyst to drive deployments and try different business models, not complete subsidize deployments.  Each state and locality has unique needs and should be free to develop solutions to meet those needs.  There is no single technology or business model that can be utilized across the country.  Even the Bell System had local engineering centers that designed their local access networks using several Bell Labs approved technologies when they were appropriate.  Funding broadband networks on the national level will require Congressional involvement.  Anyone that understands how the appropriation of transportation funds works realizes that projects are funded based on political clout and less on need.  If left at the federal level, broadband funding will be subject to the same process.  The economic and geographic diversity across this country necessitates the need for the solution to our national problem to be resolved on a local level.

WASHINGTON June 30, 2010-The Pew Center on the States has just released a report on the importance of state government involvement in broadband. In essence the report aims to show the varied efforts that the states are making to expand broadband. Additionally they give a brief explanation of why the national purposes set out by the National Broadband Plan are important.

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How Most Broadband Providers Have Focused On Decreasing Competition; Not Innovation

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Articles like these are increasingly being written pointing out that lack of true broadband competition is stifling innovation.  Cities that have built open-access municipal networks have enjoyed lower pricing and innovative new services.  The cost of building that last-mile of fiber is unjustifiable for a public company if they are the only user.  Amortize the cost over several service providers and the payback becomes around 5 years which is well within the planning horizon of a city.  The incumbents should embrace the use of “other peoples’ money” to offer new and innovative services to increase ARPU.

from the indeed dept

Ryan Single has an excellent piece at Wired that details how incredibly misleading telcos are being in claiming that the FCC’s attempt to reclassify broadband access will lead to less “innovation.” He highlights how far behind other countries the US has fallen, and how hard the telcos seem to work at not competing and not investing in innovation. Basically, Singel points out what many of us have pointed out all along. All of this posturing by telcos is about lowering their own costs (i.e., not investing) and squeezing more money out of customers, in an attempt to please Wall Street:

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Rural areas need broadband, McCaskill says

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More and more politicians realize that unfettered access to broadband services is the key to continued prosperity in this country.  If they truly belief this, then they need to remove the regulatory and legislative restrictions that impede novel business models that can increase the deployment of broadband networks in rural areas.

TROY, Mo. | Access to broadband Internet is no longer a luxury but a necessity, and rural areas need more of it, Sen. Claire McCaskill and others said Friday.

McCaskill, a Missouri Democrat, and Federal Communications Commission chairman Julius Genachowski hosted a Rural Broadband Forum in Troy, about 50 miles north of St. Louis.

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Americas Report: What Broadband Means to Rural USA

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TelecomTV is traveling around the United States to assess the state of broadband deployment in America.  Guy Daniels reports on the use of the Internet and wireless services in the most rural of rural America: Amidon, North Dakota.  Although their use is limited, the Internet has impacted the lives of its residents.   I would be curious to see how the Internet has changed their lives once they start taking advantage of the bandwidth their recently installed fiber will bring.

In the third of our weekly previews for the forthcoming “Connected States of America” documentary, TelecomTV’s Guy Daniels visits Amidon in rural North Dakota, which, with a population of just 20, is the smallest county seat in the whole of the USA. What impact has broadband, the Internet and cellular had in such an isolated part of America? TelecomTV is in the middle of an extensive filming schedule, driving across the US to collect case studies and interviews. Further previews will appear in NewsDesk each week.


Article continued on TelecomTV…

Australia makes fiber official: no more copper wires, ever!

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Telstra realizes that it is better for them to support this effort than try to compete.  If they chose to compete against service providers using the NBN, they would burn capital needlessly and still not achieve the results of their competition.  They would be offering less HD and 3D programming and slower Internet speeds than their competition.  So to participate in NBN, Telstra gives up its ducts and existing mid-mile fiber, and the government will operate its phone services, emergency services, and payphones.  Although I applaud the creation of an open-access fiber infrastructure, I think that the Australian government has encroached too far into private enterprise.  The government is essentially entering the telecommunications business through the creation of USO Co. which takes them back to the days of Telecom Australia when they were the PTT.

Australia’s going all-in with its government-run fiber network. The government has now convinced the country’s dominant telco, Telstra, to sign on with the scheme, get rid of its copper and cable lines, and transition its subscribers to the open-access national fiber program. When the project is complete, Australia will have taken an almost unprecedented step for a country of its size: legacy telecommunications infrastructure will be almost gone.

Although Australia had planned to move forward with its AUS$43 billion fiber network with or without Telstra, Telstra’s decision to join the party is a significant one—the company could have held out and fought to keep its customers from defecting to fiber, setting the stage for a long platform war. In the end, though, there just weren’t many benefits to doing this; a recent report from McKinsey and KPMG reemphasized the fact that the new fiber buildout would “accelerate the evolution of the industry,” and it would be hard to compete with open-access fiber-to-the-home on speed.

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Sorry Fiber Fans, I’ve Got Some Bad News

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I contend that Leichtman Research Group is not asking the right questions.  If 77% of those surveyed do not know their Internet access speeds, then how could they know that they need greater speeds?  The surveyors should have asked consumers about the applications that they would like to use such as watching 3D and high definition movies, video conferencing, home security, gaming, remote access to home data, etc.  Other questions asked should be how many users in the house are typically doing these activities.  Only when you see how consumers want to use their broadband services can you ascertain that the wimpy <10 Mbit/s is not enough for future use.

More than 70 percent of U.S. broadband customers are happy with their overall service, ranking it between 8 and 10 on a 10-point scale, according to Leichtman Research Group. A mere 3 percent scored their service with a 3 or less on the recently conducted survey, while just 26 percent said they’re “very interested” in receiving faster speeds at home. In other words, big, bold fiber efforts, such as Verizon’s FiOS, aren’t yet supported by consumer demand.

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