Tag: "fios"

Posted February 18, 2011 by christopher

An unfortunately common argument used against community fiber networks is that everything will be wireless in the future. This was used frequently last year in North Carolina by defenders of the pro-TWC legislation to create new barriers against community fiber networks.

The technical among us may want to get into the math theory with the Shannon-Hartley theorem to explain why wired is more reliable than wireless and therefore capable of much higher capacity.

Others might point that wireless will have less capacity because a wireless connection is really a wired connection to a tower somewhere that is then shared among hundreds or thousands of other users. Empirically, there is no wireless connection that beats fiber-optics.

But if you are looking for an entity that is intimately familiar with both wired and wireless, you might ask Verizon. Verizon is rolling out its LTE wireless network (arguably the best large scale wireless network in the country) and has millions of customers on its fiber-optic FiOS wired network. Verizon says the future needs fiber-optics to the home and wireless in the air:

"If you get underneath what's driving the fiber in the metropolitan markets it has been the need for increased video, increased reliability and security for customers," Seidenberg said. "The way we think about it is even though we have this great 4G mobile network, you still need to have fiber to the premises because we think your home will utilize a Gigabit of bandwidth."

...

"The way we look at it is we want to get fiber to as many business premises and cover as much as the footprint as we can and we believe everyone else going to do the same thing in other parts of the country," Seidenberg said. "If the incumbents or the MSOs don't do it then these little companies will do it and be the entrance facilities to homes and businesses."

As folks in North Carolina consider this year's proposal to limit competition with last-generation cable and DSL networks, they should think seriously about the communities around them served by FiOS -- with much faster...

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Posted January 27, 2011 by christopher

For years, I have heard Graham Richards, former mayor of Fort Wayne Indiana, brag about this "beg, borrow, buy, build" [pdf] philosophy as Mayor.  I am not insulting him -- his brash style is quite likable, but it is bragging.  He was somewhat of a celebrity among the broadband folks because he both understood the importance of broadband and had convinced Verizon to roll out FiOS in Fort Wayne when they had no plans to.  His philosophy is to first beg, then borrow, then buy, and finally build the network if necessary -- a similar approach of many local governments.  This is also often the path of least resistance (which, Utah Phillips reminds us, is what makes the river crooked).  

Graham is a terrific guy and a great evangelist for broadband (though he never jumped into a frozen Lake Superior) -- but we have long argued that his priorities were wrong in the long term.  Not owning the network means the network is unlikely to care about what the community needs.  Unfortunately, our philosophy has proven prescient.

When we last discussed Frontier's radical price increases for the FiOS subscribers they bought from Verizon, we failed to note that Fort Wayne was one of the transferred communities.  They begged for the network and they have no voice in how it is run.  So when Frontier jacks up its FiOS prices and glibly encourages people to drop their high quality FiOS cable for lesser quality DirectTV (with a long contract), the folks in Fort Wayne have little choice but to shrug their shoulders.

Serfs may occasion upon a good Lord of the Manor, but mostly they didn't.  Ownership of essential infrastructure offers long term benefits.

Photo used under Creative Commons, courtesy of Jenn Raynes

Posted January 21, 2011 by Mitch Shapiro

 

In late 2007 I wrote an essay [pdf] for FTTH Prism arguing that it makes increasing sense for municipalities and incumbent local exchange carriers (ILECs) to cooperate in bringing open-access fiber-to-the-home (FTTH) service to America’s small towns and rural areas.

As readers of this web site well know, such a cooperative model stands in sharp contrast to the typical reality faced by poorly-served communities wanting to connect their businesses and households to a community-owned fiber network. In virtually all such cases, the ILEC, though refusing to deploy its own FTTH network--or even provide high-speed DSL service to the entire community—will fight tooth and nail to stop construction of a community-owned fiber network.

In my essay I acknowledged that ILECs had yet to show any signs of shifting from their “kill all muni-nets” attitude to one that views open-access municipal FTTH networks as a means to better compete with cable without taking on the substantial capital investment associated with a FTTH upgrade. But I added that:

“it remains to be seen whether these [anti-muni-net] attitudes will withstand the mounting competitive pressures facing ILECs in the large number of markets in which they are not planning to deploy fiber-rich, video-capable networks. In these markets, the combination of cable VoIP and triple-play bundles, wireless replacement, and low-cost web-based services will increasingly turn what were once “high-margin” copper customers into either low-margin copper customers, or negative-margin non-customers.”

Among the trends I cited as pushing ILECs to reconsider their staunch resistance to muni-nets was the fact that, in markets where they don’t deploy their own FTTH networks, they will fall farther and farther behind in terms of broadband speeds, especially as cable operators ramp up their deployment of next-generation DOCSIS 3.0 technology.

In the face of this increasingly threatening competitive trend, I suggested that ILECs seriously consider leveraging their existing customer base and expertise to become retail providers on state-of-the-art muni FTTH networks, which can deliver much faster (and more symmetrical) speeds and better service quality than cable—even after the latter deploys DOCSIS 3....

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Posted January 6, 2011 by christopher

Frontier has been bitten by the same disadvantage many communities face when building their own networks -- little market power means having to overpay for everything. When Frontier bought millions of Verizon rural lines, it bought a few FiOS connections as well. But not enough to gain any bargaining power with channel owners. So Frontier had to raise the costs of its video services up for 46%. Lest anyone feel too sorry for Frontier, they are doing just fine. It is their customers who suffer. But it is a reminder that the issue of scale and market power are barriers to all competition, not just community networks. If we want to have real competition in this country, the Congress and the FCC need to stop ignoring the problems caused by massive players distorting the market. This unregulated market is an invitation for big players to join together and screw everyone else.

Posted December 30, 2010 by christopher

Excellent lecture.

Posted November 11, 2010 by christopher

The Media and Democracy Coalition has released a short paper detailing the many ways in which cable and phone companies have failed America. These companies use their market power to gouge residents and businesses, putting a drag on our economy. Meanwhile, the biggest ones are massively profitable and refuse to invest in the networks necessary to keep America competitive with peer nations.

We recently wrote about how privately owned networks tend to consolidate and reduce competition rather than reducing prices. The lesson is as clear as it has always been throughout human history: allowing a select few to control essential infrastructure is a recipe for economic calamity.

From the paper:

It’s good for our economy when companies make money and hire workers. But while small businesses continue to struggle in this economy, the cable and phone companies achieved extremely healthy profit margins. If the Great Recession didn’t stop these ISPs from making big profits, how could they be hurt by sensible consumer protections to keep the net operating just like it always has?

Well, seeing as how seat belts destroyed the automobile industry... and then air bags also destroyed the automobile industry... and CAFE standards destroyed the automobile industry.... wait -- all of these predictions were false. Perhaps we should not base important policy decisions upon the dire predictions of self-interested parties who are obligated to put self-interest ahead of the public interest.

I was saddened to see that the paper suggest "we need" the private companies to build these networks. Point of fact, not only do we not "need" them to do it, we "need" to wake up to the fact that even when they do the best they can, it is second best to networks built by those who put the public interest first. Compare the networks of communities like Salisbury, NC; Monticello, MN; Lafayette, LA; and Chattanooga, TN, to the joke AT&T calls U-Verse and the stronger offers of FiOS. The private sector cannot be trusted to build the infrastructure we need.

Addendum: I should note that while infrastructure must be managed in the public interest, I do believe the private sector should have a strong role as service providers operating on top of...

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Posted April 27, 2010 by christopher

Susan Crawford recently posted "The Gentlemen's Agreement," noting that major cable companies have divided the national market and tend not to compete with each other (they actually help each other in some circumstances).

Though bad for everyone not named Comcast or Time Warner, this division is actually a historic accomplishment:

Even J.P. Morgan couldn’t get independently-owned railroads to agree not to compete with one another in the late 19th century. Not that he didn’t try. In 1890 one of Morgan’s associates was excited by the prospect of a Western Traffic Association that would include a director from each railroad and set uniform rates: “Think of it - all the competing traffic of the roads west of Chicago and Saint Louis placed in the control of about 30 men!” But the effort fell apart because some of the independents insisted on cutting rates and invading each other’s territories.

Cable and fiber-optic networks, as with railroads, have natural barriers to entry because the costs of building a network are very high; entrenched incumbents have nearly all the advantages should any competitor have the resources to surmount the barrier of sky-high upfront capital costs. In short, the market cannot self-regulate. We have a number of choices:

  1. Do nothing, let Comcast, et al. do as they please.
  2. Regulate: Hope the FCC or other Federal Agencies can stand up to the corporate lobbyists and regulate in the public interest.
  3. Provide a Public Option

We prefer the public option route - communities can build their own networks and remain independent of corporate control of infrastructure.

However, many communities have chosen to do nothing -- some in hopes the federal government will get its act together and reign in the power of these companies as the U.S. falls behind international peers in broadband metrics.

Verizon's FiOS has brought fiber to the home in some cities (with many cities courting the company), but some quickly found FiOS comes with significant trade-offs. Karl Bode details some of these - like Boston being shunned because it wanted Verizon...

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Posted July 24, 2009 by christopher

A recent editorial in the Boston Globe caught my attention - Fiber-optic nerve. It seems that Boston is tired of waiting for private companies to build modern broadband networks in the city.

The editorial suggests that as Verizon has started building its FTTH FiOS in New York City, D.C., and some of the Boston suburbs, it may be a withholding the network from Boston due to the Mayor's efforts to change a state law that has exempted telecom companies from paying a number of taxes. Verizon denies any connection. From the editorial:

Menino is right to insist that telecommunication companies pay their fair share of taxes. In Boston, the exemption shifts more than $5 million a year onto the property tax bills of homeowners, say city officials. But tensions between Verizon and the mayor can be costly in many ways. City cable providers Comcast and RCN, for example, don’t offer the speedier fiber-optic connections into customers’ homes available from Verizon in 98 Massachusetts cities and towns. The new and faster broadband speeds - both downstream and upstream - offered by Verizon to Internet customers therefore remain beyond the reach of Bostonians, as do FiOS-related incentives on products such as mini netbooks and camcorders. Cable and Internet competition is alive and well in the suburbs, but flat in Boston.

Verizon has previously threatened to withhold its investments in states that do not sufficiently deregulate -- after turning its back on the New England region by offloading its customers on the totally unprepared Fairpoint company, Verizon pushed franchise "reform" in Massachusetts. Franchise "reform" is when states agree to preempt local communities that selfishly want to regulate the quality of service offered by providers - things like requiring some local channels and thresholds for customer service. As Karl Bode noted in the link above:

While these bills are promoted as a magic elixir that will bring competition and lower TV prices to a region, when people go back to investigate whether these bills actually helped anybody (which is amusingly rare), data indicates that TV prices increased anyway and consumers got the short end of the stick. State lawmakers are usually no match...

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