Tag: "open access"

Posted October 9, 2009 by christopher

We finally have a realistic estimate of the cost of bringing 100Mbps to every home in America... and Light Reading labeled the cost "jaw-dropping."

Want to provide 100-Mbit/s broadband service to every U.S. household? No problem: Just be ready to write a $350 billion check.

Federal Communications Commission (FCC) officials shared that jaw-dropping figure today during an update on their National Broadband Plan for bringing affordable, high-speed Internet access to all Americans. The Commission is schedule to present the plan to Congress in 141 days, on Feb. 17.

Don't get me wrong, I agree that $350 billion is a lot of money. On the other hand, we spent nearly $300 billion on surface transportation over 4 years from 2005-2009. $350 billion buys a fiber-optic network that will last considerably longer. Additionally, such a network will generate considerably more revenue than a highway. In fact, these networks will pay for themselves in most areas if they can access to low-interest loans.

Consider the comments of Deputy Administrator Zufolo (of the Rural Utilities Service) from my recent panel at NATOA:

Zufolo explained the RUS decision to use its $2.5 billion in funds primarily to subsidize loans and not provide grants, as the agency's best opportunity to make the more efficient use of the federal money and have maximum impact. Because the default rate on RUS loans is less than 1% and the subsidy rate is also low, only about 7%, it costs the government only $72,000 to loan $1 million for rural network development, she said.

Let's say that RUS decides to embark on getting 100 Mbps to everyone in a rural area - some of the projects will be riskier than the standard portfolio, so let's assume it costs the federal government $100,000 to loan $1 million (makes it easier math too). In order to spur the $350 billion investment for these networks, the government would have to put up $35 billion.

But it would probably be more than that because some areas - Montana, Alaska, Wyoming, and other beautiful places will need...

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Posted September 11, 2009 by christopher

Our focus on the broadband stimulus is almost entirely on last-mile infrastructure because it is the most challenging and expensive problem to solve before all Americans will have affordable access to the broadband networks they need in the modern era. As we are most familiar with Minnesota, we decided to take an in-depth look on who is proposing what projects in our state.

Total Infrastructure Grants Requested for Last Mile solely in MN: at least $240 million
Total Infrastructure Loans Requested for Last Mile solely in MN: at least $85 million

Groups seeking stimulus funds to deliver last-mile broadband access in Minnesota have asked for hundreds of millions of dollars. By my tally, some 17 applicants are seeking to serve Minnesota with last-mile access (I threw out applications pertaining to middle mile infrastructure, digital divide, and those last-mile projects that combine Wisconsin and North Dakota areas) have requested some $240 million in grants and $85 million in loans.

If one assumes that the total amount of money is divided evenly among the states, this is somewhere around 3x as much stimulus money that will be awarded to Minnesota applicants over the course of the multiple rounds of funding.

At some point, this list will have to be winnowed and prioritized, so let's delve into it. All applications still must survive the peer review process (ensuring they met NTIA/RUS requirements), the incumbent challenges (incumbents can veto applications by showing that targeted areas already have broadband advertised to them), and the prioritization of surviving projects by each state (no one seems sure of how this will happen in Minnesota, our Governor is too busy not running for President in 2012).

There are two applications that should be jettisoned immediately, Arvig Telephone Company and Mid-State Telephone Company, both of which are owned by TDS Telecom. [Update: I have now heard conflicting reports on whether Arvig is, in fact, a subsidiary of TDS]

When...

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Posted July 31, 2009 by christopher

The American Recovery and Reinvestment Act of 2009 directed the Federal Communications Commission (FCC) to develop a national broadband strategy. FCC invited comments and then invited replies to those comments in summer 2009. The Free Press Reply Comments deserve to be singled out for revealing some of the lies of large telecommunications companies like Verizon, AT&T, Comcast, Qwest, and others. It also describes many of the ways that these companies harm the communities that are dependent on them for essential services. I've highlighted some passages below that show the ways in which these companies put profit above all else. These companies claim that regulation discourages investment and deregulation (allowing a higher degree of concentration or larger monopolies) encourages increased investment in better networks - an incredibly self-serving claim that Free Press shows to be false on pages 13-29.

Competition -- meaningful and real competition -- and not regulation is the primary driver behind investment decisions. Where meaningful competition exists, incumbents are compelled to innovate and invest in order to maintain marketshare and future growth. Where competition is lacking -- such as it is in our broadband duopoly -- incumbents will delay investment, knowing full well they can pad their profits on the backs of captured customers who have no viable alternatives. (Page 14)

Regulations like open access and non-discrimination encourage competition and should be strengthened. Free Press offers an in-depth explanation of how Verizon has dumped millions of customers on other companies that clearly could not handle the burden.

Verizon began the purging of less lucrative areas with the sale of Verizon Hawaii to the Carlyle Group in 2005, a company that had no previous experience in operating telecommunications services. By Dec. 2008, the company, now called Hawaii Telecom, had lost 21% of customers and filed for bankruptcy. (Page 26)

Verizon then sold most of their New England lines to Fairpoint, which is currently heading for bankruptcy. Fairpoint's customers are not the only ones suffering - the independent companies that resell services over that infrastructure are also suffering because Fairpoint is utterly unable to meet its obligations.

Most recently, Verizon announced that it intends to sell-off mostly rural areas in...

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Posted July 27, 2009 by christopher

A one hour slideshow discussing the economics of FTTH - unfortunately it seems to have rudimentary controls that do not allow fast fowarding or rewinding, so pay attention! You can also read the bullet points to get a sense of whether you will be interested or not.

Fiber to the Home: Making That Business Model Work
This slideshow is no longer available.
View more documents from Yankee Group.
Posted July 8, 2009 by christopher

I have been digesting the NOFA (the rules for broadband stimulus projects) and I am stunned at just how much I disagree with them. I think the National Telecommunications and Information Administration, a branch of the Department of Commerce in D.C., and the Rural Utilities Service have really done a disservice to this country.

Before I highlight some commentaries that I have found most interesting thus far, I want to note that this is why we take a bottom-up approach. In talking to many people working on community networks, most everyone is frustrated and the rest are really angry. It sure seemed like the feds were heading in the right direction, but the broadband stimulus rules show just how out of touch they are. We advise communities to find ways of being self-reliant. If they are able to get help from D.C., that is great; but they should never depend upon it.

We will have some more details of our reaction to the rules soon, but for now I wanted to highlight some of the folks that reacted quickly and offered interesting thoughts.

Starting on the positive side, Andrew Cohill at Design Nine thinks the encouragement for open access networks and transparency could ultimately be the defining characteristic.

This means networks that offer competitive pricing from more than one provider get preference--this is huge, and could have important long term consequences.

The rules also do something else quite important on the same page (page 66, line 1463), where there is explicit preference for open access transport, which in telecom jargon is "interconnection." The rules say that companies that post their interconnection fees publicly and agree to nondiscrimination will get preference.

If he is correct, the implications are great. However, the rules certainly could have demanded open access as a condition of public money being used rather than a limited form of extra credit for those who will encourage competition in a market suffering the utter lack of it.

Harold Feld, who rightly noted that good people struggled and worked on this, saw both positives and negatives in the rules. He defends the "broadband" speed definition from the FCC (768kbps down and 200kbps up):

I am in the minority in thinking they played this right. There are too many good projects...

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Posted July 7, 2009 by christopher

This article details the philosophy, approach, and opposition to an effort to allow many communities in Iowa to build their own open access telecommunications infrastructure - full fiber networks. Many in Iowa feel particularly vulnerable to the new economy because their low density puts them low on the priority list for investments by absentee-owned companies:

There is much talk in Iowa today about the need to attract and retain young people. Each year thousands of college graduates leave the Hawkeye State. Today in Iowa, there are more people over the age of 74 than under the age of five. No state grew at a slower pace than Iowa during the last century. Reversing these trends is going to take bold leadership and fresh ideas. OpportunityIowa was created to educate citizens about the vital role 21st Century communications infrastructure could play in doing just that.

Daley argued that without local self-reliance, many towns in Iowa would not benefit in the digital economy because they would not have access to fast and affordable networks.

The current cable and telephone companies serving Iowa have no incentive to replace their copper lines. They have to and they don't want to. They don't have to because they know consumers have no choice but to use their copper wires and they don't want to [encourage open access] because it may bring competition where they currently have none. In fact, the incumbent phone and cable companies have expressed their opposition to upgrading existing infrastructure in order to make Iowa a leader in broadband capabilities.

The article ends with lists of both communities organizing referendums for Nov, 2005, as well as communities that already have telecommunications utilities. Ultimately, many communities authorized the telecommunications utilities but most of those have not followed up by building the envisioned networks.

Posted June 30, 2009 by christopher

The December 2008, issue of Broadband Properties features an article that offers advice to incoming President Obama regarding broadband policy. Some of the comments center around community networks. Tim Nulty makes three preliminary points:

  1. Wireless is a supplement, not a substitute
  2. Access to fiber networks is key to full participation in society
  3. Optical fiber is the most perfect natural monopoly ever invented

Building on these points, he says:

Points 1, 2 and 3 mean we have no choice but to put the government directly and unapologetically into the picture… just as we do with other basic public utilities such as water, police, education and fire protection. This runs directly counter to the recent policy, under which optical fiber systems have been steadily removed from regulation covering the key issues of universal coverage and common carriage (referred to these days as “network neutrality”). These same issues have been fought over in other arenas such as toll roads, the postal service, canals, railroads, airwaves and the telephone since the founding of the Republic. The issues are not new at all! Only the technology of optical networks is new.

I offered a number of priorities:

  1. No federal policy should preempt the right of communities to build their own networks
  2. The feds should prevent states from preempting community authority to build their own networks
  3. Feds should provide low-interest financing for public networks
  4. Feds should provide grants to networks that are open-access

Finally, Wes Rosenbalm, the President and CEO of Bristol Virginia Utilities offered a short piece explaining why barriers to publicly owned broadband must be lifted. To find these gems and more, read the article linked below.

Posted June 26, 2009 by christopher

Anyone who tells you that UTOPIA is a "success" or that it is a "failure" is probably minimizing important problems or victories for the network. The Utah Telecommunication Open Infrastructure Agency, like so many other things in life, is a mixed bag.

For those new to UTOPIA, it is a large multi-community full fiber network that operates by only selling wholesale access to service providers. Due to a law designed to protect incumbent service providers under the guise of protecting taxpayers, UTOPIA cannot offer any services itself and is strictly open access.

For a variety of reasons - that have not and likely will not be repeated by other communities - the network has not yet met expectations. The costs have been greater than expected and the network does not yet cover its entire intended territory (some 16 communities and 140,000 people).

However, where it does operate, it is blazing fast. The service providers offer the fastest speeds at the lowest prices (see a service comparison). It has offered a tremendous competitive advantage to the businesses and communities in which it operates.

Last year, Lawrence Kingsley wrote "The Rebirth of UTOPIA" that explored where the network went wrong and how it has also succeeded. Perhaps most notably, he notes that the churn rate (people switching to other networks) is ridiculously low at .5% - a common trait to community owned networks.

Last month, Geoff Daily reported on how UTOPIA is "Transforming Failure Into Success." They have greatly improved their marketing practices - which has historically been a large barrier to success. This is an important lesson for all - even though there are very few competitors in the broadband market, they do fight fiercely for subscribers. Broadband is competitive like boxing, not like a marathon.

But the news coming out of Utah is not all cheery. Jesse, the resident UTOPIA expert, has recently explained some of the current financial problems and their origin.

Perhaps the most important lesson to take away from UTOPIA is that plans always go awry. I have yet to find a community that did not have unexpected problems along the way to building their networks. Communities that take...

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Posted June 26, 2009 by christopher

Geoff Daily visits UTOPIA and discusses their strategies to get back on track. He notes what they have done to make up for past problems and what they are now doing. They've got a new team and still offer a vastly superior connection than their competitors.

A snippet from Geoff's take:

Whenever anyone tries making an argument against municipal broadband and/or open networks, more often than not it starts by citing UTOPIA as the poster child for failure, the example given for why other cities shouldn't pursue plans to wire themselves.

And in many ways, UTOPIA--the audaciously named, multi-city municipal wholesale-only full-fiber build in Utah--has been a cautionary tale. Started in 2002, the network still doesn't cover any of its pledging cities in total, it's not yet financially self-sustaining, it's already over $150 million in the hole, and it has struggled to attract service providers, especially any big names.

As Paul Larsen, Economic Development Director for Brigham City and member of UTOPIA's Executive Board, put it during my whirlwind trip to Utah last week, twelve months ago they were discussing what color UTOPIA's casket was going to be.

Posted June 24, 2009 by christopher

NATOA, the National Association of Telecommunications Officers and Advisors, comprises many people who are in, and work on, community broadband networks. Whether they are dealing with cable-company owned I-Nets or citizen owned networks, one of their jobs is to make sure the community has the network it needs.

Starting this year, NATOA has made its publication, the NATOA Journal, available to everyone, not just members. This will be a great resource for community broadband information.

This issue has important articles - from an in-depth comparison of the physical properties of copper and fiber to less technical arguments by Tim Nulty and myself. Tim Nulty wrote "Fiber to the User as a Public Utility."

He advances a number of important arguments:

  • Universal - everyone should have access at affordable rates
  • Open Access - it must encourage competition, not stifle it
  • Future Proof - the technology must be built to last and meet needs currently unforeseen
  • Financial self sufficiency - this can be done and the political culture suggests it must be done

He then delves into the problems Burlington Telecom faced, how it resolved those problems, and some of the strengths of their approach. He also offers some details on his new project - East Central Vermont Community Fiber Network.

My "Community Owned Networks Benefit Everyone" makes the case that only publicly owned networks can offer true competition in the broadband market because private network owners will not open their networks to other providers. Facilities-based competition is a policy that encourages monopoly or duopoly throughout most of America.

However, I also argue that public ownership, and the accountability that comes with it, may be more important than competition in cases where the community chooses that model. As always, we stand up for the right of communities to choose their future and to take responsibility for their choices.

Other important articles in this issue discuss the...

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