Not A New Year's Resolution

I'm not the type of person to make New Year's resolutions because why should a person pick just one time of the year to say that they are going to evaluate how they are going to live their life or run their business. This philosophy comes from my grandmother that use to say, "Why should I wait until your birthday to give you a present to show my love? I love you all of the time so anytime is a good time to give you a gift." So while I tend to evaluate my plans and life on a continual basis, the beginning of a new year is a psychological new beginning for many people. More importantly for most of us in the business world it the beginning of a new fiscal year for many of our customers.

The start of a new fiscal year is my motivator for implementing the plans that I made last year. I previously lamented about the malaise in the telecommunications industry. My assertion was that all of the excitement was in the equipment attached to the network. Looking at the excitement surrounding the CES that just ended, one could agree with my statement. Instead of an either/or option for intelligent network/intelligent CPE, the truth is that they have to operate synergistically to achieve their desired aim. There is a tremendous amount of heavy lifting behind returning your "OK Google" request or bringing you a Uber car. It may be the application developers that appear to create magic on smartphones and tablets, but it is that work of thousands of telecom network professionals like us to make it look like magic.

Although today's mobile device has more computing power than a supercomputer from 1980, that device cannot do everything necessary to deliver information or intelligence from the far-flung reaches of the Earth. There are thousands of protocols and API designed to allow systems to interact with each other to assemble disparate pieces of information into a simple result displayed on a screen. We use catchy marketing terms like Big Data and Internet of Things to make these interactions understandable by the layperson and to sell products and services to our customers. Although I cringe every time I hear buzzwords like these or cloud, I know that they are euphemisms for a complex set of interactions taking place in the network on the user's behalf.

So there are exciting things left to do in telecommunications afterall. They may not be as straightforward as the creation of DSL or SDH/SONET technology, but we have built that layer of the network and it is mature. We are in the phase of more complex interactions between different layers of the network to automate and simplify how services are delivered. For those veterans that built the foundation of today's broadband optical network, it may appear that there is not much left to do, but that is not the case.

The industry will continue to develop the SDN-based network and take advantage of powerful inexpensive computing to virtualize more functionality (NFV) into the cloud (ouch that hurt). As we continue to optimize the transport network to add more connected devices like doorbells (Ring), lights (LIFX), and cars, we will need the added sophistication that the network provides to provide near real time interactions with us.

There are still plenty of problems to solve such as ubiquitous connectivity. With only 40% of U.S. rural population having access to wired broadband and much less connectivity in many other parts of the world, there is still a tremendous effort needed to make broadband universal worldwide.

Security of data and information is another significant concern. Up to now, everything that we have done is just treating the symptom. Personal information is being stolen and sold every day from governments and private enterprises. No organization is immune to a data breach. Privacy goes right along with data security. Privacy is a basic human right that is constantly being violated globally by governments, corporations, and individuals. I question why my identity was compromised by a company that I never did business and used against me by the government. This situation is inexcusable, and it demonstrates the fact that security has not been a priority in our industry. Our liberty depends on these two tenants which is why the industry's brightest minds must develop a holistic solution that includes end-to-end encryption of all information on devices and traversing across the network. There can be no backdoors for any reason.

Millions of new devices being connected to the network monthly requires scalability. With increased scalability comes increased power consumption. We need to put our minds on how to grow these networks without exponentially increasing power consumption. Actually power consumption should be decreasing.

I could go on and on but those are the big three topics that I see the industry addressing in 2016 and beyond. Closer to home, I will continue to be involved in the larger trends in the industry while solving some of the more tactical problems to get us there. ComTech Sales and myself can be relied upon to work with service providers to develop and implement solutions to expanding broadband penetration, security, and power consumption. We will continue to grow our business on the telecom side of the industry that we started in the fall of 2015. Please rely on us for solutions to your equipment needs.

Obama Proposes Overriding the Tenth Amendment

Obama’s speech at Cedar Falls, Iowa was like most of his speeches; much to do about nothing. He is proposing nothing short of allowing municipal governments to use taxpayer funds to compete against private enterprise, and he is encouraging the FCC to override 20 state laws in contradiction to the Tenth Amendment. I make no bones that I am a free market capitalist and I am strongly against the government taking over or competing against private enterprise. What Obama is proposing is not only anti-capitalism but also illegal.

I have written here that our current duopolies are not optimal for consumers, but replacing them with a subsidized government bureaucracy is a move in the wrong direction. I support municipal governments determining their own broadband destiny as much as I support removing restrictions allowing new entrants into the market by removing obstacles that municipalities and states have created. Twenty states have created laws to protect taxpayers from having to pay for cities failed attempts into the broadband services markets. These states realized that the communications market is competitive and fast moving. They have seen how over 50% of all municipal broadband efforts have failed leaving taxpayers to pay off creditors and bondholders (link, link). Proponents of government broadband, including the press, are quick to point out the few successes like EBP in Chattanooga and Cedar Falls, but they don’t bring up UTOPIA or Longmont, Colorado that is going for its forth attempt to provide residential broadband services. There are a variety of reasons that municipal broadband efforts fail which is why it is better to leave the risk to private enterprise.

Obama cannot instruct the FCC to just override the 20 state laws enacted to protect taxpayers. The Tenth Amendment gives states the ability to make its own laws without the federal government overriding them except for powers expressly granted by the Constitution and states. The Supreme Court has already upheld the authority of the states to prevent municipalities from providing telecommunications services in Nixon v. Missouri Municipal League by a 8 to 1 decision. He can say what he wants but case law is already pretty clear on states’ authority granted by the Telecommunications Act of 1986.

There is no question to the value of broadband services to a community, but it should be delivered in a competitive environment to enjoy all of the value that it brings. Either industry partnerships or cities should be allowed to come together to build open-access broadband fiber infrastructure as done in many cities and countries outside the United States. Sharing a common infrastructure will reduce the barrier to developing a profitable business model for a service provider; therefore, promoting competition that will benefit everyone in the community. This is the direction that Obama should be encouraging states to go.

Technorati Tags: broadband,municipal broadband,open access,telecom,FTTH,broadband penetration,FCC,Obama

North Carolina Legislate to Limit Muni Broadband is Neither Fair Nor Level

Last week House Bill 129 was passed by the North Carolina House of Representatives, and it is now making its way through the Senate.  This piece of legislation’s sole purpose is to protect the incumbent service providers in the state in areas where they cannot afford to make investments for advanced broadband services.  It unfairly limits municipalities ability to drive economic growth and stimulate competition in the communications marketplace.  States that enact this type of legislation are limiting their long-term growth capabilities.  Competitive content and service providers need to band together to support municipal broadband as an alternative method to deliver their services and content.  The best way to ensure net neutrality is through greater competition. 

I have written a longer editorial on the topic in the news section at Inphotonics Research.  Please read it and provide any feedback you feel fitting.

Technorati Tags: North Carolina,broadband penetration,net neutrality,telecom,municipal broadband,rural broadband,NC politics

Incumbent Carriers Use Political Muscle to Stifle Competition

Time Warner Cable and other incumbent communications carriers in the state of North Carolina are pushing for a bill that would prevent municipalities from building or even repairing broadband networks.  An article in Indy Week states that state senator David Hoyle is introducing a bill in the NC senate that would prevent municipalities from building their own broadband networks unless they spent taxpayer dollars for a referendum on the issue.  This bill is backed by Time Warner Cable, AT&T, and Embarq (CenturyLink).  I am all for transparency in government, and I believe that any use of taxpayer money should be fully vetted, but requiring an election on the issue could add more than a million dollars to the price of the network.  The resulting impact would stop most municipalities considering building their own infrastructure.  If a city was bold enough to put the issue on the ballot, such as Longmont, Colorado did in 2009, the incumbents would campaign hard to defeat the issue.  The bill is clearly aimed at erecting as many roadblocks to municipal broadband deployment as possible.  The cost of a ballot measure is equivalent to wiring at least 1,000 homes.  Please read the article then come back for the rest of my analysis.

I do not like this bill for two reasons.  The first reason is that large public corporations are using their money and political muscle to stifle potential competition from smaller companies.  We need to stop allowing big corporations from manipulating the law for their own benefit.  You would have thought we would have learned our lesson after the telecom and housing bubbles, but we did not!  Corporations continue to buy influence through PAC and other organizations.  The second reason I do not like this bill is that the incumbents are not making the investments in infrastructure to remain globally competitive.  Structurally they cannot make these investments and provide a decent ROI to their shareholders.  Municipalities are realizing this fact which is why they are pursuing building of these networks themselves.

This last reason is why incumbent carriers should embrace municipal broadband networks instead of fearing them.  They can leverage the long-term investment capabilities of local governments to build the infrastructure in which they can deliver their services.  Cable and telephone companies frequently refer to the cost of building these networks as reasons why they cannot offer more channels and higher speeds or greater download capacities.  By working with municipalities in the design of this open-access infrastructure, they can lease their last-mile access instead of spending the capital to build it which looks better on their balance sheets.  True they will face competition from other carriers, but they can use their size for economies of scale and innovation.  The problem is that they like the stasis that a duopoly provides. 

State and federal governments must not be swayed by the political contributions and lobbying from big telcos and cable and allow competition to flourish.  Once again we have to look to public/private partnerships to rewire America.  One hundred years ago it was cost prohibitive to wire every house so the FCC and state governments made a deal with AT&T for them to provide service to every household in return for a monopoly.  This public/private partnership gave AT&T the economies of scale to economically wire 80% of homes and rate-of-return regulation enabled them to wire the rest of them.  Now it is time to enter into new public/private partnerships to rewire America that encourages competition.  Enlightened local governments realize the benefits that an open-access broadband network brings to their community.  On one hand the process should be open and transparent so the community understands how the network will be financed and built.  It should not be cross-subsidized by other sources unless taxpayers agree.  On the other hand, governments should not be swayed by vested interests that may block competition just to preserve their own revenue sources.  Elected officials work for their constituents not the corporations.  Open-access networks can be built taxpayer neutral that can serve incumbent service providers and competing service providers alike.  We need to eliminate barriers to spur competition, not erect them.

Technorati Tags: AT&T (T),broadband penetration,Longmont,politics,Time Warner Cable,North Carolina

Telecom Pragmatics Calls Google Effort “Token”

Telecom Pragmatics recent press release and report stating that Google’s Fiber for Communities project will be just a token effort misses the objective of Google’s project.  Google has been very clear through its minimalist communications of its objectives for this project.  They want to stimulate new applications, test new deployment techniques, and drive competition beyond the current duopolies.  They do not want to become a carrier or service provider.  They do not want to get into the business of building networks.  Google simply wants to find a business model for building last-mile networks that will stimulate the deployment of ultra-high speeds at reasonable costs through competition.  Whether they will do that in one or a couple communities is still up in the air.  Google clearly states that they do not have the expertise to come up with a solution to the U.S.’s broadband deficiencies, but they are betting on the telecommunications industry and capitalism to find one.

Google is currently vetting over 1,100 RFI submissions to find the few finalists that assembled the appropriate players to test out a model for building an open-access municipal network.  Their approach is different that the bureaucratic direction of the FCC with the National Broadband Plan.  They know that they do not have all of the answers and are looking to the experts to develop some solutions.  I applaud Google in their efforts and whether they select Boulder, Colorado or not, I will support their efforts to the fullest.  Sam, Mark, and David at Telecom Pragmatics are smart guys and I know that they understand what Google is trying to accomplish.  I trust that their report fully divulges Google’s true intentions.  As a community that has been driving FTTH for two decades, we need to fully open our experiences to Google to make their little experiment a success. 

Technorati Tags: broadband penetration,Google,#boulderfiber,Boulder,Google Fiber for Communities,Telecom Pratmatics

What the 1,099 Communities Not Selected by Google by Google Should Do

The past month has been crazy ever since Google announced that they are going to build an open access fiber-based network in one or a couple communities from 50,000 to 500,000 in population.  Over 1,100 communities submitted responses to the Google Fiber for Communities Request for Information including my own Boulder and Longmont, Colorado.  Those communities took the time to thoroughly understand how broadband infrastructure could benefit their community.  So what should the 1,099 or so communities that are not selected do?  They should build the open-access broadband network anyway.

Why?  Communities that responded to the RFI realize that a broadband infrastructure will not only offer their citizens greater choice of service providers, but also provide economic growth to their community.  Studies in Europe, Asia, and North America have confirmed the benefits that will come to these communities (link and link).  Some cities conducted their own surveys asking businesses how a broadband infrastructure could benefit their business.  Boulder’s results can be found here and here.  So now that Google has stimulated this awareness of the benefits, why should a community take it on themselves to build the network?  Obviously one of the incumbent carriers will build it eventually, right?

Communities need to realize that incumbent carriers are not going to make any multi-billion dollar investments in infrastructure in the next couple of years no matter how hard they squeeze them during franchise negotiations.  Verizon has publicly announced that they have completed their FiOS buildout passing approximately 18 million homes and gathering 2.86 million TV and 3.43 million Internet subscribers.  AT&T’s U-verse service only reaches 2.1 million subscribers and it based on a FTTN architecture that only provides limited speeds.  Comcast has been the most aggressive with hitting more than 80% of its service territory with DOCSIS 3.0 by the end of the year and reclaiming spectrum for more data use via Project Calvary.  Comcast is offering speeds up to 50 Mbit/s for Internet.  The bottom line is that if you do not live in a major metropolitan areas that these providers already hit, you can only expect incremental or no improvements in service.  Most of these communities will not see Internet speeds greater than 50 Mbit/s or a choice of more than two video providers. 

The economics of building a single carrier infrastructure are not suitable for these companies to undertake.  Verizon spent $23 billion building out its FiOS network which equates to over $7,600 per subscriber.  Ivan Seidenberg, CEO, stated that they would like to achieve at least 7.2 million subscribers;  thereby, cutting the cost per subscriber in half.¹  Assuming that the company nets $50 each month per subscriber, which is generous, and that Verizon achieves its 7.2 million subscribers, it will take over 5 years to see a positive return on investment.  Investors in public companies do not want to see payback periods beyond 2 years even though the investment’s lifetime is greater than 20 years.

The economics for a open-access infrastructure are much different because there are multiple service providers utilizing the infrastructure that improve the fill rate and cash flow.  Successful open-access networks enjoy a fill rate of greater than 60%.  Some of the installation issues that plague large companies like Verizon are mitigated in municipal networks.  Smaller carriers have reduced installation costs down below $1,500 and even lower.  Just taking these two factors into account and allocating $30 per month to pay for the infrastructure moves the payback time to 5 years, and that figure does not include the revenue from any business customer that definitely improves the economics.  This article, published on the Gerson Lehrman Group site, takes a look at the economics with a smaller adoption rate but does not separate the service from the infrastructure.  They conclude that the payback time is much less.  Our company, Inphotonics Research, has more detailed case studies that indicate a payback period closer to the 5 year period factoring in all of the expenses and incomes which is far too long except for the patient investor.  On the other hand, the municipal bond investor may see a compelling investment opportunity and communities may even be able to enjoy a net positive revenue flow into their general fund.

Now that communities realize the the economics are feasible and that such a network provides numerous benefits to the community, how will they do it?  The purpose of Google’s grand experiment is to show communities how they could build their own infrastructure.  Their objective is not to build these networks in every community, but share the results so other communities could do it themselves.²  Understanding the formula will get a community started.  It does not give them the expertise to build and operate the infrastructure as well as attract service providers.  Companies exist that will assist communities to plan, build, and operate their infrastructure such as Inphotonics Research.  These companies have the relationships with appropriate industry players to make the project successful for a community.  So if you are one of the communities that does not end up selected by Google, go ahead and leverage Google’s work and build the network yourself.  You can do it with a little help.

Technorati Tags: broadband,broadband penetration,Comcast (CMCSA),AT&T,DOCSIS,FTTH,telecom,Verizon (VZ),#boulderfiber

Are We Done With Broadband Service Growth...Is That All There Is?

A rosy report released by the National Telecommunications and Information Administration (NTIA) confidently states that the U.S. is doing great in broadband penetration because the current administration has increased penetration more than 1100 percent and 91.5 percent of zip codes have three or more competing service providers. 

I must only be familiar with the 8.5 percent of zip codes, including my own, that have zero to two providers.  I guess we can now start proudly chanting, "Were number 15!" because that is where the Organization for Economic Cooperation and Development (OECD) places the U.S. in broadband penetration.  Although initiatives like FiOS and U-Verse are increasing penetration and access speeds, they are only touching a small fraction of homes and the lack of significant competition, like on the UTOPIA network, prevents new services and lower prices from being realized by this supposed 91.5 per cent of Americans. 

Lately I have seen evidence that the U.S. broadband market is stagnating:

1. AT&T increases prices of its DSL service to lower tiered customers by $5 per month.
2. Comcast begins using reasonable traffic management practices which some label as intentional service degradation.
3. Time Warner Cable experiments with capping download quantities in Beaumont, Texas where it may be conceived that they are impeding competing video delivery services.

These are not trends in a vibrant competitive market.  The NTIA and Department of Commerce should not benchmark their success on absolute numbers.  Instead they should compare the U.S. to other countries that lead the world in broadband services.  Then again this is government; whereas, business benchmarks against other similar businesses.  The FTTH Council provides a thorough analysis of broadband service in the U.S. and contrasts it to other countries.  They include policy recommendations and initiatives that the government can take to stimulate broadband service deployment and competition.

Article:  TelecomTV - TelecomTV One - News

Technorati tags: broadband penetration, NTIA, AT&T, Verizon, Comcast (CMCSA), Time Warner Cable