A Time for A Transition

Almost a year has passed since I last written a blog, why? Maybe after almost three decades in the industry I'm not excited by the technology these day. Maybe it has been the associations with my last two companies that have deflated the once full sails that I had for navigating through the industry. Or maybe it is the malaise that has wandered into the industry after the deflation of the bubble. Most of the innovation has migrated to the services delivered and customer equipment and out of the network. The pendulum has swung back to intelligent CPE/dumb network. Of course there are those that will argue with me that there is more intelligence in the network than ever with bandwidth on demand, SDN, NFV, IP-centric data transport, and the cloud. All of this technology are just techniques to optimize data transport from point A to point B. Exciting as it may be, we are just at the asymptote of the Moore's Law curve.

After reading this first paragraph you may begin to think that I am jaded. I prefer to think of it as experienced. I believe that the industry will still create breakthroughs in technology but they will be focused on the customer experience more than the network experience. There is still much work to do making access to the network ubiquitous and inexpensive. The creation of Inphotonics Research was to leverage the concept of open-access broadband infrastructure to increase customer choice and broadband penetration outside urban and suburban areas, but we were a bit ahead of our time. I know that open-access infrastructure would be the best alternative for consumers and municipalities, but I am not going to fight that fight again unless some unforeseen circumstance were to unveil itself.

When I started my telecommunication career in the mid-80 at AT&T Bell Laboratories, I was fascinated by the possibilities of fiber optic communications, and I chose to be a part of it all the way from basic research on III-V materials to make better laser diodes and photodetectors to the systems that used those devices. I was a part of many industry firsts though the innovation that myself and my colleagues created and delivered. As my career progressed, I evolved from a development/technical role to a business/management role but I still stayed on top of the technology because it was my differentiator. I continually educated myself on the latest technology and standards to remain on the leading edge of technology. My companies and customers benefited from this skill.

After the bubble broke, I made some decisions that were more family than career oriented. I was disillusioned with the industry because of the corruption and ineptness that I witnessed firsthand. Maybe I would have been less disillusioned if I had cashed in on some of the spoils, but despite my best recommendations our owners decided to take a different course. Still I ended up working with some great people over the last decade and a half while at Accedian Networks and even Sunrise Telecom. Through it all it was my customers that kept me going. It was the satisfaction that no matter what happened that I was giving them the best recommendations and value that I could provide.

All is not doom and gloom though. I have been involved in many industry firsts, and gained extensive knowledge and experience along the way. I have had the privilege of working with some great people both as colleagues and customers. A few months ago, I was contemplating what I should do for the next stage of my career. I am in Boulder, Colorado which I love and have ties to my family and community. The Denver/Boulder area is not known for being a hot-bed of telecom activity these days and investors are more interested in mobile applications and social media over investing in big infrastructure companies. A Sphero-like device has a better chance of being funded over an inexpensive device that can deliver broadband services to remote areas. It is a shame because we have a vibrant communications services industry in the region still the money is going elsewhere.

What to do? Fortunately my industry colleagues and friends are always there for me, and I reconnected with one of my best manufacturer representative to expand his business into the telecom sector. Charlie Fajardo built ComTech Technologies to serve the cable TV (a.k.a. MSO) industry. Charlie and his team have been extremely successful building a relationship with MSO customers over the years to build a great business that not only sells a wide variety of products to these companies, but is a unbiased and reliable technical source to provide recommendations to these service providers.

I have joined ComTech Sales to start the telecom practice to provide the same services to customers in the telecommunications industry. We will build on the already extensive list of manufacturers that we have partnered to service our telecommunications service provider customers. I am excited to embark on this new venture with Charlie and the team to grow ComTech Sales business to the level the team has done in the MSO space. I look forward to continuing to build relationships with my existing customers plus add many more as well as forge new and stronger relationships with our manufacturer partners. We are here to be a reliable resource to all communications companies to serve your needs from the customer all the way through the network. This will be an exciting new journey that I am thrilled to do.

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

Qwest’s Request for Statewide Video Franchise Has a Weakness

The proposal by Qwest for statewide franchising for video services is not necessarily a good move for consumers unless communities have options to ensure their broadband future.  By simplifying the franchising process, Qwest/CenturyLink and others can easily re-enter the video market in Colorado without negotiating with every city they want to provide service; thereby, allowing competitors to satellite and cable TV companies.  I personally welcome Qwest’s re-entrance into the market.  Local franchise negotiations are often fraught with requests for community TV stations and equipment, free or reduced charges to schools and other institutions, municipal network access, and that pesky universal service requirement.

Elimination of these individual negotiations will reduce the cost of providing services to consumers and speed time to market.  Wireline providers such as Qwest and Frontier Communications will be able to develop successful business cases to deliver video services in communities enabling more competition and choice.  The problem is that there are still a limited number of competitors for video services in the state, and without a universal service requirement new entrants will likely serve only the markets that can be reached for the lowest cost and highest probability of market penetration leaving some suburban and rural areas with limited or no choices.  Additionally it gives new entrants an advantage over current municipal franchise holders like Comcast that are required to provide service to all households in the franchise territory.

I support Qwest’s move to simplify the franchise process with the caveat that allows communities to have control over their broadband destinies.  If a community can no longer guarantee that they will have video (and broadband) services that meet their needs, then they should be able to offer alternatives for their community.  A few years ago the legislature passed SB-152 that prevents communities from building their own broadband networks for public use.  The intent was to keep communications services in the hands of private enterprise and not divert taxpayer money for these purposes.  What is does is prevent many communities from having advanced broadband services that many of their urban counterparts have.

Building broadband networks to every home is a very expensive endeavor.  The economics to build these networks for just a single carrier use is not feasible for public companies except in the densest metro areas which is why you see Verizon’s FiOS in only major metropolitan areas.  A community could build that last mile network and lease access to multiple service providers and see it break even in 5-7 years.  Google is trying to institutionalize this model in their Fiber for Communities project.  These open-access last mile networks have proven to be economically feasible in many cities throughout the world, but in Colorado cities are prevented by law from building them.

Any proposed change in franchising and lessening of the “universal video service” requirement should come with a repeal of SB-152.  This change would allow municipalities to form public/private partnerships to build and operate network infrastructure where private service providers could purchase network to deliver voice, video, and data services.  Communities would then be assured that their citizens would have a choice of service providers and the revenue from the network would replace franchise fees.  Eventually Qwest and Comcast would see the benefits of municipal broadband infrastructure and begin purchasing capacity as well.

Denver Post Article

Technorati Tags: CenturyTel (CTL),Colorado,Comcast (CMCSA),Google Fiber for Communities,Qwest (Q),Verizon (VZ),broadband penetration,rural broadband,telecommunications,video

New US "mega kill bill" would give President and DHS even more power to control the Internet

Laws like this is the reason that I am against the FCC or Congress getting involved in any regulation of the Internet especially net neutrality.  This bill, if passed, would give the President and Department of Homeland Security (DHS) sweeping powers to shut down parts and the whole Internet or even terminate specific users they deem are threats by executive fiat.  There is no Congressional oversight.  There is little definition of what IS a cyber-threat.  Once again is proves that the current Administration and Congress does not understand the Internet. 

There are several things wrong with this proposed legislation not to mention that it is probably unconstitutional without “war power” authority to go along with it.  This power would allow the Executive branch to interfere with commerce and suppress free speech.  Wasn’t this administration suppose to be “open” and “transparent?”  They are actually more totalitarian than they claimed of the previous administration. 

Next, the legislation allows continued unwarranted surveillance of “suspects” that are deemed “threats” to national security which is an extension of the Patriot Act.  Finally the legislation barely takes into account the fact that the Internet is a global network and not just a U.S. network. 

The philosophy of the bill can be summed up by Senator Joe Lieberman’s comment on CNN that the U.S. needs the same ability to shut down the Internet as China.  So it looks like the current administration and Congress is benchmarking ourselves with the Peoples’ Republic of China.  God help us all. 

The Internet is a global network for commerce, information dissemination, and communications.  There may be a need during war to manage ingress and egress to the United States, but it should not be wholly shut down.  The NSA is better equipped to understand and manage this job than DHS.  The government should recall that open communications did more to bring down Communism than anything else we did during the Cold War.

Senator Lieberman’s legislation is ill conceived and needs to be killed immediately.  This is not a partisan issue, but one of freedom and openness.  Also, there must be checks placed on the application of such a power.  It must not be given unilaterally.  Contact your Senators and urge them not to support S.3480.  When will our industry and tech community realize that as a whole the government does not really understand the Internet and any attempt to control it will have disastrous effects?

Technorati Tags: Internet,eavesdropping,net neutrality,politics,president,telecom,wiretapping,terrorism

US Senate committee approves Internet close-down bill by vocal acclaim. Well, saves the fuss of a vote, doesn't it?

Leave it to a bunch of Brits to point out how we continue to circumvent our democratic system.  TelecomTV, along with many other publications, reported that the Senate has passed a bill that will allow the president to shut down the Internet in the United States for up to 120 days without any Congressional approval.  The passage of this bill occurred with no mention in the mainstream media, which is not surprising since they still view the Internet as a threat to their arcane business models.  The bill was passed with a simple voice vote despite protests from many civil libertarian groups and the fact that the majority of the public is against giving the president this level of control without any checks.  Once again it just proves that the current Administration and Congress are not in office to represent the American people and what is best for the economy.  I find it hypocritical that Joe Lieberman and Hillary Clinton publically denounce China for having that same control over the Internet that they are pushing through Congress.  Let’s hope that we can persuade the House not to pass their version of the bill.

Technorati Tags: net neutrality,EFF,politics,president,telecom

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

I’m Back

Okay, so it has been quite a while since I have last written anything on my blog.  I have lost most of my followers, but I was immersed in a start-up venture and did not have much free time to write.  It was another learning lesson where I gained some valuable experience that I will transfer into the next venture.

As many of you know, I have been intimately involved in driving fiber-based broadband networks most of my career.  Although I was always very close to the carrier in the implementation, I was always the vendor providing the equipment.  Still I gained a keen appreciation of the economics, business models, financing, architecture, operations, and services of those networks.  Now it is time for me to move to the other side, and be the person building those networks.

In the coming months, I will write articles describing the launching of this venture and the challenges that will be posed by Big Telecom.  Net Neutrality will be discussed from the perspective of who are the real friends of the consumer.  The resurrection of Palm and Sprint will be mentioned as well because I really enjoy my Palm Pre.

I hope that you choose to follow me on this journey and provide feedback and recommendations for topics.  I welcome your participation.  Thanks for sticking with me.

Technorati Tags: broadband,Sprint (S),Palm,telecom