Saturday, November 22, 2014

There May Be Hope Yet

2014-07-14-opendoorbluesky1Over the past couple of weeks, I have been encouraged that there are more people discussing open-access infrastructure than before. Maybe it is because they have started to read Title II and realize that it is not the panacea once thought. By definition more government intervention/regulation means less freedom, and the hundreds of pages contained in the Telecommunications Act of 1934 is no exception. Title II is jam packed with regulations designed around telephone service in the 1930’s when we were under the control of the Bell System. Needless to say that it will control every aspect of our Internet services. The Internet was founded based on a loose federation of networks survivable if any one link disappears. It was meant so any node could reach and freely exchange information with another node. Even the technical aspects that the Internet was designed were not called standards or regulations, they are called Request for Comment that implies they are fluid and optional. Imposing laws and regulations on the Internet is contrary to its founding principles.

The FCC has indicated that if they impose Title II regulation, it will chose which parts to enforce. If you expect the FCC to exercise any forbearance of any section, you have not been living in America long. Bureaucracies live to grow and expand their power. Eventually piece-by-piece the FCC will implement parts of Title II over the years. Also included in Title II is the allowance of paid prioritization which is a no no for many net neutrality wonks. People that support this heavy handed move either are ignorant of what it will really means or have ulterior motives such as lobbying to influence control of the Internet for their business advantage (i.e. crony capitalism).

Thankfully some people are waking up and realizing what regulation will really mean to the Internet, and they realize that competition is the real solution to the yet to be encountered net neutrality issue. Karl Bode wrote an article yesterday on Techdirt that concluded that open-access broadband is a superior choice to regulation. Leo Laporte had a well-balanced panel discussion about net neutrality on TWiT that touched on the fact that competition would be superior to regulation. My neighbor to the north, Brett Glass, delivered intelligent arguments against regulation and for open-access on TWiT. These intelligent and technical discussions are ones that we should have had two years ago when net neutrality reared its ugly head. Broadband competition can be achieved if we remove the barriers that are preventing it from happening.

Fortunately there are solutions that can be adopted that eliminate the need for heavy-handed FCC regulation: open-access fiber infrastructure. I am not discounting other means of access such as wireless, but there are impediments to wireless access as well such as spectrum allocation which is also under FCC control. I have already extolled the virtues of open-access in other posts so I will refrain from being repetitive. Suffice it to say that there are a few different models for open-access. Network unbundling is the least favorite of mine but in a pinch that will work. Most of the incumbents don’t have fiber that deep into the network to make unbundling an option. We need to build fiber to every home and well as provide spectrum to do it as well. The FCC should be working to support those efforts and eliminate barriers for new and existing entrants that want to provide infrastructure. Working on some convoluted semi-regulation scheme is a fools-errand that will only lead to lawsuits and more complaining. Let’s work on providing a competitive broadband environment instead.

Sunday, October 12, 2014

Avoiding the Pitfalls of Municipal Broadband Networks

I just posted an article on municipal broadband from Forbes that is one of many that points out the pitfalls of municipal broadband. Lest we forget all of the muni-WiFi follies of the last decade. It is not the purpose of government to compete with free enterprise in a capitalist economy. Government should only step in when private enterprise will not or cannot financially serve a market.

This article touches on the fact that fiber-based broadband networks are extremely costly to build. That last-mile access is the most expensive because it is the portion of the network least shared. Add to it the fact that we have a much lower housing density in the United States than in most countries, and you have added even more to the cost of providing service to a single home. Now consider the fact that the electronics that power the network will be replaced typically every 5 years to keep up with the demand for more services and bandwidth and you have offset most of the benefits of the 40-50 year life-cycle of the fiber. Do not forget the pressure to lower cost due to competition and the increasing costs for content. Now maybe you can see why there are only two providers at best in each market.

The business case for broadband services (i.e. voice, video, and data) works for at most two providers if they build and operate their own networks. Most areas of the United States are currently in this situation. A duopoly does not promote competition; hence, the desire for a third player. Google has chosen to stir up the pot in several markets by competing with the incumbents but their business objective is to use these captive eye-balls to push more Google advertising. I personally applaud Google for taking a long-term and different approach to provide true competition in some markets. The down side to what they are doing could be the "walled gardens" that so many net-neutrality wonks are afraid with managed services on the Internet. What's to prevent Facebook from doing the same as Google? Why not? The problem is if Facebook and Google start limiting content to competing services. It could happen. Remember AOL and CompuServe?

These fears and the fact that Google has only announced a limited number of markets it is entering. In Google's defense what is limiting the speed of their penetration is the byzantine regulatory environment that they have to navigate. Many cities and towns do not want to wait for Google or someone else to come so they have turned to government to fill in where private enterprise will not. A persuasive argument could be made for wanting municipal broadband which citizens of Chatanooga and around Salt Lake City have bought.

Cities have not considered out-of-the-box solutions such as they lay and manage the fiber infrastructure and allow service providers to lease the fiber access from a centralized location to the subscribers' home. Locales in Europe and Asia have successfully implemented this model. Where they have open-access broadband infrastructure, competition has flourished. I have challenged several municipalities to try open-access but they had employees more interested in building and running their own little networks. Civic leaders need to reach beyond their own bureaucrats or desire for bigger government and look for solutions that will work for the economic growth of their cities.

Sunday, April 27, 2014

Why Do We Need the F.C.C. Involved in the Internet?

Apparently my last article hit a nerve with a few people which is strange because it was only meant to enlighten people as to the real issues concerning traffic management and peering to stimulate competition for over-the-top (OTT) providers.  I have to say that at stake here is the exact issue that I have personally encountered.  My lowly blog isn’t backed by any major media outlets or elite-funded NGO, but it reached the world and struck a nerve.  I have over 25 years experience as an engineer in the telecommunications industry developing and selling network elements.  I am not a lawyer, politician, or lobbyist who want to call the shots in the industry, but through the power of the Internet my voice has been heard.  The Internet gives those of us with real knowledge a way to be heard (and those without knowledge too). 

There are people our society who don’t want those voices to be heard or at least controlled.  They purport to champion freedom and equality yet their agenda is just the opposite.  I have no agenda other than supporting the free market and everyone’s ability to be successful on their own terms.  So what does this all have to do with Net Neutrality?  The ability for all of us with a voice to be heard are under attack by people purporting supporting net neutrality.  Let me elaborate.

In my last article, I applauded the common sense rules proposed by the F.C.C. because they allow OTT providers to compete against incumbents effectively.  I do not have anything against the incumbent carriers; I use to be part of a couple of them.  I believe that competition benefits not only the consumers, but the entrepreneurs and incumbents as well.  It is a win-win for everyone except for those that end up losing control and power due to free-markets.  I believe that the F.C.C. are proposing rules that support the free-market and entrepreneurship.  To me this is a technical argument with business implications; not a political discussion.  That is where I got it wrong.

Being an engineer by trade, I always believe that a sound technical solution and logic will prevail.  Also, I believe that people understand that competition and freedom benefit all.  It appears that with even though I have age, I am still a bit naive.  My article received some negative comments by people and even NGO that supposedly support an open Internet.  They didn’t like the fact that I was supporting these proposed rules.  There is a huge public misinformation campaign going on across the Internet under the guise that the F.C.C.’s proposed rules will kill the Internet and free-speech.  At first I believed that this effort was based on a lack of knowledge of the issues at hand, but now I realize that the people behind this campaign know exactly what is going on.  They are using the general lack of knowledge by the general public on the topic to scare them into believing that these rules will benefit the incumbents and kill the Internet, and the tech media in all in on it with them.  Their real motivation is to gain greater governmental control of the Internet so they can determine who says and does what.  These groups are disingenuous in their motivations.

This is why the F.C.C. or any governmental organization does not need to be involved in the Internet.  Government involvement always leads to manipulation by special interests and loss of freedom.  The groups purporting to protect the Internet actually will do the opposite.  There are FCC staff members that are founders of groups that are campaigning against these rules under the guise of supporting net neutrality.  Unfortunately their disinformation campaign is very effective.  We do not need the F.C.C. to further regulate and interfere in the Internet although these rules do make sense.  The Internet should remain open for all to speak freely and compete effectively whether an incumbent or OTT service provider.  Please do not be fooled into supporting a cause because it sounds like the right thing to support.  Read and fully understand both sides of the argument, and draw your own conclusion.  Things aren’t always what they seem.

Friday, April 25, 2014

Common Sense at the F.C.C.

Federal Communications Chairman Thomas Wheeler (Brian Fung/The Washington Post)

After a few months of comments by the Chairman of the F.C.C., Thomas Wheeler, that the Commission would consider allowing companies to pay for special arrangements for access to their customers.  They will propose a new set of rules in their May meeting that will allow content providers to pay broadband carriers for better access to customers.  In this statement they included another proposed rule that would prevent any carrier from inhibiting, limiting, or denying access that would limit the openness of the Internet.  The Commission was not specific on how the details of this so-called fast lane could be implemented, but most likely it will be increased bandwidth at peering points, improved content caching, and traffic prioritization (i.e. Quality of Service).  The F.C.C. was specific in stating that broadband providers “may not act in a commercially unreasonable manner to harm the Internet, including favoring the traffic from an affiliated entity.”

The F.C.C.’s action is based on a January decision by the U.S. Court of Appeals for the District of Columba Circuit that struck down the FCC’s 2010 net neutrality rules.  This still left the commission with the authority under the Telecommunications Act of 1996 to regulate broadband services.  The F.C.C. would still have to look at each agreement on a case-by-case basis as required by the D.C. court.  Also they will act on any broadband company that engages in harmful conduct that threaten the openness of the Internet.

The F.C.C. has properly covered its’ bases here by preserving the value of the Internet that allows any device to freely connect to any other device, but they also wisely recognize that all bits are NOT created equal.  Since the arrival of Thomas Wheeler at the commission, the analysis and reports from the staff engineers have triumphed over the politics of the bureaucrats and outsiders.  They realize that best-effort Internet access is not sufficient to promote true content competition.

Since divestiture we have strived for a competitive telecommunications market in this country, but we have been unable to achieve it because the business case is untenable for each service provider to build high bandwidth fiber networks to homes and small businesses.  It is affordable to run fiber to business customers that spend thousands of dollars a month on services which is why we have approximately 40% of all businesses now served by fiber.  For the residential subscriber that spends less that $50 per month the cost is prohibitive. This fact is why we now have triple-play services offered by a duopoly with an ARPU over $100 per month offered by the incumbent broadband carriers.  Service providers need at least a 40% market share to provide a reasonable ROI to build a network which is why you don’t see small start-ups building alternative networks.  Investors are smart enough to realize that it takes too much capital to build these networks and it is a losing proposition to take on the incumbents.

Fledgeling startups like Vonage or Netflix could never afford to build their own network, but they can leverage the Internet to provide competing services to the incumbent carriers.  The incumbent carriers control the quality of their services by utilizing bandwidth outside of their Internet service to deliver their voice and video services.  Over-the-top (OTT) service providers do not have any ability to control the quality of their services since currently the Internet is a best-effort where all bits are created equal.  Before delay and jitter critical services like voice and video traversed the Internet, best-effort was good enough because no one really tell if their web page or e-mail was arriving a few milliseconds later than it did last time. Slow performance was usually related to the last-mile access bandwidth.  Throw a few more Mbit/s at a customer and the problem was gone. 

Now that video dominates the Internet, the backbone frequently becomes saturated at peering points and access;  thereby, affecting all traffic.  Customers of OTT companies are complaining that the quality of the service is poor, and they eventually go back to the incumbent service provider.  The OTT loses while the incumbent wins.  The customer loses too because there is less competition in the market.

The conclusion is that best-effort packet delivery is not good enough for services like voice and video.  Businesses have known that for over a decade which is why they purchased managed Ethernet services where they can prioritize their voice traffic over video over web surfing and e-mail.  There are two standards by which traffic can be prioritized end-to-end and several implementation agreements that the industry uses for interoperability.  These same mechanisms can be applied to the Internet to level the playing field for OTT service providers.

The F.C.C. is smart to recognize that true service provider competition will take a few more decades to come to the residential market.  Of course open-access municipal broadband could deliver true competition as I have written about many times, but allowing content providers to negotiate special peering arrangements and traffic prioritization will offer consumers a real choice in services other than that forced upon them by the duopolies.  OTT service providers like Netflix, Hulu+, Amazon, Google, Vonage, etc. will soon be able to deliver the same quality of service as the incumbent carriers at competitive prices.

Unfortunately this common sense technical solution to enable capitalism has been extremely politicized.  Many of the articles written over the past few months are vehemently against this proposed change in policy, but their fears are fueled by their ignorance and vested interests.  Surprisingly The New York Times and PC World each wrote very good and non-biased articles on today’s announcement that accurately presented the F.C.C.’s proposed new rules.  The usual tripe was spewed by outlets such as The Verge, NPR, The L.A. Times, and CBS’ own CNET decrying the end of the Internet and quoting any number of Soros funded front groups.

Their arguments are based on the egalitarian philosophy that all bits should be treated equal.  They trot out anti-capitalist rhetoric and class-warfare arguments.  What they do not realize that while they think they are sticking up for the little-guy (the consumer and OTT providers) they are actually supporting the big guy (the incumbent).  Maybe I am not giving them enough credit and their support is intentional. 

A prime example of the the misinformation that is propagated was on today’s The 404 Show hosted by CNET.  Bridget Carey (@BridgetCarey) incorrectly states that the little guy cannot afford to pay the toll to Comcast that the large companies could easily pay.  Well Netflix was and still is a little guy compared to companies like Comcast, but they charge an order of magnitude less than the big guy so adding a couple of bucks a month for superior quality of service insignificantly impacts their value.  She leaps to the conclusion with the support of her cohort Jeff Bakalar (@JeffBakalar) that there will be an Internet ghetto for those companies and people that cannot afford to pay. What they are missing is that only companies with time-sensitive content will want to pay for prioritization, and that companies just serving up web pages like Amazon, Facebook, LinkedIn, etc. can still survive on a best-effort service.  Jeff believes that the Internet should be free and that all service and content providers are inherently evil.  Their arguments were thinly veiled slams at Comcast which is no surprise since they are paid by Viacom/CBS.  This is the problem when you have journalism majors applying their political philosophies to the technical domain.  They certainly should not be issued a journalism license.

The problem is that arguments like these will be presented as opposition to the common sense rules proposed by the F.C.C.  They will be guided by emotions and fear and not facts which seems to dominate today’s political domain.  Thomas Wheeler is the first Commissioner in more than a decade that actually understands the industry that he is attempting to regulate.  Let’s hope that the rest of the Commission understands reason so we can have a truly competitive content market.