Recently in broadband Category

I'm in Atlanta speaking at the Microcorp One-on-One event about Trends in 2010. The three trends that I see for agents are the following: Applications, Quality of Service (QOS), and Mobile Broadband (MBB). But they are kind of inter-dependent. Ubiquious broadband leads to innovative uses and applications. Applications like on smartphones lead to a greater need for mobile broadband networks.

Mobile Broadband is growing. Smartphones are replacing cellular handsets. Social networks are moving to mobile devices so people can Facebook and Tweet. RIM's Blackberry brought us mobile email, but it is a standard on many phones now. Netbooks and data cards are presenting the US cellular companies with some fits. They like the additional revenue, but have to keep dropping billions on the network backhaul and capacity upgrades. (And another $45B+ on the upgrade to LTE/4G).

All this means that there are new uses for the mobile broadband, like the Kindle. Sprint's Wispernet allows Amazon to instantly download books, magazines, newspapers and blogs to Kindle devices. Machine-to-machine devices can utilize the cellular data network to provide connectivity for ATM machines, security cameras, and a host of other devices that need to communicate with a NOC or remote server.

All of this is a cycle of applications driving network usage. Ubiquious broadband driving more apps. It's one reason that the FCC needs to maintain open network and Net Neutrality guidelines in place.

Applications - like email, databases, office suites, CRM - are creating a demand for managed services, such as an outsourced IT department. In addition, businesses are looking at the Cloud - moving applications to a data center for redundancy, security, and availability - as a way to save money and stop worrying about the IT department. With applications being delivered in the Cloud or by way of SAAS or even Virtualization, Agents have a chance to offer more than just Internet Access or WAN circuits, like private line. Agents can sell Layer 2 to Layer 7 - pipe to apps. It's a way to get deeper into accounts. It's a way to offer a complete solution. It's a way to deliver on the label of Trusted Advisor.

Applications are driving sales. Voice and email are just the primary apps. Business critical data is also driving mobile broadband. Ubiquious broadband is allowing for innovative ways of accessing data. The problem becomes reliable access to the data. That's where Quality of Service comes in. QOS on the WAN is what is needed to access data reliably and quickly. The MPLS trigger is the Class of Service reliability and prioritization of data over the network. This is paramount for businesses running a truly converged network with video, database, VoIP, email and Internet riding the same pipes. WAN Optimization is selling due to the cost containment and the performance enhancement. Big bang for the buck.

So the agents can sell mobile broadband, applications via Virtualization or SAAS, and add QOS to the WAN to provide reliable access to these business critical data.

The WSJ has an article titled, "AT&T, Verizon Still Pouring Billions Into Mobile Networks". It notes that cellcos have already spent billions upgrading their networks to 2.5G and 3G -- and now will spend billions more on 4G.

In addition, both companies are also dumping billions into International routes, domestic broadband networks, and their respective triple play networks, U-Verse and FiOS. 

On top of that, both companies have been acquiring companies, like Alltel and Centennial. Ummm, how are they not toppled over in debt? 

These companies have felt intense pricing pressure from cable companies as well as T-Mobile and Sprint. Customer Acquisition and Retention costs have to be high, even as ARPU remains about the same. Debt costs more right now. Wireline income has been declining for at least 4 years.

Where's the money coming from?

Looks like the latest testimony says that there will only be 2 rounds of funding under the Broadband Stimulus act.

I talk with many CLEC's and ISP's that are looking at the BTOP and BIP programs to see if there is opportunity for them. As I said in the podcast with Occam Networks, most of the funds are earmarked for companies already collecting USF funds. Why do I think that? Because it is a safe bet and politics is about safe bets.

I'm attending Tech Data's Technology Solutions Tour. This morning started with TD SVP Pete Peterson discussing how to translate the stimulus spending into technology opportunity. The ARRA (aka the Stimulus bill) will spend about $787B, of which, according to the counter at Recovery.gov, over $75B has been spent. One percent of the ARRA is the Broadband Stimulus spend at $7.2B spread over 3 agencies and 3 different awards. Did you know that $50-60B of the ARRA is earmarked for IT Spending for Education, Healthcare, Energy and Government? That money will go for smart grid, green IT, virtualization, EMR (electronic medical records), video surveillance, Business Intelligience tools and more. It's a bigger pie than BTOP/BIP.

Did you know that the largest spender right now is Uncle Sam? Or as many people like to say - the taxpayer.

Anyway, Peterson told us that some cities and at least one state (Cali) does not allow the deployment of servers on-premise. It's a Green initiative and they are pushing Hosted servers or virtualization. I haven't heard that but it certainly interesting. (Also of note: No on has said Cloud since I have been here).

Another stat: there are 1 million doctor offices. Only 8% have EMR. The government wants it closer to 90%. There are funds and tax credits for that. Funny story: Nortel was pitching their Healthcare Management Programs yesterday, but didn't want to discuss the Bankruptcy nor the way the company is being sold off in slices. Um, tough to sell a solution that may not be there by the time the deal closes. When a VAR or Agent presents a solution, they are lending their reputation out to that vendor. If that vendor fails to deliver, it's a black eye for the VAR/Agent. (Psst: our most valuable asset is our reputation).

B.I. tools are important. Why? It adds productivity and efficiency to the organization that can correctly deploy and integrate it. (It's challenging).

Education will be spending on Broadband, IT infrastructure, Video surveillance, and digital signage. Go get you some From Tech Data, of course. They have SME's (subject matter experts), product specialists, marketing funds and other assistance available to help you take advantage of the current ARRA opportunities. (Including Wireless and other communications infrastructure projects).

Peterson concluded with a few insights:

- This is a Call to Action for service providers and VAR's
- (It is unprecedented in my lifetime and we likely won't see this again. It is a magnitude larger than Y2K and closer to what the US spent on NASA going to the Moon in the 60's).
- Recovery.gov is a great resource.
- Great companies are made in tough times.
- The flexible survive.

NOFA Reactions

July 16, 2009
Speakers: Peter Radizeski, Marketing and Sales Consultant at RAD-INFO, Inc. and  Juan Vela, Occam Networks

Juan and Peter discuss their reactions to the BIP/BTOP NOFA in the second in our series of Broadband Stimulus related podcasts.  (The NOFA is the notice of funds availability for the Broadband Stimulus package. BTOP and BIP are separate programs that both the RUS and the NTIA are in charge of. Each agency will be administering grants and loans for delivery of broadband to unserved and underserved areas).

Click here to listen.

If you have been even slightly following the Broadband Stimulus program, you will notice that there is an increasing amount of acronyms to keep track of - ARRA, BIP, BTOP, etc. Luckily, here's a glossary from the Knight Center of Digital Excellence.

The key words to know are Unserved and Underserved because that is where the money is earmarked to go. But you have to decide if you will apply for the RUS Broadband Initiatives Program (BIP) for broadband projects in rural areas or for the NTIA Broadband Technology Opportunities Program (BTOP) for broadband projects in unserved and underserved areas of the United States.

Each program has separate criteria. On a soon to be released podcast with Occam Networks, we discussed much of this. (I'll post it as soon as it is released). How you have to be very specific in what you can do, will do, and how you will do it to satisfy the requirements:

1.  Are you "shovel ready"? These funds won't be granted until December; meanwhile the industry has been holding it's breath and not doing much. The economy really needs the bang that the first phase will bring. On the other hand, you are granted the money but don't actually get it until the paperwork is done.
2. Are you creating jobs?
3. Are you bridging that elusive Digital Divide? If so, how will you sustain the network after its built? The funds only go towards CAPEX - capital expenditures of the network elements - it does not go for installation, maintenance, labor, or operating expenses.
4. How are you going to keep the sharks out? Already people are positioning to skim as much money off this funding as possible to line their pockets. For many companies, the accounting procedures required for federal money and the strings attached will be overwhelming. It will result in many getting federal room and board for a while. Hoepfully, it will also catch the sharks and put them next to former politicians on the federal golf course at Coleman.

The agencies are holding regional meetings to spell all this out but the window of opportunity will close soon, so  catch up.

Stacey at GigaOm writes about the data problem for cellular companies. On the one hand, data revenue of $40 to $60 more per month from an account seems pretty good; on the other hand, 70% of the traffic on a tower is from data cards (about 3-4% of subscribers). This seems like they should have known this.

Voice calls take up less than 10K per stream. 3G data takes up to 3MB. AT&T sees how much bandwidth an iPhone pulls off its network (read: a lot!). So are they just getting us addicted to a flat rate service and smartphone access only to charge us per byte later? It would seem so.

Once again they designed a voice network instead of a data network. (Remember the busy signals on dial-up?) And misjudged how people would use it.

With the workforce becoming more mobile and virtual each quarter, cellular data will increase. As households drop landlines, cellular usage will climb. I hope they have a plan for this.

Like terrestrial broadband not having a good enough business model for the network operators, it looks like cellular broadband will have to be re-tooled -- now that folks are addicted to 24/7 unlimited access.

In a recent conversation with a buddy of mine at a state PUC, we were discussing small rural ILEC's. Many are cash strapped which makes providing advanced services difficult - no cash to buy a head-end (half a million or more). 

RLEC's can get RUS loans for the upgrade to fiber, but OPEX and labor for installation are not covered by the loan. That creates a quandry.

Why are the RLEC's cash strapped? They get all that Universal Service funding (both state and federal). But they are losing the best clients to cellular and satellite (and in some cases cable).

I have a couple of clients that are small MSO's who are in a similar situation. They are losing customers to DirecTV.  It costs big money to replace an MSO (cable) system in the ground. (Verizon started at $2000 per home passed and supposedly has it down to under $900 per home passed). There are other costs besides the fiber, optics, conduit and labor - the head-end, the softswitch for Voice, and the set-top boxes. The set-top boxes used to cost $400 each but supposedly are dropping towards sub-$200. But at $5 per month rental fee, even the $200 can't be capitalized. 

With Verizon dumping its unprofitable landline regions onto companies that have no hope of deploying broadband to their regions, the question becomes what are we to do about American Broadband Deployment in Rural America?

At some point, if you want really fast broadband, you will have to move to an area with it.  However, with our current housing situation, how will you do that? If you live in an area without broadband, your economic options are slim. Communities with fiber add more jobs, have higher income, a broader tax base - than communities without fiber. 

My friend says that maybe Broadband isn't a right for everyone. It's just too expensive. Even the $7.2B BTOP funding is a drop in the bucket when you spread it out to 50 states. Can we bridge that Digital Divide?

We talked about how the FCC policy has not helped to further broadband deployment in the US in the last 8 years. Revenues at the RBOC's go up, but we haven't done anything about the Tipping Point of the PSTN. At what point does the PSTN become endangered because too many ILEC's can afford to keep it working? Or the disparate VoIP Providers and Cable Companies can't deliver dependable E-911 or inter-connect efficiently. (Inter-Carrier Compensation Reform anyone?)

The new FCC as well as the RUS and NTIA are managing a lot of funds. USF contribution factor is now 12.9%, but the contributions are dropping as landlines decline. So the thing they need to look at is Going forward what do we do to preserve E-911 service in America as well as spread the availability of true Broadband for economic diversity.
 

BellSouth and Cox fought Lafayette (LA) over the municipal fiber project (LUS) to the  tune of $500,000 in legal fees. Who do you think paid those fees? Taxpayers and consumers.

Then there's the Embarq, TimeWarner Cable fight over the Wilson (NC) municipal fiber project called Greenlight. It was a $28M project. Not for nothing, but couldn't TWC or Embarq have ponied up that cash and delivered FTTH instead of battling it in the legal system?
 
So when the Duopoly doesn't deliver broadband and the government takes matters into its own hands, they get sued. Why? The duopoly can't compete with a government-owned ISP. Instead, they lobby heavy, get the lawyers involved, and start spreading the cash to have laws made that prevent Americans from getting reasonably priced super-fast Internet Access.

Now, the Duopoly spends millions - literally, hundreds of millions - lobbying and contributing to politicians each year. Why not take that money and build FTTH instead? 

I have another suggestion:  Eminent domain. Eminent domain seems to work for cities that want to take over waterfront property for developers. How is having a network that you won't upgrade and deliver your promises on any different? When the Duopoly sues a city over a Muni Broadband project, why can't the city just counter-sue under eminent domain and take the network assets over?

Occam Networks has a pretty good blog. Today's topic is usage based pricing. I disagree with the usage based pricing.

As I see it, we have had (mainly telco) rate hikes since 1999 on the promise of Broadband. In fact, in Penn. Verizon promised DS3 to the home. Where is that?

ISP's have had 10 years to figure this out. Ten years to upgrade the networks. Ten years of rate hikes and regulatory wins.

Telco ISP's don't want to figure it out, because they are minutes-munching Bell-Heads and thinking like a Net-Head is too much of a change. Switched versus packet.

MSO's don't want to cannibalize their video revenues. Unlimited gets in the way of VOD, PPV, and premium channels. Cable really wants usage based pricing. The Network DVR is supposed to keep some video revenue from sliding to the Internet, especially for less Net-savvy consumers.

How is it these same ILEC's that desire usage based pricing are now looking to deliver video and multi-media to a cellular handset? Their cell networks are more expensive, bandwidth limited, and not up to this challenge. But they don't want to deliver this same service terrestrially? Bell-heads! Go figure.

When they live up to their rate hike promises and merger conditions, they can re-examine the usage based pricing. Till then shut up and give me my broadband.

To quote John Stewart: You are hurting America. Other countries have faster, cheaper broadband - and are taking our jobs.