Recently in broadband Category

Everyone has some plan to spend money for broadband now that the BTOP is out there.  Much of the broadband problem revolves around lack of fiber. There's no conduit and no fiber, so what do you do?

This one blog post explains the conduit and fiber access dilemma and how if it is not addresses will create problems down the road. 

Then you have a couple of Congresspeople pushing a bill to build conduit into any highway expenditures. Except the Highway Trust Fund is broke.

Maybe we need to stop looking at the federal government for broadband deployment and start looking at the business plan for after you sink all those assets in the ground. Need we forget that there is plenty of fiber in the ground from companies that have long been forgotten that lies unused (because no one knows where it is, where it goes or who owns it). 

At the end of the day, there needs to be a business plan that allows for sustainable broadband. Paying for the network usage and maintanence.

The USF contribution is now 12.9%!! WTH?  That is too much. And that doesn't include the companies that will take loans or grants under BTOP and go under (never to pay it back or deliver service). What will USF look like in 2 years?

Meanwhile, you have the NTCA saying that Google and content providers should pay into USF. Excuse me? They do pay into USF on transport billing. 

What do they think people want the broadband for? Email? Bell-heads need to figure out what happens when the system they love crashes. What happens when the Universal Service Fund collapses upon itself? Most ILEC's, including VZ and ATT, get millions from the fund.  Millions of my fee dollars go back to prop up an unsustainable system.

Tonight, Steve Case was on twitter tweeting, "Sad AOL went from being Internet pioneer/leader to also-ran. But still more there then most understand; hopeful can return to greatness." My replies were as follows: what they need are some young, hungry start-up execs, but what they will get is a stodgy exec that wants to cost cut and ride it out.

Why do I say that? Look at Embarq. Hesse had a couple months to pick a team and formulate a plan for the soon-to-be spun off Embarq. What did he do? Let's go with DSL and cost cutting. Blah! They needed that at Sprint not at Embarq. The next guy, Gerke, who took over last March, has been trying to be innovative with the eGo home phone. But EMBQ was already up for sale just trying to find a match.

Then you have EarthLink. Under Barry, it was trying everything: Muni Wi-Fi, BPL, MVNO, etc. He dies. The balls drop to the ground. The Board hires Rolla Hoff to come in, cost cut and try to find a buyer. No go. Just ride it out.

AOL has a wealth of brand recognition and content. It has active email accounts and IM users. My thoughts: go mobile with mobile IM app, definitely make the website and its content WAP based. Create MyAOL for the smartphone for $9.95 per month.

Also, I would have a premium email service that has extra value like saved address book, calendar and mobile access.

AOL has an advertising platform that I am not certain would spin-off, but if it did, there's cash and potential there, just like with the dial-up silo. And ADN, which it the AOL backbone is also something that could be leveraged.

I would even partner with ISP's to be the portal and content partner. Maybe the cable guys would like a deal like Yahoo! has with AT&T.

Anyway, there's plenty there to be worked (a social network too I think), but it wouldn't be that hard to find someone creative and passionate enough to run it. (Hey, Steve, my CV is on LinkedIn!)

Speaking with some industry channel folks today, we got to discussing Level3. Rob Powell says it best, "The Economy Takes a Big Bite Out of Level 3". This is a company with $6B in debt compared to $4B in revenue and negative free cash flow. Everyone wondered when the BK filing woud happen.

Level3 is as much at fault as Cogent and Hurricane Electric in leading the way to pricing underwater. Plus with operational challenges they aren't creating happy customers or agents. And with the new round of layoffs, not making happy employees either.

Level 3 has posted a profit only once since 1999. With pricing dropping and economy stalled, should Jim Crowe consider filing for bankruptcy? How do they even put a dent in the debt load with revenues dropping? Operational issues are still a factor which also act as a hurdle to sales. 

As an agent, I would lose revenue if they do file BK, but the truth is, I don't see how they get out from under the mountain of debt. 

I think that broadband has made some people "too connected". Between twitter, Facebook, LinkedIn, email, text messages, etc. When do you get a recess? But for those that can in fact walk away from the tech and live a normal life, broadband allows for increased productivity.

If you think I am making this up, Broadband Properties magazine has a nice article with supporting facts. BBP wrote about a study done in Iowa between one city that built out a FTTx network and the neighboring town that did not.  Fiber city wins in taxes, jobs, and home values in 3 years. Now, BBP is disclosing that, "A 2005 study in rural West Virginia found that firms with broadband were 14 to 17 percent more productive than firms of the same age without access to broadband."  (I guess you would have to define productive.)

We hear a lot about Virtual Office. But tele-work saves companies money.  BBP writes, "IBM, a third of whose employees work from home, reports annual savings of $110 million from telework. AT&T estimated $180 million yearly savings with about 30 percent of managers in virtual offices." Furthermore, "Study after study shows that telework saves money for the corporation. A survey last year by the Yankee Group found that "employees rated working from home the number one thing their employers could do to make them more productive."  Why? "About one-fifth of AT&T's documented savings came from reduced real estate costs. But beyond reducing the need for office space, telecommuting also reduces losses from employee absenteeism. With a telecommuting setup, employees can still do some work while they are at home sick or caring for a sick child. More importantly, they aren't tempted to come to the office while they are ill and spread germs to their coworkers."  Which, during a pandemic scare like swine and bird flus, would seem like Reason # 1 for Virtual Offices.  However, not every employee will flourish at home full-time. There is a social aspect to going to the office that many thrive on. Others need the supervision and the environmental pressure to get work done. Many managers do not have the skills to supervise virtual workers.

"Telecommuting is also an important part of a business continuity strategy." A distributed workforce means that your business can continue. And many employees stoire files locally not on the server, so you will have incidental back-ups. But if designed correctly with redundant data centers and full back-ups, your business would continue unabated in a disaster or pandemic.

Then there's the word that always comes up in a productivity talk: Collaboration. "Workers must now be prepared to collaborate with remote offices, suppliers and customers all across the globe."  Web 2.0, broadband, social networks, and VoIP have enabled this nexus point for businesses. America has a service economy, which means bricks-and-mortar offices aren't needed. This also means that even small businesses can compete for top talent anywhere in the world.

The final piece of the puzzle is Tele-Presence. "A new report by the Aberdeen Group, "Being in Two Places at Once," advises enterprises to look at video as a business tool, not just a communications tool." The BBP sidebar continues, "The collaboration promoted by telepresence makes companies more agile in the marketplace.....  Telepresence doesn't automatically lead to these kinds of productivity enhancements. Aberdeen found that companies were more likely to reap the benefits of telepresence when it became a prominent feature of their corporate culture." In other words, the technology is just a tool. It will be used or ignored depending on its availability, ease of use, and corporate role.

I'm seeing a lot of news in our space but not enough time to cover it all or analyze it, so here's just the headlines:

DPI (deep packet inspection) by cable being investigated by Congress. It scares the crap out of Boucher (ARS). Cox, Comcast, NebuAd  = new privacy law being debated (NYTimes).

Broadband download caps: in the news all week because apparently TWC said that without caps, they won't upgrade any more. Well, I have news for them: if they don't upgrade they will lose customers. Can you say FiOS, WiMAX, U-Verse, and now Wildblue is testing 18MB service.  ARS notes there are caps even when not explicit like TWC.  VZW and others have usage limits built into the acceptable usage policy.

Clearwire is being sued - class action status - for ETF (early termination fees) and network quality issues (can you say: false advertising on network performance?). (see here and my twitter pal @morisy).

And speaking of Caps (no, not hockey, how about Comcast battling it out with the former FCC chief's ruling that cable companies can only have a maximum of 30% of the entire market? If we applied that to telecom - and why shouldn't we? - we would have to break up Ma and Pa Bell (Verizon and AT&T). Please note: I am all for that.  Meanwhile Comcast's defense is Freedom of Speech.

Lastly, Facebook exec becomes new CEO at MySpace. Too little, too late? And Yahoo! is closing down GeoCities free hosting services, which it bought in 1999 for $3.5B. The analysis of the deal is on Fred Wilson's blog. Worthwhile read for start-ups about what VC deals look like.

As the FCC, USDA, and NTIA get set to disburse $7.2 billion in moneys to telecommunications companies for broadband deployment, penetration, and mapping along with E-Rate type services and tele-medicine, the FCC has to actually come up with a National Broadband Strategy.

"The American Recovery and Reinvestment Act charged the FCC with creating a plan to give all Americans access to broadband. The FCC began the effort, which will include a series of hearings and meetings, on Wednesday by asking for public comment. The FCC must present the plan to lawmakers by Feb. 17, 2010." [Infoweek]

One would have thought that former FCC Chairman Martin would have put a national policy in place, but all he had was a chalk board with "ideas" or guidelines that the telcos could ignore. Now acting FCC Chair Copps has been tasked and he takes this seriously.

"This commission has never, I believe, received a more serious charge than the one to spearhead development of a national broadband plan," FCC Chairman Michael Copps said in a statement Wednesday. [CircleID] 

The three agencies did  whirlwind tour of America to listen to experts and public opinion about Broadband availability. April 15th is the last day to comment on the NTIA Broadband Grant Program.  The NTIA does break down how their share of the money will be allocated and are working diligently to put in place a grant program for disbursement. The lynchpin is going to be how terms are defined. By terms, I mean broadband, unserved, and underserved.

The other sticking piint will be what companies are eligible to get grant. Certainly, the 20% matching funds will limit the smaller providers. However, the larger companies (like Verizon and TW Cable) are not happy with the Net Neutrality type of conditions on the money.

Back to the FCC: Copps could really use your input on the development of the National Broadband Plan. The FCC "Seeks public input on plan to ensure every American has access to broadband capability. (Dkt No 09-51). If you have thoughts on these elements, the Commission now seeks your comment:

• The most effective and efficient ways to ensure broadband access for all Americans
• Strategies for achieving affordability and maximum utilization of broadband infrastructure and services
• Evaluation of the status of broadband deployment, including the progress of related grant programs
• How to use broadband to advance consumer welfare, civic participation, public safety and homeland security, community development, health care delivery, energy independence and efficiency, education, worker training, private sector investment, entrepreneurial activity, job creation, and economic growth, and other national purposes.

This from Telephony online and the Convergence Consulting Group:

The latest in an annual study of the bundled services market shows US telecom service providers are losing wireline voice customers at a faster pace and being transformed in the process into companies that will look very different from their traditional telecom roots. The Battle for the American Couch Potato: Bundling, TV, Internet, Telephone, Wireless, released this week by the Convergence Consulting Group, shows maintaining a broadband connection is increasingly important to telecom providers, as wireline voice services become much less important.

If you look at the numbers in that PDF report and you still think that the QBPP is a viable option or that the last 400K businesses in the BellSouth region will somehow see the light and convert, I have some land for you in South Florida.

I have written about this in years past: the telcos have finally hit the wall. Everything is flat or down now: TV, wireline, cellular, and broadband. Granted most numbers are for residential, not business accounts which agents sell, but this will affect the entire telco business. Telco moved from the most profitable service - Voice - to Internet (the 2nd most profitable) - into TV, which is te least profitable. Why? Set-top boxes cost $400 per pop. How do you recoup that $5 per month rental? Most of the pricing goes straight to the content. You know, Disney and ESPN want their dough. Then there's the network upgrade for TV (and high-speed internet), which although VZT says is under $900 per home passed, the numbers I see are closer to $2000. Let's factor in the advertising. I get something almost everyday from VZ. At even $0.75 per mailer that's $15 per month. Times how many homes passed?  See how that may slow the telco engine? Plus MSO's moved from the least profitable service (TV) to the most profitable (Voice). And MSO's are getting into mobile data and maybe cellular voice with Sprint.

When you look at the summary from Convergence Consulting Group, it looks bleak.

• We estimate Cable's double play base of TV and Internet subscribers YE2008 at 61% (we forecast 79% YE2011). The RBOC/Telcos residential telephone to broadband overlap was 33% at YE2008 (we forecast 54% YE2011). Hence, it's easier for Cable to add voice customers off this overlap than for the RBOC/Telcos to add TV customers.
• 2008 RBOC/Telcos residential wireline telephone line loss was 10%.
• Wireless Substitution was responsible for about half the loss and Cable for the other half.
• We forecast Cable will have 23% of residential telephone subscribers by YE2009.
• We estimate wireless-only households at 20% at YE2008.
• Wireless annual subscriber additions continue to slow, 2008 saw 15.6M (2007 saw 22.4M) and we forecast 13.9M in 2009.
• Data continues to drive wireless ARPU growth (voice ARPU is declining). We forecast that price competition, which intensified in 2008, will continue to increase going forward.

Telcos are building out high-speed networks for TV and Internet, which is costing a bundle, at the same time that they are forklift upgrading the cellular networks to 4G. Have they even paid off the debt from constructing the 2.5G and 3G systems? Meanwhile, Charter is bankrupt and the rest of the MSO's have to upgrade to DOCSIS 3.0 while also constructing WiMAX networks. All while the ARPU is decreasing and the customer acquisition costs are increasing.

With these kinds of pressures on the RBOCs, imagine the pressure on the ILECs without a cellular division like QWEST, Embarq, Windstream, Frontier and Fairpoint. Landline losses that cannot be off-set by TV or cellular revenues. Yikes! Basically, the EarthLink strategy right? Cost cutting as the primary executive decision. Right out the knitting until its over.

Where do you think Agents come into that play? With losses, an easy cost cutting measure is to stop paying agent commissions. Think about your Channel Partners in 2009.

CircleID has the story of ILECs and Cable companies once again fighting municipalities, like BellSouth and Cox fought LUS.

With President Obama determined to promote the development of open network telecommunications and smart grid networks we can expect the incumbents to step up their legal battles to stop this from happening.

In relation to the recent $7 billion stimulus package AT&T made a statement that it didn't need the money, but that it would launch a defensive campaign against any competitors using the money to encroach on its territory.

To me, it's anti-American for the Duopoly to fight the city. It's more taxpayer money that could be used for something useful that gets used to fight against two enemies of progress and innovation. Should Lafayette taxpayers have had to spend $500,000 in fees to fight the Duopoly?

There is case after case where the city or town with broadband including FTTB (fiber-to-the-business) has created jobs and added tax base while increasing home values. When the duopoly sues to stop broadband deployment, while crying that it is unfair competition, look at the profit statements of these companies. And look at what it is costing your community.

Ars technica doesn't believe the articles in CNET and AOL-Tech about people switching back to dial-up. Well, info from dial-up aggregators indicate that dial-up is on the uptick. As some angry comments mention not everyone needs broadband.

Last year we saw the plateau of broadband subscriber numbers. This year we are seeing an increase in dial-up maybe due to the economic situation we face in the US. Certainly, AOL, Earthlink and United Online are showing revenue increases in their financial statements.

If there was a 10% drop of broadband, would that affect VoIP? Unlikely. It would affect Vonage and 8x8 and other stand-alone VoIP players, but it wouldn't have any effect on the Business VoIP businesses nor on SAAS.

Also, bundling means that the consumer probably doesn't know the pricing of the high speed internet component.

Certainly this has to be a consideration for the RUS and NTIA. What if everyone who wants to live online has broadband? What if the $7B results in just a 10% increase in broadband? Will that justify the $7B? Maybe. If the 10% are all business ventures of one kind or another - eBay, Amazon, affiliates, SOHO, freelancers, tele-workers. 

Acting FCC chief Michael Copps celebrated the 75th anniversary of both the FCC and the Communications Act of 1934 that birthed the agency. In a speech, Copps said, "How do we take this 75 year old agency, charged with implementing our formative communications law, and make sure it is up to the challenges of the 21st century? Born in the world of primitive radio sets, raised on plain old telephone service, now trying to manage high-speed broadband and orbiting satellites, can we make it an agency for all seasons? I'm glad you're thinking about this."

After that Copps kind of digs at Martin's feral grasp on the communications and free flow of information. (In other words, there was none).

I do think it's time for our agency to take a good hard look at our mission. Indeed, I think every independent agency ought to be required to do this. I have always believed that our government's independent regulatory agencies were set up to serve the public interest. But many of them, my own included, have sometimes strayed-- strayed pretty far -- from that purpose. At the FCC -- and I single out no specific regime or individual -- our processes over time have become opaque rather than transparent. Too often we spend our days refereeing disputes between powerful interests, with consumers and other non-traditional stakeholders pretty much left outside the loop of discussion and decision. Even the public record is difficult for the public to access.
The new Administration's Open Government Initiative is music to my ears and offers a wonderful opportunity to make this happen. At this 75th Anniversary, we should be revisiting the vows and obligations we took back at the beginning. What I'm talking about today is not rocket science. To a large degree, it's just having our goals clear in our mind, and then creating the process and management to achieve them in an open and transparent way. Or, as my old boss, the legendary Fritz Hollings, used to say: "On the way through life make this your goal--keep your eye on the doughnut and not the hole."
"...the Commission has just been charged with a truly important job. With enactment of the Stimulus bill, we are called upon by Congress and our new President to develop a national strategy to get high-speed, opportunity-creating broadband out to all our citizens. This is a very big deal -- the Commission has seldom if ever had a greater summons to action.... How we do on this will have a lot to do with how we fare in future years -- both the country and the Commission." [at least He gets this.]
We must start thinking more rigorously -- and I mean all of us -- about the profound impact of so much of our communications moving to the Internet in the years ahead. How to keep that Internet open and dynamic is an important part of this dialogue. But so is how to ensure that as the Internet becomes our primary vehicle for communicating with one another, it protects the public interest and informs the civic dialogue that America depends upon for its democracy? That's a huge question."