Recently in fiber Category

It's funny to watch Ma Bell fight Google, because Bell isn't used to fighting another company that also has billions of dollars - and millions of users. No CLEC was ever this big - nor cable company. And Google is kind of both -- or at least that is what Ma Bell is crying to the FCC about. 

Google has more video on YouTube than any DVR or cable company can match currently. Google Voice is the online VoIP service many people wish that an innovative telecommunications services company would have delivered years ago.  But Ma Bell isn't innovative. heck, they don't even own the Labs any more - that went out with Lucent.

PC World has some coverage of the fight. The LA Times and 399 other news sources wrote about the complaint. Many in the blogosphere think that this is just AT&T's way to deflect the FCC from pinning them to the ground and perhaps delay a Network Neutrality NOI.  

Google responded on their blog quickly. 

Note to Randall and Crazy Ivan:  Consumers just want you to be a fat pipe to the inter-webs. Not the Weight Watchers version you currently offer and over-charge for. A 10MB super-info-highway. Get out of the way! We want to choose our own content, apps, and Layer 7 providers.  You had your chance, but as always greed kept you from doing anything. Heck, you are closing the doors on CallVantage on Oct. 20. And that was such a great service. (Oops, did I just say that?) You could have givrn us Google Voice just like you could have given America fiber-to-the-home in 2000 when you promised many states you would if they would let you have a rate hike. 

Keep pouring those billions into TV and 4G. If Sprint and T-Mobile could get out of their own way, they would own your ass already.

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?

As stated previously, as telcos spend billions to deliver TelcoTV to the masses, the masses decided they don't want it.

The cellular companies want to deliver some kind of TV content exclusively to their uses. This makes no sense because these guys bitch a storm when you actually use your EVDO/High speed Internet card, but streaming video to my handset is fine? Schizophrenic much?

Also, these same companies - ATT and VZW - are building out telco TV networks and 4G networks. Can you say redundant billions?

Why they didn't just stick with the satellite TV partnership instead of their current play is beyond me. On top of all this fiber and VDSL deployment, there are head-ends, set-top boxes, ONT's, and disappointed customers everywhere. Plus they have to fight with cable for access rights to sports networks. Oh, and DirecTV and DISH have sweet DVR software. Others not so much.

But does it matter? No. Because people are moving to the Internet as their home entertainment network. Hulu, NetFlix, DirecTV, Joost, and so much more.

So it becomes a fight to be the best dumb pipe to the home - at an ever increasing customer acquisition cost due to a flat market that requires taking customers from each other. 

Here's the latest Report: TV Networks Should Be Afraid -- Very Afraid -- of Hulu. Even the TV Networks are in trouble. They will need exclusive content to keep viewers, because Content is still King.

I've been trying to order Dry Fiber out of the AT&T Southeast FCC Tariff # 1 for over a month.

The Service Inquiry used to be manual paper - now it is a system called NSS. No idea how to access that system. 

I tried to order it through the Channel. It is not on the commission schedule so my Channel Manager wrote me, "We need to concentrate on products we get paid for, dry fiber is not one of those products."  So nevermind helping the customer.  Or sell product and bring in some revenue. Or that the customer has a huge spend with AT&T already. (Or that I just need an SI done - nothing more).

Product Management indicated that AT&T is no longer offering the Dry Fiber product. "The product was removed once the merger between AT&T & Bellsouth took place." But that is erroneous as the following filings will prove.

BellSouth filed to discontinue Dry Fiber service in July 2007 (see letter PDF here). Then AT&T filed with the FCC to withdraw its Section 63.71 application seeking to discontinue its provision of Dry Fiber service in Jan. 2008 (see letter PDF here). It currently is written into the FCC Tariff # 1 as 4-strand fiber transport (see PDF Tariff here).

Next it's over to the CLEC side of the house where the Wholesale account rep says that she only handles UNE. The other Wholesale rep handles FCC tariff items, but not a word out of her yet. 

My big problem is that this service is listed in the tariff. It shouldn't be that hard to order service. 

Next step for the client is a phone call. Either to call a telecom attorney (either Kris Twomey or Jonathan Marashlian); or to call the FCC Wireline Competition Bureau (202) 418-1500.

After dumping New England on Fairpoint and cashing in on that garage sale, Verizon bought Alltel. Now it is dumping more rural lines on Frontier. All of this is just Verizon's way of shoring up its stock report. Without the kickers from the Fairpoint transaction and the spurt from Alltel, my bet is that the company would be showing a loss. CNET reports that its profits are down.

It's pouring money into M&A, FiOS, LTE, 3G, International backbone, and Advertising. Especially Advertising. I get something everyday from Verizon. Even at 50 cents per mailer, that's almost $10 per month on one prospect. 

It's about to dump big bucks in a conversion to LTE for its VZW network to keep saying its the best network. But that is after it integrates the Alltel network. Oh, and after it settles things with the rural cellular companies who are tired of VZW squeezing them. Remember that they just built the 3G network, so that debt isn't paid up yet. And cell phone subsidies are increasing to compete with the fact that folks want the iPhone or the Android. 

The FiOS build out is costly. I read that VZ claims it is under $900 per home passed. No one else in the industry has a number that low. Most are closer to $2000 per home passed. Customer take rate is about 21-22%. How many of those are just upgraded DSL subs? 2.5M FiOS TV subs now - some from cable but some from DISH Network, I'll bet. (Still no mention of the 500K voice lines Bright House took from VZ in greater Tampa Bay).

Lots of M&A activity to hide the fact that its growth is stalled and that it has to be taking on huge debt from Alltel, upgrades and Customer Acquisition.

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?

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.

I spent a couple of hours at VoiceCon in the exhibit hall yesterday. The biggest surprise was VZB and Sprint. Especially Sprint. They are pimping the Wireline / Fiber with mobile integration. They had lots of new handsets. (So again they can't even have a whole booth about the wireline product).

Here's a tweet from FierceVoIP: "Sprint tightens bonds with cable; offering enhanced VoIP services to basic VoIP offerings - Cable needs Sprint = Sprint needs Cable."

CircleID takes a look at America's Broadband Score

"Leonard Waverman, the dean of the Haskayne School of Business at the University of Calgary, describe a measure he developed called the 'Connectivity Scorecard.' It's meant to compare countries on the extent that consumers, businesses and government put communication technology to economically productive use. Even after deducting the untold unproductive hours spent on Facebook and YouTube, the United States comes out on top..."

What's interesting to me is the comments. How no one can find the US Broadband score is funny. (Heard of Google much?) It isn't so much the score as what the score represents.

We have a few problems to fix:

(1) ISP Competition for one. Many places only have one choice for broadband. Many have two - cable or telco. Few have three. It makes download caps and Net Neutrality a hot button that true competition would eliminate. (And please don't give me that 3G is the third rail because guess who owns that - Ma and Pa Bell in the majority just like they own the Internet backbone and the PSTN structure in more than 70% of the country).

(2) A definition of broadband. Is it 256k one way as the FCC has defined it for years? Is it now the new FCC definition of 768k? Or is it 1M x 1M minimum? Or is it 100Mbps? This would certainly help.

(3) Deployment versus Penetration. "When you look at the 2008 ITIF Broadband Rankings report ...the U.S. ranked 15th among industrial nations at a composite score of 10.25. The U.S. is reported to have an average download speed of 4.9 Mbps, which is a far distant behind Japan's 63.6 Mbps. In addition, the report states that the US broadband penetration comes in at 0.57%." [source] Here's the detail: "Composite Score: Each nation's overall score is the sum of its standard deviation score for each of the three indicators: Household penetration or subscribers per household, average download speed in Mbps and price at the lowest monthly cost per Mbps." 

We may have "broadband" deployed in a large swath of America, but the speed is low compared to other countries. Because we are a suburban and rural country, it takes more infrastructure to hit everywhere with broadband, especially very high-speed Internet Access (greater than 3Mbps). And because most places hit are single family homes - we do live in suburban sprawl consisting of McMansions filled with Yuppies and 2.2 kids - it also affects our score at the ITIF.  According to a CWA study, the speed in the US is just over 2Mbps.

(4) Cost! We probably pay more per MB than any other G8 country. We get less speed and pay more for it. That hurts us. Surprisedly, in Wilson NC, the Muni fiber sells 100MB symmetric while TWCable and Embarq just gape at the speed and price. Well, not gape, so much as sue that it's unfair that a city would provide services it refuses to.

So we have cost, penetration, subscriber per household (density), and speed. Can't do much about density, but you can improve speed and cost. Also, there is a Digital Divide in America. Poorer families do not have computers, so do not have a need (or a budget) to buy broadband. It poses a problem that funding broadband for libraries and schools is supposed to throw a rope at. The Pew Report reflects this chasm.

BTW, the Connectivity Scorecard study has been analyzed here and by my favorite snarky blog, TechDirt.

After spending much of 2H09 campaigning for ILEC Forbearance because he claims that the CLEC model has failed in the US, American Fiber Systems' Dave Rusin is interviewed by TMC's Rich Tehrani (video).

My problem with Dave is that he acts like he is CEO of a major telecom company. But according to Inc., AFS is only a $40M company with about 150 employees. It's a fiber only company. No voice. Transport and re-sold IP. No copper. Nothing complicated at all. (He sticks to his knitting, which is good). It's a high-asset, large CAPEX network operation, meaning it costs a lot to get a customer lit with fiber, long ROI, low cash flow, but fiber is an asset once trenched (which is what he often blogs about). Fiber is the diet of telecom kings. (pun intended)

AFS is more like Looking Glass, Progress Telecom, and OnFiber - all companies that were swallowed up a couple of years ago. It is nothing like his first company Frontier, which has more in common with PAETEC than just the city of Rochester.

AFS has network in 9 cities - Atlanta, Boise, Cleveland, Kansas City, Minneapolis, Nashville, Reno, Salt Lake City and Vegas. A press release states, "AFS has deployed over 90,000 miles of high-capacity, high-bandwidth metropolitan fiber optic cable since 2000....AFS has over 400 capacity enabled on-net buildings." That's 44 buildings and 10,000 route miles per metro. Many of the lit buildings are Central Offices and data centers. So I am guessing that AFS has about 500 customers.

In 2006, AFS received $25M in financing. That's $25M to get to $40M in revenue. I told you it was capital intensive. But the claim is that "AFS' unique metropolitan fiber optic network footprint supports an addressable market tele-density of over $9 billion in annualized telecommunications services." It's a $9B market and you have $40M of it? And you pick on Paetec and XO? That's like RC Cola debunking Dr. Pepper.

Rusin states (in the video) that he prices below the ILEC rates. From my experience that isn't the case, but if the plan is to price below the ILEC, then how is your marketing and sales approach different than PAETEC? That isn't selling on the value of being a focused, single minded network operator; it's taking orders on price.

After that interview, I have to wonder (again) what the campaign for forbearance is all about. Two thoughts: it is messing up his capital market and AFS needs capital to grow and add buildings to its network OR AFS is looking for an exit strategy (i.e., PR to get bought).

All in all, I do like reading his blog because it usually makes me write something. Thanks, Dave!