Before I could publish this, Chris Mitchell at MuniNetworks.org did a much more in-depth version of what I wrote here. I highly recommend reading his article for the nitty gritty details. Unsurprisingly, we both reached the same conclusion.
When Google announced they would be building a gigabit network in Austin, AT&T wasted no time trying to jump on that bandwagon for damage control. Of course, nobody believed it. How could a company who has shown no interest in network investment suddenly decide that they might want to get on that? I find myself in the same position with CenturyLink’s announcement of an FTTH testbed in Omaha. Moreso, they’re not even equipped to do it.
Bear in mind that this is going to be a very small deployment, just 48,000 homes. It’s focused on an area where CenturyLink provides TV service, a product they haven’t even put into trial in most markets after shutting it down and starting it back up again. This makes some sense as most fiber networks need multiple product offerings to make the network achieve the desired revenue goals. That also means that areas without TV trials are probably not likely to see the service anytime soon.
Then there’s the matter of money. CenturyLink is a cash-poor, debt-heavy behemoth that’s been shedding voice customers to cell carriers and broadband customers to anything that isn’t them. When was the last time they did a new ADSL2+ footprint anywhere in Utah? It’s been several years now with not a red cent of network improvement. Omaha is a testbed not because they don’t sorely need to upgrade their entire network, but because that’s likely all the money they can afford to spend. Without a highly profitable wireless business or a lead against their cable competitors, it doesn’t look like the picture is going to improve anytime soon either. Investors don’t seem to think so.
I’m sure CenturyLink will build out their “testbed” in Omaha. Heck, they’ll probably even expand it to the surrounding suburbs. But will they pick up enough steam to push it nationwide? I wouldn’t put money on it.
Today on the steps of city hall in West Valley City, UTOPIA announced their intention to pursue an RFI with Google on their ambitious fiber-to-the-home project. Mayors of several of the cities spoke strongly in favor of the idea and provided examples of how UTOPIA fiber is already enriching their cities. Several also pointed out that Google plans to use a model almost exactly like UTOPIA which validates their plan.
Several private companies, including Thomas Arts, spoke strongly in favor of UTOPIA and the value it provided for their growing businesses. It was also announced that Connected Lyfe has joined the network as a new service provider, though it’s not entirely clear as to what services they plan to offer.
Just because Kevin Martin was on his way out the door doesn’t mean he couldn’t make noise on the way. The FCC started checking into Comcast’s network management practices yet again and slammed cable pricing. There’s also more talk about the broadband stimulus that just passed the house and it looks like a 4-month delay of the DTV transition is going to pass. All this and more in this week’s Broadband Bytes.
Just when Comcast thought it was going to catch a break on its network management processes (which, I must say, seem pretty clear and concise to me), FCC Chairman Kevin “Ma Bell fo’ Life” Martin decided to see if they were using the new system to purposefully degrade competing VoIP offerings. The allegations are that phone calls could get choppy during peak times when bandwidth demands are highest. (For what it’s worth, I haven’t noticed any problems with my Vonage phone on Comcast.) The FCC is also looking at regulating Comcast’s VoIP product like a traditional phone line since Comcast Digital Voice is being given preferrential routing treatment. Comcast has previously worked with Vonage to ensure smooth operation of the competitor’s VoIP service, I think this is a lot of smoke and not much fire, even if consumer advocates are happy to use Comcast and thier lousy customer satisfaction as a big punching bag.
Not to be content with just getting in another dig at Comcast, Martin gave all cable companies a special parting gift: an inquiry into video pricing and a big bag of fines. Given that prices have jumped an astronomical 122% since 1995, he might be onto something here, though I hope that satelite and IPTV competitors are included in the inquiry. (I’m looking at you, Dish, DirecTV, AT&T U-Verse and Verizon FIOS.) The complaint also cites moving channels to premium tiers and a lack of data being provided to the FCC. While cable operators are certainly complicit in rising rates because they don’t act as advocates for their subscribers (who have little to no voice in the matter), the real investigation should be into programmers who drop double-digit rate increases for channels that cable operators consider their foundation (ESPN, Disney, MTV, etc). All of this might just be Martin trying to strike back at cable operators who he believes were behind the unflattering report from Congress last month.
Microsoft also got into a tiff with Comcast, this time over a soured deal to use MS cable boxes. Comcast bought 500,000 boxes from MS that largely collected dust and only saw usage in Seattle, Microsoft’s backyard. Once Comcast dumped the boxes, Microsoft picked up its toys and went home. It could have had better timing; cable stocks took a real beating over the last year.
Meanwhile, more voices keep wieghing in on the delay. Verizon changed its tune and now supports the delay, Qualcomm says no way, the TV tower industry isn’t in favor and Ars thinks the government should keep the original date despite botching the transition. One of the biggest concerns is rural access. While analog signals get fuzzy with interference, digital signal experience a cliff effect where the signal is either there or isn’t. Up to 20,000 residents of Hawaii may not be getting signals after that state’s switch and many in rural areas could lose signals while the FCC figures out how to extend their range.
Rural residents are getting shafted from another direction as big cablecos and telcos dump their less-desireable rural networks. Hawaii Telecom was one of those experiments and ended up filing for bankruptcy not that long ago. Fairpoint Communications faces the same challenges with the New England networks they have acquired from Verizon. Many of the rural networks are in desparate need of upgrades and the small companies assuming them don’t have the capital to upgrade broadband speeds or, in the case of cable operators, deploy VoIP. Powell, WY is one of those cities that got fed up with the crappy options and built their own FTTH network; it should be operating Real Soon Now(TM).
There’s still a lot of hold-outs who want to hang on to their dial-up or not have Internet access at all. A third of non-Internet users just aren’t interested and 19% of dial-up users wouldn’t ever switch to broadband. Price and availability, however, remain the main barrier to about half of dial-up users and about 20% of non-users. So what do we do to drop prices? That depends. A recent study suggests that wholesale rates charges by incumbents are way too high and a lack of competition often reduces your bargaining power.
There’s still plenty of throttling and capping news this past week. The CRTC, Canada’s equivalent of the FCC, composed a pretty comprehensive report listing who engages in throttling. Some of the companies never responded, but the largest ones are definitely doing it. Vodafone is trying a different kind of soft cap in Hungary that scales back available bandwidth to heavy users during peak times, a method similar to what Comcast does. Wave Broadband, however, is doing a really good job at illustrating how not to roll out caps. They used to do a 3GB/day limit, and now they publish a different limitation on the top-tier account with an unpublished limit on lower-lever accounts. Moral of the story? Users don’t hate caps or throttling nearly as much as they do a lack of transparency.
In gadget news, Verizon is rollout out a device they call Verizon Hub. It incorporates a 7-inch LCD touchscreen to sync calendars, contacts, maps and traffic directions with a wireless phone. The Hub also lets you send text messages or pop directions to your cell phone. It does not, however, integrate a femtocell. At $200 for the device and $35 per month for service, it’s hard to see how such a gadgety phone will end up catching on, especially since many consumers already can’t figure out the features on their wireless phones. Verizon is separately launching a $250 femtocell to support up to 3 CDMA calls at a time over a 5,000 square foot area. If the femtocell were integrated into the Verizon Hub, it might be a better deal.
Holy moly has the country gone crazy about the impending DTV transition deadline. There’s also more talk about the broadband spending in the upcoming stimulus package (where the money will come from is still a mystery), Charter’s impending implosion, the new FCC Chair, and continuing tech layoffs. We also know who’s going to replace Kevin “Ma Bell is my Homeboy” Martin on January 20.
The DTV transition is getting much, much uglier as Congress prepares an Obama-backed proposal to delay the switch from analog signals until June 12. Verizon isn’t very happy about it since it would delay their planned deployment of LTE, a move that also hurts Qualcomm, the company who makes the equipment. Ars Technica unveiled that an Obama cabinet member proposing the delay may have a conflict of interest as the delay would benefit Clearwire. It’s also not surprising that AT&T is in favor of the delay since it would hurt one of their largest competitors. Public safety groups also don’t want to delay their use of the freed-up 700MHz spectrum for a new public safety radio network. House Republicans have also voiced opposition to the delay citing the increased confusion of moving the date. Dish Network is already trying to capitalizing on it with misleading sales pitches. Wilmington, NC carried out a DTV test with few problems and Hawaii has already gone all digital.Add this blogger to the list of people who thinks that delaying the inevitable is a really bad idea. It’s been in the works for 10 years, we’re been talking about it publicly for at least three and stations have been bombarding consumers with warnings for at least the last 6 months. If you aren’t ready by now, then you just don’t want to watch TV. And if you do, there’s plenty of options available, including calling up local video providers for service.
Speaking of selling additional services, you might want to reconsider coming up with an in-house solution. Telephony Online proposes you start partnering up with companies that already do a really good job at providing services outside of the triple-play such as telemedicine and home security. There’s a lot of wisdom to this embrace of wholesale models since you can focus on your core business instead of being distracted by expensive (and often faulty) products with a high liklihood of being discontinued in a few years. The report focuses on FTTH operators (and part 2 discusses some of the regulatory hurdles that prevent more FTTH systems), but there’s a lot of wisdom in this for HFC, FTTN and POTS systems as well.There’s also looking at The Dark Side to make more money. The RIAA is offering up a portion of settlements with pirates if ISPs will turn them in (most of them aren’t biting) and most of the proposals to cap users are focused on squeezing out additional revenue.
Get ready for more pricing wars. MVNO Boost Mobile dropped a bombshell with a $50 unlimited wireless plan that includes voice, text and walkie-talkie services. That goes head-to-head with offerings from all of the major cell providers (most priced at $100 per month or greater) and even takes on brands like Cricket. The New York Times reports that Sprint did this with their pre-paid value brand to try and utilize more of their Nextel network. Embarq also dropped prices on it’s top-tier DSL product by $10/mo.One area that isn’t falling, however, is pay video services. While promotional rates are very attractive, rates have been rising quickly (no doubt because of higher retransmission fees). Oddly, churn hasn’t yet been affected, but that might be because a lot of customers are trapped in contracts with early termination fees. Many customers have also wised up; they know that calling to cancel can land them the promo rate for a few more months. Despite service complaints, price is the main factor driving subscribers to seek alternatives. Verizon seems to have taken the lead on this in at least one case, something that no doubt improved customer loyalty.
Despite what AT&T and Verizon are doing, Qwest is still going to stay out of the video market. Their rationale? Consumers will end up watching all of their video on the Internet soon anyway. That’s true in a lot of cases (especially for network television content), but there is still a lot of paid content that consumers want, especially as cable networks continue to make big investments in original programming. In the end, Qwest is going to have to come up with something more compelling than upload-crippled FTTN and reselling DirecTV.
As proof that Qwest might be onto something is CastTV, a relatively new site that aggregates content from various other video portals like Hulu, YouTube and others into a clean interface. If that got paired up with an Internet-connected TV, you might be able to ditch (or complement, your pick) your paid programming package. Demand for such a set is very high, over 71%. Microsoft has spent a long time working on an IPTV product for the XBox360 and its Netflix integration is supposed to be top-notch. Blockbuster also realizes the power of streaming video and is trying to push a new streaming product even though they totally flubbed their first attempt. The moral of the story is that providing gobs of bandwidth and not much else seems to be where telecom is heading.
Is Verizon planning to kill off POTS lines in favor of VoIP? It depends on which day you ask. Initial reports said they were going to within 7 years, then they came back and said they had no timeline. On the plus side, VoIP is inexpensive and has made a lot of quality and reliability improvements. On the downside, it’s still not as reliable as a POTS line and, as we learned from the Qwest-SkyWi dust-up, it may fall outside of the purview of your state PUC.
In gadget news, the Supreme Court has asked the DoJ to give them some input on the Cablevision DVR case. Pretty much every content producer in the country has come out against the proposal which would offer up 160GB worth of DVR for an inexpensive $10 per month.
Clearwire is showing off a portable WiMax “hotspot” that acts as a WiFi-WiMax bridge. Any WiFi device could be surfing over the speedy new network (if/when it becomes available in your area) with minimum fuss. Somewhat related to this is the emergence of subsidized netbooks from Dell and Acer for a cool $99 if you pair it up with a $60/mo or greater data plan from AT&T. It’s not a bad deal, but it does inspire memories of the ISP-subsidized PCs of a decade ago that ended up flopping. AT&T is also getting ready to push an in-car satellite TV and radio service – at $1300 for equipment and $22/mo for service. I somehow don’t see that catching on anytime soon.
Some universities seem to be cutting back on POTS (plain old telephone) offerings to dorms because of lack of use.
Cox and Time Warner were fined for implementing SDV and knocking CableCARD customers offline without proper notification.
It also looks like BPL (Broadband over Power Lines) is dead. Manassas, Virginia where the flagship BPL network was deployed has been turned over to the city who will keep it around until about 2010. For all you amateur radio (PDF) operators out there this is good news.
Apple is rumored to be working on a networked TV. That’s going to require a lot of bandwidth. In addition to normal TV functions, you could stream any content from iTunes like downloaded movie rentals, TV episodes on demand, etc.
Business Week recently did an excellent piece called “The Digital Divide” that talks about just how important broadband is becoming in spurring business in areas that have it, and leaving those that don’t in the dust.
President Bush signed the Broadband Data Improvement Act into law on Oct. 10. The bill will provide for improved data on the status of broadband deployment in the United States by forcing the FCC to make a couple of major changes to the way it puts together broadband information. This includes yearly metrics for “second-generation” broadband that can support full motion HD video and more granularity to for reporting of broadband broken down by ZIP+4 instead of just ZIP (as it is now). The bill also authorizes a program of grants to support public/private public partnerships to stimulate broadband deployment and adoption at the state level. I’m interested to know what this would mean for projects like UTOPIA. Thoughts?
It’s not just cash-rich incumbent telcos (read: Verizon) that can get in on the FTTH action. Broadband Properties Magazine reported in the August/September issue that Manti Tele Communications Company is replacing its copper with a brand-new FTTH network designed to devlier faster Internet speeds as well as IPTV. The company’s website (which looks like it was designed in 1997, the year the company was formed) is light on details, but I’m hopeful that this is a big step forward for these rural communities.
The fact that we will be doing a regular feature on broadband news shows that there is a lot of interest in this space. At a recent Qwest webinar, lots of business attendees mentioned slow network speeds are a major concern. Many people are supportive of UTOPIA for different reasons and come from different political persuasions, but the one cause that unites us is a desire to bring our communities into the future by supporting advancements in broadband deployments. We feel it can’t be stressed enough that networks are the railroads of the 21st century. Those cities that have it will prosper, those that don’t will be left by the wayside.
Major telecom incumbents have been slow to invest in our communities and bring us faster network speeds that will be crucial for our economy and our quality of life. In addition, these incumbents have fought and continue to fight efforts by others (like us) to improve broadband even when they themselves refuse to improve broadband speed, quality, and availability. Our goal is to share news developments and insights pertaining to broadband in the hope that with a more informed community we can make better decisions to improve the availability of fast, consumer-friendly, choice-driven, high-quality broadband. This kind of broadband is severely lacking in many parts of Utah, though fortunately, UTOPIA is changing that in more ways than one.
Without further ado, here is our first edition of Broadband Bytes:
Charter Communications says out with the old and in with the new. DOCSIS 3.0, SDV, and all digital in the works. (Goodbye analog spectrum)
The race for the speed crown continues as Verizon rolls out 50Mbps/20Mbps service to all of its current FIOS customers. The super-fast tier of service comes at a price of around $150/month, not far off from what Qwest is charging for inferior 20Mbps/896Kbps DSL service. This also prepares Verizon for a fight to the death in the Lone Star State with AT&T's inferior U-Verse service where it plans to overbuild to 600,000 homes in the GTE territories it purchased. I'm sure Qwest is sweating as well; it also borders several Verizon markets and can't compete on speed either.
Comcast also made some speed announcements, bumping upload speeds on the 6Mbps and 8Mbps tiers to 1Mbps and 2Mbps respectively. I've independently speedtested this claim and found that I'm getting a solid 1.3Mbps of upload on my 6Mbps plan. While the plan is to roll out 50Mbps service in multiple markets after testing in the Minneapolis area, that will also come with all kinds of protocol-agnostic throttling and potentially a 250GB monthly transfer cap.