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Great North American Broadband Ripoff: Canada, U.S. Pay Double What Europe, Asia Pays

Phillip Dampier September 26, 2017 Broadband Speed, Canada, Competition, Public Policy & Gov't 4 Comments

Prices in €. (Source: European Commission)

The European Commission’s latest study on broadband pricing shows while Europe and Asia offer consumers affordable broadband, North American providers are forcing Americans and Canadians to essentially pay twice as much for equivalent levels of service.

Just as was the case in 2015, the report found some of the most costly broadband packages in the world are sold to customers in Canada and the United States. This year, the study found the average Canadian paid more than $52 a month for standalone broadband, in the U.S. an average of $42 a month. In contrast, Europeans paid an average of $30 and Asians paid $22 a month for comparable service. Customers in the U.S. and Canada with a triple play bundle package of broadband, TV, and phone service paid more than double what their counterparts in Asia and Europe did last year.

As U.S. and Canadian providers raise broadband speeds and constrict the number of service tiers they offer, customers are forced into more expensive tiers, whether they need or want them. That further exacerbates the digital divide based on broadband affordability.

In Europe, competition in many EU member states has caused prices to drop for some types of service. Double and triple play packages offering 100Mbps or less declined in price by as much as 10.6% in 2016.

The study found:

Broadband prices for budget tiers actually dropped in Europe last year.

For the download speed basket 12-30Mbps, the EU vies with Japan and in some cases Korea showing the least expensive prices in one or more of the four service bundles. The lowest price for Double Play with fixed telephony in the €28 is also the lowest compared to all the countries analysed. The EU, Japan and South Korea have relatively similar prices when compared with Canada and, in particular, the USA.

Comparing the €28 with other countries in the world, the pattern in the 30-100Mbps speed basket is similar to the 12-30 Mbps basket. Japan is the least expensive country for three of four bundles; only Single Play is slightly less expensive in South Korea. Here, the EU28 just fail to present the lowest price for Double Play with fixed telephony. Again, the EU, Japan, and South Korea stay at more or less close compared to Canada and the USA. Alternatively, Canada is the most expensive country in three of four bundles. However, USA shows the most expensive Double Play with fixed telephony – despite considering the lowest price offers in three States there.

With regard to the 100+ Mbps basket of advertised download speeds, Japan and South Korea are decisively the least expensive markets, across all service bundles. South Korea has the least expensive offer for Single Play, Japan for Double Play including TV services. For the top download speed basket, the EU lies in mid-field between the low-cost Asian and the high-priced North American countries.

Other conclusions:

• Ultra-fast broadband offers (100+ Mbps) were still most expensive in the USA and Canada
• The least expensive offer for South Korea across all bundles was faster than 100Mbps
• Compared to Japan and South Korea, European citizens have to pay similar prices for offers of up to 100Mbps, but significantly more for ultra-fast connections.

Frontier Starts Retiring Copper in Spencerport, N.Y. and League City, Tex.

Phillip Dampier September 25, 2017 Broadband Speed, Consumer News, Frontier, Public Policy & Gov't 1 Comment

Frontier Communications has started notifying the Federal Communications Commission of small-scale retirements of its existing copper wire facilities in favor of all-fiber optic replacements.

The company has begun copper wire retirement with certain customers in the hamlet of Adams Basin in Spencerport, N.Y. and League City, Tex. near Houston, in both cases due to roadwork.

“Frontier Communications announces that it is retiring copper feeder plant as part of a Highway Improvement plan impacting its Spencerport, New York Central Office,” Frontier wrote in its notification to the FCC. “The copper loops will be replaced with fiber to the home and impact a portion of the Spencerport Central Office service area. After the planned copper retirement, there will no longer be copper loop feeder facilities providing connectivity between Frontier’s Spencerport, NY Central Office and the customer premises locations listed below. Frontier is planning to replace the existing copper loops with fiber drops as part of this project. After the planned network changes are implemented, Frontier will (1) no longer offer services over copper facilities; and (2) cease maintaining the copper facilities. Following the transition to fiber, customers can anticipate receiving services from Frontier that are equivalent to or better than those they received over copper facilities, and at that same prices.”

The retirement will not impact the entire community of Spencerport, but rather customers near the hamlet of Adams Basin, named for the Adams-Ryan House, an inn opened in 1825 that provided rest and refreshments for those journeying the original Erie Canal.

Affected Customers:

  • 3486-5206 Brockport-Spencerport Rd.
  • 439-550 Washington St.
  • 2-31 Dresser Rd.
  • 40-100 Hubbell Rd.
  • 545-848 Gallup Rd.
  • 5-211 Campbell Rd.
  • 4436-4452 Canal Rd.

In League City, Tex. Frontier will retire its copper network in areas around a road expansion project widening Calder and Butler Roads and Turner St. Affected customers will receive FiOS fiber to the home service instead. The handful of impacted customers are located at:

  • 2502-3000 Butler Rd.
  • 1313-1325 Turner St.
  • 1201-1217 Weyer St.

Frontier’s very conservative fiber expansion effort was discussed by Perley McBride, chief financial officer at the phone company, during the recent Goldman Sachs Communacopia 2017 conference.

McBride predicted Frontier would expand fiber to the home service to 50,000-100,000 customers over the next two years, mostly in new housing developments.

“Anywhere there are ‘greenfield’ or subdivision builds, that’s always fiber-to-the home,” McBride said. “We will do about 50,000 of those this year and another 50,000 to 100,000 next year. We do see instances where overlaying fiber on top of fiber-to-the-home and fiber-to-the-node has made some sense. I think the beauty of the fiber-to-the-home network is that it is low-cost. If you need to then move into the next generation of speed, it’s not a very capital-intensive change you have to make.”

It also seems likely Frontier will replace copper wiring infrastructure in areas where infrastructure projects are underway, particularly those that will require utilities to relocate their current infrastructure, such as in road construction or expansion projects. In the past, Frontier would have moved poles and either reused existing copper wiring or replaced it with new copper wiring. As seen in New York and Texas, fiber will likely now be used instead.

But such upgrades are incremental at best, and upgrading 100,000 customers to fiber optics is a small percentage of the nearly five million residential customers Frontier serves across the country.

UAE Leads With 93.7% of Homes on Fiber Internet; U.S. Lags at 13.1%

Phillip Dampier September 21, 2017 Broadband Speed, Consumer News, Public Policy & Gov't No Comments

The United Arab Emirates now has the highest penetration of fiber optic broadband in the world, according to data from the FTTH Council Europe.

At least 93.7% of UAE homes are now hooked up to fiber-to-the-home internet service, and the country’s largest provider — Etisalat — promises it will spend millions more to further expand fiber connected home broadband and mobile services across the country.

In contrast, the United States has only wired 13.1% of its homes to fiber broadband, 11.8% in Canada. The countries with the highest percentage of fiber connections are the UAE, Qatar, Singapore, South Korea, Hong Kong, and Japan.

According to the World Bank, broadband internet is today seen as critical to the transition to knowledge-intensive economies across the world. Countries in the Middle East and North Africa are accelerating their fiber broadband programs, believing the technology will prove transformational to remake or build their economies in a digital world. As many first world countries’ telecommunications networks are captive to large, for-profit corporate interests that have dragged out broadband expansion to protect profits, the developing world has a chance to leapfrog over countries in North America and Europe and launch new connected technology centers for the digital economy.

For the UAE, fiber optic broadband is a critical part of the country’s Vision 2021 strategy to invest vast sums in infrastructure and development programs to diversify the country’s economy away from its dependence on oil and gas reserves and guarantee future prosperity.

T-Mobile Increases True Unlimited to 50GB a Month Before Speed Throttling

T-Mobile today announced it was boosting the amount of data its “unlimited data” customers can use before they are subject to speed throttling from 32GB to 50GB, effective Sept. 20, 2017.

“Meanwhile, Verizon and AT&T sit at a meager 22GB, meaning Un-carrier customers can use more than 2x the data before prioritization kicks in,” wrote Neville Ray, T-Mobile’s chief technology officer. “Now, 50GB of data usage means a T-Mobile customer is basically the top 1% of data users, and to put it in context, you could stream a full two hours of Netflix every single day – that’s 30 SD movies – and never even reach that point! You’d still have roughly 8GB to go.”

Like other wireless companies, “unlimited data” does not actually mean “unlimited.” Providers allot a certain allowance of truly unlimited data which, once exceeded, subjects the customer to speed-reducing “throttles” until the next bill cycle begins. T-Mobile claims it only throttles customers when a customer exceeds their “prioritization” allowance — 50GB as of tomorrow — and the cell tower they are using is currently experiencing congestion.

“When T-Mobile customers who use the most data hit these prioritization points during the month, they get in line behind other customers who have used less data and may experience reduced speeds,” Ray wrote. “But this impacts them only very rarely, like when there is a big line, and it resets every month. If you have a lot of congestion in your network (I’m looking at you, Verizon & AT&T), these lines can be long and deprioritized customers can be waiting a long time.”

No wireless company will provide data on which cell towers are likely to experience the most congestion, how many customers are speed throttled, or what speeds customers will get for how long before the throttle usually drops. But it is definitely harder to hit 50GB than 22 or 32GB, which means fewer customers are likely to find their wireless data connections throttled.

There has been no response yet from T-Mobile’s competitors — AT&T, Sprint, and Verizon.

Deutsche Telekom: We’ll Build a Nationwide Fiber Network If You Let Us Monopolize It

German Chancellor Angela Merkel examines fiber optic telecommunications cables.

Germany has an internet access problem not very different from the one afflicting the United States and Canada. The national phone company, still partly owned by the government, remains mostly dependent on a decades-old wireline telephone network to deliver landline and DSL broadband service. The only way Deutsche Telekom will invest adequately to replace it with optical fiber is if they get assurances from the federal government they will be allowed to monopolize access to it.

According to the business weekly WirtschaftsWoche, a sister publication of Handelsblatt, Telekom executives have agreed to build a fiber-optic network everywhere in Germany provided that it is excluded from European anti-monopoly rules so that Deutsche Telekom wouldn’t be forced to open its network to competition.

The proposal from the German telecom giant was particularly audacious because many in the country blame it and its uncompetitive behavior for creating Germany’s slow broadband problem, but that did nothing to stop the company from asking to be shielded from competition.

“A fundamental departure from the kind of logic that viewed regulation of Deutsche Telekom (DT) as the normal state in the last 20 years is urgently needed,” the company said in a filing with the German Federal Network Agency, which regulates the internet in the country.

For most Germans, DT is the problem. The phone company has proven itself a formidable competitor across many parts of eastern Europe, where it bought control of privatized telecommunications companies that used to operate as government monopolies. But back home in Germany, it has been happy to continue offering DSL service that the rest of Europe cannot get rid of fast enough. In certain larger cities like Munich and Cologne, upstart fiber to the home providers have filled the broadband gap and have wired significant parts of both cities, and DT has responded with a fiber offering of its own without complaining about the cost of building a fiber network or the return on its investment.

Oberbürgermeister Wolff

But in smaller towns and villages across Germany — particularly in the eastern states, broadband has been terrible for years and under DT’s “leadership” it has not gotten much better, allowing other countries in the EU to sail past Germany in broadband rankings. Like AT&T and Verizon in the U.S., DT claims that where it has not upgraded its network, there is either no demand for fiber fast internet speed or inadequate return on investment. Also like in the U.S., DT has spent its money on other technologies, notably wireless, while investment in landline networks has not kept up.

Some German communities like Bretten, fed up with inaction, have taken charge of their own broadband future and are building their own fiber to the home networks. Martin Wolff has dreamed of a digital economy boost for his town of 28,000 located near Karlsruhe in western Germany.

As mayor, he has begged and pleaded with DT to give Bretten something beyond lackluster DSL service, which is now too slow to handle the kind of 21st century internet applications that better wired communities take for granted. Mayor Wolff wants Bretten known as a gigabit city. DT, in contrast, wants to leave Bretten as a forgotten digital backwater. The phone company had repeatedly told the community the broadband it gets now is more than good enough and nobody should hold their breath waiting for something better. DT’s few competitors, including Britain’s Vodafone, weren’t interested either. Bretten is too small… too… irrelevant to matter to their investors.

“They are only interested in serving the cream of the crop in the cities and don’t come to rural areas,” the mayor said.

Like in North America, Germans are asking themselves who should be in charge of their digital future — investor-owned telecom companies or the community itself. The country’s continued embarrassing showing in European broadband rankings has become an issue of national pride and has sparked a loud debate between established telecom companies and the public that wants faster and better broadband.

The noise of the debate has attracted the politicians, and the issue of German broadband has now taken center stage in the parliamentary elections, which will be held Sept. 24. Handelsblatt reports the issue of inadequate broadband now interests German voters more than the latest economic policy position paper or how Germany will manage to deal with U.S. President Donald Trump for the next three years. Many Germans have plenty of time for these kinds of offline debates, because online, it can take a minute to load a webpage on some of the country’s dial-up like DSL connections.

“Germany is one of the most under-supplied countries in Europe, especially in terms of rural coverage,” wrote Bernd Beckert, an internet expert at the Fraunhofer Institute for Systems and Innovation Research, in a recent study of European broadband. He said countries such as Switzerland, Spain and even tiny Estonia are far ahead of Germany. In fact, the Baltic states and many former Eastern bloc countries are moving towards a fiber future while Germany considers wrapping itself even tighter in copper wiring installed in the 1960s. More than 70% of German internet users get internet access through a DT-provided, ADSL-equipped landline. Many connect at just 1-6Mbps, about the same speed users were getting in the late 1990s when DT’s internet monopoly was abolished.

Since then, DT has done everything possible to encourage “competitors” to not build competing networks. In fact, most competing ISPs like 1&1, Versatel, Telefonica Deutschland, and Vodafone rent DT DSL-capable landlines to provision service to their customers. That means they cannot compete on speed and they are forced to rely on DT to maintain its wireline network. It is no accident that German adoption of fiber optics is stuck at only 1.8%, fifth from last place among the 35 member states of the Organization of Economic Cooperation and Development (OECD). In comparison, Japan and South Korea have more than 70 percent of their customers on fiber to the home connections.

Germany’s largest political parties that have been in government since 2005, the Christian Democratic Union (CDU) and the Christian Social Union in Bavaria (CSU) have tolerated DT and its anemic upgrade policies. Broadband stagnancy, many believe, would not be possible without acquiescence and appeasement by those in control of the country. That conspiracy theory is backed by many of Germany’s smaller political parties which believe it is time to change the government’s involvement with DT.

The Left Party’s platform supports nationalizing DT and returning it to a state-owned enterprise that will answer to the public policy priorities of the next government. The capitalist, pro-business Free Democratic Party wants to get the government completely out of its 32% remaining stake in DT and hope that free market solutions will emerge. In the meantime, that party proposes to use the proceeds of any sale to fund a national broadband subsidy fund to convince private telecom companies to upgrade their networks in underserved areas.

DT has not stayed quiet in the public policy debate either. After disappointing the German public by rejecting a proposal to build an open, nationwide fiber to the home network, the company has instead promised to upgrade existing DSL lines to newer technologies like VDSL and vectoring, which DT claims could deliver up to 100Mbps service. American phone companies like Verizon have been reluctant to head in a similar direction, admitting many of the next generation DSL technologies work better in the lab than in the field. Many of the technologies promoting the most dramatic speed improvements have also proved to be vaporware so far.

Deutsche Telekom HQ Bonn, Germany

“We are committed to vectoring, because it is the only way to provide people in rural areas with faster lines quickly,” Deutsche Telekom said in a blog post published in August. “If we are fixated on [fiber to the home], those in the countryside will remain left behind for years. It is simply impossible to roll out fiber lines to homes everywhere in the country. Neither the construction capacity nor the funding is available for that. Plus, there is quite simply no demand for it.”

Some of the other competitors in the market seem to agree with DT.

“No provider can achieve fiber optic expansion on its own,” said Valentina Daiber, a member of the board of Telefonica. Daiber said DT was already nearly $60 billion in debt. Daiber said she hoped a solution could be found after the election.

But just a week after Daiber made that claim Vodafone announced it will spend $2.4 billion on a new fiber to the premises network targeting 100,000 companies in 2,000 German business parks. The company will also spend up to $450 million partnering with municipalities to extend the network to about one million rural homes, in addition to boosting its current broadband speeds delivered to German cable customers to 1Gbps.

That announcement could cause DT’s DSL plans to eventually collapse, if Vodafone follows through on its fiber buildout.

Mayor Wolff has no intention of waiting to see how it all plays out. Wolff has convinced private fiber optics company BBV to install the fiber infrastructure and has a Dutch investor partner arranging $12 million in financing, which is always the biggest stumbling block to get fiber buildouts underway. Upfront construction costs often deter many municipalities and would-be competitors from launching. But for Wolff, where there is a will, there is a way to deliver fiber fast broadband, and he is making certain it happens sooner rather than later.

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