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Google Fiber Headed to Atlanta, Charlotte, Raleigh-Durham, N.C., Nashville; Avoids Verizon FiOS Country

atlanta fiberGoogle has announced it will bring its fiber broadband service to four new cities — Atlanta, Charlotte, N.C., Raleigh-Durham, N.C. and Nashville, Tenn., according to a report on Google’s Fiber blog.

In a familiar pattern, Google recently sent invitations to local news organizations in those four cities to attend events this week, without identifying the subject.

As with earlier similar events, the topic was the local launch of Google Fiber.

The cities were all on Google’s 2014 list for possible expansion. Those left out (for now) include Salt Lake City, San Antonio, Phoenix, Portland, Ore., and San Jose, Calif. Google recently told city officials in those communities it was still contemplating projects, but remain undecided for now.

After the announcements this week, it will take at least one year before Google is ready to light up the first “fiberhoods” in the cities, usually selected based on customer signups.

Google will challenge Comcast and AT&T in Georgia, Time Warner Cable and CenturyLink in North Carolina, and Comcast and AT&T in Nashville. In Atlanta, the fiber build will not only include Atlanta, but also Avondale Estates, Brookhaven, College Park, Decatur, East Point, Hapeville, Sandy Springs and Smyrna.

expansion

Google will offer unlimited gigabit broadband service for an expected $70 a month. AT&T limits U-verse customers to 250GB in Georgia and Tennessee, and Comcast has subjected both Atlanta and Nashville to its compulsory usage cap experiments, setting a monthly usage allowance at 300GB.

Time Warner Cable does not limit broadband customers in North Carolina, but the Republican-dominated state government is also hostile to community-owned broadband, making it unlikely either Raleigh-Durham or Charlotte will see public broadband competition anytime soon.

Fiber-is-comingGoogle officials have also been reportedly sensitive to local government red tape and regulation. In Portland, the Journal reports Google has put any fiber expansion on hold there because Oregon tax-assessment rules would value Google’s property based on the value of their intangible assets, such as brand. That would cause Google’s property taxes in Oregon to soar. Until the Oregon state legislature makes it clear such rules would not apply to Google Fiber, there will be no Google Fiber in Portland.

Google has also once again shown its reluctance to consider any community or region where Verizon FiOS now provides fiber optic service. The entire northeastern United States, largely dominated by Verizon, has been “no-go” territory for Google, with no communities making it to their list for possible future expansion.

Among the collateral damage are Verizon-less communities in northern New England served by FairPoint Communications and Comcast and portions of western New York served by Frontier Communications where Time Warner Cable has overwhelming dominance with 700,000 subscribers out of 875,000 total households in the Buffalo and Rochester markets.

Wall Street continues to grumble about the Google Fiber experiment, concerned about the high cost of fiber infrastructure and the potential it will create profit-killing price wars that will cut prices for consumers but cost every competitor revenue.

http://www.phillipdampier.com/video/WSOC Charlotte Mayor Google Fiber is coming to Charlotte 1-27-15.flv

Charlotte city manager Ron Carlee spoke exclusively to WSOC-TV’s Jenna Deery about how Charlotte won Google over to bring its fiber service to the community. Having a close working relationship between city infrastructure agencies and Google was essential, as was cutting red tape and bureaucracy. (2:10)

Verizon Cutting Wireline Broadband Investments: Still No FiOS Expansion, Less Money for Wired Networks

Verizon's FiOS expansion is still dead.

Verizon’s FiOS expansion is still dead.

Verizon Communications signaled today it plans further cuts in investments for its wireline network, which includes traditional copper-based telephone service and DSL as well as its fiber-optic network FiOS.

“We will spend more CapEx in the wireless side and we will continue to curtail CapEx on the wireline side,” Verizon’s chief financial officer Fran Shammo told investors this morning. “Some of that is because we are getting to the end of our committed build around FiOS.”

Instead of expanding its FiOS fiber to the home network to new areas, Verizon is trying to increase its customer base in areas previously wired. It is less costly to reconnect homes previously wired for FiOS compared with installing fiber where copper wiring still exists.

Verizon continues to lose traditional landline customers, so the company is increasingly dependent on FiOS to boost wired revenue. The fiber network now accounts for 77% of Verizon’s residential wireline revenue.

Wherever FiOS exists, it has taken a significant number of customers away from cable competitors. FiOS Internet has now achieved 41.1% market penetration, with 6.6 million customers, up 544,000 from last year. Of those, the majority want broadband speeds they were not getting from the cable company. At the end of 2014, 59% of FiOS Internet customers subscribe to broadband speeds above 50Mbps, up from 46% at the end of 2013.

Verizon-logoDespite the success of FiOS, Verizon’s senior management continues to devote more attention to its highly profitable Verizon Wireless division, spending an even larger proportion of its total capital investments on wireless services.

In 2014, Verizon spent $17.2 billion on capital expenditures, an increase of 3.5% over 2013. But only $5.8 billion was spent on maintaining and upgrading Verizon’s landline and FiOS networks, down 7.7% over 2013. Verizon Wireless in contrast was given $10.5 billion to spend in 2014. The company is using that money to add network density to its increasingly congested 4G LTE network. In many cities, Verizon Wireless is activating its idle AWS spectrum to share the traffic load and is accelerating deployment of small cell technology and in-building microcells to deal with dense traffic found in a relatively small geographic area — such as in sports stadiums, office buildings, shopping centers, etc.

Verizon Wireless is branding its network expansion “XLTE,” which sounds to the uninitiated like the next generation LTE network. It isn’t. “XLTE” simply refers to areas where expanded LTE bandwidth has been activated. Unfortunately, many Verizon Wireless devices made before 2014 will not benefit, unable to access the extra frequencies XLTE uses.

With Verizon increasing the dividend it pays shareholders, the company is also cutting costs in both its wired and wireless divisions:

  • Verizon Wireless’ 3G data network will see a growing amount of its available spectrum reassigned to 4G data, which is less costly to offer on a per megabyte basis. As Verizon pushes more 4G-capable devices into the market, 3G usage has declined. But the reduced spectrum could lead to speed slowdowns in areas where 3G usage remains constant or does not decline as quickly as Verizon expects;
  • Verizon will push more customers to use “self-service” customer care options instead of walking into a Verizon store or calling customer service;
  • The company will continue to move towards decommissioning its copper wire network, especially in FiOS areas. Existing landline customers are being encouraged to switch to FiOS fiber, even if they have only landline service. Copper maintenance costs are higher than taking care of fiber optic wiring;
  • Verizon has accelerated the closing down of many central switching offices left over from the landline era. As the company sells the buildings and property that used to serve its network, Verizon’s property tax bill decreases;
  • Verizon will continue cutting its employee headcount. Shammo told investors in December, Verizon Communications cut an extra 2,300 employees that took care of its wired networks.

Cuomo Administration Promises $1 Billion for Rural Broadband Expansion Across Upstate New York

ny agendaNew York will see at least $1 billion in investments to expand and improve rural broadband in upstate New York to bring Internet access to every home in the state by 2019, if the state legislature approves the budget for Gov. Andrew Cuomo’s New-New York Broadband Program.

New York Lieutenant Gov. Kathy Hochul traveled to the North Country to unveil the spending plan in the broadband-challenged Adirondack region.

“Governor Cuomo’s program will be the largest universal broadband deployment in the nation,  investing up to one billion dollars in both public and private resources to connect every New Yorker to high-speed Internet,” Hochul told the audience. “With a state investment of $500 million in capital funds from bank settlements the program will incentivize the private sector to expand high-speed broadband access to under-served New Yorkers. The plan will elevate broadband speeds in under-served areas to previously unheard levels including a minimum speed of 100Mbps, more than ten times the federal definition of broadband.”

New York’s newest broadband initiative comes courtesy of an unexpected windfall of more than $5 billion in legal settlements with crooked banks and mortgage companies that defrauded state residents and helped trigger the Great Recession.

At least $500 million of the settlement fund would be set aside for broadband expansion, with providers required to match any funds received from the state. Time Warner Cable is likely to be awarded a significant percentage of the money, used to expand cable infrastructure into sparsely populated areas that have never met the company’s Return On Investment requirements.

The Cuomo Administration expects little opposition to the plan, because the bulk of the broadband money would be spent in Republican-controlled rural districts and won’t come from taxpayers’ pockets.

Hochul

Hochul

Republican assemblyman Dan Stec’s 114th district is a case in point. Hamilton County has little or no access to broadband service and Stec’s constituents in nearby Essex, Saratoga, Washington and Warren counties have spotty coverage. He’s thrilled the state will likely spend money on broadband in his district.

“There are towns in my district that don’t have good access to the Internet,” Stec said. “Moms and dads will drive their son or daughter and park in the parking lot of the public library or park in the parking lot of Town Hall to access a broadband wireless connection. That’s crazy.  It’s nice to see the governor making the infrastructure investment that needs to be made in the North Country and frankly in all of upstate.”

Although speaking in the Adirondacks, the former congresswoman turned lieutenant governor said there are plenty of areas in western New York that also desperately need broadband access. Regional economic development committees will be responsible for identifying the most broadband-challenged areas where funding should be prioritized.

“I had [served] seven counties including Wyoming, Livingston, Ontario, Niagara, and Genesee,” Hochul said, referring to parts of the 26th Congressional District between the cities of Buffalo and Rochester she lost in the 2012 election. “The Southern Tier has challenges as well. We have a map that shows the areas which do not have the access and so we know where to have a laser focus on increasing that availability. We know New York City is in good shape. The urban areas are in good shape. So this is very much a rural initiative.”

Despite the unlikely case for any significant broadband funding headed downstate, the governor is attempting to carefully balance his overall spending initiatives between upstate and New York City, the latter now demanding a larger share of the settlement money for downstate. To avoid a budget battle between the two regional factions, Gov. Cuomo intends to bundle his spending programs together in a package presented to the state legislature as part of today’s State of the State address.

New York's Broadband Availability Map

New York’s latest Broadband Availability Map, excluding well-covered downstate regions – Areas in white have no broadband access.

“He’s going to present them as part of a package: the New York State Opportunity for All program,” said Hochul. “This is one of the most significant announcements he’s going to make because it’s going to affect the lives of so many millions of people in our state. In this day and age the fastest road to opportunity is the information highway. Probably the comparable analogy would be the interstate highway system back in the 1950’s. That was able to connect communities and enhance commerce. It was transformative. It was essential in its day. That’s the opportunity that lies before us.”

Ironically, the state-funded initiative is likely to deliver faster broadband to rural New York than their more urban neighbors receive. Under the program, grant recipients will have to pledge to deliver at least 100Mbps speeds to customers, except in the most rural areas where the minimum speed requirement will be set at 25Mbps, with upgrades to come later. Most urban residents receive between 3-10Mbps DSL from Verizon or Frontier Communications and 10-15Mbps from Time Warner Cable, the largest cable company in the state. Verizon FiOS delivers even faster broadband to customers in New York City and Long Island, and selected suburbs in Buffalo, Syracuse, and Albany.

Providers will be encouraged to use state-owned institutional fiber networks, including one laid along the length of the New York State Thruway, and other government infrastructure wherever possible. That is likely to mean fiber broadband will constitute a major part of the initiative. That pleased the Fiber to the Home Council, which advocates for fiber to the home broadband service.

“The [council] commends Governor Andrew Cuomo on an ambitious plan to hit 100 Mbps in every New York home by Jan. 1, 2019,” read a statement from the Council. “This $500 Million investment into the NYS Broadband Program Office will make high-speed Internet affordable in underserved communities by incentivizing private investment, something the FTTH Council strongly supports.”

The state’s chief digital officer Rachel Haot claimed New York is doing more than any other state to invest in high-speed broadband.

http://www.phillipdampier.com/video/2015 Opportunity Agenda NY Statewide Broadband Access for Every New Yorker 1-16-15.mp4

Upstate New York officials discuss the broadband problems in rural New York and how they spent years trying to get attention in a state where government is often focused primarily on the interests of New York City. Lt. Gov. Kathy Hochul announces a $1 billion statewide broadband improvement program. (44:42)

President Obama Calls for an End to State Bans on Community Broadband; Public Networks Save $

Obama

President Barack Obama

President Barack Obama will be in Cedar Falls, Iowa today to announce steps his administration plans to take to improve broadband in the United States, including a call to end laws that restrict community broadband development that limits competition.

“Today, too few Americans have affordable and competitive broadband choices, but some communities around the country are choosing to change that dynamic,” says a statement issued by the White House. “As a result – as outlined in a new report being issued today – cities like Lafayette, Chattanooga, and Kansas City, have broadband that is nearly one hundred times faster than the national average, yet still available at a competitive price. By welcoming new competition or building next-generation networks, these communities are pioneers in broadband that works, and today in Cedar Falls, Iowa, the President is highlighting their remarkable success stories and providing municipal leadership and entrepreneurs new tools to help replicate this success across the nation.

The report, produced by the National Economic Council and Council of Economic Advisers, finds no evidence to support industry contentions that community-owned broadband duplicates existing broadband services and wastes taxpayer dollars. It also challenges cable and phone industry-backed groups claiming publicly owned broadband networks are business failures.

It cites the success of Chattanooga’s EPB Fiber service, operated by the local municipal utility. Not only is EPB successful financially, but it has introduced Chattanooga residents to the kind of competition sorely lacking in most cities for telecom services.

cedar falls“EPB’s efforts have encouraged other telecom firms to improve their own service,” states the report. “In 2008, for example, Comcast responded to the threat of EPB’s entrance into the market by investing $15 million in the area to launch the Xfinity service – offering the service in Chattanooga before it was available in Atlanta. More recently, Comcast has started offering low-cost introductory offers and gift cards to consumers to incentivize service switching. Despite these improvements, on an equivalent service basis, EPB’s costs remain significantly lower.”

In Wilson, N.C., Time Warner Cable customers pay significantly less for cable and broadband service than other North Carolina customers because of the presence of Greenlight, the community-owned fiber to the home provider. TWC customers in Wilson pay stabilized prices for service while residents in the nearby Research Triangle pay as much as 52 percent more for basic Internet service, according to the report. Greenlight’s competition has brought gigabit broadband to the community as well as lower prices for customers who decide to remain with Time Warner. The combined savings is estimated at more than $1 million annually for Wilson residents.

EPB is the municipal utility in Chattanooga, Tenn.

EPB is the municipal utility in Chattanooga, Tenn.

Those who believe municipal broadband is a waste of taxpayer dollars should consider the story of Lafayette, La.’s LUS Fiber. In addition to bringing superior broadband service to a city dominated by a cable operator that used to treat the market as an afterthought, the presence of LUS’ fiber to the home network has forced Cox Cable to improve service, offer significant customer retention deals to departing customers and defer rate increases. The investment in community broadband has saved residents an estimated $4 million from rate hikes that went ahead in other Cox cities, with an estimated total savings of between $90 and $100 million for Lafayette-area broadband customers over LUS’ first 10 years of service.

Taxpayer-supported institutions like local government, law enforcement, and schools have also seen dramatic savings by switching to municipal solutions. In Scott County, Minn. the local government’s annual bond payment for constructing their own broadband network is $35,000 less than what the county used to pay private companies for a much slower network. Area schools that formerly paid private sector telecom companies $58 per megabit of Internet speed now pay $6.83 — a savings of nearly 90 percent. Schools also received dramatic speed increases from 100 to 300Mbps. They paid less for more service — from $5,800 a month before to $2,049 a month today. Those payments go straight back to the county government instead of into the hands of out-of-state investment bankers and shareholders. On the state level, Minnesota’s public institutional network is saving taxpayers almost $1 million a year.

With the broadband profit gravy train for big cable and phone companies grinding to a halt in competitive areas, several of these companies have spent millions lobbying state governments to outlaw public broadband services. They have succeeded in 19 states, primarily with the assistance of the corporate-funded American Legislative Exchange Council (ALEC), which appeals to primarily Republican lawmakers with claims government broadband is unfairly competing with the private sector. In fact, private providers have not been driven out of communities where they face municipal competition, but they have been forced to lower prices and improve service for customers.

Today the president will call for a new effort to support local self-determination for broadband by strongly opposing industry-backed, anti-competitive deterrents and bans on community-owned networks. The president will also sign a letter addressed to FCC chairman Thomas Wheeler encouraging him to move forward with a federal ban on state broadband laws that restrict broadband development.

He will also announce additional funding for rural broadband expansion and take steps to bring local leaders together to explore how the development of community broadband initiatives in their cities and towns can make a major difference in the 21st century digital economy. The president recognizes that most Americans lack sufficiently competitive choices for broadband service and often have just one choice — the cable company — for broadband speeds greater than 25Mbps. That means many Americans are seeing their broadband speeds lag while their monthly bills continue to grow.

Community-owned broadband may be the only alternative many cities have for better broadband as would-be competitors are scared off by high construction costs and an inability to secure cable television programming at competitive prices for their customers.

4K Ultra HD Television Arrives Via Satellite; DISH Network Adding ‘4K Joey’ Set Top Box

4kjoey

That is DISH’s CEO banging the drum beside a panoply of kangaroos. (Image courtesy: Gizmodo)

The ultra high-definition, bandwidth chewing 4K television standard has arrived and like HDTV before it, the first place most Americans will get to sample the new standard is over satellite television.

DISH Network is planning to introduce HDMI/HDCP 4K television owners to its new 4K Joey this year — a souped-up set-top box that can handle the high demands of 4K video.

DISH is using a Broadcom dual-core chipset and 7448 ARM processor that can handle the next standard in high-definition viewing.

While DISH set-top boxes will be ready for 4K, many cable and DSL broadband networks in the United States will face difficulties handling the online video demands that 4K video will place on their networks. In tests, watching an average movie required a minimum of a maxed out 10Mbps broadband connection. Live programming, particularly sports, required considerably more broadband speed to keep up. Few DSL networks will be able to sustain more than a handful of customers attempting to stream 4K video before neighborhood nodes become overwhelmed. Even the DOCSIS cable broadband standard still relies on shared bandwidth, and a few video aficionados in the neighborhood could pose significant challenges and speed slowdowns for other customers in the area.

Besides satellite, only fiber optic broadband will be ready to handle the practical requirements of streaming 4K video without significant upgrades.

dish logoDISH’s plans to stream video content over the Internet could one day also include 4K programming, but viewers are likely to run smack into usage caps and usage billing that ISPs are using to deter online video from gutting cable television revenue as well as further monetizing already highly profitable broadband.

Downloading just three 4K movies consumed 90GB and took more than a day to download, even with Comcast’s 100Mbps broadband service. In usage-capped markets, fewer than a dozen 4K movies would eat your entire monthly allowance. Each additional movie would subject Comcast customers to overlimit fees averaging around $6 per title.

Although DISH will offer a set-top box to handle 4K viewing, content producers are still waiting to see whether the public embraces the next HD standard before investing heavily in programming delivered using the new standard. DISH would only promise content from “several providers” would be forthcoming by the time the 4K Joey is released during the second quarter.

Cuomo: 100% of New York State Should Have Access to 100Mbps Broadband by 2018

ny broadbandNew York Gov. Andrew Cuomo has set a goal that every resident of New York State should have access to at least 100Mbps broadband no later than 2018.

The governor will kick off his latest broadband expansion effort with the launch of his $500 million broadband expansion program, dubbed the New New York Broadband Fund, a follow-up to the state’s $70 million public-private effort to expand broadband that began in 2012.

Much of the money awarded in the 2012 broadband expansion effort went to Wireless Internet Service Providers, institutional broadband networks, middle-mile fiber projects not accessible to the public, and emergency service network upgrades. Another $5.2 million was awarded to Time Warner Cable to expand broadband service to 4,114 households in the Capital, Central, Finger Lakes, Mid-Hudson, Mohawk Valley, NYC, North Country, Southern Tier and Western regions of New York State. In June, many of the top funding recipients also received honors from the governor’s office in the first annual New York State Broadband Champion Awards.

Gov. Cuomo

Gov. Cuomo

Despite the money, the 2012 effort did not make a significant dent in the pervasive problem of broadband availability in upstate New York.

While Gov. Cuomo is committed to a target speed of 100Mbps within the next four years, more than one million New York households still cannot access broadband that achieves the state minimum — 6.5Mbps. That includes 113,000 businesses.

The governor’s solution is to subsidize private businesses with more tax dollars to resolve the broadband problem, with a significant part of the next round of funding likely to reach more institutional and public safety networks off-limits to the public, middle mile network expansion that can build state-of-the-art fiber rings that do not connect to end users, and an even bigger amount handed to Time Warner Cable (or Comcast if the state approves a merger with Time Warner Cable) and rural phone companies like Frontier Communications. Much of the money awarded to last mile providers like cable and phone companies will placate those that have stubbornly refused to expand further into rural areas unless taxpayers pick up some of the expense.

“In some of these areas, there’s just not a business case for these [service] providers to build out,” said David Salway, director of the New York State Broadband Program office. “The cost far exceeds what the revenue might be for that area.”

An unintended consequence of the broadband funding effort could be taxpayers subsidizing the establishment of for-profit monopolies in rural corners of the state. Although Salway told Capital NY he wanted to make sure New Yorkers had a choice, he clarified he was referring to a choice in technology, not service providers.

twcGreenThat must come as a relief for Verizon. The state’s largest phone company has petitioned state officials in the past for a gradual mothballing of New York’s rural landline network in favor of switching customers to wireless voice and broadband over Verizon’s cellular network. Theoretically, taxpayers could end up subsidizing the demise of rural New York landlines and DSL if Verizon seeks money from the rural broadband fund to expand its wireless tower network in rural New York. Time Warner Cable almost certainly will also seek more funding, probably in excess of the average $1,264 paid to the cable company for each of the 4,114 additional connections it agreed to complete during an earlier round of funding.

While rural broadband remains an important issue in New York, the merger of Comcast and Time Warner Cable is on the front burner and Salway, like the governor, had little to say. But Salway did offer that he did not believe the merger “would reduce [access] as much as further our goal” for expansion.

Guidelines for grant recipients are expected to become available just after the governor’s State of the State presentation in January, with ground-breaking on projects likely to start by mid-summer of 2015.

FCC to AT&T: Put Up or Shut Up; Agency Seeks Details About AT&T’s Fiber Pause Over Net Neutrality

Stephenson: No fiber for you

Stephenson: No fiber for you

AT&T’s decision to suspend fiber broadband upgrades over the Obama Administration’s strong support for Net Neutrality may backfire on the telecom giant’s multi-billion dollar bid to acquire DirecTV.

The Federal Communications Commission has dispatched a letter to Robert W. Quinn, Jr., AT&T’s senior vice President and federal regulatory & chief privacy officer, inquiring whether AT&T really meant what it said about plans to suspend fiber expansion and that might impact at least two million additional homes that are part of a broadband expansion commitment included in AT&T’s offer to acquire DirecTV.

The FCC’s Jamillia Ferris wants AT&T to clarify CEO Randall Stephenson’s comments at a recent investor event, requesting information that may reveal whether AT&T was using the suspension of its fiber buildout as a political weapon against Net Neutrality.

“We made some comments in the DirecTV announcement that we would build fiber to two million additional homes,” Stephenson said at a Wells Fargo technology conference last week. “We will obviously commit to that once the DirecTV deal is done, we will keep going. But what we have also announced on top of that is that we are going to deploy fiber to 100 cities. And look, we can’t go out and just invest that kind of money deploying fiber to 100 cities other than these two million not knowing under what rules that investment will be governed. And so we have to pause and we have to just put a stop on those kinds of investments that we are doing today.”

The FCC’s request suggests the company’s answers may impact how the FCC treats AT&T’s request for approval of its merger with DirecTV.

Requested from AT&T no later than Nov. 21:

(a) Data regarding the Company’s current plans for fiber deployment, specifically:

(1) the current number of households to which fiber is deployed and the breakdown by technology (i.e., FTTP or FTTN) and geographic area of deployment;

(2) the total number of households to which the Company planned to deploy fiber prior to the Company’s decision to limit deployment to the 2 million households and the breakdown by technology and geographic area of deployment; and

(3) the total number of households to which the Company currently plans to deploy fiber, including the 2 million households, and the breakdown by technology and geographic area of deployment;

(b) A description of

(1) whether the AT&T FTTP Investment Model demonstrates that fiber deployment is now unprofitable; and

(2) whether the fiber to the 2 million homes following acquisition of DirecTV would be unprofitable; and

(c) All documents relating to the Company’s decision to limit AT&T’s deployment of fiber to 2 million homes following the acquisition of DirecTV.

Comcast Boosting Speeds in Pacific Northwest to Fend Off CenturyLink, Frontier, and Google

Phillip Dampier November 5, 2014 Broadband Speed, Comcast/Xfinity, Competition No Comments

Comcast-LogoAfter raising prices for Internet service and imposing the nation’s highest modem rental fee, Comcast customers in Oregon and southwest Washington are finally getting some good news: speed boosts.

Comcast will double Internet speeds for “the vast majority” in the Pacific Northwest between now and the end of the year, bringing 100Mbps service to Comcast’s “Blast” Internet plan and 50Mbps to “Performance” tier customers. Comcast says it is the 13th speed increase in the last dozen years in the region, but that isn’t all that has increased.

Comcast raised prices for its broadband plans last month: $66.95 for standalone Performance service ($53.95 if you bundle), $78.95 for Blast ($65.95 for those also taking cable TV or phone service). The modem rental fee remains a steep $10 a month.

Customers will receive e-mail when the faster speeds become available in their area, and a modem reset (unplug it briefly) will be required to get the new speeds.

Comcast is facing competition from CenturyLink, which is installing fiber optics in the area and Frontier, which inherited Verizon’s FiOS network when it acquired landlines in the region. Google Fiber is also expected to eventually make an appearance in the Portland area. Comcast prices are on the high side in comparison to the competition. CenturyLink’s introductory rate is as low as $50 a month for fiber service and Frontier charges $35 a month for 30Mbps service on its FiOS network.

For now, Comcast broadband service remains uncapped in the region, but Comcast is continuing market trials elsewhere that include a 300GB usage cap and an overlimit fee for those exceeding it.

Wall Street Investors Suckered By Broadband, Wireless Myths on Usage Pricing, Network Investment

verizon-protestBig Telecom companies like Verizon and AT&T use phony numbers and perpetuate myths about broadband traffic and network investments that have conned investors out of at least $1 trillion in unnecessary investments and consolidation.

Alexander Goldman, former chief analyst for CTI’s American Recovery and Reinvestment Act grants, is warning Wall Street and investors they are at risk of losing millions more because some of the largest telecom companies in the country are engaged in disseminating bad math and conventional wisdom that relies more on repetition of their talking points than actual facts.

Goldman’s editorial, published by Broadband Breakfast, believes the campaign of misinformation is perpetuated by a media that accepts industry claims without examining the underlying facts and a pervasive echo chamber that delivers credibility only by the number of voices saying then same thing.

Goldman takes Verizon Communications CEO Lowell McAdam to task for an editorial published in 2013 in Verizon’s effort to beat back calls on regulators to oversee the broadband industry and correct some of its anti-competitive behavior.

McAdam claimed the U.S. built a global lead in broadband on investments of $1.2 trillion over 17 years to deploy “next generation broadband networks” because networks were deregulated.

Setting aside the fact the United States is not a broadband leader and continues to be outpaced by Europe and Asia, Goldman called McAdam’s impressive-sounding dollar figures meaningless, considering over the span of that 17 years, the United States progressed from dial-up to fiber broadband. Wired networks have been through a generational change that required infrastructure to be replaced and wireless networks have been through at least two significant generations of change over that time — mandatory investments that would have occurred with or without deregulation.

Over the past 17 years, the industry has gotten more of its numbers wrong than right. An explosion of fiber construction in the late 1990s based on predictions of data tsunamis turned out to be catastrophically wrong. University of Minnesota professor Andrew Odlyzko, the worst enemy of the telecom industry talking point, has been debunking claims of broadband traffic jams and the need to implement usage-based pricing and speed throttling for years. In 1998, when Wall Street was listening intently to forecasts produced by self-interested telecom companies like Worldcom that declared broadband traffic was going to double every 100 days, Odlyzko was telling his then-employer AT&T is was all a lot of nonsense. The broadband traffic emperor had no clothes, and statistics from rival telecom companies suggested Worldcom was telling tall tales. But AT&T executives didn’t listen.

fat cat att“We just have to try harder to match those growth rates and catch up with WorldCom,” AT&T executives told Odlyzko and his colleagues, believing the problem was simply ineffective sales, not real broadband demand. When sales couldn’t generate those traffic numbers and Wall Street analysts began asking why, companies like Global Crossing and Qwest resorted to “hollow swaps” and other dubious tricks to fool analysts, prop up the stock price and executive bonuses, and invent sales.

Nobody bothered to ask for an independent analysis of the traffic boom that wasn’t. Wall Street and investors saw dollars waiting to be made, if only providers had the networks to handle the traffic. This began the fiber boom of the late 1990s, “an orgy of construction” as The Economist called it, all to prepare for a tidal wave of Internet traffic that never arrived.

After companies like Global Crossing and Worldcom failed in the biggest bankruptcies the country had ever seen at the time, Odlyzko believes important lessons were never learned. He blames Worldcom executives for inflating the Internet bubble more than anyone.

A bubble of another kind is forming today in America’s wireless industry, fueled by pernicious predictions of a growing spectrum crisis to anyone in DC willing to listen and hurry up spectrum auctions. Both AT&T and Verizon try to stun investors and politicians with enormous dollar numbers they claim are being spent to hurry upgraded wireless networks ready to handle an onslaught of high bandwidth wireless video. Both Verizon’s McAdam and AT&T’s Randall Stephenson intimidate Washington politicians with subtle threats that any enactment of industry reforms by the FCC or Congress will threaten the next $1.2 trillion in network investments, jobs, and America’s vital telecom infrastructure.

Odlyzko has seen this parade before, and he is not impressed. Streaming video on wireless networks is effectively constrained by miserly usage caps, not network capacity, and to Odlyzko, the more interesting story is Americans are abandoning voice calling for instant messages and texting.

8-4WorldcomCartoonThat isn’t a problem for wireless carriers because texting is where the real money is made. Odlyzko notes that wireless carriers profit an average of $1,000 per megabyte for text messages, usually charged per-message or through subscription plan add ons or as part of a bundle. Cellular voice calling is much less profitable, earning about $1 per megabyte of digitized traffic.

Wireless carriers in the United States, particularly Verizon and AT&T, are immensely profitable and the industry as a whole haven’t invested more than 27% of their yearly revenue on network upgrades in over a decade. In fact, in 2011 carriers invested just 14.9% of their revenue, rising slightly to 16.3 percent in 2012 when companies collectively invested $30 billion on network improvements, but earned $185 billion along the way.

While Verizon preached “spectrum crisis” to the FCC and Congress and claimed it was urgently prioritizing network upgrades, company executives won approval of a plan to pay Vodafone, then a part owner of Verizon Wireless, $130 billion to buy them out. That represents the collective investment of every wireless provider in the country in network upgrades from 2005-2012. Verizon Wireless cannot find the money to upgrade their wireless networks to deliver customers a more generous data allowance (or an unlimited plan), but it had no trouble approving $130 billion to buy out its partner so it could keep future profits to itself.

Odlyzko concludes the obvious: “modern telecom is less about high capital investments and far more a game of territorial control, strategic alliances, services, and marketing, than of building a fixed infrastructure.”

That is why there is no money for Verizon FiOS expansion but there was plenty to pay Vodafone, and its executives who walked away with executive bonuses totaling $89.6 million.

As long as American wireless service remains largely in the hands of AT&T and Verizon Wireless, competition isn’t likely to seriously dent prices or profits. At least investors who are buying Verizon’s debt hope so.

Goldman again called attention to Odlyzko’s latest warning that the industry has its numbers (and priorities) wrong, and the last time Odlyzko had the numbers right and the telecommunications industry got its numbers wrong, telecommunications investors lost $1 trillion in the telecommunications dot.com bust.

As the drumbeat continues for further wireless consolidation and spectrum acquisition, investors have been told high network costs necessitate combining operations to improve efficiency and control expenses. Except the biggest costs faced by wireless carriers like Verizon are to implement strategic consolidation opportunities like the Vodafone deal, not maintain and grow their wireless network. AT&T is putting much of its spending in a proposed acquisition of DirecTV this year as well — at a cost of $48.5 billion. That could buy a lot of new cell towers and a much more consumer-friendly data plan.

Voice to text substitution (US)

year voice minutes billions texts billions
2005 1,495 81
2006 1,798 159
2007 2,119 363
2008 2,203 1,005
2009 2,275 1,563
2010 2,241 2,052
2011 2,296 2,304
2012 2,300 2,190

Cell phone network companies (if you can believe their SEC filings) are incredibly profitable, and are spending relatively little on infrastructure:

year revenues in $ billions capex in $ billions capex/revenues
2004 102.1 27.9 27.3%
2005 113.5 25.2 22.2
2006 125.5 24.4 19.4
2007 138.9 21.1 15.2
2008 148.1 20.2 13.6
2009 152.6 20.4 13.3
2010 159.9 24.9 15.6
2011 169.8 25.3 14.9
2012 185.0 30.1 16.3

Comcast Prepares to Launch All-Out Attack on C Spire’s Irritating Competition in Mississippi

comcast crushThe sleepy deep south isn’t often a battleground for an all-out broadband competition war, but Ridgeland, Miss.-based C Spire, a regional cell phone company with fiber broadband aspirations, has gotten too big for its britches and Comcast is preparing to demonstrate its size and resources can run even a home state provider into the ground.

C Spire is building a statewide fiber-to-the-home network, city by city, on its pre-existing fiber backbone which extends to C Spire’s cell towers across the Magnolia State. As the fiber network expands, talk of doing something in a “Mississippi Minute” will be a thing of the past as C Spire prepares to deliver gigabit broadband speeds far in excess of what competitors like Comcast, AT&T and Cable One are prepared to offer.

Communities already on the construction list include: Batesville, Clinton, Corinth, Hattiesburg, Horn Lake, McComb, Quitman, Ridgeland and Starkville.

But C Spire’s network caught the attention of Comcast earlier this month when it announced Jackson, the state capital, was going to get fiber service.

C Spire is following Google Fiber’s model, attempting to get enough residents in a neighborhood to pre-register with a refundable $10 deposit. Online pre-registration for the service began in Jackson last month, and several hundred residents applied even before the fiber network expansion was announced, ready to tell Comcast to take a hike.

Jackson neighborhoods that reach sign-up levels set by C Spire will be the first to get the new generation of fiber services, the company says.

“Gigabit infrastructure can create a new economic reality for the city of Jackson,” Duane O’Neill, president & CEO of the 2,100-member Greater Jackson Chamber Partnership, told the Mississippi Business Journal. “In the handful of U.S. cities where this infrastructure is deployed and widely available, it has generated thousands of jobs, millions of dollars of new investment, boosted home values and improved the overall quality of life.”

c spire fiberC Spire’s plans could cost Comcast a significant number of cable customers across Mississippi, and it isn’t taking that lightly.

Departing from its usual tradition of focusing new technology on large northeastern cities, Comcast will begin saturating Jackson with its Wi-Fi hotspot service, starting with 200 public hotspots slated for launch before the end of this year. The company only had a handful of Wi-Fi hotspots in Jackson before. Jackson will also get significant cable service upgrades, including the introduction of a new “smart home” service, a cloud-based service integrating Comcast’s cable, Internet, and home-security.

Comcast says it has plans to turn Jackson into a “truly connected city,” and if that means competitively disconnecting C Spire from its nascent fiber customer base, all the better.“This is the kind of threat that would frighten competitors,” said industry observer Jeff Kagan. “Comcast can be a heavy-duty competitor when they want to be. So why is Jackson and other Mississippi cities getting this kind of attention from Comcast and C Spire? I think it’s a matter of competition and C Spire’s aggressive move in the state of Mississippi played a role in the Comcast decision to turn up the heat.”

Kagan also expects Comcast will cut prices to undercut C Spire. That would be consistent with Comcast’s customer retention policies that dramatically lower rates for customers threatening to leave. Rate-cutting will benefit consumers, but if Comcast engages in below-cost predatory pricing, those savings will be short-lived.

“It’s starting to look like that old nursery rhyme, Jack and the Beanstalk,” said Kagan. “Watch out Jack, the Giant is waking up.”

If that battle becomes cut-throat, C Spire’s fiber aspirations may end up nothing more than pipe dreams if the company retreats, deciding it cannot survive in a battle with Comcast, the Giant of all cable companies.

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