The business community of Poulsbo, Wash., a Seattle suburb of 9,000 in Kitsap County, is fed up waiting around for CenturyLink and Comcast to increase broadband speeds in the area so several have joined forces to share the city’s underused, existing fiber-optic cables to offer free Internet access for area businesses and residential users.

The Kitsap Public Utility District has launched a public-private partnership that offers free wireless mesh antennas to businesses willing to host them and pay any power costs incurred, so long as they agree to let customers and others in range of the network use it at no charge. The wireless mesh technology, more robust than traditional Wi-Fi, costs the public utility district between $7,000-$12,000 per site, but the resulting wireless coverage is cheap compared to wiring individual homes and businesses with fiber.

Local businesses, community leaders and the public consider it a win-win for everyone, especially because the existing institutional fiber network already in place is underutilized. The comparatively inexpensive wireless technology has not created any significant issues for area taxpayers or ratepayers, which effectively underwrite the antenna purchases, installation, and maintenance.

The wireless network offers speedy connections — as much as six times faster than the current broadband speeds sold by Comcast and CenturyLink in the county.

So far, four antennas have been installed downtown at local restaurants and a Lutheran church.

Stephen Perry, the PUD’s superintendent of telecommunications, says the new network is a pilot program to test if an economic model can be created to sustain the service and eventually expand it.

“The whole idea was to have it be a community network. It’s community based and owned so to have the community step up and want to take ownership of it … thought we’d have to force it on people,” Perry told the Kitsap Sun, noting district workers “can’t go fast enough” responding to fiber-optic interest.

The surprising support from the local business community has helped drive the project and publicize it. Local businesses love the new service, which they consider more reliable than paying for and maintaining a Wi-Fi network and Internet connection from Comcast or CenturyLink. The service does not require a password or complicated setup to access and has proved more reliable than older Wi-Fi solutions. Customers also enjoy the higher speeds.

Ed Stern, a member of the city council, said wireless mesh technology represents a major improvement over traditional Wi-Fi.

“It’s not a typical ‘hot spot’ limited to that business or specific location, but rather like ‘umbrella’ coverage, in that the antennas join together to create seamless coverage of everything and everybody throughout the area,” Stern said, adding network expansion is now inching into residential neighborhoods as well. “It’s really exciting.”

With countless towns and cities equipped with underutilized institutional fiber broadband networks lacking money to install direct fiber connections to homes or businesses, the wireless mesh option can offer an affordable introductory solution to expand service, publicize the community broadband initiative, and build support for even more ambitious public broadband opportunities in the future.

One local resident told the newspaper it was about time.

“The privatization business model has proven a failure,” wrote one reader. “Kitsap PUD needs to offer retail broadband to residents and businesses. These fiber cables are just sitting there doing nothing. There is one at the end of my driveway, but no one will sell me the service. Why would CenturyLink bother when they can continue to get overpaid for very slow speeds. In most places, there aren’t choices.”

AT&T has told more than 75 call center workers in the Triad they have three weeks to either start looking for another job or consider relocating to Birmingham, Ala. if they wish to remain employed by the telecom giant.

The holiday layoff took workers partly by surprise, but some told a local Fox affiliate they felt something was coming when they noticed AT&T stopped updating the affected workers’ training to handle customer calls.

The Communications Workers of America called the announcement devastating news for career employees and their families during the holiday season. The union is trying to get AT&T to extend the deadline to give workers more time to consider their options.

Local AT&T workers have had a tough year at the company, with difficult contract talks and technicians complaining about the company’s policy to allow customers to have AT&T U-verse installed on Christmas Day.

CWA’s Local 3902 chapter, which represents AT&T workers in the Triad, claims the company has systematically tried to drive its workers out of the middle class with benefit and pay reductions and a race to the bottom mentality cutting labor costs and demanding longer work hours for less money:

[CEO Randall] Stephensons’ philosophy is as old as time. It is a belief that he is entitled and workers are not.  It has been called “wage slavery” and worse. People rose against it. Governments that stood by it have been toppled.

In America, the people began to say no more beginning in the late 1880’s. It took the Great Depression of the 1930’s to cause our great-grandparents to finally hit the streets. CWA began to see real successes in the 1950’s. A strike that lasted 72 days in 1955 set the stage for our best days. The strike itself did not win much, but it left a scar AT&T did not soon forget. Contract negotiations after that were easier. That period lasted through 1980. In that period we won solid pensions and no-premium healthcare. By 1980 we were a solid part of the middle class and thought we would be always.

By 1981 we had begun to lose our way. Those hired during the boom of the ’70’s did not want to hear of  the prior struggles. They just happily enjoyed the hard won gains of the generation before them. They began to vote against their own interests. They began to believe that AT&T and BellSouth loved them and would always take care of them. That is the period we find ourselves in today. But we are beginning to see it for what it is.

During this period we have lost most of our pension gains. We are again paying a large part of our healthcare. Our wages are stagnant. Workers are fired almost at will. AT&T is out of control. Politically, they control the state legislatures who deregulate the industry. They run roughshod over the American worker. They contract out and off-shore at will. It has been a devastating period for CWA and for all unions.

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WGHP in Greensboro covered the sudden holiday announcement AT&T was letting go at least 75 North Carolina workers by the end of December unless they agreed to relocate to an AT&T call center in Birmingham, Ala.  (2 minutes)

From writing friendly reports defending Internet Overcharging to the FCC’s new chief economist — D.C.’s revolving door keeps on spinning for Professor Steven Wildman.

The Federal Communications Commission has proved that Washington’s revolving door enjoys perpetual motion with the announcement it hired a new chief economist who just three weeks earlier was peddling his findings favoring usage caps and consumption billing before a National Cable & Telecommunications Association gathering that paid for his research.

Professor Steven Wildman’s move from the cable industry’s go-to-guy for defending Internet Overcharging to a cushy new position at the FCC just weeks after shilling for the country’s largest cable industry lobbying group is shocking even by Washington’s standards.

Remarkably, FCC Chairman Julius Genachowski praised this cheerleader of wallet-pilfering by saying “his deep economic expertise and problem solving abilities” are the perfect fit for an agency pressed with challenging initiatives – like charging you more for your broadband service and calling it “pro-consumer.”

There is no doubt Wildman has deep economic expertise — he has found success penning dubious research bought and paid for by an industry that expects his findings to echo their own talking points. His problem-solving abilities at fixing the facts around the cable industry’s agenda are also unquestioned.

But his research reports aren’t worth wasting your monthly usage allowance to download because they only tell part of the story.

At the December NCTA Connects event, Wildman was the darling of the cable industry echo chamber telling tall tales about the problems of broadband penetration in a country where providers enjoy up to 95 percent gross margins on broadband pricing:

“One of the key mechanisms through which positive welfare effects are realized is the crafting of lower-priced plans for users who otherwise might not take service, while users who have a more intensive demand for broadband are able to contract for more advanced services. We also showed that UBP has flexibility advantages for users whose data service needs vary over time. Because UBP creates an incentive to offer lower cost-lower usage plans to consumers who otherwise could not profitably be served at a unitary price, UBP can be an effective tool for promoting increased broadband penetration in the United States, a role that is enhanced by the fact that low price-low usage options reduce the financial risks to consumers thinking about trying broadband for the first time.”

“Tiered pricing also has benefits for the recovery of shared network costs and for network investment. Whereas investment decisions are also influenced by other factors, including the costs of extending networks, potential revenues, and overall economic conditions, we found that, other things equal, usage tiers will likely contribute to better cash flows and stronger incentives to invest in broadband plant, both to improve the quality of service for current customers and to extend networks into unserved and underserved territories.”

Wildman does not mention his cable benefactors earn a higher percentage of profit on broadband than oil sheikhs in the Middle East rake in charging $90+ for a barrel of oil. So it is unsurprising his analysis lacks one simple solution providers could use to differentiate their services and enhance broadband penetration: lower the price to compete. He also ignores the fact that true usage pricing would offer consumers a chance to pay only for what they actually consumed during a month, but those plans are not on offer anywhere.

Wildman ignores the real industry agenda: monetizing broadband usage to create even higher profits. The cable industry is well on its way, using the enormous market power enjoyed in the current monopoly/duopoly state of consumer broadband to preserve today’s near-extortionist pricing while trying to pick up customers currently unwilling to pay, charging for slightly discounted service that comes with a paltry usage allowance.

The meme that unlimited, flat rate broadband is somehow responsible for America’s broadband-unserved is a popular one at the FCC, where Chairman Genachowski has applauded usage based pricing as an “innovative” experiment that could change how broadband is marketed in the U.S. and promote its expansion.

While those in D.C. may live in a bubble populated by industry lobbyists, others do not.

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Message Confusion: While some in the cable industry still advocate usage pricing and caps as a matter of “fairness” and as a salve for peak time congestion, today’s advocates of usage-based billing appearing at a cable-industry event in December admit congestion is simply no longer a problem on wired networks. Sandvine’s Dave Caputo and Professor David M. Lyons of Boston College Law School dismiss the notion of congestion-based pricing only during peak usage, arguing congestion is no longer the real issue driving usage caps. That is why everyone must be subjected to higher priced, usage-capped broadband no matter what time of day they use the network. (3 minutes)

The inevitable outcome of “differentiated pricing” is charging consumers more to access popular websites, as is already the case in countries like Colombia.

Wildman argues that like car manufacturers that offer many different models ranging from basic to well-appointed with luxury extras, providers should be free to offer different types of plans to consumers.

Wildman’s auto analogy fails because consumers have more than a dozen different manufacturers to choose from, each making a range of different models. For broadband, the overwhelming majority of Americans have two choices: the cable and phone company. Unlike auto manufacturers that respond to consumer demand, broadband providers are hellbent on eliminating the overwhelmingly popular flat rate, unlimited option in favor of mandatory usage pricing and/or usage caps. It would be like telling auto-buyers that their Honda Accord, Toyota Camry, or Chevy Malibu no longer met the needs of manufacturers. Instead, you have one choice: the Toyota Yaris. But you can get it with heated leather seats, so what’s the problem?

Wildman also ignores the fact providers already sell different plans, based on different speeds. Customers with only light web use can select a cheaper, lower speed tier and never notice the difference. Heavier users buy up into premium speed tiers, paying higher prices to cover their additional usage and expectations of performance.

Providers have spent the last few years trying to justify adding a usage component to the pricing equation and Wildman is perplexed by public policy and consumer groups overwhelmingly hostile to plans that would leave current pricing largely intact and add an artificial usage cap. Considering who pays for his research, this is not too surprising.

Wildman’s style of “innovation” already exists in countries like Canada, Australia, New Zealand, and in parts of Europe allowing everyone to witness what actually happens when these pricing schemes gain a foothold. Usage-based pricing has successfully boosted the profits of providers but has done nothing to expand rural broadband networks or offer customers big savings. When providers gorge on profits made possible in uncompetitive markets, the money goes straight into bank accounts or back to investors, not into capital spending to improve service or expand into areas deemed unprofitable to serve.

Customers despise usage caps so much that in Australia and New Zealand, the government has partially taken over rebuilding infrastructure with new fiber to the home networks and promoting international capacity expansion that will eventually banish usage pricing for good. In western Canada, Shaw Cable heard so much condemnation about usage caps during its listening tour, it greatly relaxed them. (The fact its biggest competitor Telus barely enforces their own caps didn’t hurt either.)

In the rest of Canada, independent ISPs have found a growing niche selling plans with considerably larger usage allowances or flat rate access. How did dominant providers like Bell (BCE) respond? They asked regulators to force the competition to stop selling flat rate service.

How Sandvine helps providers “innovate.” Alaska’s GCI implemented its draconian caps and overlimit fees using Sandvine’s Internet Overcharging technology.

Wildman’s report flies in the face of reality, and every so often the cable industry itself admits as much. Take the word of Suddenlink president and CEO Jerry Kent, who runs a largely rural cable company that launched its own Internet Overcharging scheme:

“I think one of the things people don’t realize [relates to] the question of capital intensity and having to keep spending to keep up with capacity,” Kent said. “Those days are basically over, and you are seeing significant free cash flow generated from the cable operators as our capital expenditures continue to come down.”

Unsurprisingly, that sentiment did not make it into Wildman’s analysis either.

Wildman

Financial reports from providers that have usage caps and those that don’t show the same remarkable trend: broadband expenses are way down, capital intensity is well within expected norms, and cable operators are not pouring their profligate earnings into expanding rural broadband.

That makes Wildman the consummate team player, and hardly the best choice for taxpayers who will cover his salary for a few years before he takes another trip through the revolving door back to his industry friends. When Americans wonder why Washington doesn’t seem to be living in the reality-based community, this is why. We can hardly expect Mr. Wildman to represent our interests when he has spent the last several years representing an extremely profitable industry reviled for its overcharging, poor service, and scheming, and will be more than welcomed back if he remembers his friends while working at the FCC.

This latest move represents another disappointment from Chairman Julius Genachowski, who increasingly appears to be warming up to a telecommunications industry he used to aggressively oversee at the start of his tenure.

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Three weeks ago, the Three Musketeers of Internet Overcharging appeared at a cable industry-sponsored event promoting usage caps and consumption billing. Sandvine CEO Dave Caputo makes his living scaring providers and consumers about Internet growth and (conveniently) selling the equipment that manages the traffic “tsunami” with speed throttles and usage limits. Professor David M. Lyons of Boston College Law School calls usage pricing “second degree price discrimination,” a term he hopes the industry will rebrand into something less ominous and obvious. He argues selling broadband at incremental costs will never recover “fixed costs” for networks the cable industry itself admits have already been largely paid off. Professor Steven Wildman, now on the way to the FCC as its new chief economist, peddles research bought and paid for by the cable industry. They got their money’s worth. (1 hour, 9 minutes)

Russian state-controlled telecom operator Rostelecom has announced it is refocusing most of its capital investment on broadband expansion, after the Russian government called on providers to build out Russia’s broadband infrastructure.

At least 60 percent of the company’s investment from 2013-2017 will directly target improved broadband. The company previously emphasized expansion of its mobile wireless division, a highly-criticized decision on the part of Russian officials who consider the country’s cell services already highly competitive and sufficient. Five major cell companies compete in Russia: MTS, MegaFon, Vimpelcom, Tele2 and Rostelecom — the smallest of the five.

Broadband expansion is key for Russia’s economic growth and private market development. Rostelecom maintained a landline monopoly until it merged with several regional operators and today competes among private rivals in the telecom business. Rebuilding and expanding its network is deemed critical to its long term survival.

But the current management of Rostelecom may have fallen out favor with the Kremlin.

Reuters reports Rostelecom CEO Alexander Provotorov may be headed for an early exit after state investigators searched his home in an unrelated fraud probe.

The government is expected to sell off its remaining interest in Rostelecom by 2015 after a restructuring of the government’s telecom assets is complete.

At least 95 percent of Vermont residents will have access to broadband by the end of today, because of a combination of private investment, public funding, and innovative service solutions for some of the state’s most rural areas.

State officials say 2012 was an important year for broadband availability in Vermont, as dominant phone company FairPoint Communications made inroads in expanding its DSL service in areas that never had access before.

In 2011, Governor Shumlin set an ambitious goal to see 100 percent of Vermont covered by broadband by the end of 2013, and the state appears on track to achieve that target in the coming year.

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Gov. Shumlin answered questions from state residents regarding his plan to see 100% broadband coverage in Vermont by the end of 2013. (Feb. 3 2011) (3 minutes)

Vermont’s small size would seem to make it an easy target for total broadband coverage, but significant rural areas have made it unprofitable for commercial phone and cable companies to make inroads.

Comcast, the state’s largest cable operator, has not grown much geographically over the past five years. FairPoint, which took control of much of the state’s landline network from Verizon in 2008, has been compelled to achieve broadband expansion as part of an agreement that approved the sale.

Karen Marshall, who heads a state effort to expand both cell phone and broadband access in Vermont says the remaining areas without coverage will be a difficult challenge, but one that can be achieved with the help of private and public investment.

“The last 5 percent are the needle in the haystack,” Marshall told Vermont Public Radio. “They are the most far-flung, probably the most expensive and sometimes even the most physically challenging to get to.”

Wireless is often the most cost-effective solution, both for broadband and cell expansion, and Marshall suggested Vermont would use microcell technology along Vermont’s rural roadways.

“I think we will be one of the first places in the country that is deploying microcell technology for example, on the top of telephone poles or utility poles, kind of like a daisy chain,” Marshall said.

The rural Vermont Telephone Company won a $5 million state grant to cover Vermont’s southernmost counties with a combination of wireless phone and broadband service.

While areas of rural Vermont will likely have broadband access for the first time, improvements have also been available to those who already have the service.

Marshall estimated the average broadband speed in the state has increased from 5.5 to 9.7Mbps, which is above the national average.

Vermont Public Radio surveys how the state is doing meeting Gov. Shumlin’s goal to see broadband service available to every Vermonter. (December 28, 2012) (2 minutes)
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