Gilbert

Only in Texas.

Less than a day after the Texas Department of Agriculture unveiled its statewide broadband map, an opposition candidate running for the office of Agriculture Commissioner dismissed it as a re-election scheme that will never benefit rural Texas.

Hank Gilbert, the Democratic agriculture commissioner candidate, criticized the incumbent commissioner’s efforts as a cheap stunt that took four years to deliver and wasted taxpayer money.

“This is yet another stupid, sleazy, ‘look-at-me’ political trick designed to cover up the fact that he’s one of the best at wasting tax money in the history of the state,” Gilbert said. “That map will do nothing for people without broadband access.  I’m sure people on landline modems will be grateful to Todd—after the 45 minutes it takes them to actually view the map to determine, sure enough, that their area isn’t served by broadband,” Gilbert continued.

Gilbert is referring to a joint broadband mapping project by the Texas Department of Agriculture and telecom industry front group Connected Nation, which is stacked to the rafters with telecom industry executives with a vested interest in making sure those maps reflect the industry’s interests.

Current commissioner Todd Staples released the map with great fanfare, claiming 97 percent of Texas already had access to broadband service, with just three percent, representing 250,000 Texans without.  Those numbers were debatable, considering Connected Nation was involved.  In earlier mapping efforts, the group claimed ubiquitous broadband was already available over large sections of several communities, even though it turned out many of those homes could not qualify to receive the DSL service the group said was available.

Gilbert put a less fine point on it:

Texas Broadband Map (click to enlarge)

“Aside from the fact that he considers the federal stimulus dollars for broadband an excuse to gain further name recognition, what has Todd Staples really done to increase broadband connectivity in Texas,” Gilbert asked. He also questioned why TDA officials have said publicly, in the weeks prior to the map’s unveiling, that they didn’t know what areas of Texas were not served by broadband or high-speed internet access.

“It is a sad day when the agency and commissioner in charge of making sure rural areas get broadband don’t know which areas are underserved. It’s even more sad that the TDA had to depend on a public-private partnership with a non-profit agency to figure it out. I don’t think it will come as a surprise to anyone that telecom companies have far more granular information on existing service areas,” Gilbert said.

“Based on the information available on the website Staples is touting, anyone with a pulse, vocal chords, and the ability to dial the keys on a telephone could have collected this information from providers. I don’t see why it has taken Todd Staples nearly four years to do this,” Gilbert said.

Gilbert is apparently new to the broadband availability debate.  Telecom companies treat specifics about their broadband service areas and speeds as proprietary business information and will not disclose it to the government or any other third party, claiming it needs to protect the information for competitive reasons.  Earlier efforts to collect this information in other states met with stonewalling from providers.  Even the federal government has been unable to gather street-level statistics on broadband service from some providers.

But Gilbert has a point that a map project, especially with an industry front group in the mix, does not actually bring broadband to anyone.  Too often, such maps are used to block would-be competitors from getting federal broadband grant money, with nearby providers claiming the maps show the funding would help a community already served by broadband, even if it was not.  They also help paint a helpful picture for an industry seeking funding for middle-mile projects that divert broadband stimulus funding to help incumbent providers enhance their networks at the public expense.  In short, Texas cable and phone companies get to argue the stimulus program is a waste of money (unless they are recipients) because Texas doesn’t have a broadband problem.

Cue the Texas Cable Association:

“The map shows that less than 1 percent of all Texans cannot access some form of broadband, whether, wired, wireless or mobile. Yet – without this information – the federal government awarded more than $200 million in grants and loans to projects in Texas. Some of these projects propose to duplicate service in an area already served by multiple broadband providers.

“In addition, the federal government set a deadline for second-round funding applications that forced the Texas Department of Agriculture to again make recommendations without the benefit of the mapping data.

“As the federal government considers these new applications, the Texas Cable Association urges it to make its decisions based on the new Texas broadband availability map.

“Taxpayer dollars – in the form of government grants – should not be used to duplicate services or to provide free capital that allows grant winners to gain market advantage over private companies that have invested millions of dollars of their own money to make broadband available.”

The state cable lobby even has a 30 second ad running, thanks to the help of the mother-of-all-astroturf groups, Broadband for America — a front group for big cable and phone companies.

[flv]http://www.phillipdampier.com/video/Texas Cable Association Broadband Ad.flv[/flv]

The Texas Cable Association has this not-too-subtle ad promoting private investment in broadband, suggesting Texas telecoms are helping, not hurting consumers and businesses.  (30 seconds)

The Staples campaign responded to Gilbert’s accusations Texas-style — by accusing their opponent of being a crook.

Staples’ campaign manager Cody McGregor said:

“Our opponent has a criminal conviction for theft, unpaid taxes, current tax liens, and allegedly accepted a bribe for $150,000. I hope all Texans will gain access to the Internet and have the ability to view www.guiltyguiltygilbert.com and get the facts about our opponent and his campaign’s trouble with telling the truth.”

Staples’ website is way over the top, accusing Gilbert of being a “villainous Obama Democrat” who is guilty of not wearing his seatbelt and being stupid.

Todd Staples owns stock in at least two telecom companies, AT&T and Fairpoint Communications, the latter of which is probably not helping his portfolio too much considering it declared bankruptcy.

Read Gilbert’s “fact sheet” on Todd Staples’ broadband mapping project below the jump.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/Repeat Offender Hank Gilbert.flv[/flv]

And you thought your state’s campaign ads were too negative.  The Staples campaign goes back to the old west to drive home a message about their opponent.  (1 minute)

… Continue Reading

Oklahoma residents — your state government needs you… to test your broadband speeds.

Mapping the state’s broadband access will require the participation of all levels of state, county, and local government as well as Oklahoma citizens. A new website makes it easy for any Oklahoman to contribute some results of their own.

All Oklahomans are invited to test their Internet connection speed at the broadband mapping website. Visitors can then select their location (work, home, or other), street address, zip code, and what Internet provider they utilize. All the data collected will be consolidated onto a map of Oklahoma depicting what areas of the state are served, underserved, and unserved by broadband.

The Oklahoma Broadband Mapping Initiative is being conducted under the direction of the Secretary of State and a partnership of several state agencies.

Telstra is Australia's largest telecommunications company. (Photo: Telstra)

It’s not as if the Australian government didn’t warn private broadband providers, notably Telstra.  For the past several years, Australians have endured expensive, slow, heavily usage-limited broadband service that has put the country well behind many other Commonwealth nations.  Australian Communications Minister Stephen Conroy finally warned the nation’s largest telecommunications provider if it didn’t move forward on upgrades and improved service, the government would be forced to step in to protect the national interest.

Instead of improving service, Telstra spent years stonewalling the government and the Australian public, while banking high profits for broadband service.  That’s a familiar story for North Americans, stuck with companies like Bell, Rogers, AT&T, Comcast and Verizon — all of whom seek ultimate control over what kind of service you receive, what you pay for it, and what websites you can and, perhaps down the road, cannot visit without paying a surcharge.

Australia is closing the chapter on this story with a happier outcome for its 22 million citizens.  Perhaps the United States and Canada could learn a thing or two from the folks down under.

Bringing U.S. Oligopoly-Style Management to Australian Broadband: The Sol Trujillo Years — 2005 to 2009

Telstra, a former government monopoly comparable to the American Bell System, was privatized in the late 1990s.  Telstra looked to the United States for a chief executive that had experience navigating that transition.  They found Sol Trujillo working his way up the management ladder at AT&T, finally culminating in chairmanship of former Baby Bell Qwest Communications.  Would Trujillo like to take on the challenge of managing Australia’s largest phone company? Trujillo signed on with as Telstra’s CEO in 2005 promising to modernize the business and to bring American-style innovation to the South Pacific.

Instead, Trujillo established an American-style rapacious oligopoly.

[flv width=”424″ height=”260″]http://www.phillipdampier.com/video/Nine Australia Trujillo War on Unions.flv[/flv]

Channel Nine in Australia reported on Telstra’s sudden interest in union-busting after Sol Trujillo arrived in 2005.  (1 minute)

Sol Trujillo

In his first year at the company, Trujillo started an all-out war to get rid of Telstra’s organized labor, slashing 10,000 jobs to “save the company money” all while boosting his own salary.  What started as $3 million in compensation in 2005 would rise to more than $11 million dollars just four years later, even as the value of Telstra declined by more than $25 billion on his watch.

Trujillo alienated his employees and officials in the Australian government.  Then-Prime Minister John Howard attacked Trujillo’s salary boost as abusive.

“I’m not complaining about the salary I get but I do think the average Australian, who gets paid a lot less than I do … regards that sort of salary as being absolutely unreasonable,” Mr Howard said on Southern Cross radio. “And it doesn’t help the capitalist system, which I believe in very passionately, that some people appear to abuse it.”

Trujillo’s salary was 38 times greater than the highest official in Australia’s government.

The average Australian retiree gets by on $219AUS a week.

Trujillo had to make due with more than $211,000 a week.

[flv width=”424″ height=”260″]http://www.phillipdampier.com/video/Nine Australia Telstra Salary Hike.flv[/flv]

Channel Nine ran this report on the controversy over Sol Trujillo’s compensation package.  That old meme about having to pay high salaries to attract quality talent would have been more convincing had Trujillo’s policies not caused a $25 billion reduction in Telstra’s value.   (2 minutes)

Customers weren’t exactly endeared to spending more of their money on Telstra products and services.  Telstra had already embarked on cost controls for network upgrades, leveraged its monopoly power in many parts of the country with high rates for usage-restricted service, and bungled a critical application to participate in Australia’s National Broadband Network.

Australia’s National Broadband Plan, a roadmap for broadband improvements, set pre-conditions to involve small and medium-sized businesses in network construction.  Trujillo balked, demanding that Telstra — and only Telstra — should have the right to determine what kind of network should be built in the country.  More importantly, unless they exclusively ran it, the company would do everything in its power to block or destroy it.

Internet Overcharging schemes limit enjoyment of broadband usage across Australia. Telstra provides a usage meter estimator that includes all of the useless measurements for e-mail, images, and web browsing. But throw in some movie watching and the gas gauge really starts to spike.

The Sydney Morning Herald business reporter Ian Verrender was stunned:

Telstra has employed a three-step strategy to muscle out any competition.

It can be neatly condensed into three words: Bluster, Belligerence and Obfuscation.  We [just] saw it again in spades.

Telstra has been excluded from one of the most ambitious infrastructure projects announced by a Federal Government in decades: the construction of a national broadband network.

Could it really be that Telstra’s board and management were so incompetent that they could not get past stage one in a tender process of this magnitude?

After all, there were only four main criteria that had to be met. The first was the proposal had to be lodged in English. The second and third had equally low hurdles. Metric measurements – not the old inches, feet and miles – were required and the bid had to be signed. Nothing too difficult there.

But the fourth criterion appeared to stump Telstra. It didn’t include any plan for the inclusion of small business. And so the Communications Minister, Stephen Conroy, was obliged to exclude Telstra, an announcement that shook 12 per cent from the value of the country’s biggest telecommunications company.

This was no accident on Telstra’s part. It knew it was lodging a non-conforming proposal. Why, you ask?

The answer is simple. Telstra does not want a national broadband network, particularly one that involves anyone else. That includes taxpayers.

And if one has to be built, Telstra will do everything in its power to delay or kill the process. Yesterday marked stage one in a protracted war, ultimately designed to defeat one of Prime Minister Kevin Rudd’s key election promises.

Trujillo claimed yesterday that Telstra had been unfairly excluded from the process on a technicality. That’s just rubbish.

In recent months, the company, its chairman, Don McGauchie, and Trujillo repeatedly threatened to walk away from the tender process, and lodged the proposal only a few hours before the deadline.

Trujillo’s rhetoric yesterday was laced with the usual mixture of bravado and threats. He compared Australia to North Korea or Cuba. He declared only Telstra was capable of building the type of network required by the Government.

But two lines stand out. First this: “Customers make the choice of who they do business with; regulators and governments and others do not.” And then: “We reserve our rights regarding future action.”

The message is clear. Telstra will launch legal action at every opportunity – and even when there aren’t opportunities.

That time-honored American practice of simply suing your way through any legislative or regulatory roadblocks threatened to come to Australia.

The exclusion of Telstra from such a revolutionary broadband project didn’t sit well with the board or shareholders, and directly led to Trujillo’s ouster in 2009.  By then, he had alienated customers, the government, and just about everyone else.  Perhaps the government would allow a second look at a Telstra broadband application if it was submitted by someone other than Sol Trujillo?  It couldn’t hurt to find out.

[flv width=”424″ height=”260″]http://www.phillipdampier.com/video/Nine Australia Telstra Trujillo Quits 2-26-09.flv[/flv]

Channel Nine covers the ousting of Sol Trujillo, wondering what sort of golden parachute he’d receive on the way out the door.  (3 minutes)

Just weeks after leaving, Trujillo decided to settle scores with Australia, telling reporters that he thought the country was backwards and racist.

[flv width=”424″ height=”260″]http://www.phillipdampier.com/video/Nine Australia Trujillo Calls Australia Racist 3-09.flv[/flv]

Payback time.  Trujillo threw a hissyfit in a BBC interview calling Australia’s lack of laissez-faire regulatory policies backwards, and treatment towards him racist.  (Channel Nine – 1 minute)

The Post-Trujillo Era: More Arrogance and Ruthlessness, But a Communications Minister Outmaneuvers the Telecom Giant — 2009 to Present Day

Telstra spent the summer of 2009 attempting to heal the Trujillo-caused wounds with conciliatory statements in the Australian media.  Telstra’s new chief executive, David Thodey, admitted the company’s customer service record needed improvement.  He distanced himself from some of the more caustic comments from the former CEO, and claimed the company was on-track to be a major participant in improving Australia’s broadband experience.

Conroy

But as the months progressed, Australia’s Communications Minister, Stephen Conroy ultimately concluded he was getting the lip service treatment that Telstra had delivered Australians for years.  Conroy, already suspicious of the company’s control-minded tendencies, quietly began bending the ear of Prime Minister Kevin Rudd.  Conroy had watched Telstra’s steadfast refusal to work constructively towards a National Broadband Network (NBN).  By last summer, the company was making proposals for underwhelming broadband expansion.  Fiber optic broadband was unnecessary and expensive, they said.  Besides, the service Telstra was providing was already good enough.

Australians didn’t agree.  Part of the platform that brought the Rudd government to power was the promise of better broadband service in Australia.  Waiting for Telstra to provide it was a futile exercise.

Conroy told Rudd the government should not be setting its broadband policy agenda based on what worked most conveniently for private providers.  If they won’t move, then let’s get them out of the way, Conroy suggested.  Rudd, working for the interests of the Australian people — not just a handful of telecom companies seeking riches with substandard service at monopoly prices, agreed.

After reviewing the proposals submitted to design and construct 21st century broadband service for Australia, Rudd dismissed them all, calling them inadequate.  The government, he announced, would go it alone and build the network itself — delivering a fiber to the home network for 90 percent of Australians on an open network available to any provider that wanted to rent access at wholesale rates.

More importantly, Conroy was not going to allow Telstra to continually block progress on the NBN.  Conroy was not some supine minister willing to compromise away the goal of super-fast affordable broadband.  His critics called him Machiavellian, slashing and burning anything that stood in his way.  But Conroy was steadfast — corporations would never be allowed to dictate broadband terms to the government.  He warned Telstra to cooperate or face the consequences.

Telstra continued to stall and stonewall, and last September, the Rudd government delivered what it promised — a forced break-up of Telstra.  The company was given a choice — either sell back its copper wire landline network to the government or divest itself of satellite TV service Foxtel and lose access to any additional wireless mobile frequencies for Telstra’s cellular service.

The equivalent in the United States would be to declare fiber to the home to be in the national interest, and if AT&T and Verizon didn’t deliver it to nearly every home in their service areas, the government would move in and do it themselves, taking back ownership of the AT&T and Verizon’s infrastructure along the way.

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/Network 10 Aus Telstra Break-Up 9-15-09.flv[/flv]

Network Ten covered the announced break up of Telstra by the federal government.  (2 minutes)

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Channel Nine ran several reports on the announced breakup of Telstra, including an interview with the opposition.  (6 minutes)

Australia Declares Broadband a Utility Service that Private Providers Cannot Control

Monday marked a day in history for Telstra, agreeing to sell back its copper wire landline business (for which it will receive $11 billion in compensation).  In return, Telstra is assured wholesale access to the new fiber broadband network, and can market products and services on it.  It cannot, however, serve as a gatekeeper to keep competitors out nor maintain virtual monopoly service, especially for less suburban and rural customers.

Some telecom analysts believe the deal is actually good news for Telstra, if they’d see beyond their control tendencies.  After all, they say, Telstra gets to rid itself of a legacy copper-wire landline network that is expensive to maintain and serves a dwindling number of consumers, many who have switched to wireless.  They also get to develop and market new high bandwidth applications on a network they are no longer responsible for financing.

It’s a win for the government as well who gets a single, national fiber network built in the public interest, which makes it far easier to recoup the billions in costs to build it.  They’ll even likely make a profit suitable to defray the costs of subsidizing wireless broadband service for Australia’s rural residents, to be served with at least 12Mbps connections.  No cost-recovery fees on customer bills, no usage limitations that restrict innovation, and broadband that serves everyone, not just a handful of corporations that seek to monetize every aspect of it.

Conroy wouldn’t think much of America’s National Broadband Plan, which relies near-exclusively on private providers voluntarily doing the right thing. Conroy stopped putting blind faith in Australia’s large telecommunications companies.  The Obama Administration hasn’t.

We’ve seen millions spent lobbying to permit a handful of providers to control broadband service on their terms.  Few will provide fiber to the home service and many are content leaving rural Americans with dial-up service.  With dreams of Internet Overcharging schemes to manipulate usage to maximize profits even higher, things could get much worse.  What’s right for AT&T isn’t right for us.

For Australia, who has lived under such monopolistic broadband regimes for over a decade, a National Broadband Network without arbitrary usage limits and available to all — rural and urban — is the promised land.  It will leapfrog Australia well ahead of the United States and Canada, with far faster speeds and better prices, all because a government stood up to a corporate provider that preferred to overpay its executives instead of getting the job done right.

Australia had a reality check — broadband is a utility service necessary for every citizen who wants it.  Just as electrification and universal phone service became ubiquitous in the last century, broadband will also join those services in the years ahead as commonplace in nearly every home.

If only the strength and conviction that is fueling Australia’s broadband future could also be found in the United States, where too often what is urgently needed today gets frittered away into “maybe we can have it someday” compromises with big telecom and their lobbyists.  That isn’t good enough.

ABC National Radio interviewed telecom analysts about the implications of today’s deal with Telstra to retire Australia’s copper wire phone network (June 21, 2010) (4 minutes, 17 seconds)
You must remain on this page to hear the clip, or you can download the clip and listen later.

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Australia is set to leapfrog over the United States and Canada, declaring its intent to deliver fiber broadband service to the vast majority of its citizens within eight years.  The country embarked on a National Broadband Plan more than a year before the United States, declaring the current state of usage-limited, slow, expensive, and incomplete broadband coverage to be unacceptable.

Australia discarded an earlier plan to work with private providers to build the network when government officials faced opposition from private providers who did not want to lose control of the broadband market.  In a surprising decision last September, Prime Minister Kevin Rudd announced the government would commence construction of a fiber to the home network itself, excluding private providers from participation.

NBN Company, a government-owned entity, will construct the $43 billion network over eight years, delivering 100Mbps speeds on a fiber network.  The infrastructure will be designed for an easy upgrade to 1 Gigabit service as bandwidth demand intensifies.

A separate deal concluded today with Telstra, Australia’s largest telecommunications company, will retire the nation’s copper wire landline network and cable systems, to be replaced by NBN fiber.

Up to 37,000 jobs will be created to build the network across the country, supplemented with wireless broadband for Australia’s most rural areas.

But some are complaining the network is too extravagant and expensive, adding their displeasure with the Rudd government’s strong-arming of Telstra to give up its network.

Opposition finance spokesman Andrew Robb said taxpayers would be on the hook for the project.

“It’ll come with a multi-billion dollar taxpayer debt that will have to be paid off over decades,” Robb said, adding if elected, the opposition promises to scrap the plan.

[flv width=”424″ height=”260″]http://www.phillipdampier.com/video/Nine Network New National Broadband Plan 4-6-09.flv[/flv]

Prime Minister Kevin Rudd originally introduced his nationwide fiber network proposal in April 2009.  Channel Nine provides this roundup of the original announcement, media reaction, and a few insults from the opposition.  Just a day after the plan was introduced, Communications Minister Stephen Conroy warned Telstra to “back off,” referring to the company’s immediate lobbying effort to block the proposal.  (11 minutes)

Prime Minister Rudd announcing the deal between Telstra and the federal government.

Australia has taken the first step towards 100Mbps unlimited broadband service this weekend as an agreement was reached to decommission the country’s copper wire phone network, replacing it with fiber connections to 90 percent of Australian homes.

After months of heated negotiations between Telstra and the federal government, Telstra CEO David Thodey this morning joined Prime Minister Kevin Rudd at the podium to announce the $11 billion deal.  Telstra will agree to scrap its copper-wire phone system and make way for the federal government’s new fiber network.

Rudd claimed the deal would benefit everyone because it would permanently retire an obsolete network with easily-upgradable fiber, connected right to the home.  Under Rudd’s previously announced National Broadband Plan, the government would finance the construction of the fiber network and lease access to any provider, including Telstra, at wholesale pricing.

In addition to an $11 billion offer, Telstra is expected to keep the estimated $580 million the company could earn from recycling more than 70 million kilometers of copper phone wiring no longer needed.  Another $1 billion will be earned from real estate sales.  At least 3,000 telephone exchange offices are expected to be declared redundant after switching to the fiber network, bringing Telstra plenty of additional earnings as those properties are sold off.

“I can’t stress enough just how complex this certain negotiation has been, because we’ve had to look at commercial issues, what the future of the business would be, what the structure of the industry would be, but we have got to this position and we are pleased to have done so, because it does give us clarity, and that’s what this company needs,” Thodey said. “Firstly we’ve got to grow our share of the market, we’ve got to simplify this business to take the unnecessary complexity [out], and we are going to continue now to build and invest in building new products and services to work in an NBN world.”

The agreement gives NBN Company, the government-owned entity building the fiber network, access to Telstra’s outdoor facilities to house the fiber network, saving the government billions in construction costs.  Telstra has also agreed to purchase wholesale access to the new network and will also decommission its coaxial cable-based systems, moving customers to the new fiber facilities as built.

Telstra will continue to operate its wireless mobile network and satellite TV business independent of the government broadband project.  For Telstra, in return for giving up control of broadband, the company is also freed from its universal phone service obligations which required it to provide service to any Australian that asked.

Telstra shareholders liked what they saw as the stock soared in value earlier this morning, but Thodey urged some caution.

“We believe that this is an important milestone towards getting [the deal done], but I want to stress it’s only a milestone, because it’s a non-binding financial heads of agreement that sets us on a road to get to a definitive agreement over the next period,” Thodey said.

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Network 10 covered the deal between Telstra and the federal government in its weekend news report.  (4 minutes)