A similar group in Baltimore placed bus advertising complaining about the lack of FiOS in that city in 2010.

A Buffalo group backed by the Communications Workers of America is demanding a federal and state investigation into whether Verizon is intentionally bypassing urban, ethnic, and economically-challenged neighborhoods for its fiber-to-the-home service, FiOS.

The Don’t Bypass Buffalo Coalition has stepped up the pressure on Verizon with a new billboard campaign that accuses the company of exacerbating the digital divide in western New York.

“The Verizon FiOS deployment in Buffalo is a corporate redlining scheme undermining the City of Buffalo with intentional discriminate design,” said Coalition member Jim Anderson.

Verizon suspended FiOS deployment during the height of the economic downturn, leaving some cities with a patchwork of FiOS service in some locations, traditional copper phone wiring in others.  In Buffalo, suburban areas that quickly approved the FiOS network with few franchise pre-conditions were among the first to get the fiber network.  Other suburbs, and the city of Buffalo itself, were effectively bypassed when franchise agreements and negotiations were left uncompleted at the time Verizon suspended further expansion.

The Coalition released a letter signed by two dozen local officials and community leaders that suggests Verizon may be up to something more sinister, suggesting possible racial and economic discrimination by the company over its choice of areas to deploy the service.

Coalition members note that in the 10 suburbs where Verizon offers FiOS, the proportion of African American residents in those areas is more than 13 times lower than it is in the city of Buffalo, and the Hispanic population is nearly four times lower. Even more telling, the Coalition writes, is that the network infrastructure is already in place to deploy FiOS within Buffalo city limits.

The Coalition is among the most vocal among local pressure groups Verizon has faced since its decision to suspend further FiOS expansion.  Other cities, especially Baltimore, have their own coalitions to complain about Verizon’s apparent lack of interest in restarting fiber projects.

Verizon rejects most of the charges the Buffalo-based Coalition has made.

“As Verizon has told the Coalition and local officials countless times, our focus these days is meeting the buildout commitments in the 182 municipalities across the state where we currently have TV franchises,” a Verizon spokesman said in a statement. “The allegation of discrimination with respect to FiOS deployment is just plain wrong…period. The coalition simply needs to look at other FiOS deployment areas in New York and other states to see those allegations are off base.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Is Verizon Redlining Baltimore City 3-16-10.flv[/flv]

In March, 2010 Progressive Maryland held a public rally protesting the lack of Verizon FiOS in Baltimore.  (8 minutes)

A new proposal from the nation’s six largest telephone companies would double or triple Universal Service Fund (USF) fees on many telephone lines, extending them to wireless, broadband-based phones, cable TV “digital phone” products, and potentially even Internet accounts, providing billions from consumers for the companies proposing the plan.

Universal Service Fund reform has been a hot topic this year in Washington, as regulators attempt to reform a long-standing program designed to help keep rural landline telephone service affordable, subsidized with small charges levied on customer phone bills that range between $1-3 dollars, depending on the size of your community.

The original goals of the USF have largely been achieved, and with costs dropping to provide telephone service, and ancillary services like broadband DSL opening the door to new revenue streams, some rural phone companies don’t need the same level of support they received in earlier years.  As a result, USF funds have progressively been disbursed to an increasing number of projects that have little to do with rural phone service.  Several funding scandals over the past decade have underlined the need for USF reform, and FCC Chairman Julius Genachowski has been a strong advocate for directing an increasing amount of USF resources towards rural broadband deployment projects.

But now some of America’s largest phone companies want to establish their own vision for a future USF — one that preserves existing funding for rural phone service –and– levies new fees on ratepayers to support broadband expansion.

The ABC Plan's chief sponsors are AT&T...

America’s Broadband Connectivity Plan (ABC), proposed jointly by AT&T, Verizon, CenturyLink, Windstream, Frontier Communications and FairPoint Communications, departs markedly from Genachowski’s vision for a revised USF that would not increase the overall size of the Fund or its cost to consumers.

That’s why some ratepayer consumer groups and utility regulators have taken a dim view on the phone companies’ plan.

Colleen Harrell, assistant general counsel to the Kansas Corporation Commission says customers would find USF fees doubling, if not tripling on their home phone bills under ABC.  That could mean charges of $6 or more per month per phone line.

While the plan substantially benefits the companies that propose it, critics say ABC will do little to enhance service for ordinary consumers.  In fact, some language in the proposal could open the door for landline companies to discontinue universal landline service, a long time goal of AT&T.

In fact, protection for incumbent phone companies seems to be the highest priority in most of the ABC’s framework:

1. The proposal provides a right of first refusal to the incumbent phone company, meaning USF grant funds effectively start at the landline provider, and are theirs to accept or reject.  This has competitors howling, ranging from Wireless ISPs, mobile data providers, cable companies, and even fiber networks.  The ABC proposal ignores who can deliver the best broadband most efficiently at the lowest price, and is crafted instead to deliver the bulk of funding to the provider that has been around the longest: phone companies.
2. Provisions in the ABC Plan provide a convenient exit door for landline providers saddled with providing service to some of America’s most rural communities.  An escape clause allows “satellite service” to be provided to these rural households as a suitable alternative to traditional wired service, sponsored by an annual $300 million Advanced Mobility/Satellite Fund.  This, despite the fact consumer ratings for satellite providers are dismal and existing providers warn their services are often unsuitable for voice calls because of incredibly high latency rates.
3. Provisions in the ABC Plan adhere to a definition of acceptable broadband well within the range favored by telephone company DSL providers — 4Mbps.  Setting the bar much higher could force phone companies to invest in their networks to reduce the distance of copper wire between their offices and customer homes and businesses, allowing for faster speeds.  Instead, lowering the bar on broadband speeds assures today’s deteriorating rural landline network will make-do, leaving a rural/urban speed divide in the United States.
4. To “resolve” the issue of the increased fees and surcharges that could result from the plan’s adoption, it includes a subjective cap of $30 a month on residential basic landline home phone service (without calling features).  But since most ratepayers pay substantially less for basic home phone service, the maximum rate cap provides plenty of room for future rate increases.  Also, nothing precludes phone companies from raising other charges, or creating new “junk fees” to raise rates further, ignoring the “cap.”

...and Verizon

Rural states seem unimpressed with the phone companies’ proposal.  The Kansas Corporation Commission (KCC) called various provisions of the plan “a train wreck.”  Kansas is one of several states that developed their own state-based Universal Service Fund to help the state’s many rural agricultural areas receive acceptable telecommunications services.  Kansans initially paid one of the highest USF rates in the country when their state plan was enacted in 1996.  But Kansas phone companies used that money to modernize their networks, especially in rural communities — some of which now receive fiber-based phone service, and the rates have fallen dramatically as upgrade projects have been completed.  Today, most Kansans pay just $1.45 in USF fees to rural phone companies, while AT&T customers in larger Kansas towns and cities pay an average of $2.04.

If the ABC Plan is enacted as-is, Kansans will see phone bills spike as new USF fees are levied.  That’s because the federally-based USF Fund reform program would require today’s 6.18% state USF rate double or triple to sustain various programs within its scope.

And forget about the $30 ‘smoke and mirrors’ “rate cap”, according to the KCC:

[…] The ceiling will not preclude carriers from increasing the basic rate beyond $25 or $30 through higher state USF surcharges or higher local rates.  Multiple states including Kansas  have partially or totally deregulated basic local phone service rates, and the only component of retail  local service pricing that the FCC regulates is the federal Subscriber Line Charge.  Thus, a carrier may face no constraint whatsoever in increasing basic local rates to the point that total local rates are well above the illusory ceiling.

The state of Wyoming was also unimpressed with a one-size-fits-all national approach advocated primarily by big city phone companies AT&T and Verizon, the chief sponsors of the ABC Plan.

The Wyoming Public Service Commission filed comments effectively calling the ABC Plan boneheaded, because it ignores the plight of particularly rural states like Wyoming, chiefly served by smaller phone and cable companies that face challenges in the sparsely populated, mountainous state.

First among the Wyoming PSC’s complaints is that the plan ignores business realities in rural states.  No matter how much USF funding becomes available or what compensation schemes are enacted, dominant state phone companies like CenturyLink are unlikely to “invest in broadband infrastructure unless it is economically opportune to do so.”

The PSC points to the most likely outcomes if the ABC Plan is enacted:

• Phone companies not challenged by a broadband competitor will make due with their current copper wire wireline infrastructure the PSC says has been deteriorating for years.  The PSC fears broadband expansion funds will be used to improve that copper network in larger areas where cable competition exists, while the rest of the more-rural network gets ignored;
• In areas like larger towns or suburbs where phone companies suspect a cable (or other) competitor might eventually expand or launch service, USF funding could be spent to bolster the phone company’s existing DSL service to deter would-be competitors from entering the market;
• 

  We'll pass, too.

  The Wyoming PSC believes phone companies will spend broadband funds only where it would improve the phone company’s competitive position with respect to cable competitors.  Providers are unlikely to expand into currently-ignored rural areas for two reasons: lack of ongoing return on investment and support costs and the ABC Plan’s willingness to abandon rural America to satellite providers.  “We are familiar to a degree with satellite service at it presently exists in Wyoming markets, and we are not particularly enamored of the satellite solution,” the PSC writes.  But if adopted, no rural phone company would invest in DSL service expansion in areas that could be designated to receive federally-supported satellite service instead.

Wireless competitors are not happy with the ABC Plan because it ignores Wireless ISPs and sets ground rules that make them unlikely to ever win financial support.  Many also believe the ABC Plan picks technology winners and losers — namely telephone company provided DSL service as the big winner, and everyone else a loser.

The Fiber to the Home Council also heaped criticism on the ABC Plan for the low bar it sets — low enough for any phone company to meet — on broadband speeds.  The FTTH Council notes the ABC Plan would leave rural America on a broadband dirt road while urban America enjoys high-speed-rail-like service.

Coming Next… Who Really Supports the Phone Companies’ ABC Plan.

For the past two years, we’ve watched a lot of expansive fiber broadband projects get promoted by local media as broadband nirvana for individual homes and businesses that are either stuck with molasses-slow DSL or no broadband at all. Now, we’ve found another, sold by Springfield, Mass. media as salvation from Verizon’s ‘Don’t Care’ DSL for western Massachusetts.  But will the 1,300 miles of fiber actually reach the homes that need a broadband boost?

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WSHM Springfield Broadband in Berkshires 7-26-11.mp4[/flv]

WSHM-TV in Springfield covered the start of MassBroadband 123’s fiber optic project as the solution to rural broadband woes in western Massachusetts.  But most residents won’t actually get to use the new network, at least initially.  (2 minutes)

Last month, Gov. Duval Patrick joined public officials and firefighters at the Sandisfield Fire Department to kick-off construction of the MassBroadband 123 fiber-optic network project to expand broadband access to more than 120 communities in western and north central Massachusetts.

MassBroadband 123 Service Area (click to enlarge)

“For too long, families and businesses in western Massachusetts have lived without reliable and affordable high-speed Internet access,” said Governor Patrick. “Today, as we commence the installation of more than 1,000 miles of fiber-optic cable across the region, we start the critical final step in delivering broadband access to everyone. The digital divide in Massachusetts is about to close.”

Don’t hold your breath.

Don’t get me wrong.  The Massachusetts Broadband Institute means well.  Judith Dumont, the group’s director, is well-aware of the challenges rural Massachusetts has getting 21st century broadband.  She’s helping to oversee the construction of an enormous middle-mile, fiber backbone network that will eventually reach those ten dozen communities.  But much of the funding for the project precludes the possibility of directly wiring that fiber to the people who actually need it.  The incumbent providers’ lobbyists have seen to that, broadly warning it would represent ISP Socialism to allow government money to deliver service to homes and businesses — customers they themselves claim to be committed to serve.  But ask any resident in Sandisfield how well they manage that.

Gov. Patrick splices fiber cable at inauguration ceremony for fiber expansion project. (Courtesy: MBI)

A good part of upgraded broadband on the way in the Berkshires will be provided to government institutions like local government, public safety, schools, and libraries.  There is nothing wrong with that either, but when local media blurs this distinction into belief fiber-fast Internet access is on the way to Mr. & Mrs. Jones living on Maple Street, they do a real disservice to the cause for better broadband.

Dumont optimistically believes that opening the state’s fiber network to incumbent providers on a wholesale basis will dramatically help the pervasive problem of reaching rural customers.  Unfortunately, this has simply not been our observed experience watching these projects develop.  The “last mile” problem doesn’t get solved with the existence of a middle mile network, because providers are rarely willing to invest in the construction costs to wire the unwired.  Political and business matters too often get in the way.

Cable companies frequently boycott participation in these networks, and phone companies like Verizon Wireless -may- utilize them for backhaul connectivity to their cell towers, but don’t expect to see lightning-fast Verizon FiOS fiber to the home service springing up anytime soon in western Massachusetts, even if fiber connectivity is provided just a mile or so up the street.  If they didn’t build it themselves, many providers just are not interested.

“Last mile” is often the most expensive component in a broadband network.  It’s the part of the project that requires digging up streets and yards, stringing cables across phone poles, and literally wiring the inside and outside of individual homes and businesses.  Verizon FiOS works in densely populated areas where large numbers of potential customers are likely to deliver a quick return on investment in the network.  But Wall Street has always disagreed, declaring the capital costs too high to make sense.  AT&T won’t even match Verizon’s commitment, relying instead on fiber-to-the-neighborhood networks that deliver access over a more modern type of DSL, delivered on fiber to copper wire phone lines already in place.  That’s their way of not spending money rebuilding their own last mile network.

Wireless ISPs are expected to take advantage of the state's new middle-mile network.

If any part of the broadband network in rural America needed subsidies, the “last mile” is it.  But Washington routinely delivers the bulk of federal assistance to the construction of middle mile networks and institutional broadband that doesn’t deliver a single connection to a homeowner or business.  That suits incumbent providers just fine, judging from their lack of interest in applying for broadband subsidy funding made available two years ago and their hard lobbying against community broadband networks, or anything else smacking of “competition.”

Thus far, the limited grants that are available for “last mile” projects require substantial matching funds and are often limited to $50,000 — a ridiculously low amount to solve the “last mile” challenge.  Those trying are primarily fixed wireless providers valiantly attempting to serve the areas DSL and cable forgot, but deliver woefully slow speeds at incredibly high prices.  WiSpring, one such Wireless ISP, wants to expand coverage with the help of the new fiber network.  But their top advertised wireless speed for residential customers is 1.5Mbps, and that will set you back $100 a month after a $500 installation charge.  Oh, and their customer agreement limits use to 25GB per month with a $10/GB overlimit fee.  That’s hardly the kind of broadband solution a multi-million dollar fiber network should bring to individual consumers.  It’s as frustrating as filling a pool, one cup of water at a time, with an eye-dropper.

Now imagine if a quarter of the state’s $40 million investment in broadband — $10 million, was spent physically wiring individual homes with fiber broadband.  Would that make a bigger splash in the lives of ordinary consumers than a middle mile network they cannot directly access?  Is construction of a state-of-the-art fiber network a good investment when many of the providers scheduled to use it are Wireless ISPs delivering bandwidth suitable for e-mail and basic web browsing only?

In West Virginia, we learned last month the state is swimming in middle mile stimulus grant money it can’t spend fast enough on behalf of institutions — many who either already have super fast service or can’t afford the Cadillac pricing that represents the ongoing service charges not paid for by grant funds.  Is this a good way to spend tax dollars?

Communities large and small need to think big when it comes to broadband.  Building a middle mile network does not by itself solve the access problem.  It’s a fine start, but absolutely requires a follow-up commitment to solve the last mile problem.  Here are our recommendations:

1. Demand the federal government eliminate restrictions on the kinds of network projects that can built with stimulus funds, especially those that prohibit investment in last-mile networks;
2. Don’t believe for a moment large cable and telephone companies will bring better broadband to consumers just because you have a middle mile network.  Historically, they have lobbied hard against last-mile projects they do not own or control, and fund conservative political groups to oppose your community’s right to develop and govern your own broadband future;
3. If incumbent providers won’t provide the service your community needs, consider exploring the possibility of doing it yourself.  Just as MBI contracts the wholesale part of its service out to a third party to administer, nobody says the village clerk has to be a billing agent for a community broadband service that directly serves your residents;
4. Involve local citizens in rallying for better broadband instead of sitting around and waiting for the local phone or cable company to provide it.  They won’t.  It’s a simple matter of economics for them – will they get a sufficient return on their investment within five years? If not, you are not getting improved broadband.  That works for them but doesn’t work for your community, and providers have made it clear most of the networks they intend to build are already built.  That leaves a lot of communities behind.
5. While wireless may be an answer for the most rural or difficult-to-reach homes, it is not a realistic solution for 21st century broadband inside village or town limits.  Wireless networks often lack the capacity to sustain the growing demand for multimedia, high-bandwidth content that is becoming more important for today’s online experience.  When a provider limits usage to 25GB a month, that’s a big problem for any community that will soon find itself stuck in a broadband swamp while the rest of the country passes it by.
6. The biggest financial challenges seem to come to those who think small about broadband projects.  Don’t rely on yesterday’s technologies for tomorrow’s networks.  Fiber-based broadband will deliver the best bang for the buck and is infinitely upgradable.  That’s why rural phone companies and cooperative telecom providers are constructing fiber networks themselves.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WGBY Springfield The State Were In Judith Dumont 7-11.mp4[/flv]

WGBY-TV in Springfield talked with Judith Dumont about western Massachusetts’ broadband future.  (19 minutes)

Martin

While thousands of West Virginians continue to struggle without any broadband service, the state government is having trouble finding a way to spend up to $40 million in broadband stimulus money on institutional broadband projects that often already have cutting edge fiber networks.

State officials won $126 million in federal stimulus grant money last year, from which the state announced it would lay more than 2,400 miles of fiber optic cable to wire government offices, schools, and libraries.  Now, a vocal critic says a combination of government waste, preferential treatment for the state’s largest phone company — Frontier Communications, and bad planning could leave up to $40 million of the grant money on the table, unspent for better broadband.

Jim Martin, president of business broadband provider Citynet, says the state overestimated the number of public facilities that need broadband improvements.  Many of the facilities involved already have high speed service, and do not require additional infrastructure.  As the grant expires, Martin says he would not be surprised if the state only managed to fund the installation of 300 miles of fiber.

Martin believes funds should be redirected to bolstering the state’s “middle mile” network — fiber infrastructure that would serve as an open network backbone to ensure capacity exists to support growing broadband demands in the state.  Instead, Martin told the Charleston Gazette, the state has been spending money providing fiber broadband to small libraries with fewer than a dozen computers that are unlikely to have the resources to pay the monthly fees Frontier Communications will charge for the service.

“There’s no value to any of this to anyone but Frontier,” Martin said.

In fact, Martin believes many of the current projects funded by taxpayer dollars deliver enormous benefits to Frontier’s bottom line, but only incremental improvement to some institutional users.

Martin claims Frontier has, in some cases, only spent enough money to install fiber from the pole to the building. That assures Frontier of being the only provider that can deliver ongoing service to institutional users.  Martin has a dog in this fight — his company competes with Frontier for business service contracts.

West Virginia's current broadband map shows large areas of the state have access to no broadband at all. (Olive color = No broadband.) (Click to enlarge)

Before the grant expires in February 2013, the state is hurrying to bolster its list of would-be recipients.

Jimmy Gianato, the state’s homeland security chief, said his office recently identified 330 additional “replacement locations” — higher education facilities, schools, health departments and state-owned hospitals — that could be eligible for the project, according to the newspaper.

Not on the list are individual consumers and small businesses who currently do not have access to any broadband service.  One of the ongoing problems of broadband stimulus funding is that public funds are often available to bolster broadband for state and locally-owned institutions, such as government offices, health care facilities, schools and libraries, but no funding to improve infrastructure for individual broadband service for “last mile” users.  This can result in Cadillac-style installations for small schools and libraries who win superb quality networks they ultimately cannot afford to operate on an ongoing basis.  For most, that service would come from Frontier Communications.

Martin already accused the state of investing in more than 1,000 routers without being certain if they were needed or where they would be installed.  At $20,000 each, Martin called the routers “Lamborghinis” and suggested they were largely unnecessary.

The People’s Republic of China will become the world leader in fiber optic network deployment by 2016, with more than 50 percent of all fiber subscribers worldwide residing in the country, according to a new report from research firm Ovum.

The unprecedented growth in fiber networks comes through a combination of government incentives, including subsidies and private-public partnerships, and cooperating Internet Service Providers, who want to reach more customers.

In fact, with the Chinese government aggressively pursuing and monitoring broadband upgrades, China will rapidly exceed broadband deployments found in other countries in Asia, including Korea and Japan.  That could allow China to become the global leader in broadband before the end of the decade.

China Telecom is one of the providers that is moving the country towards dominance in fiber deployments, on track to pass 26 million homes with fiber networks this year.

Through the company’s “Broadband China — Fiber Cities” project, China Telecom should pass 100 million homes with fiber broadband access by 2015, with the help of contractors like Alcatel-Lucent.

In smaller cities and rural areas, combination fiber and copper networks plan to deliver temporary speed upgrades with technology similar to AT&T U-verse. But China sees such upgrades as interim, until additional fiber networks can be constructed.

The upgrades are a win-win for China and its citizens.  China’s telecommunications companies are enjoying new revenue opportunities for their wired networks, Chinese citizens will eventually obtain some of the fastest broadband speeds on the planet, and the Chinese government wins an advanced telecommunications network on which it plans to continue growing the country’s digital economy and helping spur additional manufacturing and export opportunities.

So far, China’s large expanse and large rural, often poor population found further inland are not inhibiting China’s infrastructure development plans.

“You cannot become one of the world’s most powerful nations if you can’t deliver basic services to your own citizens,” says Wu Dan, a development coordinator for the Chinese government.  “With clean water, good roads, reliable power, and advanced telecommunications, China’s western cities will grow and become as important as coastal cities in China’s progress.  Internet access is a part of that progress.”