"Hey, we're #19!"

The United States may be a leader in many things, but broadband isn’t one of them. The country has now fallen two more positions — to 19th place, behind South Korea, Sweden, Denmark, the United Kingdom, and even Iceland, since the Berkman Center for Internet and Society released its last rankings in 2009.

In 2004, President George W. Bush complained about the U.S. falling to 10th place, which he declared was “ten spots too low.”

Now eastern Europe and former Soviet Republics in the Baltics threaten to overtake the United States, and countries in southeast Asia already have.  Innovation in the United Kingdom, Australia and New Zealand means deploying fiber to the home service to the vast majority of the population.  Innovation in North America means conjuring up new pricing schemes to raise prices on broadband service and engage in competition-busting mergers and acquisitions.

But a USA Today editorial this week also places much of the blame on corporate influence inside Washington, which has promulgated legislative policies that favor telecommunications companies and throw customers under the bus.

“The simple answer is that other countries have policies that promote competition and innovation,” the editors write. “In contrast, policies here have allowed a few dominant players that control the least interesting parts of the broadband landscape (the cables and the wireless spectrum) to dominate.”

Indeed, a series of telecommunications laws enacted by Congress, combined with short-sighted policies at the Federal Communications Commission, have allowed a handful of super-sized players to own and control broadband service in America, resulting in providers establishing non-competing fiefdoms that avoid head-on competition.

The worst policy of all allowed broadband providers to keep competitors from reaching customers over existing broadband networks.  During the days of dial-up, you could purchase Internet access from the phone company, a large provider like MSN or AOL, or thousands of smaller regional and local service providers.  Simply dial a local access number and you were connected to the provider of your choice.  Now, U.S. law gives broadband network operators the right to restrict these independents from selling service over their networks.  Comcast need not sell anything other than Comcast Internet.  Frontier Communications can make a killing selling its own DSL service, while protecting that revenue from other Internet Service Providers who might sell the service over Frontier’s network for half the price.  Time Warner Cable voluntarily allows Earthlink and a handful of other companies to sell cable broadband service over its infrastructure, but at prices equal to or higher than what Time Warner charges itself.

Broadband providers argue that allowing competitors to sell service on their network would discourage future investment and rob shareholders a return on investments already made.  Today, major cable operators and phone companies are falling all over themselves denying they are in anything but the broadband business.  It has become an enormously lucrative enterprise, more profitable than television or telephone service.

USA Today compares the broadband landscape back home with that in South Korea — perennially the world’s fastest, and considerably less expensive than what North Americans pay for service:

South Korea has made broadband a national priority, mandating deployment and in some cases giving private companies incentives to build out. It has also prevented major players from monopolizing their businesses, encouraging competition and innovation. In South Korea, consumers can get broadband service from a cable or telecom company. But they may also choose among myriad independent providers that are given access to the physical infrastructure. This competition keeps prices down and the quality of service high.

[…] But over time, cable and telecom companies worked the courts and Congress to make sure that this competitive world would never come to be [in the United States]. […] Wireless is a bit better. But the market has remained a near duopoly, with none of the smaller players emerging as a strong competitor to AT&T and Verizon.

The same open network concept has fought its way forward in Canada (where Bell has worked furiously to sabotage the business plans of independent providers) and in the United Kingdom, Australia and New Zealand where all three governments have decided the best solution would be to scrap the ancient landline network and start fresh with an open-to-all-comers fiber to the home service.

Back home in the States it is business as usual with increasing broadband prices and the looming prospect of usage-limiting schemes designed to cut capital costs, monetize broadband usage, and stop cord-cutting.

The opposing point of view comes courtesy of dollar-a-holler, corporate-backed think tank The Heartland Institute, who is stuck quoting notorious industry-funded studies and think tanks like the Discovery Institute and the Technology Policy Institute:

The idea that European and Asian countries are lapping America in the race for broadband speed and penetration is a fallacy created with statistics comparing “persons” instead of “households.” Once you make that correction, the USA is firmly planted among the top of industrialized nations, as economist Scott Wallsten pointed out when he was a staffer at the Federal Communications Commission in 2009.

And as tech researcher Bret Swanson of Entropy Economics points out, if you measure Internet usage by gigabytes used per month — a better measure of the speed and utility of networks — the USA has nearly lapped Western Europe once and Asia twice.

Heartland Institute: "By not disclosing our donors, we keep the focus on the issue."

If you measure how many mouse clicks customers in New York make on a Thursday afternoon, we could be number one as well!  Gigabytes used per month does not measure the speed or price of service on broadband networks, considerations that actually do impact broadband rankings.

Mr. Wallsten is a familiar favorite go-to-guy for The Heartland Institute.  He’s also the choice of Time Warner Cable, who paid him $20,000 for a 2010 essay: “The Future of Digital Communications Research and Policy.”

There is big money to be made writing corporate-funded research reports.  Bret Swanson knows that very well, having been involved with the Discovery Institute, a “research group” that delivers paid, “credentialed” reports to telecommunications company clients who waive them before Congress to support their positions.  Swanson is also a “Visiting Fellow” at Arts+Labs/Digital Society, which counted as its “partners” AT&T and Verizon.

The gentleman from Heartland also quotes from the misnamed “Progressive Policy Institute,” which counts among its funding partners, AT&T.

It would have been probably easier (but ineffectively transparent) to simply quote from AT&T and Comcast directly.

The Heartland Institute, unsurprisingly, believes letting existing broadband providers deliver service exactly the way they want is the best option:

The digital economy — one of the only vibrant economic sectors left — doesn’t need more government “investment” or regulation. It needs only for government to butt out and let the market work the magic that continues to bring us the marvels of the modern age.

That magic will cost you $50 a month and rising.  If some providers have their way, while the rest of the world abandons usage caps, American providers can’t wait to slap them on, reducing the value of your service even further.

Phillip "Wants a High Fiber Diet" Dampier

Believe it or not, there are still some people out there who believe wireless broadband, as it exists today, is the future of high bandwidth communications in North America.  Forget DSL, forget cable, forget fiber optics, they say.  Technology like 4G and WiMax are “far superior” and cheaper.

To be fair, most of the people advocating the technology Sprint is in the process of abandoning have a vested interest in stopping fiber broadband projects.  That is because while Verizon continues to sit on its hands expanding its excellent FiOS fiber-to-the-home service, some of the most aggressive fiber projects in the country are being built by your local town, city, or village government.  It’s community-owned broadband, by and for the people in your own area.  Large telecom interests that have always refused to deliver fiber service (or pretend to by using the word ‘fiber’ while not bringing a single strand to your home) have it in for potential competitors that are willing to provide the advanced fiber technology they won’t.

So why aren’t big phone and cable companies providing this level of service?  In a word, money.  Their shareholders don’t like the initial cost of deploying fiber to the home service, even though the technology is superior to what reaches your home today, is infinitely expandable without stringing new cables across town, and can support money-making applications developers and providers have not even dreamed of yet.  With a pervasive lack of competition, there is nothing to overcome Wall Street’s conclusion that fiber doesn’t deliver fast enough profits to justify the initial expense.

When you take Wall Street out of the equation, especially in the telecom sector, the math works very differently.  While the phone and cable company is probably telling you “no,” companies like Google are saying yes in Kansas City.  So are municipally-owned rural co-operative phone and cable companies.  Communities deciding broadband is too important to leave to the phone companies that deliver half their residents 1-3Mbps DSL and call it a day are saying yes to fiber optics as well.

Overseas, fiber networks are being built in countries in Eastern Europe where the economics would never make sense by Wall Street standards, yet residents (and perhaps more importantly new digital economy businesses) are now getting Internet speeds of 100Mbps or better.  The next countries that could import good-paying American jobs might be Lithuania, Latvia, Poland, Romania, and Bulgaria.

So what does it take to adapt to this reality in North America?  Providers that are willing to make a long term investment in fiber broadband — one that may take a few extra years to pay back, but will generate dividends like increased employment, capacity to provide better, faster service, more reliable networks, and earning a piece of the action powering North America’s new digital economy.  If they won’t listen, tell your elected officials to support policies that promote additional competition and back community broadband expansion that can make all the difference between 3Mbps DSL and 100Mbps fiber.

[flv width=”640″ height=”372″]http://www.phillipdampier.com/video/Fiber is Better.flv[/flv]

Watch and share this video with friends and family to educate them about the infinite possibilities of fiber optic broadband and learn why it is superior to usage-capped wireless, slow speed DSL, satellite fraudband, or lopsided cable “High Speed Internet” broadband that delivers high speed in only one direction. (3 minutes)

While most rural telephone companies are selling customers 1-3Mbps copper-delivered DSL service, Alcatel Lucent has announced the commercial availability of VDSL 2 Vectoring, a new way of delivering up to 100Mbps over the copper wire telephone network most rural North Americans still depend on for telecommunications service.

VDSL2 combines a fiber-copper hybrid network similar to Bell’s Fibe or AT&T’s U-verse, with interference-cancelling technology called “vectoring” to deliver speeds much closer to the 100Mbps theoretical limit of current DSL technology.

“Alcatel-Lucent’s plan to make VDSL2 vectoring commercially available is very timely,” said Rob Gallagher, Principal Analyst, Head of Broadband & TV Research, Informa.  “VDSL2 Vectoring promises to bring speeds of 100Mbps and beyond to advanced copper/fiber hybrid networks and make super fast broadband speeds available to many more people, much faster than many in the industry had thought possible.”

A new way to boost copper speeds even faster.

Different flavors of DSL are currently in use around North America and beyond.  The most basic form, ADSL, also happens to be the most commonplace among phone companies offering basic broadband service.  For customers up to 12,000 feet away from a phone company central office, DSL delivers speeds usually at 1Mbps or faster.  Customers enjoying the fastest speeds must live much closer to the phone company facilities.  The further away you live, the slower your broadband speed.  In rural areas, consumers can live further away than the maximum distance of the central office, which means no DSL service for those subscribers.

A combination of signal loss and interference, called “crosstalk,” from adjacent copper wire pairs are both the enemies of DSL broadband, because they can drastically reduce speeds.

Telephone companies can address this problem by building new satellite central offices located halfway between customers and their primary facilities.  These offices, usually connected by fiber, can successfully reduce the amount of copper wire between the customer and the company, boosting speeds.  Many phone companies also deploy DSL extensions called D-SLAMs, which can be attached to a phone pole or enclosed in a metal box by the roadside.  A fiber cable connects the D-SLAM back to the phone company, while existing copper phone wires go back to individual subscribers.

More modern forms of DSL: ADSL2, ADSL2+, and VDSL, share some of those concepts.  The key is cutting as much copper wire out of the network as possible, replacing it with fiber optic cable which does not suffer signal loss or interference in the same way.

Many European and Pacific broadband networks rely on ADSL2/2+, which can usually deliver reliable speeds in the 20Mbps range.  VDSL networks offer even more bandwidth, and are the basis of U-verse and Fibe, which split up broadband, phone service, and television on the same cable.  When customers demand even faster speeds, phone companies can “bond” several individual DSL connections together to deliver faster speeds.  Some traditional ADSL providers do that today for their customers, especially in areas where low speeds prevail.

An argument the phone company will love.

Alcatel Lucent says VDSL2 with Vectoring is the next best thing to fiber to the home, because it is cheaper to deploy with fewer headaches from local authorities when streets and yards are dug up for fiber cable replacements.  It also meets the growing speed needs of average consumers.  Alcatel Lucent predicts the minimum speed North Americans will need to support the next generation of online video is 50Mbps, more than 10 times the speed phone companies like Verizon, AT&T, Frontier, and CenturyLink provide over their traditional DSL networks, especially in rural and suburban areas.

Vectoring can deliver results for phone companies with aging copper wire infrastructure, more prone to crosstalk and other signal anomalies.  Alcatel Lucent compares vectoring with noise-cancellation headphones.  By sampling the current noise conditions on copper cable networks, vectoring can suppress the impact of the interference, boosting speeds and delivering more reliable results.

With technologies like VDSL2 with Vectoring promising speeds far faster than what rural North Americans currently enjoy, the Federal Communications Commission may want to re-evaluate its national minimum speed standard for broadband — 3-4Mbps — found in its National Broadband Plan.  Alcatel Lucent promises they can do much better.

[flv width=”640″ height=”324″]http://www.phillipdampier.com/video/Alcatel Lucent VDSL2.flv[/flv]

Alcatel Lucent produced this video to promote its new VDSL2 with Vectoring technology.  The video targets cost-conscious phone companies who are being pressured to deliver faster service, but don’t want to spend the money on a fiber to the home network.  (6 minutes)

The People’s Republic of China is accelerating its deployment of fiber optic broadband at the expense of DSL, according to a new report from market research firm Infonetics Research.

“The major story in the broadband aggregation equipment market this quarter is the dramatic drop in DSL ports in China, which points to operators there continuing their dramatic shift away from DSL,” said Jeff Heynen, directing analyst for broadband access at Infonetics Research.  “The first quarter is typically one of the slowest for DSL, but the seasonal effect was worsened by Chinese operators’ continued shift away from traditional [DSL].”

The Chinese broadband market is increasingly based on fiber networks, especially in larger cities where broadband demand is rapidly increasing. Worldwide spending on advanced broadband networks is being driven by broadband expansions in China, Japan, and Korea — all accelerating their fiber deployments. For Chinese companies like Huawei and ZTE, the news is both good and bad.  Both companies profited from sales of EPON and GPON equipment which help power fiber networks, but lost plenty from the decline in spending on DSL technology.

The North American market has stalled, and is expected to remain in neutral until Verizon decides to re-initiate its FiOS buildout.  Broadband stimulus funding may also help boost spending, but most providers are relying on slow speed DSL to introduce rural America to broadband service.  In markets where providers are delivering fiber to the home, companies like Calix are reaping the rewards, with revenue up 222 percent this quarter, mostly earned from sales of Ethernet Fiber to the Home equipment.

A snake in the grass… defective water meters can result in customers paying hundreds of dollars for water they never used.

“Paying for what you use” is an idea some broadband providers want to adopt to re-price broadband service in an effort to capture additional revenue and profits from “high usage” customers.  But when the provider reads the meter without any independent oversight, customers can be billed for any amount of usage — accurate or not — and have little recourse to prove their case if overbilled.

At least water customers in Charlotte, N.C., are getting an independent audit of their water meters after Charlotte-Mecklenburg Utilities began sending some customers bills in the hundreds of dollars for a single month’s usage.

Broadband providers who bill consumers based on their usage answer to no one.  Completely deregulated, providers need not submit to independent verification of their measurement tools.

“There is no Bureau of Weights and Measures verifying broadband usage meters anywhere in North America that I’m aware of,” writes Stop the Cap! reader Mitch.  In fact, in several countries the telecommunications industry is specifically excluded from oversight by such accountability agencies.

In Australia, large businesses are often the first to discover overbilling because of their accounting practices which track usage over time.  Australian telecommunications companies are exempt from monitoring by weights and measurement oversight.  Canadians have complained about metered charge accuracy for several years now, especially when usage doesn’t appear on web-based “usage gauges” for days.  Nobody verifies those meters, either.

In late June, the Charlotte Observer reported a sampling audit of 9,000 out of 250,000 water meters found a significant error rate of at least 1.4 percent.  While that’s a small percentage, the numbers add up — more than 3,000 area customers would be billed erroneously at that error rate, some for hundreds of dollars more than they actually owe.

The audit is continuing, but early findings show that the utility has a significant problem in how it bills customers.

The audit so far has found 78 residential accounts where there was a mismatch of more than 1 CCF (100 cubic feet) of water usage. The mismatch was between the mechanical water meter, which is considered reliable, and the more error-prone electronic transmitters that send water usage data to the utility. While this raises concerns, individuals requiring professional assistance to address such issues can check out Sarkinen Plumbing here!

Some of the mismatches suggested that the customer was billed too much, while others showed the customer was billed too little.

“Some (of the accounts) were for only a few dollars, said Barry Gullet, CMU director. “Some were several hundred dollars.”

CMU calls the results thus far “not unexpected and within industry norms.”  But when customers called to complain about suddenly higher bills, CMU feigned ignorance, telling several customers the meters were accurate — perhaps they had a leak or washed their cars too many times.  One customer reporting a bill four times higher than average was told to hire a plumber at his expense to repair the problem.  It later turned out to be an erroneous meter.  Now that customer is also out the cost of the plumber visit.  CMU inflamed matters further in early June when it blamed the news media for “hyping” a non-existent problem, despite a finding from the Charlotte-Mecklenburg Utilities Advisory Committee showing an electronic equipment failure rate three times the national average.

That CMU is being held accountable by an independent audit was an important part of the process that eventually led them to admit there may be a problem with meter accuracy, say city officials.

“It is a breath of fresh air to have some acknowledgment that there is a problem and a sense about what to do about how to move forward with it,” Mayor Anthony Foxx told WCNC-TV.

CMU’s final report will be out in September.  By then a third party auditor will have looked at 9,000 meters.

The question for broadband consumers is whether you trust your cable or phone company to read your usage and bill you fairly if they know nobody is watching them do it.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/WCNC Charlotte Water Meter Debacle.flv[/flv]

WCNC-TV in Charlotte ran three reports on the water meter controversy, starting in December 2009 when some enormous water bills arrived as unwelcome Christmas gifts from the local water provider.  (6 minutes)