“Economic development is at the heart of what we do,” said Dave Osborne of VTX, a rural broadband operator serving a large swath of south Texas. Osborne was part of a panel at NTCA’s 2015 RTIME that focused on how operators are using their broadband networks as a basis for new applications that are helping their communities compete.
This idea of putting community and customer first was a recurring theme throughout the many conference sessions. Keith Larson of CTC of Minnesota explained that their decision to work with the city of Little Falls fit into their mission. Similarly, Gary Johnson of PBC explained that their expansion to Gig services was fundamentally about helping their members and it is already helping their local economic development efforts. This “overnight success” was the result of a Fiber to the Premise plan that began in 2004.
The advanced fiber-based networks these operators are building will facilitate the Internet of Things, which will overshadow the use of the Internet of Humans in terms of end points, according to VTX’s Osborne. Mobile tech trucks are one way that VTX is helping their customers understand how they can use their network and the associated technology and applications the network enables.
With only 0.75 lines per mile and sometimes hundreds of miles of windshield time, these trucks play a key role in helping their members learn how to get the most from the VTX network. Diversification of revenue is clearly an important motivation for expanding the number of services offered, as well as expansion into new service territories beyond their existing exchanges.
Regarding revenue, there seemed to be a sense of optimism among the operators that the FCC’s recent actions will open the door for financial support of rural broadband, instead of today’s approach of basing rural build outs on Plain Old Telephone Service. Bob Debroux of TDS suggested that the FCC is considering two basic plans; a plan based on models and one a rate of return. He suggested that the FCC first must fix how the monies are distributed and then solve for the contribution side.
In the short-term at least, the FCC’s Title II rules seemed to be of minimal concern in that these operators have been complying all along with the “bright line rules”. Still, some expressed concern that a different FCC could change the rules in the future.
One of the biggest regulatory challenges, particularly when expanding outside an existing serving area, is working with local communities. Former Kansas City, Kansas Mayor, Joe Reardon, talked about some of the benefits his city has seen from the Google fiber deployment. One example of success is an area termed “start-up village” where they have seen small businesses and entrepreneurs move into this Gig-capable area from other cities.
Economic development and betterment of schools are two drivers that will motivate local elected officials to facilitate an operator’s roll out of broadband. Citing his Kansas City experience, he indicated that a city doesn’t need to subsidize a rollout, but streamlining permitting and other regulatory hurdles will go along ways to smoothing out the rollout of gig networks. He said that the Google experience spurred a review and refresh of regulations and that was a good thing beyond the fiber project.
Reardon warned against municipal builds, as it is difficult for municipal entities to keep up in a very competitive and dynamic business. There are some interesting examples of public-private partnerships, such as the aforementioned Little Falls, MN example, as well as TCT and the city of Powell, which TCT’s Don Jackson deemed a successful public/private partnership.
And local broadband networks are important to keep a community vibrant. Don Macke of the Center for Rural Entrepreneurship, suggested that 35 to 50% of young people who moved away from their communities would return, if they could (e.g. if there were jobs, etc.). This reinforces the point made by Gary Johnson of Paul Bunyan Communications when he stated the reason they built FTTH/Gig everywhere is that, “It’s the right thing to do [for their members].
Stay tuned for video interviews with Gary Johnson, Don Jackson and others who made NTCA’s 2015 RTIME an informative and thought-provoking event.
Netflix announced Tuesday that it had agreed to pay AT&T for a direct “peering” connection to AT&T’s network. The two companies arranged the deal this past May and have been working since then to connect their respective networks.
AT&T had been pressing Netflix to pay for an upgraded connection between their networks since at least March when Netflix asked for a free peering arrangement.
“We reached an interconnect agreement with Netflix in May and since then have been working together to provision additional interconnect capacity to improve the viewing experience for our mutual subscribers,” an AT&T spokeswoman said in a statement.
“We’re now beginning to turn up the connections, a process that should be complete in the coming days,” Netflix spokeswoman Anne Marie Squeo said.
AT&T and other broadband ISPs believe that Netflix should bear the cost for the recent surge in video traffic. Netflix replied that broadband providers should be responsible for making sure that their subscribers get the content they are viewing online in a reliable and consistent manner.
Netflix, as well as Google’s YouTube, provides a regularly updated video quality report that ranks the speed of ISPs. AT&T’s services have typically ranked low on Netflix’s list, although Verizon’s services haven’t fared much better since it signed a peering agreement with Netflix.
[Internet traffic flows between different networks generally in one of two ways, through transit, in which a smaller network passes its traffic through a larger one to connect to the broader Internet; and peering, in which large networks connect with each other. Traditionally, smaller networks paid larger ones for transit services, but peering didn’t require any kind of payment from one company to another. Instead, both networks are responsible for their own costs of interconnecting.]
When there was still some notion of network neutrality, interconnection deals between content and network providers/ISPs were free. But now, broadband providers require fees paid to them. Some fear that moves like this could have a serious problem on startup content provider (which may not be able to pay those fees), especially if the content they provide is used by many over the Internet. That negates the concept of network neutrality.
Netflix has protested the move to these so-called “paid peering” arrangements. The company has noted that it is sending to ISPs’ customers only the data they are demanding in the form of streamed movies. Furthermore, it has argued that the only reason ISPs can demand to be paid for peering is because of the limited competition for broadband access.
Despite its protests, Netflix has now announced three paid peering relationships. Earlier this year, it inked deals with both Verizon and Comcast. If AT&T were to block or throttle Netflix, many of its customers would have no other place to turn for Internet access. The company has called on the FCC to ban paid peering arrangements as part of a broader move to curb ISP practices as part of a new, stronger net neutrality policy.
Net neutrality advocacy groups are pushing the FCC to intervene in these situations and stop broadband providers from asking for interconnection fees. Yet the FCC has done nothing and hasn’t even finalized its new rules for net neutrality.
“The principle that all bits traversing the network should be treated equally was a key feature of the internet’s original design. It was also one of the reasons why the internet became such an enabler of disruptive innovation. Net neutrality meant that the bits generated by a smart but unknown programmer’s application, for instance the web, file-sharing, Skype and Facebook, would be treated the same as bit streams emanating from a giant corporation. Neutrality kept the barrier to entry low.”
Slowing down or “throttling” Internet traffic has been another contentious issue for the FCC. In a July 25th letter to Verizon CEO Dan Mead, FCC Chairman Tom Wheeler voiced his objections to plans Verizon announced last week to begin throttling LTE customers on unlimited plans that use an exorbitant amount of data. Verizon said the change will only affect about 5 percent of its users and it is being done in the name of network management.
Chairman Wheeler took issue with how Verizon described the issue, stating that he believes Verizon may be misinterpreting the FCC’s rules on network management.
“Reasonable network management concerns the technical management of your network; it is not a loophole designed to enhance your revenue streams,” Wheeler wrote, saying that it is “disturbing to me that Verizon Wireless would base its network management on distinctions among its customers’ data plans, rather than on network architecture or technology.”
Wheeler noted that legitimate network management purposes could include:
“Ensuring network security and integrity, including by addressing traffic that is harmful to the network; addressing traffic that is unwanted by end users (including by premise operators), such as by providing services or capabilities consistent with an end user’s choices regarding parental controls or security capabilities; and reducing or mitigating the effects of congestion on the network.”
We wonder what enforcement power the FCC has to stop wireless (or wire-line) carriers from throttling users data throughput. If a subscriber has a unlimited data plan, why aren’t they notified about throttling before they sign up and once they are coming close to exceeding their monthly limit of bytes streamed or downloaded from the Internet?
It seems the Wheeler-led FCC is prepared to let the industry settle these contentious issues and play a very passive role. That’s not what communications regulator should, IMHO!
Seventy-five million is dedicated for testing the construction of networks that provide 25 Mbps down and 5 up, and another $15 million will go “to test interest in delivering service at 10:1 speeds in high cost-areas,” defined as those where the monthly cost per location of providing service is between $52.50 and $207.81. The third set of funds comprises $10 million for 10/1 service “in areas that are extremely costly to serve,” or those where service of at least 3 Mbps up and 768 kbps down is unavailable, and that would exceed $207.81 monthly.
More than 1,000 entities have expressed interest in the projects, including utilities, wireless operators, and CLEC affiliates of local telcos, according to the FCC.
“By encouraging utilities and others to provide broadband that is robust, affordable and reliable, the FCC is creating new opportunities to promote economic growth and expanded access to health and safety, education, and essential services in our rural communities,” said Connie Durcsak, President and CEO of UTC, in a statement.
On May 29th, House Commerce Committee Chairman Fred Upton (R-MI) and Communications and Technology Subcommittee Chairman Greg Walden (R-OR) wrote to Federal Communications Commission Chairman Tom Wheeler to streamline the approval process for upgrading existing wireless facilities. The letter asks Mr. Wheeler for clarification of Section 6409(a) – the spectrum provisions of the Middle Class Tax Relief and Job Creation Act of 2012. That section was intended to speed the approval of eligible requests for new wireless broadband facilities.
“We urge you to take swift action to clarify the terms of Section 6409(a) consistent with the intent of the statute to deliver the benefits of wireless broadband access to all Americans. To ensure that 6409(a) achieves its goal of streamlining the approval of eligible facilities requests the commission should adopt rules that provide consistency for applicants and reviewing authorities alike.”
Note: Section 6409(a) of the aforementioned act states that “a State or local government may not deny, and shall approve, any eligible facilities request for a modification of an existing wireless tower or base station that does not substantially change the physical dimensions of such tower or base station.”
The two congressional leaders also expressed the urgency for the commission to identify ways to foster broadband infrastructure deployment.
“Facilitating both the deployment of small cells for targeted capacity and the use of temporary towers for short, sharp spikes in usage are part and parcel to meeting national broadband goals. Both are important tools for providing the robust service upon which consumers, businesses, and public safety rely.”
We think the Congressmen are right on the mark with their requests. New FCC rules and procedures are urgently needed to get wireless broadband deployed in more of the US, especially in rural areas that are currently un-served or under-served.
On May 15th the FCC Commissioners narrowly voted to approve a framework for rules that would create an Internet fast lane, while trying to patch up the loopholes that would make that fast lane possible.
The proposal from FCC Chairman Tom Wheeler would ban broadband providers from blocking or slowing down websites, but leaves the door open for them to strike deals with content companies for preferential treatment, or fast lanes to customers. The Democrat-majority FCC voted 3-2 along party lines to open the proposal to public comment for 120 days, with an eye toward voting on final rules later this year. However, the timing of actual rules will depend on what the agency decides to do after the four-month comment period expires.
Frankly, we don’t understand why there are objections for content providers and consumers paying more for higher speed delivery of broadband Internet content. Doesn’t every ISP charge more for higher speed Internet access? Don’t pay TV providers charge more for premium content with tiered service offerings? And an extra charge for HBO, Showtime, STARZ, Cinemax, etc?
The FCC is proposing that it should use the authority that it has under Section 706 of the 1996 Telecommunications Act to regulate net neutrality, which leaves the rules open to the possibility of “paid prioritization” of Internet traffic. While FCC Chairman Tom Wheeler said that those rules don’t allow paid prioritization and is vehemently against allowing any bifurcation of the Internet, it’s also something that the agency can’t enforce if the ISPs offer a creative legal challenge to its no-blocking rules or the wording of the eventual net neutrality rules.
“The potential that there would be some kind of a fast lane has many concerned,” Wheeler said. “I don’t like the idea and I will work to see that does not happen. We specifically ask whether we can and how to prevent an internet fast lane.”
While broadband providers like Comcast, Verizon and AT&T are firmly against stronger regulatory oversight of the industry—a possibility that the commission opened up for comment—they have indicated that Mr. Wheeler’s proposal as it stands is something they could live with.
The content providers disagree vehemently. Google, Facebook, Amazon.com, and many web content startups are vehemently opposed to any arrangements that allows broadband providers to charge content companies extra for preferential treatment.
Netflix, whose streaming service is responsible for a substantial share of overall Internet traffic, said it is “concerned that the proposed approach could legalize discrimination” in how broadband providers treat Web traffic, “harming innovation and punishing U.S. consumers.” The statement added, “Netflix is not interested in a fast lane” on the Internet.
Another key issue is whether the FCC should reclassify broadband as a public utility service that’s regulated. Currently, Internet Service Providers (ISPs) are classified as information services, which means the FCC cannot regulate them as it would landline phones which are considered telecommunication utilities and under the FCC’s purview. Reclassifying ISPs as utilities (like common carrier telephone services) would potentially give the FCC far greater control over ISPs and, potentially, help the FCC ensure an open Internet.
The problem with defining broadband (not including mobile Internet access) differently than land-based common carriers, which are governed by Title II in the original 1934 U.S. Telecommunications Act, is that the FCC doesn’t have the right to regulate broadband or truly protect net neutrality.
When the FCC sought to censure Verizon’s efforts to manage its own Internet traffic, the D.C. Court of Appeals found it had overstepped its bounds and struck down the net neutrality rules the FCC essentially built as a bulwark against Internet access abuse. The rules it was applying to Verizon’s Internet services were not covered under Section 706 of the 1996 Telecommunications Act, which governed the FCC’s oversight of broadband.
Section 706 of the 1996 Telecommunications Act didn’t give the FCC that kind of power. Redefining broadband Internet services a utility would allow the FCC to bring to bear all the rules and power found in Title II of the 1934 Telecommunications act.
“The fact is that reclassification doesn’t mean any additional regulation at all,” said Free Press Research Director S. Derek Turner who added that industries like wireless and carrier Ethernet currently classified under Title II “are thriving.” So what’s the problem?
Net neutrality proponents believe officially designating broadband as a utility to be regulated is the only way to ensure an open Internet. “It is exactly what the bulk of activists are supporting, as the recent court decision made it clear that it is the only way in which true net neutrality regulations can be applied,” said David Segal, executive director of Demand Progress.
Some would like the whole Internet designated a public utility. “The Internet is a public utility and the FCC must regulate Internet providers as common carriers. Anything short of undoing the George W. Bush-era deregulation of broadband industry is fake net neutrality, and we’re not falling for it this time,” said Becky Bond, Political Director at CREDO Mobile.
“Tom Wheeler spoke passionately about the open Internet, but his rousing rhetoric doesn’t match the reality of his proposal. The only way to accomplish the chairman’s goals is to reclassify Internet service providers as common carriers,” Craig Aaron, CEO of the open-media advocacy group Free Press said.
Broadband (wire-line) providers, though, say reclassification would be devastating for their industry. Former FCC Chairman Michael Powell (now the CEO of National Cable and Telecommunications Association) said: “Treating broadband as a utility-like Title II service would reverse years of settled precedent, dry up investment in broadband deployment and network upgrades, and result in protracted litigation and marketplace uncertainty. We (the NCTA) will continue to reiterate our unwavering opposition to any proposals that attempt to reclassify broadband services under the heavy-handed regulatory yoke of Title II.”
The FCC’s proposal is open to months of debate before a final document is voted on at the end of this year. Whether the Title II reclassification concept survives that long is open to conjecture and debate. Mr. Wheeler emphasized that his proposal is only a draft, and that he is open to changing it before a final vote later this year.
Mr. Wheeler has repeatedly vowed to use all tools at his disposal to prevent Internet providers from striking deals that would shut out startups and smaller companies that can’t afford to pay for preferential treatment. He said consumers pay for a specific amount of bandwidth when they subscribe to broadband Internet access, and that the commission won’t allow broadband providers to throttle that connection or limit how consumers use it.
“The potential for there to be some kind of ‘fast lane’ available to only a few has many people concerned. Personally, I don’t like the idea that the Internet could become divided into have’s and have-nots,'” Mr. Wheeler said. “I will work to see that doesn’t happen.”
“There is one Internet. It must be fast, it must be robust, and it must be open,” Mr. Wheeler added. “The prospect of a gatekeeper choosing winners and losers on the Internet is unacceptable.”
That remains to be seen. This is going to be one heck of a balancing act for the FCC. For sure, they won’t be able to satisfy all the stakeholders in the broadband Internet (content providers, ISPs, consumers, public interest/ consumer advocate groups, etc).
We’ll update you with our perspective, comment and analysis as this controversial proposal and ultimate ruling progresses. We think it will be a “battle royal.”
Here’s how to submit a comment to the FCC:
The above title is by no means an original thought; this belief has been documented in policy statements and legislation at the Federal and individual state level many times over the years. Technology and other social factors have resulted in many changes to telecommunications policy for the common good of our country. A significant number of the social goals and policy revisions were initiated to ensure that people, communities and economic development in Rural America were not left behind and to ensure that all Americans would realize the benefits from advancements in technology. Today, our government, via laws, rules and policies have stipulated that open & fair competition is right for all of America. But before we discuss the current landscape, a brief review of how we got here would be helpful.
Alexander Graham Bell patented the telephone in 1876; American Telephone & Telegraph (AT&T) and the associated Bell companies were formed and became known as the Bell System. Generally speaking the local Bell companies provided the local connections in mostly larger cities and AT&T provided the long distance lines. In addition to the Bell System, various non-bell telephone companies (independent or cooperative companies) were created to offer local service where the Bell companies were not currently offering service; these mostly rural areas were in some cases farms, ranches, very small towns and even resort communities.
[Because there was some concern that it was not an attractive economic decision to build facilities to serve rural areas, the government stepped in to offer financial assistance to ensure quality service was offered in rural America. The Rural Electrification Administration (REA), now the Rural Utilities Service (RUS), was created to assist the interests of consumers and communities in areas where adequate service was not provided. Because this requirement for financial assistance in rural areas continues today, the RUS remains a vital part of economic development in rural America.
One of the earliest involvements of the government in the provision of telephone service was a determination that the American common good would be best served by determining that the telephone service marketplace should not be open to all competitors in all areas. Telephone service at that time was provided by above ground wire and poles; policy makers were concerned about safety, economic and environmental impacts of numerous above ground facilities in urban areas and very little service in less populated areas.
This concern was highlighted by the strong belief that many companies would flock to more densely populated areas creating havoc for consumers; but few, if any, companies would want to offer serve in less populated more costly rural areas.
For these and other reasons, it was determined that the common good would be best served by replacing open “competition” for the provision of telephone service with “regulation” and by establishing local monopoly franchised service areas. One company was given the right to be the only company in a designated franchised area to offer telephone service in exchange for operating under the rules and regulations (including the rates for services) of a regulatory organization; a federal agency for the services between the states and state agencies operating in each state jurisdiction.
This “regulated one-company monopoly” model appeared to satisfy consumers for a number of years; but advancements in technology (i.e., new products and services) were extremely slow. Only the limited products and services offered by the company providing telephone service in that area were available to those consumers.
Another major development in government involvement was a policy that became known as “Universal Service”; which was an understanding that the common good for all America was best served when more telephones were on the network. The idea…every new telephone line added to the network increased the value of every other telephone line on the network (the Network Effect). This proposition resulted in revised rate structures, revenue sharing between companies and subsidies between services. It led the way to subsidies between toll & local service, business & residential services and urban & rural services. These defined subsidies, along with government financial assistance, fostered the expanded economic growth and consumer satisfaction in rural areas throughout America. Telephone service penetration grew substantially throughout the country.
Throughout the earliest stages of the development of telephone service in this country, policy makers continued to believe that a regulated monopoly with no or limited competition was beneficial for the American consumers. However, some consumers and other groups began to believe that this type of structure or model was stifling the development of new products and services. These groups started to expound on the idea that, as long as a company was “guaranteed” all customers in a given area, that company would do very little to satisfy customer demand in that area. It was clear that consumers wanted new products and services…they wanted choice and competitors wanted to enter the market. These underlying beliefs brought about a national interest in revisiting the real benefits of a regulated monopoly for telephone service.
It began in the consumer product arena. The regulated companies had stipulated that only their company provided equipment could be connected to the public switched network. However, many new products (such as The Hush-a-Phone and, Carterfone) were being introduced into the market and consumer demand appeared to be growing.
The regulated companies argued that the newer products would harm the public network…the use of one of these products by one customer could have an adverse impact on the service of another customer. After many court and regulatory battles, “customer provided equipment” was permitted, connection rules (including jacks) were established and telephone service went on with little or no problems. The fear that competition would denigrate the network was unfounded and the consumers began to enjoy a plethora of many new end-user type products.
The interests of all American consumers started to become the primary measuring stick utilized by policy makers & regulators when discussing issues and making decisions affecting the provision of telecommunications.
The next area ripe for the introduction of competition was the long distance segment of the telecommunications marketplace; but it proved to be much more complex, requiring more time to implement. It started slow, in the specialized services arena. Some new companies (such as MCI, SBS, etc.) were offering private services to companies with large communications needs.
These companies wanted to offer any spare capacity to the general public. The regulated monopolies objected; they believed that the public offering of this type of communications service was their exclusively their business and these upstart companies should cease offering these competitive services. Again, numerous court and regulatory battles ensued and the policy makers wrestled with the balance of competition versus regulation.
It was clear that the true benefits (economic and quality) of technological advancements could only be realized if these new market entrants with alternative products and services were permitted to participate in the marketplace….for all consumers…in all areas.
One particular court battle was a very long antitrust action against AT&T and the Bell companies. After extensive arguments, the parties agreed to an unprecedented settlement of monumental proportions for the telecommunications world. It was announced on January 8, 1982 and scheduled to become effective January 1, 1984. It would take almost two years to carry out the stipulated agreement, which was outlined in a “Plan of Reorganization” which outlined the corporate separation; distribution of assets; defining service areas, interconnection arrangements; assignment of personnel; establish contracts; etc.
In summary, it separated this enormous American corporate giant along the lines of what was perceived as competitive activities (AT&T long distance) and what activities that, at that time, were not considered to be competitive (the local Bell operating companies). AT&T with a few subsidiaries. such as Bell Labs, Western Electric, etc. (that were more aligned with a competitive activity) went in one direction. And the twenty-two local bell Operating companies were separated and reorganized into seven Regional Bell Companies providing local telephone exchange service in specific areas.
AT&T was immediately thrown into a competitive world, having to formally “interconnect” with its earlier corporate subsidiaries and others. The Bell Operating companies would continue their local regulated monopoly services with all the requirements (Carrier of Last Resort, etc.) associated with that position. But the handwriting was on the wall…..the word of the day was competition and even the individual Regional Bell Companies soon looked at the other regions (and everyone else in the marketplace) as competitors.
Bottom line; the telecommunications world was turned upside down. Local Access and Tandem Areas (LATAs) were designed….“Access Charges” was added to the industry glossary of terms… Organizations were created, such as NECA, ECSA, etc., to assist in the management of interconnecting carriers. The complexity of this event was compounded due to the number of other participating carriers & companies, such as the 1,000+ non-Bell independent and cooperative exchange companies, the new long-distance carriers, wireless providers and the equipment manufacturers.
This far-reaching action was another step in what was an obvious movement to a competitive operating environment for the entire telecommunications landscape. Now that the Bell companies could control their own destiny, they began to venture into other areas and test their freedoms; i.e., they could not offer competitive services in their territory; but they could offer competitive services outside their individual region territory. Wireless or cellular service was of particular interest and the bell companies were successful in grasping a major foothold in that arena.
Gene R. South Sr. is a telecommunications and broadband professional with 45 years of experience including positions as EVP for Panhandle Telephone Cooperative in Guymon, OK; CEO / GM of Lakedale Communications in Annandale, MN and currently the V.P. & Director of Governmental Affairs for Lake Communications in Two Harbors, MN. Mr. South served as Chairman of the Board of USTA, RTFC and MART; he also has held Board memberships for OPASTCO and MTA. In addition, he has testified before congress and state legislatures.
[Editor’s note: Mr. South’s first article provided a brief history of AT&T as as a regulated monopoly and the forces that drove to the 1984 break-up of “Ma Bell”. Part 2 examines the aftermath of the break-up, particularly its impact on telecommunication services to rural areas.]
AT&T was immediately thrown into a competitive world, having to formally “interconnect” with its previous corporate subsidiaries and others. The Bell Operating companies would continue their local regulated monopoly services with all the requirements (Carrier of Last Resort, etc.) associated with that position. But the handwriting was on the wall…..the word of the day was competition and even the individual Regional Bell Companies soon looked at the other regions (and everyone else in the marketplace) as competitors.
Bottom line; the telecommunications world was turned upside down. Local Access and Tandem Areas (LATAs) were designed….“Access Charges” was added to the industry glossary of terms… Organizations were created, such as NECA, ECSA, etc., to assist in the management of interconnecting carriers. The complexity of this event was compounded due to the number of other participating carriers & companies, such as the 1,000+ non-Bell independent and cooperative exchange companies, the new long-distance carriers, wireless providers and the equipment manufacturers.
This far-reaching action was another step in what was an obvious movement to a competitive operating environment for the entire telecommunications landscape. Now that the Bell companies could control their own destiny, they began to venture into other areas and test their freedoms; i.e., they could not offer competitive services in their territory; but they could offer competitive services outside their individual region territory. Wireless or cellular service was of particular interest and the Baby Bell companies were successful in grasping a major foothold in that arena.
What was a closed marketplace with a limited number of participants was changed into a semi-open market with many providers (telcos, long distance companies, CATV, wireless, internet providers, satellite, etc.) and you could not tell a player without a scorecard…and even then it was tricky. The convergence of services over the facilities provided by some companies compounded the complexity; Digital Subscriber Line (DSL) internet access service over the voice grade copper facilities of telcos; Voice Over Internet Protocol (VOIP) provided by internet service providers, etc.
It was becoming abundantly clear that there would be some winners and some losers. What happened next were a significant number of mergers and acquisitions…each was an attempt to gain a stronger position in the market by increasing its footprint and enhancing its product line offering…. Even the very large Regional Bell companies were not excluded from consolidations.
The marketplace was partly competitive and partly regulated….The lines of demarcation were very fuzzy. To say it was chaotic would be an understatement. Regulators were constantly changing rules; putting out fires with little long-term direction for planning purposes. It was evident that something had to be done to protect the American consumers and ensure that all consumers would realize the numerous benefits from this technological explosion.
Congress was compelled to step in to attempt to crystallize the telecommunications landscape for everyone; regulators, companies, consumers. The effort would prove to be herculean and consumed lengthy discussions, hearings, comments, arguments and positions from all interested parties. After various draft bills, congress produced “The Telecommunications Act of 1996” which was signed into law by the President. The stated objective of the law was
”To promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies”.
The message was crystal clear; advanced services were critical to the economic growth of America and that competition was the vehicle to deliver those benefits. When before the signals were cloudy and piecemeal, America was now focused on a direction that offers the greatest benefit to all consumers. This very significant congressional action sent the message that all future decisions would be measured against what is best for all American consumers.
This national debate went far beyond just Plain Old Telephone Service (POTS). Historical discussions had dealt with, “Who was going to provide POTS to a certain community.” Now it is, “What provider can offer me with all my telecommunications, Internet & broadband services….today”. This new debate further continued on with, “What provider can provide the required services to assist my community with education, health care, security, etc.”
It will not only be based on who is the provider (telcos, ISPs, CATV operators, satellite providers, private companies, etc.), how it is financed (private or public funded); or who manages the operation., but it will be decided on the ability to offer the most advanced services at the best prices in the timeliest manner to serve the consumer and the community.
If one company is not in a position to offer satisfactory responses to these issues for the community and its consumers; then these services will be provided by an organization(s) that step forward and is ready, willing and capable of the task(s).
Economic development and Consumer interests are the prime movers in these current debates……
The entire industry became under a magnifying glass; externally by media interests, Congress, regulators, consumer groups and policy makers. Internally, industry players studied the market for more self-serving reasons.
Reports indicate that approximately 100 million Americans do not have broadband in their home. Internationally, America has fallen behind other countries in the deployment of broadband services. Domestically, consumers continue to demand advanced services/faster speeds; educators want better service (especially in rural areas); health care providers indicate that enhanced services could improve health care (especially in rural areas). These type of reports are getting significant media attention and many policy makers continue to express concern.
Because Congress, the FCC, the NTIA and state agencies began to place a focus on telecommunications and advanced services, various activities were initiated to investigate and analyze the current state of affairs. Various studies were undertaken….from a National Broadband Mapping project… to a study of where we are today and what is needed for the future.
In 2009, Congress charged the FCC with developing a National Broadband Plan to ensure every American has access to broadband capability. The FCC conducted a hearing in November, 2009 to discuss specifically identified “barriers” that exist in formulating a new national broadband policy plan. One major barrier was the Universal Service Fund. The FCC Task Force believed that …
“the fund should also be used to help subsidize the cost of deploying broadband in rural areas.”
A second barrier that was identified by the FCC Task Force was….
“the fact that broadband service providers tend to favor higher-income regions in more populated areas over low-income areas. The data suggests that many low-income people in these parts of the country are offered only one broadband service option. The data also suggests that these consumers who have only one option tend to pay higher prices for service.
What this means is that lower-income people, who have less disposable income, are often the ones forced to pay higher prices, while people who have more money pay lower prices for service.
Deployments in rural areas are often affected by the high cost of building infrastructure and providing service. The task force noted that “middle mile” costs are almost three times higher than general network operations costs. This high cost is often a serious barrier to rural broadband deployments, the group said.”
The FCC Task Force conducted an extensive analysis and investigation into what would be required to implement a national broadband policy that would provide high-speed internet access to every American.
The results of the FCC efforts were documented in a comprehensive report unveiled on March 16, 2010 entitled:
Government can influence the broadband ecosystem in four ways:
Design policies to ensure robust competition and, as a result maximize consumer welfare, innovation and investment.
Ensure efficient allocation and management of assets government controls or influences, such as spectrum, poles, and rights-of-way, to encourage network upgrades and competitive entry.
Reform current universal service mechanisms to support deployment of broadband and voice in high-cost areas; and ensure that low-income Americans can afford broadband; and in addition, support efforts to boost adoption and utilization.
Reform laws, policies, standards and incentives to maximize the benefits of broadband in sectors government influences significantly, such as public education, health care and government operations.
The plan also recommended that the country adopt the following six Goals:
At least 100 million U.S. homes should have affordable access to actual download speeds of at least 100 megabits per second and actual upload speeds of at least 50 megabits per second by the year 2020.
The United States should lead the world in mobile innovation, with the fastest and most extensive wireless networks of any nation.
Every American should have affordable access to robust broadband service, and the means and skills to subscribe if they so choose.
Every American community should have affordable access to at least one gigabit per second broadband service to anchor institutions such as schools, hospitals, and government buildings.
To ensure the safety of the American people, every first responder should have access to a nationwide, wireless, interoperable broadband public safety network.
To ensure that America leads in the clean energy economy, every American should be able to use broadband to track and manage their real-time energy consumption.
The release of the National Broadband Plan (NBP) received significant media attention and great anticipation from the entire telecommunications, Internet & broadband segments of the marketplace. Market participants reviewed all their plans and strategies to measure any impacts on their operations. Existing broadband providers studied their markets to make investment decisions on the most attractive locations to allocate resources; i.e., where they need to move quickly and where they could delay deployment. These decisions could be based on a variety of factors such as density, cost to install facilities, current competitors in the area and where it was believed they had a sense of control over that market area.
New entrants in the market conducted similar analysis; but they were starting from a position of limited information; they did have the Broadband Mapping information, but lacked consumer demand and cost data. But they did believe that time was critical….”first in the market, and so on…”.
Some encouraging good news was that some necessary financing capital was available. The President had made universal broadband access a key goal for America. Economic Stimulus money was available in the form of grants and loans to approved providers. Numerous applications were prepared and submitted for approval from existing providers and new entrants.
The other good news for the American consumer was that individual communities, in the form of local municipal or county organizations, became well aware of the importance of advanced services to their constituency and its economic growth. In the past, when consumers complained about the lack of available services in the area, local government officials believed that their hands were tied. Now, they saw what was taking place in other parts of the country and around the world and said…Why not us and why not here.
This community awakening was contagious and many community activists and organizers (including the general public, businesses, schools, and medical institutions) joined this very active movement. The battle cry was…”What can we do to secure advanced services for our community”. They did not want their taxpaying public consumers to become “second class citizens” and in certain situations the communities had run out of patience in being last in line for advanced services from competitors providing service in the area. Municipal and county officials believed that they were doing their job and this is one of the reasons why their constituency trusted them with the responsibility to protect their interests.
The municipalities and / or counties established organizations, reviewed their existing situations, analyzed alternatives, met with constituencies, sought voter approval (if warranted), developed a strategy, prepared documentation, filed paperwork, sought financial assistance (grants or loans from federal government), established contracts with consultants and construction companies….and scheduled installation.
Of course, this activity met with some opposition from competitors in the area; who believed that they had the right to that area. The answer to that issue is simple….If the perceived competitors had been providing acceptable level of advanced services in the area; it would not have been necessary for the municipality or county to take that action. The fact is that a lot of existing companies have assumed “ownership” of the area and they believed that these consumers were obligated to wait until the competitor was ready to upgrade facilities in the area to provided advanced or broadband service.
Well, contrary to their opinion, today’s consumers just do not want to wait indefinitely….and educators, health care administrators, business operators, police forces and economic development councils do not want to wait at all….especially in Rural America !
Gene R. South Sr. is a telecommunications and broadband professional with 45 years of experience including positions as EVP for Panhandle Telephone Cooperative in Guymon, OK; CEO / GM of Lakedale Communications in Annandale, MN and currently the V.P. & Director of Governmental Affairs for Lake Communications in Two Harbors, MN.* Mr. South served as Chairman of the Board of USTA, RTFC and MART; he also has held Board memberships for OPASTCO and MTA. In addition, he has testified before congress and state legislatures.
*Lake Communications, a private company, is building and operating Lake Connections for Lake County. Lake Connections is a local fiber-optic broadband provider owned by Lake County and formed to bring High-Speed Internet, Digital TV, and Voice services to Lake County and Eastern St. Louis County in northeastern Minnesota starting in 2014.
On April 23rd, Federal Communications Commission Chairman Tom Wheeler said that he’d circulate his net neutrality proposal to other commissioners on Thursday of this week, in preparation for a vote at the FCC’s May 15 meeting. The draft rules will then be formally proposed and available for public comment.
“In its Verizon v. FCC decision, the Court of Appeals invited the Commission to act to preserve a free and open Internet. I accept that invitation, and in the coming days, I will be outlining how I propose to proceed.”
The proposed FCC rules are expected to ensure that network operators disclose exactly how they manage Internet traffic and do not restrict consumers as they surf the Web. In particular, the rules would prevent the service providers from blocking or discriminating against specific websites, but would allow broadband providers to give some traffic preferential treatment, so long as such arrangements are available on “commercially reasonable” terms for all interested content companies. Whether the terms are commercially reasonable would be decided by the FCC on a case-by-case approach in reviewing the practices adopted by Internet providers.
However, the FCC rules are not expected to address the issue of interconnection, or agreements in which content companies pay network providers for faster access to their sites or services. In the past, Wheeler has said that net neutrality rules would not regulate deals between businesses on connections before they reach the user. That’s because the scope of the net neutrality rules is limited to the “last mile” of the (broadband access) network that reaches the consumer or business customer.
The Wall Street Journal reported today that
“The FCC’s proposal would allow some forms of discrimination while preventing companies from slowing down or blocking specific websites, which likely won’t satisfy all proponents of net neutrality, the concept that all Internet traffic should be treated equally. The Commission has also decided for now against reclassifying broadband as a public utility, which would subject ISPs to much greater regulation. However, the Commission has left the reclassification option on the table at present.
In addition, the FCC plans to significantly increase the disclosure requirements for broadband providers, which could include details such as the speed and congestion of their service along the last mile. The proposal wouldn’t cover wireless carriers, but it will ask whether mobile broadband providers should be subject to a similar commercially reasonable standard when striking deals with content providers.”
Here are few recent facts related to net neutrality:
This January, the U.S. Court of Appeals for the District of Columbia Circuit struck down the FCC’s previous version of the open Internet order. It was the second time the court took such action.
However, the Court ruled that the FCC has the legal authority to issue enforceable “rules of the road” to preserve Internet freedom and openness. It affirmed that Section 706 of the Telecommunications Act of 1996 gives the FCC authority to encourage broadband deployment by, among other things, removing barriers to infrastructure deployment and promoting competition. It also found that the goals of the Open Internet Order are within the scope of authority granted to the Commission.
The court opinion specifically included that the Commission was justified in concluding that an open Internet would further the interest of broadband deployment by enabling the virtuous cycle of innovation that unites the long-term interests of end-users, broadband networks and edge-providers. After all, it explained, when edge-providers are prevented from reaching end-users, demand for both those upstream applications and for network expansion suffer. The upshot here is that the preservation of an “open Internet” is within the FCC’s authority.
Comcast, through conditions placed on its 2011 merger with NBC Universal, is the only Internet provider still bound by the earlier FCC net neutrality rules through 2018. Comcast has now proposed to buy its biggest rival Time Warner Cable Inc and Netflix has come out in opposition of the $45.2 billion merger, arguing that the Internet provider should be banned from charging fees for delivering its content. Comcast has said that Netflix’s opposition was “based on inaccurate claims and arguments.”
Netflix, which accounts for much of Internet traffic during peak hours (some say over 50%), in February struck a deal to pay Comcast for faster online delivery of its movies and TV shows.
Indeed, Netflix, Skype (now owned by Microsoft), Hulu/ Hulu +, Amazon, Google/You Tube, and other content providers that offer video, voice, or audio services that rely on broadband Internet connections could take advantage of such arrangements by paying the broadband providers to ensure that their traffic reaches consumers without disruption. Those companies would be paying for preferential treatment on the “last mile” of broadband networks that connects directly to consumers’ homes.
To reiterate, the FCC’s net neutrality proposal is not expected to address the separate issue of “back-end interconnection” or “peering” between content providers and broadband network providers. It’s new rules will only apply to the “last mile” broadband access network.
AT&T will begin pilot testing all-digital IP phone networks in West Delray Beach, Florida, and Carbon Hill, Alabama, as part of the U.S. carrier’s push to move away from legacy switched telephone networks (PSTN and POTS) in favor of all-IP delivery of voice, data and video.
AT&T’s announcement:Testing the Next Generation of IP Networks,states that the carrier has filed plans with the FCC to conduct IP Trials in these two wire centers and that the trials will run over the next few years. These trials will provide information about the customer experience in transitioning to the faster, more advanced network that consumers and businesses are demanding. Several sources stated that the FCC has approved these two AT&T trials (see references below), but we couldn’t find anything at fcc.gov to confirm that.
The trials will pay particular attention to the reliability of IP-based networks for accessing emergency services and connecting consumers to medical devices and home security networks.
AT&T initially will ask customers in the test areas to switch to the new technologies. In a separate phase that would require U.S. approval, the company would stop offering plain old telephone service to new customers, Hank Hultquist, AT&T vice president-federal regulatory, said today at a press briefing.
These regional experiments will help the FCC decide whether AT&T and other telecom operators (telcos) should be allowed to stop offering traditional wired phone service as customers migrate to wireless and Internet-based communications.
More than 70 percent of residential customers in AT&T’s 22-state service area have abandoned traditional wired service, the company said in a filing last year, asking the F.C.C. to end rules preventing them from dismantling legacy systems.
“The Proposal for Ongoing Data Initiative (Order) kickstarts the process for a diverse set of experiments and data collection initiatives that will allow the Commission and the public to evaluate how customers are affected by the historic technology transitions that are transforming our nation’s voice communications services – from a network based on time-division multiplexed (TDM) circuit-switched voice services running on copper loops to an all-Internet Protocol (IP) network using copper, co-axial cable, wireless, and fiber as physical infrastructure. Americans have come to expect secure, reliable, and innovative communications services. The purpose of these experiments is to speed market-driven technological transitions and innovations by preserving the core statutory values as codified by Congress – public safety, ubiquitous and affordable access, competition, and consumer protection – that exist today.”
Unfortunately, the transition could leave hard-to-reach customers stranded. About 4 percent of Carbon Hill’s AT&T customers won’t be getting access to the new IP-based systems at all; while AT&T says it’s committed to finding solutions for those people, it doesn’t yet have a plan.
“We will not move to Phase 2 until everyone has a solution,” said Hank Hultquist, AT&T federal regulatory vice president. “That solution may not come from us,” cautioned AT&T lawyer Christopher Heimann.
The IP transition trial may also hold unpredictable consequences for competition. The test area in West Delray Beach includes a residential complex that has an exclusive contract with Comcast, meaning AT&T can’t sell services to those customers. That won’t stop AT&T from trying to influence potential customers; it plans to set up informational tables at the complex to woo its residents.
Consumer advocate groups – such as Public Knowledgehave warned that telcos should not inadvertently make service worse for some Americans in the pursuit of improving service for others. Phone companies have an incentive to accelerate the IP transition because maintaining the old copper system is expensive, particularly if it is being used by a declining share of customers.
Another critical issue is being able to make emergency phone calls during a power outage. POTS inherently provides that capability via power feeding and a phone that doesn’t plug into the AC outlet. VoIP operates over a broadband Internet connection that must be powered at all times. During a power failure, a battery backup box must be installed (and operate) on customer premises for emergency phone calls.
At its January 30th Open Commission Meeting, the Federal Communications Commission (FCC) voted to approve a petition AT&T had filed (in November 2012) to conduct trials of an “all-Internet Protocol (IP) network” that would eventually replace the PSTN and TDM networks now used extensively in the U.S. The transition will be from plain Plain Old Telephone Service (POTS) delivered over 2 wire copper subscriber loops to feature-rich voice services using Internet Protocols, to be delivered over coaxial cable, fiber, or wireless networks. The TDM network that transports POTS and digital switched voice/data would be replaced by an IP based packet switched network.
The FCC press release on this initiative can be read here. The FCC says: “This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action.” But that FCC order has not yet been published.
Service Provider Trial Proposal Schedule and Requirements:
Described as a “set of voluntary experiments,” the FCC asked service providers to submit proposals for the IP transition trials. Such proposals are due by Feb. 20, 2014, followed by a public comment and reply period ending on March 31, 2014, with a final decision on the proposals to be made at the FCC’s May 2014 meeting.
The FCC’s evaluation of the trial proposals will be based on what it calls the “enduring values” underlying its stewardship of the nation’s communications networks:
Public Safety communications must be available, no matter what underlying network technology providers use;
Universal access so that all Americans must have access to affordable communications services;
Competition to ensure choices for consumers and businesses; and
Consumer protection: Service providers must accurately describe the terms on which they offer service and must treat consumers fairly.
The FCC hopes the trials will enable it to gather information in the following areas:
Service-based experiments: Providers are invited to submit proposals to initiate tests of IP-based alternatives to existing services in discrete geographic areas or situations;
Rural America: Experiments will focus on ways to deliver robust broadband service to rural areas. While most of the trial is focused on ILEC services, based on the news release and statements at the meeting, this component may permit competitive providers to obtain universal service funding to build broadband networks, separate from the “Connect America Fund” process under Section 254’s “Universal Service” mandate. The details of this aspect of the trial will be important, and will not be available until the formal order is released;
Disability access: Experiments will explore how to ensure that speech- and hearing-impaired Americans, and those with other disabilities, will continue to have access to quality communications services in an all-IP environment; and
Telephone numbering plan in all-IP network: a numbering test bed will address concerns raised about how to handle number assignment and the operation and maintenance of numbering databases (such as the local number portability database) in an all-IP world, without disrupting current systems.’
Data improvement including reform of the FCC’s consumer complaint and inquiry process to collect better data on how technological change is impacting consumer values. Intergovernmental collaboration (state, local and tribal governments) is encouraged to better understand consumer impact. Collection and analysis of data on next-generation 911 systems in coordination with the U.S. Department of Transportation’s National 911 office and public safety associations.
The FCC stated, “The data gathered in these experiments will ensure that the ongoing public dialogue about technology transitions is based on solid facts and data. This discussion will guide the FCC as it makes complex legal and policy choices that advance and accelerate the technology transitions while ensuring that consumers and the enduring values are not adversely affected.”
What to Expect from the All IP Transition Trials:
In AT&T’s January 21st Notice of Ex Parte – IP Transition, GN Docket No. 13-5a two stage process for service provider trials is described. In the first stage, participating carriers would file detailed plans that identify their existing TDM services, the IP network based replacements for those services; and when those IP networks would be available. As part of the first phase, the participating service provider would file petitions for authority to discontinue the affected interstate TDM based-service(s). After approval by the Commission, the provider would be permitted in the first phase of the trial to “grandfather” existing TDM services and allow existing customers to continue receiving those services, while permitting the carrier to fulfill all new orders for service in the relevant wire center using IP-based wireline and wireless alternative networks.
During Phase 2, the participating service provider could file a second application to withdraw the grandfathered interstate TDM services for existing customers. That application would identify how many customers remain for each TDM service to be discontinued and would provide a retirement plan, including the notice(s) to be provided to customers, the available wireline and wireless IP replacement services, and the timeframe for when the conversion of the wire center to all-IP services would be complete. Under this proposal, the FCC would have the opportunity to evaluate the results of the first phase of the trial before granting participating carriers approval to proceed with the withdrawal of TDM services for existing customers.
AT&T Reaction to FCC Sanctioned “All IP” Network Trials:
AT&T praised the FCC for moving forward with the IP transition experiments. The decision is “important and profound,” Jim Cicconi, AT&T Senior Vice President for External and Legislative Affairs, wrote in a blog post. “All Americans should applaud the FCC’s action, because all Americans, and generations yet unborn, will benefit from it.”
But AT&T will benefit a whole lot more. That’s because it would be alleviated of the burden of maintaining its POTs/PSTN/TDM network, which continues to lose subscribers with revenue steadily shrinking. In his blog post, Cicconi wrote, “The cost of maintaining the legacy architecture, with its rapidly declining subscriber base, was unsustainable for any company, and was pulling significant dollars away from broadband investment. That decline has only accelerated over the past fifteen months – AT&T’s consumer POTS access lines decreased from 15.7 to 12.4 million lines between 2012 and 2013, proving the truth of the FCC’s conclusions in stark numbers.”
Mr. Cicconi endorsed the FCC’s protection agenda by his closing comments:
“We need to make this transition in a way that preserves universal service, competition (including interconnection), public safety, network reliability and consumer protection. Chairman Wheeler has referred to this process as a Values Trial, and has stressed that our new IP communications system should reflect these underlying values as we transition to newer and better technologies. We agree, and are committed to work with the Commission and all other stakeholders to ensure that we preserve those values throughout this transition. We’re now embarking on a task that’s of vital importance to our Nation. We have an obligation to do it right. And we will.”
Stay tuned for future coverage of this hugely important telecom transition initiative.