Once Again, Deja-Vu…
March 19, 2010
It’s Déjà-vu all over again! Welcome back to the 1990’s–but this time with a twist!
Yes, I have been preaching the virtues of owning your own local fiber optic network and/or carriers to be on anyone elses’ network except the ILEC’s … well; the crows are coming home to roost. I’m just a simple man of the earth … so what would I know?
Qwest announced today that they are launching – get this – a referral program targeted to small businesses. As I like to say, the T1/IAD, DOCSIS, special access and xDSL end of the market. They are offering cash (not bill credits) incentives between $50 -$150 per referral for one small business to refer another small business to switch to Qwest. Just the thought of this brings back the long distance price wars of the 1990’s where such marketing further commoditized and devalued the long distance service industry and value propositions. As a result, we saw rapid consolidation and the bankruptcies of “asset light” resellers virtually over night. And if you care to remember, the last of the dying warriors ended up somewhere between Bernie Ebbers cooking the books at WorldCom and Joe Nacchio allegedly conducting inside trading as former CEO of Qwest.
What’s that crazy saying about if you don’t pay attention to history, history has a tendency to repeat itself? I think that’s the saying. Thus my thesis is: if a carrier does not have a low cost platform to lever from as organic bandwidth demand continues to accelerate and cash referral marketing evolves — history may not be as nice this go around!
I have no idea if Qwest has started a fire and if AT&T and Verizon will put on a similar squeeze in-territory also. No matter how you cut it though, this does not bode well for the CLECs who have built their fortunes, dreams and investors’ cash on renting pieces and parts from the ILEC. Most CLECs can’t afford to even match this cash offer, let alone any marketing “gotcha” in response – it’s a pure cash incentive play. Bare knuckle stuff… he with the most cash wins.
So what’s the multiple of an asset-light CLEC under these circumstances versus, say an AboveNet? Cogent Communications? TW Telecom? Level 3? You know, those idiots and their local fiber infrastructure…what do they know after all? Bunch of dummies …
I hear something in the distance; it’s a fine whine just developing. Yes, it’s coming from the Beltway … it’s a protest against Qwest for doing this … “It’s not fair!” After all, the CLECs only had 14-years to figure out how not to be dependent upon the ILEC – Qwest should now be required to slash their loops, special access and T1 prices for making such a bold move and to make the shareowners of asset-light CLECs viable.
Analysts–what will they say? I pity the CEO’s quarterly call reporting excessive churn in Qwest’s territory … I can hear it now … “… due to continued downward economic pressures and aggressive promotions by competitors …” will be the cry. But the reality is, like in the story of the three little pigs; when you build your house out of sticks or hay, eventually the big winds of reality arrive. It may be too late to build that brick platform that has been ignored for years. Equally culpable, deemed acceptable to ignore as of value for doing so are the Wall Street analysts. (All my public brick-owning, fiber-bigot CEO friends just smiled because they can’t write stuff like this but I can).
As the analysts say on Wall Street, what have you done for me lately (this quarter)? The winds are a blowing with Qwest firing the first salvo, maybe a cable company will follow as well … meanwhile the AboveNet’s, Cogent’s , Level 3’s and TW Telecom’s of the world are happily nestled inside their brick fortresses which they built (and/or bought), brick-by-brick, slowly over many, many years–when it was not popular to think beyond next quarter and securing their future by spending capital on bricks (local fiber optic infrastructure)! To this day, capital expended for unique local fiber is yet to be understood in value, multiples, strategic or sustainability as a business model by Wall Street.
Caw! Caw! Caw! I hear the crows and they are getting closer. (Editorial Note: Based upon my Native American ancestry, the crows arriving are a good thing for my tribe).
I own a brick platform and I intend to make money off of Qwest – so can you. I am going to submit some referrals into Qwest under this small business referral program to make some cash. I am going to obtain all the local Yellow Page books in Qwest territory and staple it to a referral application and just wait for the cash to flow in …
Amazing how things can change so quickly if you are not prepared or constantly scanning the horizon.
I’m Not Picking On Anyone…But…
November 12, 2009
I typically try to listen in to the quarterly calls of publicly traded carriers just to benchmark AFS and see what underlying trends are being identified. Since I was on a secret mission last week, I missed a few calls. When I miss the calls I get a copy of the call transcript, read it, and mark it up for internal distribution to our leadership team at AFS.
I missed the call last week.
Before I go further on an observation I made, let me tell you what we believe in at AFS: The Golden Rule. Business is business, and applying The Golden Rule suffices in most situations if all parties are objective. In addition, in competing for business, we don’t deal in dishonest dollars or unethical conduct. Winning business at any cost requiring an employee to trade off their moral beliefs, ethics or soul to gain a deal is business we would rather not have. Questionable conduct takes two parties–the buyer and the seller.
I want non-carriers reading this to also pay close attention to this blog and ask themselves, “how would I respond in this situation?”
To start, I want to quote exactly from the transcript for accuracy:
“Analyst: Just a question on the pricing environment, if you could give us a sense of how we’re positioned today in the NetCentric base specifically? Some of the [inaudible] some more aggressive pricing there as well as some updates this quarter in terms of benefits that we’re seeing from some of the content players in the market. The secondly, if you could just delve in to the lowest price guarantee a little bit more for us? I wanted to understand the mechanics of this and in particularly trying to get a sense of the extent to which you have some flexibility there to reject some of these lower prices on the basis of non-comparable networks and how that’s determined? That would be very helpful. Thanks so much.
Carrier: The NetCentric market is one in which we and other providers are selling a commodity based service. We offer the greatest amount of connectivity and capacity operating on a network on a non-oversubscribed and non-blocked basis. We have a standard pricing policy that prices services anywhere from $4 to $10 per megabyte depending on contract term and length. Occasionally we do offer special promotional programs either on a given period of time or in a given geographic region. We remain the lowest cost provider. We believe that our price at $6.33 for our install base is at about 50% of where the market is. In addition to that, our average new sale in the quarter at $4.82 we believe is less than 50% of the average price in the market. We have seen situations a couple of times in this most recent quarter where we have offered lower prices in response to discounts from others. We have a policy where if a customer shows us an invoice from another tier-1 network operator, some other network operator that is offering global connectivity, we will beat that price and we did that a couple of times in the quarter. We’ve actually seen a decline in the rate in which we’ve had to offer those very aggressive prices. If in fact, a customer provides us a price and it is not documented we will push back on them and request that they provide us documentation under a non-disclosure agreement because we have no intention of being in the business of negotiating against ourselves. Then finally, we are looking for networks that can provide the service so it really comes down to the locations in which the service is requested and the scope of the network. But, we remain the lowest cost provider and in fact, we have seen less competition as we’ve seen the number of companies that we actively compete with continue to decline.”
Here is what I can tell you about AFS: we quote a customer and we will use sales tools to accommodate the prospective customer on a price conversation. We can offer longer terms to lower a price, declining scale pricing, forward pricing or a larger NRR payment or combination thereof. We do not however, tell a customer to show us the written quote from a competitor under the guise of an “NDA.”. If we had any, and I mean any, sales person conduct such behavior, they would be fired immediately. It is my opinion that you compete on your merits, value, differentiation and network reliability strength and not act as a used car dealer.
Conversely, a prospective customer is just as guilty of such behavior for turning over what any common sense
person would consider proprietary information disclosed in good faith by a competitor to a competitor while giving a perception you are running a purchase decision/process allegedly on an equal playing field. Turning over such confidential information tilts the perceived level playing field unless the customer doing this is willing to turn over the Carrier response in return and continue to play the game of “pricing” chicken.
We have, on many occasions, given a prospective customer all sorts of pricing configurations. At a certain point, our sales people will say “no” and walk away. You would be surprised how many prospective customers come back months later when the competitive price was a bait and switch, the carrier never delivered on time and/or the network reliability of the connection was garbage. It is okay to say “no” to price shoppers. One would think with a massive network, that price alone is not your only value point or point of differentiation.
In my opinion, I find the conduct and policy in the above transcript unethical and not necessary.
No one needs dishonest business or a dishonest customer. No customer needs a dishonest carrier. What both parties need is a relationship not a transaction solely based on price.
Surprisingly enough, no analyst called Carrier out on such a practice during the call. I guess the almighty dollar trumps any ability to question such conduct by Wall Street analysts … why am I not surprised?
On the service proposition, what we are dealing with here is what is often referred to as a “commodity.” Calling IP services, in my opinion a “commodity” is a misnomer. Quite frankly, it’s a “commodity” based on price until it breaks or does not work. Last I knew, network reliability has yet to become a commodity. You get what you pay for in deregulated communications – and don’t forget this fact.
In summary, if this is how the game is played by some, I suggest competing carriers insert language on each and every quote that by a prospective customer accepting this quote certain confidentiality and disclosure rights are created and as such a violation may be subject to damages inclusive of consequential damages.
I just found the disclosure in the transcript telling and interesting.
I am not picking on this particular Carrier–I am sure a few others play the same game. To make it a matter of fact, in an upcoming blog I will share with you a multi-year process AFS just went through after discovering bid-rigging by a major carrier which was processed through the Department of Justice. Yes, a gazillion dollar carrier, in this case, caused AFS to lose a bid only to be flushed out in rigging the bid in compliance with the customer. More on this in a future blog.
In another future blog, I will share with you how the “consultant” game is played to rig the deal also and how in the case involving AFS, the gazillion dollar carrier ended up burnt in the end. Though we ended up with one of our largest customers churning, we came out on top. If you believe in karma, you will enjoy the blog.
I am not naive, but America has to start showing something else to the world about who we are beyond greed at any cost …
Houlihan Lokey’s Media & Telecom Group
October 24, 2009
I was an invited speaker to the recent Houlihan Lokey’s Media & Telecom Group Conference at the Waldorf Astoria in New York City.
For the most part, with the exception of two of my charts, I behaved myself. But, that’s not the real story coming out of this conference.
Houlihan Lokey did something very different from most banking firms that host these events for the financial community. They invited a number of privately-owned Telecom and media companies to present their businesses, strategies and outlook. Similar banking events often only invite publicly traded companies, which basically tell you what you already know by reading their quarterly reports and filings under Sarbanes-Oxley. The “big guys” mentality
exist at those events even though, in the grand scheme of things, some of the “big guys” are still a pimple in comparison to an ILEC .
I think the eye opener at this conference was for the Private Equity firms attending. They were able to receive information on companies that, quite frankly, outperform a number of public companies by significant margins and benchmarks. Albeit smaller companies, but the fact of the matter is, give these same small firms the capital to expand, and they will take many public firms to the cleaners. Most PE firms, however, wrestle with believing, “I can only invest hundreds of millions of dollars.” in my opinion, investments should always made on the management team. It’s like the old saying at the race track – always bet on the jockey. You can always add money, so why let someone get drunk on up-front cash regardless of business model or razzle-dazzle PowerPoint charts and projections?
Too often CEO’s with too much cash go on ego trips with that cash burning a vicious hole in their pocket. Becoming a celebrity CEO and using someone else’s money is disingenuous at a minimum! Our last round of Celebrity CEO’s and
CFO’s using other peoples money resulted in the telecom meltdown circa 2001-2003 … let’s not have short memories. Fund responsible management – not a story of conquering lust!
Many presenters leading the private companies have in fact previously held executive positions at multi-billion dollar firms, I amongst them. One reason I started AFS was the waste of capital and human resources at large companies I often witnessed that could perform much better if utilized appropriately or should have less people as they underutilize their intellectual capabilities either by operating procedure limitations or cultures of control. The human resource maximization mindset was well illustrated by the low churn rates of customers the private firms disclosed. Focus on customers is paramount over focus on each other internally was a key repeating theme.
A lunch time panel of various financial firms indicated that things are changing and they see consolidation relative to metro fiber firms picking up as the bid and ask gaps have closed, however, the bid and ask gaps have increased amongst media companies for various risks more related to the evolution of the Internet and uncertainty than anything else. The favor of metro fiber is the real accelerating growth of organic bandwidth, the need of optic connectivity to enable everything else and the “platform” fiber provides growth and flexibility by owning such a platform.
From a metro fiber platform, you can remain a horizontal provider of services or vertically integrate services — when the markets make sense to do so. A local fiber platform gives an operator this advantage over the risk of an application provider which is asset-light.
I would be remiss by not saying that I did get to see and say hello to many of my PE friends that have been looking to get into the metro fiber space “platform” for at least the past four years. Once again, I believe the performance by the private firm’s disclosed at this conference must make for some interesting PE introspective relative to existing portfolio companies, quality of management and execution focus.
In addition, at the conference, the recent announcement of Comcast purchasing a Chicago CLEC has caught the attention of many. The scuttlebutt at the conference was the multiple of EBITDA was well north of 10x and to expect more cable companies looking at the “small metro Telecom guys” who are fast, focused and thrifty as future consolidation occurs.
Why cable companies?
As rumor had it at the show, Comcast not only bought the CLEC “business” to go deeper into metro and establish a solid beachhead for business customers but to obtain people that know how to compete in local telecom … kudos to Comcast for thinking diversely, differently, realistically and non-insular.
I suggest, if given the opportunity and if Houlihan Lokey repeats the private company invites at their next Telecom & Media Conference, it could be well worth your while and eye-opening to attend.
I was hesitant to participate when invited, I am glad I did.
Next Generation Connectivity
October 22, 2009
This link will take you to a 232 page report on Broadband titled, Next Generation Connectivity:
A review of broadband Internet transitions and policy from around the world. It is published by The Berkman Center for Internet & Society at Haarvarrd University. (Yes, Buffy dear, I purposely spelled Harvard as “Haarvarrd” for contextual affect.)
Click here to go to the report.
My conclusion: In America, it’s all about having policy, objectives and economic incentives to deliver fiber optic connectivity to 90% of homes and businesses with remote areas being served by subsidized satellite capabilities that already exist within 10 years. This approach will stop spending good money after bad, keeping copper loops alive. And, of course, broadband mobility should be left to the free markets to sort out with the least amount of government “help.”
If you have the fiber optic infrastructure, mobility backhaul for 4G services is a slam dunk. You need the fiber infrastructure first; otherwise you end up putting the cart before the horse.
Churning…Churning…Churning Inside the Beltway…
October 8, 2009
Today it is short and sweet.
As much as I dislike going political, let’s use industry terms…
We need to “churn” out our elected officials inside the Beltway – all of them. Forget tenure and your self-serving interests because your representative has been there for years.
Korea is going 1 gigabyte by 2012 … I have written about this before. What is in the water inside that Beltway?
Wake-up America!
http://joongangdaily.joins.com/article/view.asp?aid=2900490
Tele-Orgasm
September 24, 2009
I have a new word and sensation for Telecom – it’s the Tele-orgasm.
A Tele-orgasm is the tingling sensation that Chris Matthews gets when he encounters a fiber bigot, such as myself, discussing copper loop removal from a building or residence. Yes, the Tele-orgasm is the equivalent of Chris Matthews in awe of anything President Obama utters – that same identical tingling.
At the Goldman Sachs investor conference this week, Ivan “The Terrible FIOS” Seidenberg, CEO of Verizon pretty much stated that copper is just about dead as far as Verizon is concerned. These comments were aimed at the shrinking loss of lines that analysts like to measure. Joined by Randall “FTTP” Stephenson, CEO of AT&T and Ed “Wireless-less” Mueller, CEO of Qwest, all concurred that someday the landline loss would stop shrinking.
As aptly reported by conference attendee Saul Hansell of the New York Times, “In other words, that snipping sound you hear around copper phone lines is just going to get louder.”
Oh, that tingling sensation I get just thinking about it!
In the same article, Seidenberg declared, “Video is going to be the core product in the fixed-line business and the focus will move from selling bundles of video and landline to video and cell phones.” He added: “Once I shed myself of the burden of chasing the inflection point in access lines and say ‘I don’t care about that anymore,’ I am actually liberated.” Let’s here it for liberty and freedom – I am having a vision, perhaps Ivan can be caste in a remake of “Braveheart” as William Wallace – the Telecom version!
Since I have written about this before, let me translate this for Wall Street: Measuring legacy copper lines is of declining value, possibly of no value at all. It is not an indicator of anything anymore. Ivan, Randy and Ed won’t say it, but I have before and will again — you need to measure ports installed and bandwidth deployed. Mr. Wall Street – any idea how many simultaneous VOIP calls you can run over one port of Gigabit Ethernet? You count that “port” today as a line… Think about it. You really don’t know how much net line loss is going on with VOIP as a substitute for copper TDM lines, do you?
And I do know for a fact that many of you on Wall Street do read this blog but never comment. That’s called voyeurism.
The other secret I’ll let out of the bag, though my buddy Ivan insinuated it, is this: They are not the telephone company anymore. Wall Street-–you need to accept this and figure out what to measure accordingly. The big “service push” that is evolving is data. And I don’t mean data in the sense of point A to point B.
What I am talking about is the effort by my three new friends trying to figure out how to sell one data plan to customers that covers all their needs — fixed and mobile. People don’t want to pay for separate, multiple data plans – a single “portable” data plan is of significant value to the customer. Data – anytime, anyplace, on-demand regardless of access device is powerful. The single point IP addressable data plan is the new Holy Grail in telecom. A personal data plan or a shared corporate data plan —- but one data plan period – wire line (fiber) or wireless (LTE/4G/Wimax) is coming our way. So stop it with the copper line loss shenanigans.
However, before we get to data utopia, that copper needs to get snipped … and there goes that tingling sensation – another Tele-orgasm.
Digital Britain
September 2, 2009
In my former life, I used to travel the globe mercilessly on business. You name the place–I pretty much have been there. One might say I am a mystery man of international intrigue.
One of my haunting places on many, many occasions was the United Kingdom. So, I keep a watchful eye on the comings and goings within UK telecoms and Europe in general, plus South America, plus Asia, plus Australia/New Zealand . I affectionately refer to the UK, when it comes to things like healthcare, horticulture, cuisine and telecoms, as the land of “That’s Good Enough.”
I just came across a report called Digital Britain published under Lord Stephen Carter, the first Minister for Communications, Technology and Broadcasting. Just Google or BING “Digital Britain” and “Lord Carter” and you to can download this 245 page report as well. (I put BING in here just in case Google reads this…).
There were two things that caught my eye, though I have not read the report cover to cover, that I would like to share with my loyal fiber bigot readers…and of course the few copper loop loving Oafs. Don’t worry–I love my loyalists and copper Oafs equally. It’s all about the love at American Fiber Systems.
In the land of “That’s Good Enough” it’s nice to see not much has changed. Though Telecom is a £52 billion a year economic driver, the British government has in its sights a goal. That goal is this: by 2012, for all of Britain have broadband speeds of 2 megabits. This is classical British authority – the government establishing what’s good enough for the British commoners.
In fairness, they do recognize the value of fiber optics to the home and businesses per the Digital Britain report.
So, beyond 2012, they want fiber and they want it everywhere. Per the report, they pretty much figured out that 2/3 of the country can be served by just letting private Enterprise compete in an open market with limited government involvement but regulatory oversight of British Telecom by Ofcom (aka their FCC) to succeed with last mile fiber deployment.
Lord Carter, through Digital Britain, has concluded that there needs to be the ambition “to accelerate the rate of growth, and cement the UK’s position as a world leader in the knowledge and learning economy.” Note to Lord Carter and the Queen of England: You are not going to cement anything at 2 megabits per second – I can swim the English Channel faster – I told you I am a mystery man of International intrigue.
So our friend the Lord, has proposed an idea to address the remaining 1/3 of the country that can’t be addressed by the private sector due to rural economics. He has proposed a tax of 50 pence per month or £6 per year on each and every copper loop as long as they are in existence.
The collected tax will be centrally collected, controlled and disbursed by Ofcom to subsidize the private sector to service and build out rural UK with fiber optics. Lord Carter believes this scheme will in 4-5 years time provide fiber access across 90 percent of the UK. Estimated tax proceeds from the copper facilities of £175 million per year will be the source of public funds to achieve rural fiber access by matching it with private funds. I am sure eventually that reality will settle in and that wireless 4G, LTE or WiMax will also play a subsidized role in the hinterland. I have been to Scotland – I don’t see running fiber cables from glen to glen.
What I like about this approach, is the British government trying to stay out of the mix as much as possible (translated – no government authority or entity trying to be in the communications business.) Maybe by watching America, they wish not to repeat our mistakes of municipal or public utility participation on a tax subsidized basis, not being required to make a profit, let alone have the appropriate core competencies or burning desire of an entrepreneur.
Now, for a few of my readers that may be from the UK, or conduct business there or just follow things like this as I do, you may be thinking: “But Dave, isn’t the push on for Fiber-to-the-Curb (FTTC) in the United Kingdom leaving the access to copper?” And my answer to that is yes!
That’s the beauty of the tax.
Today, British Telecom is the national wholesale backbone provider and for this privilege is regulated by Ofcom. BT is required to place at various intervals along the backbone cross-connect huts with power and get this – non-discriminatory, equal access to the copper from the hut to the residence or building. If a hut runs out of space, BT is required to build another hut adjacent. Most of these “huts” are underground. No volume discounts or any of those last mile “special access” games – competitors pay the same for the last mile copper as BT uses it for itself. (I am trying to keep things simple). BT is the wholesaler – the technology push is last mile for all.
The incentive over time is for competitors and BT to build fiber from the hut to the premise to displace the copper and the tax that goes along with it. Nothing prohibits a competitor to build their own backbone in and around the huts. This makes for an interesting mix of diverse last mile options that could range from a neighborhood to multiple kilometer area coverage. The key is the equal access, non-discriminatory and same cost interconnection in the huts. To a certain extent, it can rationalize the deployment of capital expense whereby a last mile fiber owner has a sharing incentive for access (i.e. waves) or take the risk of getting built over for trying to be a last mile monopolist. If a competitor has an equal access backbone from BT, it becomes a more level playing field for rational access deployments.
There is a very nice Layer 2 access model in all of this as an option for private investment.
BT as a wholesaler will get regulatory relief as networks and options evolve, but as things evolve they have every incentive to deliver reliable, diverse and equitable bandwidth to those huts. If they don’t, besides Ofcom, competition with open access to the huts can usurp their wholesale position.
It will be interesting to see if the tax gets approved. I am not one for taxes; however, copper loops are like kryptonite to me, it makes a nation weak.
Speed Matters
August 27, 2009
The Communications Workers of America (CWA) have just released a study called “Speed Matters” – I couldn’t agree more that speed matters, but I also disagree with the namby-pamby view of what the CWA believes broadband speed should be. The website for more information is www.speedmatters.org.
Before I go on to explain why the CWA recommending that an acceptable broadband speed is 10 megabits downstream and 1 megabit upstream is not in their long term best interests. But before I go there … a trip down memory lane.
While President of Frontier Communications back in the 1990’s, I had the opportunity to interface with Local CWA 1170 – “Up the Rebel!” Anyhow, for the most part, I had good dealings with these folks. On occasion, I would spend a day with one of the techs in the service van’s going around fixing customers problems. I always thought those moving office van jobs were the best in the company. You showed up early, received your assignments, and management was now in your rear view mirror.
Customers always enjoyed when you showed up because you were there to solve a problem or initiate a service. These grassroots services people were invaluable to the company, they knew where the proverbial bear would crap in the woods and were street warriors, of sorts. The biggest gripe the van nomads had was with arbitrary job assignments by management – which I happened to agree with the CWA. A van nomad would get his or her assignments for a day and by going down the list they could tell you out of six jobs, two will take all day – if anyone new, they would. But, management measured on how many jobs got done without considering complexity as many calls were repeat situations.
A lot of repeat situations were the result of not being allowed to do the job right in the first place in order to meet measures. So, you completed your 6 jobs, but you know at least two will be showing up again in a day or two — no one was measuring repeats outside of the nomads in the vans. The groans in the garages at 6:30 am when certain addresses would pop up … again and again.
This is a family blog, but some of the stories I could tell you that the van nomads experience are varied and wide — ranging from a topless women greeting a tech at the door to allowing hookers during February cold spells in Rochester to warm up for a while in the van (sorry, no hanky panky), to discovering service fraud by cross wiring blocks to the President (yours truly), riding shot gun with a super soaker pulling up on another working nomad crew and letting them have it on a hot summers day.
Anyhow, as I said I had a good relationship with the CWA and in leading the first local market competitive carrier in the United States back in 1994, the CWA was a great conduit for being competitive. Bob Flavin, President of 1170 back then would call me occasionally and whisper sweet nothings in my ear over the phone on certain competitor’s activities or a forthcoming pissed-off customer. Many times I was able to counter or diffuse certain situations as a result.
Bob and I didn’t need a contract to know what was in the best interest of the company and its customers – we trusted each other.
Back to the speed question. If you look at the release of information, here are the top and bottom rankings by state in America:
Fastest Internet Connections
Delaware (9.9 mbps)
Rhode Island (9.8 mbps)
New Jersey (8.9 mbps)
Massachusetts (8.6 mbps)
New York (8.4 mbps)
Slowest Internet Connections
Mississippi (3.7 mbps)
South Carolina (3.6 mbps)
Arkansas (3.1 mbps)
Idaho (2.6 mbps)
Alaska (2.3 mbps)
No offense to Delaware or Rhode Island, but Ted Turner owns land bigger than your states. I am surprised you don’t have higher speeds than this!
As I have advocated in previous posts that it would be in the interests of all Americans and the CWA to have a minimum threshold of 100 megabits now and 1 gigabit services to 80% of America within a decade. My opinion, any grants or loans from the government should be predicated on achieving these parameters plus reliability standards. When you combine speeds like this with reliability standards, the most cost effective platform is fiber optics. The 20% outside the 80% is mostly rural-rural – USF-like funded satellite, 4G or WiMax capabilities for access is my proposed solution. Let’s face it folks, 50 megabits to rural-rural areas can be a good goal, a fair goal – dial-up or no service is unacceptable. Global competitiveness requires we do not fall behind further by serving the lowest common denominator such as rural-rural (i.e., FTTB — Fiber-To-The-Barn) just like what has been done in our public school systems but everywhere.
Though this is my view and world statistics supports me, I have yet to get invited to the White House for lunch to discuss my opinions on 100 megabits or the dumbing down of our public education system to serve the lowest common denominator of student.
The telephone companies are on the way to becoming “integrated telemedia” (copyright Dave Rusin) companies with one huge advantage at the moment – an in place network infrastructure wire line and wireless. However, to achieve long term cost advantage, the CWA should push for fiber connectivity while avoiding copper creep bandwidth limits to enable others to succeed. Its pure arbitrage and a fools bet in my opinion, to milk the copper under today’s regulatory environment. If you can’t get forbearance on the copper, either sell the copper to an unsuspecting third party or rip it out and replace it with fiber as soon as possible. Think about it, if some CLECs whine inside the beltway for copper access, see how fast they will line up to buy the frame and copper loops from the ILEC and its regulatory conditions – I think the hypocrisy will show itself. Let the CLEC own the facility and the van rolls … . If you don’t believe me, go ask an RLEC … I am sure they would rather pay regulated rates for copper facility use to a CLEC that thinks it’s a great money maker… van rolls are even more costly in rural areas.
Assuming Japan, South Korea, Australia, Tasmania, those crazy Portuguese and others stand still with bandwidth rates they are delivering today, at our current rate it would take America 15 years to catch-up – assuming they stand still!
I encourage the CWA to lobby for 100 megabits and reliability first, and then the dialogue on how to incent investments private and/or public can begin in earnest. In the interim, encourage ILEC management to offer up copper loops for out right sale to CLECs fighting forbearance – just sell them as is where is and subject to regulations – hell, the ILEC can be a CLECs customer on those loops since the business model is so lucrative per the CLECs. Meanwhile, the CWA can get busy installing last mile fiber access and advancing America.
Up the Rebel!
Excitement in BTOP Land
August 13, 2009
As we approach the August 14th deadline for the first round of proposal submissions under the Federal Governments $7.2 billion Broadband Technology Opportunity Program (BTOP), excitement fills the air. It’s almost like the feeling that Chris Matthews of MSNBC had – a tingling running up your leg. With $1.6 billion to be allocated during Round 1, the submissions should make for some interesting reading.
I have found a few more oddities in the process that I’d like to share with commonsense America.
Before I start, have you noticed something that has been going on over the past 4-6 weeks? It is very pertinent to the BTOP process and how a proposal may be challenged after submission by an incumbent wire line or wireless carrier–or any carrier for that matter–anonymously, of course, and without due process.
There has been a flurry of press releases from all major wire lines–wireless and cable companies claiming to offer service speeds on an advertised basis in excess of 10, 20 or 50 megabits in some cases, some as high as 100 megabits. All sorts of new high-speed advertised services!
Keep the above in mind …..
According to the BTOP folks, a proposal receives points on 5 parts of a submission form. Each part gets 20 points, so the highest points a submission may receive is 100 points.
In one of the sections, based upon the USA’s definition of broadband of 768 kilobits, an initiator of a proposal has to go through all sorts of census data machinations and mapping in defining areas of a proposal that qualify as being unserved or under-served. Respectively, no service is un-served and under-served below the broadband service definition of 768 kilobits per second. It is plausible that a proposal may be eliminated at this stage by not meeting these criteria by supportable quantifiable analysis, though in a different section of scoring, if your proposal offers megabits or gigabits of broadband you can get extra points.
Think about this for a second. The two points contradict each other.
That said, a proposal may also be challenged for elimination – get this – if the advertised broadband speed by a provider in an area is greater than 3 megabits per second. Thus, all the recent announced advertised speeds greater than 3 megabits are dripping all over the place.
Think about it – not an installed speed of 3 megabits with 90% coverage, but an advertised speed greater than 3 megabits. Advertised! It gets better.
If a proposal gets rejected because some carrier did a press release and updated a tariff to a new advertised speed above 3 megabits the proposal submitted gets called into question of the quantifiable analysis of unserved and underserved per the rules, assuming you get a hearing on the matter; and guess where the burden of proof falls? Yes, on the company that submitted the proposal and quantified census research must prove that the advertised speeds are not available, limited, etc. Now, can someone out there in blog land please tell me where you are going to find such information? Think about this for a second – you are guilty of a quantifiable census analysis according to the BTOP rules as required if someone advertises a speed greater than 3 megabits across a region wire line or wireless. The burden should be exactly the opposite – a carrier or Cable Company advertised certain rates of speed greater than 3 megabits per second, especially the last 4-6 weeks, should prove the penetration rates on a map by actual sales via their billing records.
It gets better.
In the BTOP rules, with the definition of Broadband at 768 kilobits, there has been a sector excluded from consideration because they not only deliver at least 3 megabits of service but they can serve 100% of America today. Satellite companies as an industry group and platform are excluded from BTOP as a viable measurement for unserved and underserved. Why? Because the satellite broadcast companies by the Federal Governments own definition of broadband makes America 100% served at 3 megabits or above … how convenient. They not only advertise it today, they are doing it today. Why the discrimination against this sector? I can’t tell you why and I am surprised satellite carriers are sitting by idly.
The straight talk here is simple: it’s about politics, the beltway disconnect with reality and protecting the interests of campaign contributions even though America is woefully behind in broadband access and speeds overall. I filed my opinion at the start of the process calling for a minimum standard of 100 megabits as the definition of broadband with a goal of 1 gigabit within a decade with the global economy as a backdrop. According to “advertised” announcements recently, my 100 megabit broadband definition suggestion seems plausible and achievable.
BTOP Nuggets
July 21, 2009
My dear friends and fellow taxpayers,
You won’t believe what I am about to tell you. Make sure you are sitting down. It’s about the Beltway again.
Remember all that stimulus money (aka tax dollars/future debt) President Obama is sprinkling across America? Well, $7.2 billion of it is dedicated to the Broadband Technology Opportunity Program (BTOP) with a primary emphasis on making low interest loans and grants available for broadband infrastructure.
Two Federal organizations have processes to distribute the funds. The traditional Department of Agriculture RUS administration serving rural communities (loans) and under the Department of Commerce the NTIA is serving in a matching grant capacity issuance of funds.
Here comes the UNBELIEVABLE part – two nuggets just for you.
The first nugget, the NTIA is responsible for awarding $4.2 billion in funds. That’s “b” as in billion. The NTIA is seeking unpaid but “expert” volunteers to assess grant applications and score them. Just think about this for one second.
If I were a nasty ass ILEC or Cable Company, I would have every “expert” on my payroll apply to volunteer. I would ask every retiree with a pension interest to volunteer. I would have every law firm or consulting firm I have ever done business with encourage to have their experts apply to volunteer. If I were the CWA, I would get expert members or retirees with pension interests to apply as volunteers.
Talk about conflicts of interest…who you may know over what your application says; potential of fraud, competitive bias, potential of grant fixing, the overall integrity of the process and lack of plain old commonsense. This is amazing!!!!
There are no other “volunteers” in any other area of the $700+ billion stimulus funds being distributed. This is ripe for corruption, schemes, collusion – you name it.
The second nugget, after any entity submits a proposal, the proposal will be posted for public review/comment. This is called “transparency”. Within the process of a public review, there is an ability to question a proposal on its merits by a third party. A proposal may be declined based upon what this third party states or alleges. By the way, if you submit a proposal and are challenged by a third party; you have no due process rights if this happens. The NTIA will not even disclose to you who questioned what or what they alleged. If this isn’t Communism, what is it?
If I were a nasty ass ILEC or Cable Company–any municipality proposing anything–I would be submitting a challenge. If I were a nasty ass ILEC, Cable Company, Wireless Carrier, ISP or CLEC (and for pure self-serving competitive reasons) and saw a proposal that gives me competitive heartburn, I would be submitting a challenge. One would think any and all “challenges” would be transparent and open for public scrutiny as well.
I thought we recently elected transparency.
Pretty nuts, huh!!
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