The BTOP Blues
December 8, 2009
The BTOP blues…my song goes out to those really singing the blues–AT&T and Comcast.
It seems that AT&T and Comcast are filing protests on just about anyone seeking broadband funds under the Federal Broadband Technology Opportunity Program (BTOP). It seems they believe, wherever they are, consumers and businesses are already served well by them and that any BTOP money should go to proposals that bring wireless and fiber optics to the most remote areas in America. Affectionately, they are telling our government they are serving everyone (lie), that they have competition (lie) and that they are concerned about those receiving funds building in their markets. They use the term “building over us.”
I do hope–and this is a big hope–that the NTIA and RUS see right through this garbage and such a blatant act of protecting their monopoly presence. If what AT&T and Comcast say is true, then they are telling the President and Congress, “you are a bunch of idiots for even entertaining urban/suburban proposals unless they are targeted towards fiber to the barn (FTTB) or WiMax to the chicken house (WiTTCH).”
I am a fair person. I can agree with AT&T and Comcast–if they open up their networks for access to others to further enable broadband penetration and competition.
And what I mean by “opening up their networks” is that they lease dark fiber and wholesale capacity to any and all comers at the same rate it is costing them. This creates a level playing field, maximizes capital infrastructure efficiency and allows competition to occur based upon applications and bundles by eliminating the high fixed cost barrier to entry they each have and each enjoy today.
BTOP Blues … it’s been 13 years since the Communications Act of 1996 … the ILEC and able companies after 13 years still dominate their markets ranging anywhere from 85% market share to 100%. If you measure it on physical network competition, they are well above 95% market share and going as slow as possible and filing against carrier BTOP submissions that can and bring open access networks to anyone, including AT&T and Comcast.
AT&T, Comcast and a few others have those BTOP blues a-playing…should be interesting to see how the NTIA and RUS react to their lyrics…
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.
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.
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!!
Agnostic Fiber
July 16, 2009
Are you aware that fiber optic strands have no idea if they are attached to a residence or commercial building? None whatsoever. On occasion somehow, “experts” in our industry confuse things such as FIOS, for example, which is a residential service and not a business service.
Well, FIOS is a fiber platform – it does not know what service runs over it. Moreover, FIOS is a fiber termination directly into a home or business.
Why do I bring this up? Let’s play connect the dots.
First, for disclosure purposes, I am a fiber bigot – dark, dim or lit – I am a fiber bigot. I guess one can say I have diversity towards and sensitivity to optical fiber. Lit fiber provides a host of spectrum colors as well beyond dark and dim. I am like part of a fiber Optic Rainbow Coalition – I like all the things fiber can do.
Today I happen to read that Motorola has sold off its Fiber-To-The-Pedestal (FTTP) business and is keeping its Fiber-to-The-Home (FTTH) business of products. For those of you still relying on Ma Bell, “to the pedestal” results in the last point between the pedestal and the building/home are copper. For those looking at the “H” in FTTH – once again, whether it’s a home or building – the fiber strands do not discriminate.
Question: Why did Motorola sell off FTTP business but not FTTH interests?
Another article I read from Infonetics Research states that video will triple in consumption by 2013. For sake of connecting the dots, let’s say Infonetics Research is half-right with their forecast.
Cisco also announced a new product this week. This product is geared to the television set to provide – get this — affordable video conferencing. Sure there will be early adopters, but it is fairly important Cisco is making such a capability available targeted to households.
Connect the dots … what medium can handle this with scale, reliability, speed and lowest/cost per bit? Copper? Coax? EVDO? 3G? 4G? LTE? WiMax? BPL? Fiber?
I’ll let you be the judge.
By the way — those televisions supporting high-definition video – its 30 megabits a channel.
Connect the dots my friends – unless you are moving, you want to have a direct fiber connection.
Motorola is making a move, Cisco is making a move, and Infonetics if half right…which tells me the legacy networks are incapable from a physics perspective.
Then again, this past week, our government issued a definition of Broadband for America as a measure: 768 kilobits. Can someone give me the math on watching a high-definition video or real time program via IPTV over a 768 kilobit link?
One Big Yawn
July 14, 2009
The most prominent headline this week is the Department of Justice looking into anti-trust violations because large (non-dominant) wireless carriers entered into exclusive agreements on cell phone devices. America has ADHD and usually comes to some type of conclusion after reading just the headline. In this case, anti-trust investigating will not focus on how the wire line ILECs are screwing with competitors, bids, E-rate abuse, tax loop holes, etc. It’s about cell phone device exclusivity deals.
This antitrust initiative, my dear readers, is going nowhere. I give it a big yawn.
Isn’t it ironic though? On one hand, the DOJ is clamoring anti-trust against the large wireless carriers for being too big (too big to fail???) while on the other hand, our Treasury and the Congress are working feverishly to nationalize (aka “make big”) our banking system (too big to fail??). What sweet irony! Pure Beltway magic – Walt Disney is blushing.
A new telecom super hero organization has popped up in the headlines seeking justice against those bad actors, the ILECs. The NoChokePoints Coalition (www.nochokepoints.org) is leading the charge to have the government redress the inequities of special access service pricing from the ILECs. Translated: we don’t want to actually spend capital on infrastructure of our own or alternative carriers, but we want the ILECs infrastructure for cheap – legacy infrastructure at that!
To call it straight, this is the same old tired arguments previously made before the FCC against the ILECs resulting in a lot of lawerying and lobbying only to eventually, once again, have a Federal Court rule in favor of the ILEC under the law. In particular, the Communications Act of 1996.
Ever watch a dog chase its tail? It’s sad. The dog is really suffering from a psychosis.
I have written about this before and will summarize it again here: It has been 13-years since CA 1996 was enacted, I am sorry that in, 13-years, certain CLECs have not figured out or invested into getting off Ma Bells teat. What more do you want, another 13-years to figure things out?
I am glad, in the short term, that you played the arbitrage to grow a top line. However, margin growth and profits do matter in the long run. And you are not going to get margin growth riding on the back of Ma Bell … plain and simple. The ILEC controls your costs if you rent from them … they are not your friend.
Banking on change in the Beltway due to the elections? Relying on the government? Trusting the government to lower your costs after 13-years? All I can say about trusting the government – go ask an American Indian.
There are transport options available beyond Ma Bell–you just need to pay the going rate. Don’t be hypocritical, complaining on one side that special access prices are too high, while telling alternative providers unless you price below Ma Bell, you are not an option. Instead of viewing short term interests, pay the going rate with a non-Ma Bell transport provider so they can build out even more facilities you can take advantage of. Stop plowing cash for special access into Ma Bell who is taking your money and building out fiber optic transport and access that you legally have no access to directly which is also increasing the ILECs competitive advantage over you daily.
All due respect to the members and concept of our new super hero, NoChokePoints Coalition, but this is one big yawn.
Ultimately, the ILECs will see the FCC in court and history will repeat itself. The dog is chasing its tail again.
The Joke is on You, America!
July 9, 2009
I hope everyone enjoyed the Fourth of July weekend–the celebration of one of the more advanced countries (allegedly) in the world, technologically speaking.
The joke is on you America!
Just before the holiday weekend, the Notice of Funding Availability (NOFA) was issued by the Federal government to begin the process of building broadband infrastructure under the Broadband Technology Opportunity Program (BTOP). The NOFA is over 120 pages long – before you get to the actual application form to be released on July 7th.
So what’s the joke?
We finally have a definition of Broadband in America by our Government. Such high standards, goals and ambition – I am in awe! Let me quote from page 18 of the document:
“Broadband means providing two-way data transmission with advertised speeds of at least 768 kilobits (kbps) downstream and at least 200 kbps upstream to end users, or providing sufficient capacity in the middle mile project to support the provision of broadband services to end users.” (Yes, that is not a typo it is kilobits, akin to a step above dial-up. Not megabytes or gigabytes or petabytes or terabytes or exabytes… just kilobits.)
Those spineless, buggy whip wonders within the Beltway. When you use this as a data point, technically speaking, if you have a telephone on copper or a cable TV service you can be readily served. This places our penetration rates over 95%. A feel good country at a feel good moment in time … politicians can now claim what they have done to you – I mean for you.
Let’s see…Australia – going to 1 gigabit nationally in 4 years. South Korea ibid. Japan ibid. Tasmania ibid …. Need I go on?
America is ranked 17th in the world for Broadband access speeds and I am sure this will move us up the dial … Not.
We need to resurrect JFK from the dead; he understood vision and prosperity for America. We can gigabit America in less time than it took to put a man on the moon and at a fraction of the cost.
My favorite word selection in the above definition is; “advertised speeds.” That’s a beauty!
Happy 233rd Birthday America! At this rate, there is a comeback for the Telegraph and Pony Express — that would create jobs also!
The ponies are green.
Jacko
July 2, 2009
Dateline: June 25, 2009.
Headline: Michael Jackson is Dead
Dateline: June 25, 2009
Headline: The Web Collapses Under The Weight Of Michael Jackson’s Death
Wake up America … if something really big happens (Think Crazy Man with nukes in North Korea), you can’t count on the web.
The government infrastructure programs and future Policy need to require minimum bandwidth delivery of 100 megabits – the proof is in the pudding. I think it should not only be a global economic imperative for the US of A competitiveness for REAL broadband over fiber but also in the interests of Public Safety and National Security.
Fiber access … plain and simple.
Something big happens (Think Crazy man with nukes in Iran), only the rural folks will have connectivity as major centers crash.
Back to the Future
May 15, 2009
It’s Back to the Future for me – just like the movie.
The big media buzz of Verizon selling select rural wire line (copper) facilities to Frontier Communications over 14 states for $5.6 billion in Frontier stock is the latest indicator that a consolidation cycle is starting and credit markets thawing. Though this deal won’t see Free Cash Flow positive for Frontier Communications for two years, it is the right strategic move for both companies. For an RLEC transaction, the EBITDA multiple is very good.
Verizon is focusing on the higher growth population centers and gains from the divestment of rural facilities that no longer accommodate Verizon. This also lessens any argument that Verizon is a menacing monopoly by way of this divestment.
Frontier Communications benefits from scale as they specialize in more rural areas to the extent they gain more proficiencies by integration. Frontier Communications does not serve the most rural of rural locations, so don’t expect any effort to deliver broadband to the barn, Green Acres or Petticoat Junction. It’s a great consolidating play for Frontier Communications, especially using stock as a currency, leaving the ability to lever debt off of EBITDA flows as a viable option/hedge.
Why is it back to the future for me? Well, way back in the early 1990’s, I was the first President of Frontier Communications well before the Communications Act of 1996. Once again, I will find myself holding Frontier stock as a result of this transaction since I hold Verizon stock. I am more confident this time that my stock quality will sustain itself, as the last time I held Frontier stock, the bandits from Global Crossing bought Frontier Communications, and in very short order destroyed shareowner value, the wealth and pensions of thousands of people. And no one went to prison.
I would like to share with you, my gracious readers, a funny story as an aside to this transaction (at least for me). If you go back to the 1990’s, the really big thing back then was long distance carriers. Hundreds, if not thousands of them existed. In the mid-1990’s, a consolidating cycle amongst these carriers had commenced as there was an over supply of carriers (capacity) that drove long distance prices so low, that you either merged for cost synergy or went bankrupt.
During this time of long distance consolidation, I participated in the Frontier Corporation M&A meetings discussing various targets or strategies. My invite was eventually lost in the mail.
If you have read the blog for sometime now, you know I don’t buy into the lemming model of business (move as a group to mitigate risk in the eyes of Wall Street…after all, if everyone is doing the same thing, it must be the right/safe thing to be doing. And, Wall Street, of course, being the fee-based vultures they are, happily endorses such paradigms.) Myself, I prefer contrarian moves and innovation.
Back to the M&A meetings: My first meeting, I went and listened. After all I was the new guy from “outside” the phone company and I wanted to take in the ambience. The second meeting, I raised my hand and made a suggestion. That suggestion was not to focus on buying into the over-supply of long haul carriers which drove prices into the ground, but instead to focus on acquiring local operating companies that already own infrastructure who are a gateway to the multitudes of long distance operators. My simple mind theory on this approach was that once prices go down, they usually don’t go up – integration synergies will keep the price wars going as things consolidate. I was told: “Dave that’s an interesting idea.” And the discussion continued on acquiring long haul carrier interests.
The third meeting I attended, I listened attentively again. Once again, I suggested a contrarian focus on acquiring local operators, this time my logic was that it had been my experience that those whom are closest to the customer have a better relationship and competitive advantage over those that are more distant – like in long distance. I was told: “Dave–that’s an interesting idea.” And the discussion continued on acquiring long haul carrier interests.
The fourth meeting…well there was no fourth meeting for me. Somehow my name fell off the e-mail invitation list. Several months later, Frontier merged (acquired) a major long distance carrier.
Today, as we know, long distance is near free with services such a Vonage, VOIP, Skype and MagicJack rapidly driving all-you-can-eat long distance services at flat rates across the globe. Flat rate all-distance is not far behind.
Since waking up with Back to the Future, my biggest worry now is waking up in Ground Hog Day – just like the movie. There is nothing brewing, but the Ground Hog irony of this adventure would be if Frontier Communications were ever to acquire American Fiber Systems because of our local presence, unique fiber assets, lucrative ARPU’s and our focus on being closest to the customer!
Talk about crazy!
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