Policy and regulation

Can covered bonds build telecom for communities?

Submitted by acohill on Mon, 08/04/2008 - 07:49

U.S. Treasury Secretary Paulson has endorsed "covered bonds," which are a new idea in the United States but have been used in Europe for centuries, according to this article. Covered bonds are secured by loans carried on the books of the issuing bank. Keeping the loans on the books forces the bank to pay attention to the performance of those loans, unlike the mortgage mess, where mortgages were packaged, re-packaged, and sold until no one really knew how the mortgages were performing.

Covered bonds can be used as an investment vehicle for issuing mortgages, but in Europe, they have been used heavily by the public sector to finance infrastructure, and are backed by the governments receiving the funds. Why are they different than general obligation bonds? Covered bonds enable local governments to tap a much larger, global marketplace of capital funds, meaning more cash could be available for local infrastructure projects at lower rates because of increased competition among lenders.

NATOA calls for local government action, fiber

Submitted by acohill on Tue, 07/22/2008 - 14:05

The National Association of Telecommunications Officers and Advisors (NATOA) has called for a range of policy changes and investments that includes a guaranteed right for local governments to invest in broadband and fiber as the preferred mode of access.

Comcast in trouble over service blocking

Submitted by acohill on Fri, 07/11/2008 - 09:12

Comcast has been reprimanded by the FCC for blocking certain Internet services without telling customers and without regard for the level of use. Service providers can be as arbitrary as they like in managing their Internet access services, but they have to tell customer what they are doing. A service-based network would not need to penalize customers for doing something they enjoy, but they would probably pay more. Today's broadband model is upside down for service providers because they make the most money when a customer never turns their computer on; they make the least if the customer is on the Internet all day long. That is the exact opposite of every other business in the world, and it's why broadband is such a mess in the U.S. Fortunately, communities like Danville, Virginia are changing that model.

FCC provides new definitions of broadband

Submitted by acohill on Wed, 06/25/2008 - 10:01

The FCC has finally released new definitions of broadband.

This is a major improvement over the old definition of "200 kilobits" as broadband. By this old definition, the country has very high levels of broadband penetration, but made the U.S. the laughingstock of the rest of the world. In much of Europe, residential broadband tends to be north of 40+ MEGABITS, or about 200 times more capacity than the FCC definition.

The graded scale is useful because it can provided benchmarks to measure progress in a community or region. If the FCC has provided targets, that would have been even better. For example, a ten year target could be to have 90% of businesses and homes in the "100 Mbps and beyond" category, and indeed, U.S. community broadband projects like the one in Danville, Virginia are deploying "100 Mbps and beyond" today.

Comcast to target users, not protocols

Submitted by acohill on Thu, 06/05/2008 - 12:07

Comcast has announced that it will start slowing down the traffic of its broadband users if they are using too much; "too much" generally means running P2P (peer to peer) filesharing applications like BitTorrent, which can run for hours or days while sending or receiving large files (like movies or music).

The strategy is reasonable, given that cable companies price their Internet services in part based on average use. Customers that far exceed those average use parameters slow things down for everyone else on that cable modem network segment, which often includes 100-200 neighbors. Cable modem bandwidth, like most wireless services, is shared among all connected users at an access point (wireless) or a cable network mode. Fortunately, not all users are doing something at the same time, but background applications like BitTorrent do run continuously for long periods of time.

Broadband Properties '08: FCC--Bandwidth doubling every two years

Submitted by acohill on Sun, 05/04/2008 - 14:32

FCC Commissioner Deborah Tate spoke on the last day of the Broadband Properties conference. She had some interesting statistics that should give pause to anyone who thinks that DSL and cable modem broadband services are "good enough." Commissioner Tate noted that:

Tate went on to enumerate that choice was important to buyers of telecom services, and she listed that choice should be available for services, for providers, and for equipment.

Undersea cables were cut by improper anchoring

Submitted by acohill on Mon, 04/14/2008 - 07:49

The undersea fiber cables that were cut a couple of months ago were the subject of numerous conspiracy theories, but satellite photos have revealed the culprits--cargo ships that were anchored in the wrong place. Sometimes Occam's Razor (the simplest explanation is the likeliest one) is exactly right.

The object lesson for communities is to plan for cable outages by making sure local networks have redundant cable paths. Sometimes this is quite expensive to do when just getting started with community telecom investments, so an alternative to a second fiber cable is a high capacity wireless link that can handle local traffic (perhaps with somewhat less throughput) while repairs are made.

NY governor calls for universal broadband

Submitted by acohill on Mon, 12/10/2007 - 08:48

Eliot Spitzer, the governor of New York, has called for universal access to broadband in the state. The text of his speech is here (note that you have to scroll down past the agriculture remarks to get to the broadband stuff).

Unfortunately, Spitzer seems comfortable relegating rural areas to second class status. He calls for a minimum of 100 megabit connectivity in urban areas, but says that just one-fifth of that (20 megabits) is fine for rural areas. Cable and DSL are not going to provide universal access in rural parts of New York, so Spitzer has apparently decided that rural areas will have to make do with wireless while the cities get fiber. Rural citizens and legislators in the state should be outraged that the governor is willing to choke their economic future so easily.

Cable companies block customer traffic

Submitted by acohill on Mon, 10/22/2007 - 08:58

This news report suggests that some cable companies are actively blocking certain kinds of traffic on their networks. The target of such blocking is peer to peer file sharing, in which the subscribers are often sharing very large files like movies and TV shows. From a network operator perspective, what you see is a very small number of your customers using a disproportionately large chunk of your network bandwidth, which can degrade service for other customers and increase costs.

Of course, the whole issue of net neutrality comes into play here, where the argument is that Internet access providers should not block traffic or offer preferential treatment to certain kinds of data over other kinds. But the access providers are on the horns of a dilemma, because the peer to peer sharing does have a measurable impact on their network.

But almost all of the arguments for and against traffic blocking, the rights of access providers to manage their own traffic, and free speech issues are red herrings. The real problem is the outdated and obsolete business model that nearly every access provider is still using.

It made sense, more than a decade ago, to sell bandwidth by the bucket to users because all folks were doing back then was email and some light Web browsing. And the Web in the mid-nineties was most text and a few pictures. Today, the media-rich Web is filled with sound and movie files of all kinds, and everyone uses them--look at the popularity of YouTube.

The current business model does not provide any cost information to consumers; that is, the "cost" of downloading a few emails is exactly the same as the "cost" of downloading an entire movie in DVD format. This is a classic and well-understood economics problem. Current pricing, to users, makes it appear as if there is unlimited supply (of bandwidth), which in turn creates unlimited demand.

The solution is simple. Rather than trying to discourage customers from doing things they want to do, you change the pricing model so that it conveys more information about the real cost of downloading things like movies.

In other words, you move from a business model of networks based on bandwidth, which we know is not working, to a business model based on unlimited bandwidth but where pricing is based on the service you want to use. So users that like to do peer to peer file sharing subscribe not to a bucket of bandwidth but instead subscribe to a service designed specifically to support high performance file sharing, and the price of that service will be based on the real cost of providing the service.

It is simple economics. Communities like Danville, Virginia are already rolling out networks that do this. These multi-service, open networks support real competition and will start driving innovation on the network because the business model support innovation, rather than stifling it.

Wireless spectrum fights

Submitted by acohill on Mon, 10/01/2007 - 08:47

Fights over WiMax spectrum are slowing deployment of WiMax. The FCC, which manages the WiMax spectrum, has been renewing the existing spectrum, called EBS (Educational Broadband Services). The problem is that the EBS spectrum licenses, in many cases, belong to local educational institutions. Sprint wants to build a national WiMax network and thinks that the FCC should require the schools not using the spectrum to give it up.

To make things more confusing, Clearwire, another WiMax provider, has taken the route of simply negotiating licenses directly with the schools, who make some money from something many of them were not using.

The end result will be extensive overbuilding of WiMax networks, which raises costs and makes it more difficult for users to roam from network to network. Wireless broadband operators have never been able to work out roaming agreements the way the cellular industry did. Cellphones did not become popular until roaming agreements were in place, meaning your phone would work pretty much everywhere. Today, in most airports, as one example, there are often two to five WiFi providers, and paying for service on one operator's network does not let you roam on any other operator's network.

The bigger problem here is overbuilding. With several different companies all trying to build wireless broadband networks in a community, costs go up for all users because of duplication of infrastructure. The solution is for the community to build a multi-service network that allows multiple providers to use a single network. Users gain the benefits of true competition, and prices are lower because there is no duplication of infrastructure. The FCC could play a valuable role here by encouraging the development of multi-service networks, but instead, continues to try to put band-aids on outmoded policies.

Could Internet taxes show up?

Submitted by acohill on Wed, 09/26/2007 - 08:39

A 1998 ban on taxing services provided over the Internet is due to expire next month. Congress has three options: make the tax ban permanent, extend the ban for several more years, or start raking in a whole new source of cash.

If Congress decides to tax Internet access, everyone's access provider bills (dial up, DSL, cable modem, wireless, Blacksberry, etc.) could jump as much as fifteen to twenty percent.

The big picture issue here is whether Congress ought to be making the telecom industry tax collectors at all. For business, telecom taxes are pure overhead that crimp a company's ability to create jobs and pay for expansion. And if the company is profitable, it is still going to pay taxes on the profits. From an economic development perspective, telecom taxes are a drag on jobs development and business growth. Design Nine, as an example, gets phone bills with as much as 30% of the charges just taxes of various kinds, from local, state, and the Federal government.

Given the weak state of the economy right now, let's hope Congress does the right thing and extends the ban on Internet taxes for services.

If the FCC was in charge of roads

Submitted by acohill on Wed, 08/22/2007 - 19:10

Here is an interesting article that talks about what life might be like if the Federal Communications Commission was in charge of highways. It is not a pretty picture. The upcoming auction of 700 Mhz spectrum formerly used by TV stations is not likely to benefit communities or smaller, independent service providers.

The FCC has the opportunity to change things in a way that could simultaneously lower prices for wireless services and create lots of new business opportunities. What's the rub? The incumbents would have to compete on a reasonably level playing field with new companies, without a structural monopoly advantage. And that really worries them.

Congress wants to own our devices

Submitted by acohill on Fri, 08/03/2007 - 08:31

Mark Pryor (D-Ark) has decided that Congress and the Federal government should decide what we can and cannot see on our TVs, cellphones, and portable media devices. Pryor is sponsoring a bill that would require the FCC to develop a "super V-chip" that would have to be installed in every device that connects to any third party network, including the network.

There are so many things wrong with this that it is hard to know where to start. First, adding this sort of flawed technology to every single electronic device would raise the cost of everything. And remember that we are rapidly moving towards a time when every single electronic device we own (radios, phones, TVs, computers, music players, etc. etc. etc.) all have some kind of connection to networks. The cost of implementing this would be staggering, and we would get to pay for this with higher prices.

It also beggars belief that we would want FCC bureaucrats in Washington D.C. to decide what we can and cannot look at. Pryor is wrapping this in the usual "it's for the children" bait and switch language, but it would give the Federal government total control over the media. The V-chip was a dumb idea from the start, but if you squinted hard, you could dimly see some kernel of justification for it, since in 1996 a lot of us still got TV over the airwaves, which was still heavily regulated by the FCC. With all the alternative ways to get news, information, and entertainment today, the FCC is hardly needed to "protect" us.

Pornography is a scourge, but as more and more communities move toward an open services model for delivering media, the open market will take care of this problem quite neatly. In open services networks, some Internet access providers will be able to cheaply and easily sell "family friendly" Internet access with all sorts of parental controls built in. It will be quicker, cheaper, and easier than any government-mandated solution, and it will work better. That's the right way to do it.

Ohio and broadband

Submitted by acohill on Thu, 08/02/2007 - 07:27

There are many articles and commentary on the recent announcement by the Governor of Ohio to create a statewide broadband network. But it is not clear what the impact might actually be. If you read the Executive Order closely, what you see is that Ohio, in many ways, is just starting to catch up to other states.

Most of the statewide initiative simply requires Ohio state agencies to start buying off the statewide network, instead of making their own deals. States like Iowa and Virginia did this many years ago. It also creates a Broadband Council, which other states, like Virginia, have also announced. But statewide task forces rarely have the opportunity or the authority to actually get things done. These groups can make use of the bully pulpit to raise awareness of a problem, but even then, the groups often become captured by political realities.

Because so many states have had operational statewide networks, we have had the opportunity to learn something about them. What typically happens is that the networks have a substantial initial impact by lowering the cost of broadband for schools and state agencies, especially in rural parts of a state that might be otherwise underserved.

But small and medium-sized (that is to say, innovative) broadband providers rarely get these big contracts. Inevitably, the big incumbent providers get the contracts. Once in place, the rates tend to decline only slowly, and so after the first big price reduction, prices tend to stagnate.

But here is the worst problem. From a community perspective, statewide networks are a disaster. Schools, libraries, and state agencies are the anchor tenants of a communitywide or regional open network. Without those government customers paying into the community network, it becomes much more difficult to make a business case for such a project.

So schools and state agencies in a rural region get lower rates, but the rest of the community, including businesses, seldom see any benefit, and in fact, are often worse off. Statewide networks can cripple economic development prospects. There is some language in the Ohio Executive Order about allowing non-government connections, but when state agencies and universities are calling most of the shots for a statewide network, business interests usually don't get appropriate attention. And in fact, over time, rates on the statewide network may be higher than what businesses can do in the private market. We don't really want government bureaucrats negotiating rates and services for businesses, and that is way statewide networks are usually run.

What is the alternative? Get local and regional initiatives started that use the "digital roads" approach, where government's role is limited to building a high performance digital road system, and let customers buy directly from private sector providers, instead of putting state level bureaucrats in charge of prices. States have an important role to play, but as I have said for many years, states should be building inter-community digital roads to connect local and regional efforts, using the same open access, open services model.

Voting machines may finally get fixed

Submitted by acohill on Tue, 07/31/2007 - 07:25

Legislators are finally getting the message about faulty electronic voting machines, and perhaps some of these machines will get auditable paper trails in time for the 2008 election. The House of Representatives is working on a bill that will require better accountability for the electronic ballot systems for all Federal elections, starting with the fall 2008 elections.

The really galling part of this is that all this was completely avoidable. Many of us in the IT business saw this train coming a long way off. Unfortunately, a lot of local governments, who buy most voting equipment, were happy to ignore technical experts without a financial stake in the outcome and instead fell hook, line, and sinker for the promises of vendors, who were giddy over the windfall market that fell into their laps--nearly every voting machine in America was going to be replaced!

The taxpayers get to pay twice for this fiasco, but at least it is going to get fixed.

AT&T ready to set up toll booths for all of us

Submitted by acohill on Wed, 06/06/2007 - 08:50

In an astonishingly candid remark, the outgoing head of AT&T, Ed Whitacre,
remarked, when asked about network neutrality, "Well, frankly, we say to hell with that. We’re gonna put up some toll booths and start charging admission."

The public Internet, whether we like it or not, is about to undergo great changes over the next three to five years. The original design of the Internet was never intended to support billions of connected computers, and in particular, it was not designed to support bandwidth-intensive applications like voice telephony and video.

So changes are necessary so that innovative new uses of the Internet can evolve, but the real question is not so much about architecture but control. Do communities want toll booths controlled by a third party that has no obligation whatsoever to the future prosperity and economic competitiveness of that community? It is extremely risky for a community or region to allow third parties like AT&T to decide their economic future.

Instead, communities have to begin viewing telecom, at a certain level, as essential community infrastructure, and begin making appropriate investments that will allow the communities a measure of control over their economic future. Services can still be provided by companies like AT&T, but AT&T should be paying tolls to the community for the use of the infrastructure, not the other way around.

700 Mhz spectrum up for grabs

Submitted by acohill on Mon, 06/04/2007 - 08:04

The Public Knowledge folks have published their recommendations for how the FCC should handle the impending auction of 700 Mhz radio spectrum for broadband use. This frequency range, down around the broadcast TV spectrum, can carry a broadband data signal many miles and could be a boon for underserved areas waiting for community fiber efforts to build out fiber.

Public Knowledge is concerned that the FCC may set the auction rules in a way that favors incumbent providers, who have deep pockets and could afford to purchase most of the local market licenses for the spectrum and then do nothing with it. Independents like Google are also concerned that they may be shut out by slanted auction rules.

PK suggests several reasonable requirements, including one that would require purchasers of the spectrum to actually deploy a service or lose the license.

The 700 Mhz band is not a complete solution, but could be a really good way to provide capable mobility access as well as serving as a reasonably affordable bridge solution for broadband services until fiber arrives in some areas.

Stop phishing with a new domain

Submitted by acohill on Tue, 05/08/2007 - 08:29

Here is an interesting idea that could put an end to phishing. Everyone has received those emails claiming to be from some well known bank, urging you to log in immediately to update your bank information. The URLs look like legitimate Web sites, but belong to crooks who want to capture your account information so they can empty your bank account.

This new proposal from an Internet security expert is simple and likely to work. It would create a new top level domain, .bank, that would be issued only to legitimate financial institutions and it would cost a lot of money (e.g. $50,000) to register the domain, rather than the trivial $10 that it costs a criminal now to register a phony bank site.

Banks would be likely to move quickly to the new domains, because phishing fraud is a major headache that costs them millions. And it would eliminate some of the spam in our mailboxes. Let's hope this idea gets traction quickly.

FCC to look at broadband

Submitted by acohill on Tue, 05/01/2007 - 09:27

The FCC has announced that the agency will take another look at broadband, meaning the Federal Communications Commission might actually revise the definition of broadband to something that is actually meaningful, rather than the current 256 kilobits, or in shorthand, "...a little faster than dial up."

While one third of Japanese homes and businesses already have fiber connections, with 50 megabit service going for as little as $27/month, the FCC has stubbornly tried to prop up incumbent telephone and cable broadband providers by setting the broadband bar so low as to make the U.S. the broadband laughingstock of the rest of the world. Vienna, Austria is busying running fiber to every premise in the city, while "advanced broadband" discussions in the U.S. usually mean a couple of underpowered wireless access points on Main Street.

Even more encouraging, the FCC is apparently going to rethink the way it counts broadband in the U.S. Currently, if a single home in a zip code area has DSL or cable modem service, the FCC counts the entire zip code as having broadband. This explains why we see government statistics claiming something north of 90% of the U.S. has broadband.

The Federal government is not going to solve the broadband problem for communities. Most state governments do not have the funds to help with much more than initial planning efforts. So communities that want to increase economic development and help create new job opportunities will have to do it themselves. Fortunately, there is plenty of money locally to do this, and raising taxes is not required. Call us if you want more information about how to get real broadband in your community or region.

Open ditch policies

Submitted by acohill on Fri, 04/27/2007 - 07:51

It is spring, and around the country, many communities are starting water, sewer, and road projects of one kind or another. On the way back and forth to a project Design Nine is working on, I pass a water line project--a couple of miles of new water line along a major artery and business corridor, and the main route between two communities.

Any telecom duct going in the ditch? Nope. None. Zilch. For a very small incremental cost, duct could be put in alongside the water line that would provide an opportunity to create a major new fiber connection between those two towns, as well as hooking up businesses and homes along the way.

Another region is talking about the need for regional fiber connectivity, but a couple of years ago, they installed a major water line between two key towns and did not bother to put duct in the ditch. Now it is going to cost them a lot more to go back and install fiber.

Every community and planning region should have an open ditch policy that requires planners to evaluate water and sewer projects to see if fiber and duct should be installed, and to look at road repaving and sidewalk upgrades and improvements the same way.

The key to making this relatively simple is to spend a little money developing a community telecom infrastructure plan that outlines where fiber is needed. Once that is done, it is simple to determine if a duct or fiber should be installed alongside a water or sewer line.

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