February 2010

The Myth of the Benign Monopoly

[Commentary] It's worth noting that big commercial technology companies throw their weight around the world in increasingly anti-open, and dangerous, ways.

As OStatic notes today, the powerful International Intellectual Property Alliance (IIPA) has just produced a 498-page report for the office of the U.S. Trade Representative arguing that government mandates to use open-source software must be "carefully monitored." The IIPA report recommends that numerous entire countries be placed on international watchlists because their governments favor such software, which it characterizes as a threat to innovation. A closer look at the report, though, shows that its recommendations are made in conjunction with the Business Software Alliance, which counts among its members Microsoft, Adobe, Symantec, IBM and many other large commercial software providers. Innovation all around the world depends on countries, governments, companies and users finding harmonious ways to work together. Just ask the Chinese science community, which has made clear that without Google's technology, its research efforts will suffer enormously. Now, more than ever, there needs to be a healthy and open global ecosystem for technology innovation, and the most dominant technology companies bear great responsibility for protecting it.

Google May Spend 'Hundreds of Millions' on Broadband

Google said it may spend as much as "hundreds of millions" of dollars on an experimental broadband service that offers Internet speeds 100 times faster than current networks.

The cost of the test project, announced this month, isn't known and will depend on demographics, the lay of the land and the number of households that use it, said Richard Whitt, Google's Washington counsel on telecommunications and media issues. The company hasn't determined the location or size of the network, which could serve 50,000 to 500,000 customers. Google, after urging the Federal Communications Commission to expand broadband access, is developing the network to show the potential of high-speed Internet service. It also wants to ensure that networks are open to different software and technologies, rather than the ones picked by service providers.

"This is not a small thing," Whitt said in an interview. "We're trying to advance the ball on open networks. We're hopeful this is one way to do that."

Four reasons gigabit 'demo deployments' won't matter

[Commentary] It's difficult to criticize any effort to boost the capacity of broadband networks here in the U.S. But forgive us for feeling that high-profile demo deployments, attention-grabbing announcements and even over-arching national plans are unlikely to truly drive broadband deployments.

Here's why:

1. Test networks aren't exactly a new idea. From Time Warner's Full Service Network demo in Orlando to university Internet2 test beds, there have always been demonstration networks stretching the leading edge. Such deployments are good at some things, such as showing what's possible or helping vendors sort out interoperability and other issues on next-generation products. But what they are not good at, and have never done in the past, is truly act as a driver to real-world, mass-scale deployments.

2. Scale matters. It's one thing for Google to build broadband networks in a few communities. It's quite another thing to scale those networks over metropolitan areas across the country. Demo networks are limited in reach, and what truly matters is a nation's baseline level of broadband, not the outlier peak levels.

3. You can't fake capital expenditures spending. Throwing a few ten or hundreds of million of dollars into some community networks is one thing. Managing the financial/capex challenges of delivering fiber-fed broadband across the U.S. is quite another. Just ask Verizon, which even as it rolls out its FiOS broadband service across cherry-picked markets faces tough scrutiny from financial analysts who want to see revenue growth and margin optimization that matches such massive investment. Service providers today are driving greater levels of bandwidth where they can monetize it at the fiber cell to support mobile broadband, in the transport and access networks to support higher-speed, enterprise-focused carrier Ethernet services; in the local loop where it makes sense to deliver IPTV and faster home broadband. That's how networks get upgraded; not all at once, big-bang style.

4. It goes against the principles that drove the Internet and the Web. It's important to learn from mistakes, but also successes. The Internet and the Web grew, from both a network and applications perspective, in a very pragmatic way. The Web didn't wait for broadband speeds to deliver useful applications; it worked with the speeds available. Certainly, higher network speeds could enable better video applications including two-way solutions like telepresence. But it's not only bandwidth that drives the next generation of apps. Social media required little bandwidth at all, yet has delivered a communications revolution. Early mobility apps are proving just as impactful, even as they operate over today's mid-bandwidth mobile networks. Higher speeds aren't a panacea in and of themselves. If bigger pipes just end up getting eaten up by HD, rather than regular resolution, video, have we really gained that much?

In the Netherlands, 1 Gbps Broadband Will Soon Be Everywhere

ReggeFiber, in partnership with Dutch incumbent KPN, will make 1 Gbps the standard connection speed for all fiber to the home customers. The company currently has more than 300,000 customers and is on target to grow to a million subscribers. Zeewolde is the first city that will get the service.

Independents post progress toward broadband

Fourth quarter earnings reports from four different Independent telcos reveal a mixed bag this week as the companies seek new revenue sources to compensate for continued line loss in their traditional voice business.

Many industry observers view bundled broadband services as the best focus for small and large telcos moving forward -- and SureWest Communications seems to be having significant success with that approach. The company saw consolidated revenues increase 2% year-over-year, driven by 13% broadband revenue growth, which offset telecom revenue declines of 15%. The broadband gains did not happen without investment, however. The company, which operates fiber and hybrid fiber coax networks, passed 8800 additional advanced fiber homes in 2009. Also noteworthy was the company's average $8 increase in average revenue per user for triple-play marketable homes. "This was due to a fourth quarter 2009 video and data price increase that reinforced the company's ability to maintain growth while targeting customers who value superior service offerings," the company wrote. Increased demand for higher data speeds, high-definition TV and digital video recorders also helped generate ARPU growth, the company said.

IBM survey: land lines to disappear, mobile broadband to explode over next decade

IBM surveyed 8,000 consumers and 60 telecom company executives to get a sense of Internet-related trends over the next decade, showing that broadband will continue to evolve and expand while traditional communications infrastructure -- those copper lines we've used to make phone calls for decades -- will rapidly disappear.

IBM predicts that the use of land lines will decrease by 95 percent in the next five to 10 years. Conversely, usage of mobile and wireless broadband will increase by 98 percent during the same period. The company also found that consumers will demand open platforms, where they can access content on all types of devices. In fact, 70 percent of those surveyed said they want to access content on any device-- a computer, TV, phone or netbook--from any provider. Interestingly, IBM found that 65 percent of consumers expect their telecom provider to maintain their role as simply providing Internet and wireless services. Only one in five consumers expect telecom providers to have a role in the retail and delivery of online content services.

Could Another 9-11 Be Mitigated by a $16 Billion National Public Safety Broadband Network?

Although broadband infrastructure companies are building out a national network of high-capacity fiber optics for broadband, the needs of emergency service "interoperable public safety" communications aren't being met by these private plans. So the Federal Communications Commission is recommending that Congress allocate $6 billion in Federal cash to build a nation-wide, fiber network and lay out a further $6 billion to $10 billion to fund its ongoing operations over the next 10 years.

The network will be supported by a wireless system too, which could be created by forcing networks that recently bought frequencies in the 700MHz band to devote a small segment of priority airspace to the public safety grid. FCC Chairman Julius Genachowski is strongly arguing that it's the "best and shortest path" to building a national public safety grid, and he's irritated that through political wranglings "we have gone too long with little progress to show for it." What would the grid be used for? Its inception lay in analysis of how the emergency services around the U.S. responded to the events of 9/11. Airwaves were clogged with radio pager and cellphone calls, from emergency services and members of the public, and there was no way to absolutely guarantee the emergency responders or government officials would get priority on the airwaves, or even digital Net-based communications. A reserved broadband network, with prioritized radio bandwidth for mobile communications would've helped matters incredibly, and that's exactly what the FCC is aiming at.

Lower-Income and Less Educated Still Face Broad Digital Divide

More than 75% of Americans, across racial and ethnic groups, now use the Internet on a regular basis. Seventy-nine percent of Whites, 69% of African Americans, 59% of Hispanics, and more than 83% of other racial and ethnic minorities, including Asian and Pacific Islander Americans, Native Americans, and multiracial Americans are now online.

Between December 2009 and January 2010, the Joint Center for Political and Economic Studies conducted a study of 2,741 respondents, oversampling African Americans and Hispanics, to understand national minority broadband adoption trends, and examine broadband adoption and use between and within minority groups. This report addresses the experiences of minority consumers of wireline and mobile broadband services and provides insights into some of the factors affecting the decisions of minorities who have adopted broadband.

Overcoming disparities in broadband Internet access depends in large part on identifying key factors that are most likely to influence the behaviors of potential users. To achieve universal access, ensuring that all citizens have access to high-speed connections to the Internet is paramount to opening the door to greater use and acceptance of the Internet in all aspects of our lives. However, research primarily focused on broadband adoption, to the exclusion of the discrete circumstances surrounding it, is not enough to accelerate minority acceptance and use, especially since educational status, income, and age are critical factors impacting the degree and quality of engagement.

In addition to providing trend data on minority broadband adoption and use, this report goes a step further -- it offers a research framework for understanding the behaviors affecting broadband acceptance. Specifically, this report contrasts the socioeconomic profile of minorities actively using the Internet against that of minorities who have yet to integrate the Internet into their daily lives.

One of the major findings of this study is that minority groups, middle-aged, higher income, and college-educated individuals are
the fastest growing group of broadband adopters. These individuals have greater levels of Internet use and home broadband adoption.
91% of African Americans earning more than $50,000 regularly use the Internet as compared to 89% of Hispanics earning $50,000.
More than 75% each of African Americans and Hispanics earning between $20,000 and $50,000 also report regular use of the Internet.
98% of Hispanics and 94% of African Americans with a college education report regular Internet use and over 80% of respondents
from each group with some college are regular Internet users.
82% of Hispanics and 79% of African Americans earning more than $50,000 report a home broadband connection. More than
60% each of African Americans and Hispanics, with annual incomes between $20,000 and $50,000, also report having a homebased
broadband connection.

Broadband and New Media Strategies for Minority Radio

On January 26, 2010, the Office of Communications Business Opportunities (OCBO) hosted a roundtable on .

The list of the roundtable participants and other details can be found here. The roundtable boasted an aggressive agenda which included topics ranging from the current state of radio and its many challenges to possible collaboration with other media and what the future may hold in a technological environment that is ever-changing. The participants discussed the shift in advertising revenue from traditional radio to the Internet citing statistics which indicated that, in 2007, for the first time in history, Internet ad revenue surpassed radio ad revenue and that that trend continues. The point was made that the slow economy is something that cannot be overlooked as a challenge to all as ad spending is down across the board. All of this impacts the ability of small businesses to gain access to capital. However, even with the challenges faced by radio, weekly radio listenership still dominates across all forms of media. This led to an exploration of the unique value that radio offers to the public. It is positioned to best serve local markets as well as national interests, e.g., Census 2010 and voter education. In that vein, the roundtable participants turned to a lively exploration of creative strategies and innovative business models that could take advantage of the new technologies. There was a demonstration of some of the capabilities and applications that currently exist today, such as online radio, and discussion of some of the collaborations that may result in a happy marriage between the traditional broadcast of radio and broadband. The goal for all of us is to ensure that minority radio adapts new methods of delivering content, expands across a multimedia platform, and thrives in this digital age of communications.

USDA Broadband Initiatives Program Round 1 Approved Projects as of February 17, 2010

The Department of Agriculture's Rural Utilities Service has released a list of 33 broadband stimulus projects funded by the American Recovery and Reinvestment Act. The Broadband Initiatives Program projects include short summaries and loan and grant amounts.

Benton

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