Joan Engebretson

Half of Verizon FiOS Internet customers have opted for a FiOS bandwidth upgrade, said Verizon CEO Lowell McAdam.

Verizon uses the brand name Quantum for its higher-speed data services, which offer data rates as high as 500 Mbps. Upgrades to Quantum are being driven by increased use of video and the proliferation of WiFi-capable devices within customers’ homes, McAdam said.

McAdam added that Verizon could easily raise FiOS data rates to a gigabit per second but has no near-term plans to do so. For residential users to need gigabit connectivity, the industry “has to come up with new apps besides video and more devices,” he said.

Previously FiOS data and FiOS video had similar take rates, but more recently the company has been signing up 20% to 40% more broadband customers. This shift may be driven, in part, by customers shifting toward over-the-top video options. But McAdam isn’t concerned about the possibility of more customers moving in that direction because margins are better on broadband.

“If they convert over, that’s fine,” he said. “The more traffic into the home, the better for us because we’ve got the technology that’s future-proof. We’re in the best position to capitalize on high-volume traffic going into the home.”

Frontier Communications plans to offer a landline phone service designed for emergency use only, said Frontier CEO Maggie Wilderotter. He said Frontier is planning a residential VoIP product to be launched in the second half of 2014.

Frontier’s planned emergency phone service targets rural areas, which represent a large portion of Frontier’s customer base.

Like all local phone companies, Frontier is seeing customers canceling landline service and moving to cellular or other alternatives. But as Wilderotter noted, rural areas experience frequent power outages. And because traditional phone service is powered from the phone company’s central office, it could provide a reliable communications method even during an extended outage.

Frontier believes there is a market for an emergency landline phone, which would be capable only of dialing Frontier or a 911 operator. The service will have “four nines” reliability, Wilderotter said, using telecom jargon for a service that is available 99.99% of the time.

Charter Communications is working on some important new set-top box technology, Charter Communications President and Chief Executive Officer Tom Rutledge revealed.

The goal is to use IP communications to the set-top box, which will act as a thin client that can be updated from the head-end to support new capabilities, including security system functionality.

Charter is working on technology that would enable any set-top box the company has deployed to act as a thin client that the company can easily upgrade through an IP connection. The company hopes to have the technology deployed throughout its network by 2015. “From an investment perspective and a capital intensity perspective it [makes things] a lot easier,” said Rutledge of the new approach.

The thin client approach also will enable Charter to “leverage the interactivity of our network,” said Rutledge, adding “that’s what differentiates us from satellite.” Using a thin client “enables you to stay state-of-the-art and it’s also customizable,” Rutledge noted. “Whatever interfaces you think are attractive might not be what somebody else thinks is attractive and you have all the different demographics,” he said. “I could see a world where everybody could make up their own user interface.”

[Commentary] With Federal Communications Commission Chairman Tom Wheeler vowing to take action against state-level laws that block municipal broadband networks, we are seeing considerable debate about the pros and cons of those networks. Nineteen states currently have laws limiting and in some cases effectively prohibiting municipalities from offering commercial services on broadband networks constructed by the municipality, according to the Institute for Local Self-Reliance. I thought it would be a good idea to review the arguments on both sides.

Supporters of municipal broadband opposition laws
Chairman Wheeler’s opponents, including industry research consultancy The Precursor Group, say the FCC would be overstepping its authority if it were to take the sort of action Wheeler has threatened. “Municipalities are legal creations of the state, not the federal government,” argued Scott Cleland, president of The Precursor Group, in a blog post.

Opponents of anti-municipal broadband laws
Municipal network supporters, including the Institute for Local Self-Reliance’s Community Broadband Networks Initiative, dispute the claim that “the vast majority” of community networks have been failures. Noting that there have been more than 400 municipal projects to date, Chris Mitchell -- director of the ILSR’s Community Broadband Networks Initiative -- said there were some projects that didn’t work out but others that have had major benefits. As for FCC authority, Mitchell said the recent Net Neutrality court decision said that the FCC had the authority to remove barriers to broadband network deployments.

What happens next?
In taking action against anti-municipal network legislation, Mitchell believes the FCC will go after the “most egregious” state-level laws. He cited North Carolina as one state with such laws, noting that the North Carolina law totally prohibits municipal networks. But if the FCC makes such a move, Cleland argues that it will encounter substantial opposition.

Schools and libraries nationwide should be able to get gigabit connectivity to their service provider’s central office for an average of $750 per gigabit per month, said Evan Maxwell, CEO of Education SuperHighway, at a Federal Communications Commission workshop about E-rate modernization.

The E-rate program is part of the Universal Service program, which covers some of the costs of broadband connectivity for schools and libraries. The target speed for connectivity from the central office to the Internet should be three dollars per megabit per month -- a substantial decrease from the average $22 paid today, Maxwell said.

Education SuperHighway is a research and advocacy group that aims to improve broadband connectivity to the nation’s schools. Maxwell based his comment on research conducted by Education SuperHighway, which has been collecting cost and speed data from schools nationwide.

“We know these prices are possible,” Maxwell said, noting that the top half of schools pay an average of just under $600 per gigabit per month for local connectivity. “Every school with over 100 kids should get fiber,” added Maxwell. He added, however, that the nation will have to subsidize deployment where deployment would not otherwise be commercially feasible.

Verizon plans to offer an in-home router that will support Wi-Fi connectivity at speeds up to 300 Mbps beginning this summer, said Verizon Chief Financial Officer Fran Shammo.

The device supporting Verizon 300 Mbps Wi-Fi is proprietary, Shammo said, and is expected to drive increases in subscriber broadband speeds as end users consume more bandwidth within the home.

Verizon also plans to phase out set-top boxes, Shammo said. Beginning this summer, the company will provide video customers with a single video media server per home and will distribute video content in IP format.

“We will deliver everything through IP to FiOS,” said Shammo. Customers “won’t need a set-top box,” he said. “For televisions that are not IP capable, we will have an attachment.”

The new approach will cut installation time 50%, Shammo said. Installers will attach the media server to the optical network terminal and won’t have to test coaxial cables, he noted.

Windstream isn’t satisfied with how AT&T has proposed to handle wholesale customers in its proposal for TDM-to-IP transition trials and is asking the Federal Communications Commission to establish rules to govern this aspect of the IP transition.

Windstream, an AT&T wholesale customer, wants the FCC to require AT&T to continue to offer high-capacity circuits including IP equivalents to DS-1 and DS-3 special access circuits -- a requirement that isn’t likely to sit well with AT&T.

In its proposal for the TDM-to-IP trials, AT&T said it would discontinue certain TDM-based offerings but would continue to make copper loops available to other network operators. The company noted, however, that it would not provide electronics, instead expecting the other carriers to provide those electronics -- and what Windstream is asking would require AT&T to provide electronics.

“In the post-IP world, competitors still will need equivalent access to last-mile facilities and services to continue offering business services to millions of customers,” argues Windstream in a letter sent to the FCC.

[Commentary] Netflix and Entropy Economics have issued dueling network diagrams aimed at supporting opposing points of view on paid peering -- an issue that has been hotly debated since Netflix signed a paid peering deal with Comcast earlier this year.

Yet the diagrams have a striking similarity when it comes to showing how Netflix connects to Comcast. It’s possible that by keeping up the pressure about traffic exchange, Netflix is hoping to pressure regulators into imposing some sort of obligations on Comcast and Time Warner Cable as a condition of approval of Comcast’s acquisition of Time Warner Cable.

Now that Charter is involved in that deal as well, it may not be exempt either. And conditions written into merger approvals sometimes have a way of gaining traction beyond the merged companies.

Regulators should tread carefully before imposing any major new traffic exchange requirements. Considering the complexity of the issue and how quickly practices change, it’s difficult even to determine what those requirements might be. The true cost of interconnection is dependent on a wide range of factors. And only the network operators know and understand the dollar values underlying these factors.

[Commentary] AT&T is trying a new approach toward the over-the-top video opportunity, announcing that it has created a joint venture with media company The Chernin Group to focus on over the top (OTT) video.

The companies said they would jointly invest $500 million in the venture with the goal of “investing in advertising and subscription VOD channels as well as streaming services.” OTT is both an opportunity for and a threat to the nation’s largest pay TV providers -- including AT&T, Verizon and cable companies such as Comcast and Time Warner Cable.

OTT video offerings such as Netflix and Amazon Prime threaten the pay TV providers’ subscription and VOD revenues. But Netflix and Amazon Prime don’t have their own networks -- and those networks could become increasingly important as TV Everywhere gains in popularity, giving consumers the ability to watch video on a variety of devices. And as that happens, companies such as AT&T and Verizon that have mobile as well as landline broadband networks may have an edge.

Based on the press release announcing the AT&T/ Chernin Group venture, the venture partners appear set on capitalizing on that edge.

Three in 10 US adults do not use the Internet at home -- and getting them online will be considerably more challenging than connecting the first seven, notes a paper released from NTCA -- The Rural Broadband Association.

But the effort would be worthwhile, argues author and NTCA economist Rick Schadelbauer in the paper titled “Conquering the Challenges of Broadband Adoption.” In the paper Schadelbauer also makes a case for why he believes smartphones are not a suitable replacement for landline broadband services.

The 30% of US adults who are not currently connected at home is comprised of roughly equal measures of people who use the Internet somewhere else and those who do not use it at all, according to Schadelbauer. It would be particularly challenging to get the latter group online because a Pew Research Center survey found that 92% of those people said they had no interest in getting online. Others likely do not connect because they cannot afford it or because it is not available to them.