June 2010 Archives

France Kicking US's Broadband Butt

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Over the weekend during my travels through Paris with my wife I had a chance to visit with Michael Curri of SNG Networks at his home.

While there he highlighted something that while I knew as a data point hit me much harder seeing in person firsthand, namely that France is kicking the US's broadband butt.

Upon returning from a wonderful bike ride through a neighboring park, he excitedly fired up his computer to run a broadband speed test.

The first time he ran it it only came up at about 14Mbps downstream and 4Mbps up. Naturally I had to rib him that this all seemed to be much ado about nothing. But he'd pulled a fast one on me, as this first test was being run over his old cable connection. Then he switched to his newly installed fiber.

BOOM! The speedometer on SpeedTest.net, which only goes up to 50Mbps, was redlining, ultimately peaking at over 90Mbps down and almost hitting 80Mbps up.

Impressive as that is, what really floored me is the price he's paying: 30 Euros, or roughly $40/month.

I've been touting the speed and value customers can get in Lafayette (50Mbps symmetrical for less than $60/month) and have received astonished looks across the US from app developers to business leaders, and yet in Paris you can get 100Mbps for $40/month.

But wait, there's more! That same 30 Euros also gets you your phone and TV service. Now, I forgot to ask, but I'm assuming that these phone and TV packages are pretty basic. Even still, that's an unbelievable difference in the value customers receive for their dollars.

As I mentioned at the beginning of this article, it wasn't as though this was necessarily news to me, and yet seeing it in person had a deeply profound impact on me.

I currently live in Washington, DC and I'm paying $70/month just for ho-hum cable broadband service roughly equivalent to Michael's first speed test.

How are we OK with this as a nation? Many in broadband policy circles try to claim that there is no bandwidth crisis in the US, but how can that be the case if consumers and innovators in France are getting ten times the capacity for half the cost?

I've said this before, but I'll say it again: what if a hundred years ago we had this same dynamic in the cost/capacity of electricity? What would that have meant for our economy in the industrial economy? Do we really think we'd have been the world's economic leader if this was the case?

These aren't academic questions. These are the real-world challenges we face today that if we don't find ways to resolve them significantly and soon we risk losing our position as a global economic leader.

We can't let these issues get swept under the rug. If you look at the US in a bubble things may look fine, but as soon as you look up and take into consideration where the rest of the world is you can't deny that we're facing a bandwidth crisis.

If we as a nation don't take our heads out of the sand and recognize that countries like France are kicking our broadband butt, then they will be the ones to realize the full benefits of the digital economy while America's leadership continues to erode away.

I, for one, refuse to accept that our great nation is content with this reality. And I hope everyone reading this article not only feels the same way but pledges to work tirelessly to insure that we don't allow our country to fall victim to the curse of lowered expectations.

That's why I ask that we all continue to raise these issues to policymakers, the press, and beyond. America needs to know that France and countries like it are kicking our broadband butt, and that the time is now or never to do something about it.

One growing trend among America's communications providers is the offering of "price for life" services. These promise to deliver a guaranteed price for service for the life of a customer.

But there's a bizarre assumption underlying these offers, namely that carriers are threatening that the price of service may go up unless customers protect themselves with "price for life" packages.

Now, correct me if I'm wrong, but if the telecommunications market is competitive, doesn't that mean the price of service should go down over time and not up?

The whole premise behind arguments for market-driven broadband policies is that sufficient competition does exist to trigger market-driven investment and pricing dynamics.

And yet here we have carriers trying to sell "price for life" packages on the one hand, while declaring there's sufficient competition on the other.

While an argument can be made that "price for life" packages that include TV service do have merit as the ever-increasing rates of content providers puts constant upward pressure on cable TV pricing, the same can't be said for telephone and data services.

In fact, the only way the cost of telephone or data should go up in a competitive market is if the provider is offering significant additional value to existing services. But here again the "price for life" scheme falls short as they tend to lock customers in to specific service tiers.

With this in mind, the only way I can see "price for life" schemes being something that benefits customers is if the contracts include service level escalators, so that while you continue to pay the same your service improves over time. But so far I haven't seen any "price for life" packages that offer this.

To me, the simple inescapable truth about "price for life" offerings is that either the carriers don't believe their own hype about the telecommunications market being sufficiently competitive to keep down prices or providers are trying to pull a fast one on their customers.

So which one is it? Are providers who are selling "price for life" deals lying to government about the competitiveness of their markets, or are they lying to their customers about the value they deliver?

The long-awaited video record of FiberFete--an invitation-only event held in April in Lafayette, LA that explored the question of "Now that you have fiber, what can you do with it?"--is now available online!

To get these kicked off, I thought I'd start with one of the neater things that happened at FiberFete: an exclusive opportunity to hear a presentation from and ask questions of Minnie Ingersoll, product manager of the Google Fiber project.

I actually didn't know this until she said it at the event, but the only conference the Google Fiber team is going to in 2010 is FiberFete, because as Minnie said, "This was pointed out as the best conference to be at." Hopefully it lived up to your expectations, Minnie!

Without further adieu, here's that video:

Minnie Ingersoll - Google from Geoff Daily on Vimeo.

Much of the content of the presentation is an overview of what has already been shared about the Google Fiber project: 1Gbps open fiber testbed for next generation apps to 50-500,000 people.

But there a number of interesting observations to take away from this presentation.

The overarching theme for me is that Google seems like they're taking an incredibly open-minded approach to this project. While some have criticized them for the lack of specificity in their plans, I find it quite refreshing that they're not coming at this problem with much in the way of preconceived notions about how to do it right. Instead they're clearly in hardcore data-gathering mode, trying to learn as much as possible so they can make the best decisions.

Though with that being said, I do find the challenge they've set up for themselves to be quite daunting. Not only do they have to become experts in the technology, deployment, and operation of fiber, they've also got to find ways to fill the pipe once its built and setup a fully articulated testbed environment, while making sure that everything they do is done with an eye towards replicability and scalability so that the best practices they're learning can be spread across the country. They're not just attempting to go from zero to 60, they're reaching for 160 and beyond.

The Google Fiber project has the potential to push the needle on so many levels, and its impact is already apparent in another nugget Minnie shared, namely that out of the 1,100 communities that applied the vast, vast majority were serious applications. That's actually a pretty profound thing. It shows that the response to this project isn't just a bunch of cities hoping for free money, but rather are cities that understand the value of next generation infrastructure and the need to get themselves equipped with it ASAP.

This reality validates the sense that I have had for a while that there's a tidal wave of interest that's been building among communities for fiber that may now be nearing a tipping point. Let's hope Google Fiber can be the catalyst to help this interest reach a sustainable critical mass!

I encourage you all to watch the whole video. The FiberFete audience asks a ton of terrific, pointed questions, and Minnie, flying without the safety net of a lawyer, answers them like a champion.

Google admits that they don't have all the answers for what all the final details are for how the Google Fiber project will be implemented, but I will say that if the rest of the Google Fiber team is as intelligent, inquisitive, and good-natured as Minnie, then odds are this project is poised for success.

I'm a big believer that if you're going to do something you should do it right the first time. Also, if you're going to do something, make sure you're doing the right thing.

To that end, today I want to make the argument that the FCC should abandon its push for a "third way" on telecom regulation and instead get behind the push for a Congressional update of the Communications Act.

As a quick refresher, the FCC recently lost a court battle that's called into question their authority to regulate broadband. FCC Chairman Julius Genachowski has proposed a "third way" that aims to split the difference between the side that wants broadband to be regulated and the one that doesn't.

While this is going on, Congress has grumbled about the FCC's attempt to take unilateral action on broadband reclassification, and now they've come out to say that they're prepared to revisit the Communications Act, which will necessitate a debate over things like FCC authority over broadband.

Now, with this refresher in mind, I think it's a mistake for the FCC to try and blaze its own trail on these issues. I say that for multiple reasons.

The first is simple: what good is a "third way" if whatever the FCC comes up with as a compromise is overruled or made irrelevant by Congressional action? That could easily happen in big and small ways, meaning that all the work the FCC puts into this may be for naught.

The second is a related thought: the FCC should wait until it has its new Congressional authority before trying to re-regulate broadband. At this point we have no idea what the FCC's new powers will be, so it seems unwise to embark on such a fundamental reexamining of how we regulate broadband with this much uncertainty.

The third is to acknowledge the basic reality that Congress is higher on the totem pole than the FCC. There's really nothing the FCC can do that can't be taken away by Congressional action, so it seems like it makes sense to try and work with Congress rather than against them.

Which brings me to my main point. The most fundamental truth of these debates about re-regulating broadband is that whatever is decided and however these decisions are made, it's going to be a contentious process. There are no such things as making easy, no-nonsense tweaks to broadband regulation. Instead, what's going to happen is that there will be a massive PR and lobbying fight pitting those who wish to maintain the status quo vs. those who want to see revolutionary changes.

I bring this up for the simple reason that if we're going to have to endure a knock-down-drag-out fight, I want to make sure we're doing it to accomplish something that matters. My fear is that we're going to have to put all this energy into making sense out of what will be a bloody battle between interest groups only to create new regulations that could be washed away by Congress.

That is why I believe that if we're going to open Pandora's Box and try to take on these most contentious of issues, then we need to make sure we're doing this right, we need to concentrate everyone's energy on one focused battlefield rather than allowing these battles to spring up everywhere. And in my mind, the battlefield with the most at stake, with the greatest chance of improving our country's broadband future is in Congress.

Now, I understand there are risks associated with abandoning the FCC's "third way" approach and focusing all our energy on Congress.

One big downside to doing this is timeframe. With elections in the fall, we'll be lucky to get serious Congressional movement on these issues until 2011, and it could take even longer to resolve given how little Congress seems to understand the real issues at hand.

The FCC, on the other hand, has the potential to move unilaterally and more quickly. But there's a flipside to this, namely that whatever the FCC does will be more exposed to being tied up in court challenges than whatever Congress does. So while the FCC may be a shorter path to getting new regulations resolved in the short term, in the long term it may take FCC action a lot longer before it can create regulatory certainty.

Another potential downside some might cite in trying to work through Congress on these issues is that many people feel as though a significant portion of Congress is in the pocket of the biggest broadband providers. Some might point to the recent letters from Congress to the FCC demanding that they abandon their "third way" proceedings as evidence of this as the signees of these letters were broad and represented both parties.

But be that as it may, this doesn't change my opinion of what needs to be done. For starters, even if it's true, there's no way to get away from it. Whether we focus the fight in Congress or the FCC, ultimately Congress will have its say. Because of this, I'd rather have Congress involved from the outset so at a minimum we don't end up having to deal with a Congress that's pissed off at the FCC for attempting to make these decisions unilaterally.

A final potential downside to taking this Congress-centric approach is that it may cause the debates to broaden too widely, dealing with too many issues. One advantage the FCC has right now is that they're laser-focused on a specific issue they feel needs to be addressed. When these debates go to Congress under the umbrella of revisiting the Communications Act, there could be any number of minor issues that flare up that will divert us from the need to focus on establishing a new core for how America's broadband policies work.

But again, I feel like this is a risk we have to take. If we want real reform, if we want to have a comprehensive communications policy that's relevant to the advances in 21st century communications technologies, then we need to have a far-ranging debate. The responsibility, then, falls on our shoulders to make sure that debate stays focused on the issues that matter most.

If the FCC feels it must proceed with its attempt at "third way" regulations, what I'd strongly suggest the agency do is take the approach that what they're doing is not the be-all-and-end-all of communications policy but rather is the first step towards a top-to-bottom review of the Communications Act. The more the FCC says that what they're doing doesn't need Congressional action, the more they're pissing off Congress and the higher the odds are that whatever work (good or bad) the FCC does will be wiped away by new legislation.

Instead, the FCC should clearly state that America's communications policies do need a comprehensive review and likely reform, that Congressional action will ultimately be needed, and that the FCC is setting off to start that process of identifying the issues that most need to be addressed. In this way, while it may take a bit longer to make progress, the progress we make should be more significant and more likely to be permanent.

As a final thought on this subject for now, I can't help but express my disappointment that the FCC's national broadband plan was largely silent on the topic of Congress revisiting the Communications Act. Yet again we're seeing the shortcomings of a plan that's neither comprehensive nor a real plan. Imagine how the dynamics of this debate would have shifted if the FCC would've really taken up these larger issues, established a framework for what's needed moving forward and what's missing now, and suggested a path through Congress for making the changes that need to be made.

Instead, despite having a national broadband plan that's less than three months old, we're essentially starting this debate over broadband regulations from scratch, with little serious intellectual groundwork for new legislation to be built upon. I can only hope that this won't prevent us from making the progress that's needed.

But regardless of these laments, moving forward the only path I see towards making lasting positive changes to how America regulates broadband is one where the FCC and Congress work together, where we endure this battle as one government and one nation rather than attempting to fight the same fights on multiple fronts without coordinating these efforts.

AT&T; just announced that they're changing the way they offer wireless service to devices like the iPad and iPhone. Instead of paying $30 a month for "unlimited" service (really a 5GB cap), now new subscribers will have to pay $15/month for a 200MB cap or $25/month for a 2GB cap. Then there's a $10 fee for every 1GB of additional cap.

While there's been a lot of buzz over what the ramifications of these changes might be, I think most of them are missing the point by focusing on how they'll affect cellphone usage. Put simply: very, very few people will get anywhere near the 2GB cap through today's cellphone usage alone.

Where these caps become potentially troublesome is when you think about devices that go beyond today's cellphones.

The most immediate and obvious one is the iPad. As much as anything else the iPad is intended to be a media consumption device. An average movie takes up about 750MB, so download three movies to your iPad over AT&T;'s 3G network and you're over the cap. Now for every additional movie you download over 3G you'll have to pay a $10 surcharge to buy additional bandwidth from AT&T.; In practical terms, this means that AT&T;'s new cap will put the kibosh on mobile downloading of movies to iPads over 3G.

In all honesty, I'd be surprised if Apple's happy about this turn of events, unless they've brokered a behind-the-scenes deal with AT&T; to not count iTunes traffic against that cap because this could really limit the demand for on-the-go video content.

The next major impact these caps could have is on the upcoming use of iPhones as tethering devices. I know from firsthand experience that a 2GB cap is fine if you're only using it to get online when you're traveling or on the move as I used to have a 3G dongle from Verizon that I tracked my usage on closely. But when I went a few days at home with my cable broadband connection on the fritz, my usage spiked to hundreds of MBs a day because I watch all of my TV online. That much usage would've overwhelmed that 2GB cap within a week. So what this means is that if you watch any serious amount of video online, you won't be able to use your iPhone tether as a primary Internet connection without being hit with a boatload of overage charges.

Now, there is the chance that when iPhone tethering comes online since AT&T;'s planning on charging extra for that service perhaps they'll adjust the caps in kind. But if not, then 3G tethering will only be usable as a complementary rather than a primary way to access to the Internet.

Another impact of these caps is that it will restrict the growth of some user behaviors relative to technological capabilities. What I mean by that is simple. The next iPhone will undoubtedly capture higher quality video and may try to introduce videocalling capabilities. What this means is a lot more data that could be pushed through the network, but only if there's sufficient capacity to do so.

If people start capturing hours of video on their iPhones, they're going to have to upload that over WiFi or transfer it to a computer rather than simply sending it over 3G as they could quickly exceed their 2GB cap without downloading a single file.

If people start getting excited about using videocalling, at some point if there's enough usage and high enough quality video, that usage is going to put them at risk of reaching that cap. So an app that may be free to use when released could start incurring a cost to continue to use if users end up liking it enough to want to do so.

How's that for a screwy business model? Get everyone to really want your product only to make it more expensive the more people use it thereby dissuading that consumption.

Now, I'm not necessarily faulting AT&T; for doing this. Bandwidth has real costs to deliver, and this is likely a step taken to help them drive enough revenue off of this usage to be able to justify additional investments in capacity to keep up with demand.

But in the long run I think it's going to be an unwise decision as I'd rather see a model in place that rewards consumption. For example, maybe they could move to an entirely usage based model where you pay for the GB but with additional usage the price per GB gets cheaper.

Unfortunately, there aren't a lot of easy answers to the question of how do we make sure bandwidth's always getting more capacious and less expensive, but those are the issues a story like this brings up as there's no way that these caps don't stifle innovation for some, even if the additional revenues allow AT&T; to make the experience more reliable for others.

In yet another sign of the gaping chasm between America's broadband trajectory and the rest of the world, China Telecom has announced that they're going to install a fiber network that passes 18 million homes this year.

To put that into context, there are barely 18 million homes passed by fiber in the entire US today.

The vast majority of those passings have been made by Verizon, but Verizon's publicly indicated its intentions to slow down and even stop their fiber deployment.

While there are lots of other deployers and cities considering fiber, we have no clearcut champion ready to pick up Verizon's slack. Because of this America's year-to-year growth of fiber penetration is expect to slow.

So while America hits a plateau of next generation networks at about 18 million passings, China's ramping up to see 18 million homes passed in a single year.

Like Tasmania that I mentioned previously, the arguments against fiber's viability in the US (that we're too big and too spread out) don't hold water when a country like China, which is bigger and sparser, proves that the impossible is possible.

So how can we read this turn of events as anything other than the US not just being caught up to but that we're actually getting passed by countries large and small who are more committed to equipping their citizens with truly next generation communications infrastructure.

While elsewhere in the world countries are banding together, committing serious capital, and figuring out plans to accelerate their digital economies as quickly as possible, here in the US we're stuck in the slow lane, with nothing in the form of a concrete action plan for how we can keep up with the rest of the world.

News like that coming out of China simply takes these complaints about the US not doing enough out of the theoretical and throws them into stark reality. China's getting ready to start lapping the US. So what are we going to do about it?

Unfortunately, based on the current trajectory of our nation, the answer appears to be not much.

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