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Google Finds Nothing is Shovel Ready, Not Even for Free Fiber Build

"Regulation can get in the way of innovation. Regulations tied to physical infrastructure sometimes defer the investment altogether." – Kevin Lo, head of access at Google, as quoted in Total Telecom.

Google is deploying fiber at its own expense in Kansas City, Kansas and Kansas City, Missouri to demonstrate the value of one gigabit (a gigabit is a billion bits – a lot) per second residential Internet connections and perhaps to show at&t and Verizon and the cable companies how the search giant might fight back if its growth is restricted by their restrictions or limitations. Thousands of communities competed for this bonanza including the whole State of Vermont (see the video here). Kansas City, KS won and Kansas City, MO was added later. Among the selection criteria was the ability of the community, if chosen, to move at Google speed.

Whoops. Google just learned the same lesson that President Obama learned in Stimulus 1: nothing in America is shovel ready. Even when a rich company is willing to spend its own money on a project which almost everyone agrees is of huge economic benefit (spelled J-O-B-S), red tape and entrenched interests get in the way.

Google's Lo says that local governments should be given more power to decide where they enforce zoning regulations. The implication is that Google's deployment ran afoul of zoning ordinances and that variances were not easy to come by, perhaps even in cases where the impact is de minimis. Usually all it takes is one person objecting and the hearings can go on almost forever.

Google is also having trouble getting pole attachment rights quickly. The article doesn't say whom the poles belong to, but it's highly likely that either the phone company or electric utility (or both together) owns them. Usually, since poles tend to be in the right of way and are owned by regulated utilities, there are laws which do require allowing qualified use of them. However, poles do have to be inspected before additional load can be put on them; some poles will always need to be replaced. Electric utilities may not give high priority to Google's project; the local telco may not be in any hurry to see such a fearsome broadband competitor deployed. So actually getting the pole attachments can take a long time.

And Google says that it cannot easily acquire rights of way.

These are local issues; when federal dollars are spent or federal regulation of some kind invoked, the gates a project has to go through are even more onerous and time-consuming. That's why almost no stimulus dollars were spent for construction except for repaving. That's why another stimulus will NOT result in the kind of infrastructure investment America needs; we might have to spend dollars repaving the same roads we did last time.

But many American companies – not just Google – are cash rich. Many American companies have projects ready to go but are waiting for permitting and the inevitable endless appeals. We can have a private construction boom without spending a borrowed dollar of government money if we can reform permitting so that it takes a reasonable and predictable amount of time and if we can circumscribe the ability of appellants to hold virtually any project up for an indefinite period at no cost or risk to themselves.

One sour grape: Here in Vermont we have enlightened pole attachment rules which assure speedy deployment and we have given local authorities the ability to waive hearings for some telecom projects with de minimis impact. I'm sure we would've moved at Google speed; wish we'd been put to the test.

Related posts:

Irene Lesson #2: Nothing in America is Shovel Ready – Until It Has to Be

Jobs Rx: Make America Shovel Ready

Will Googlerola Be Able to Fight Data Caps?

"Is Google Turning Into a Mobile Phone Company?" asks the headline in Andrew Ross Sorkin's New York Times story. Wrong question, IMHO.

But is Google doing the deal at least partly to give it leverage over wireless providers? I think so. The biggest threat to the growth of Smart Phones and tablets and other Google businesses like YouTube is the imposition of data caps and metered pricing by wireless providers like at&t and Verizon Wireless.

The providers would like to charge by the number of bytes transferred – similar to the way they charge for voice minutes today. Content providers (including Google) don't want an expensive impediment in the way of their content distribution. Providers of software and hardware for tablets, Smart Phones, and computers (including Google) don't want these devices to be less useful because content delivery to the devices is expensive. Not a moral issue here but a business one, although – in the long term – I think unlimited data plans lead to more growth for everyone (and proved that to my own satisfaction with the launch of AT&T WorldNet, which popularized all-you-can eat pricing way back in dialup days).

Today the handset manufacturers, with the exception of Apple, are at the mercy of the carriers, especially in the US where most phone are locked to the wireless network that subsidizes their initial purchase. If the manufacturer doesn't have a deal with Verizon or at&t, they can't get the volumes they need to be a serious player in the US market. iPhone as a must-have device for networks began to upset that balance of power; but Steve Jobs hasn't yet used Apple's muscle to build a US market for open iPads or iPhones which can run on any network given the right prepaid SIM card.

But Google is much more in the content business than Apple is – even given iTunes. Google has more to gain by stopping the spread of bandwidth caps and metered pricing before they become universal for wireless and spread to wireline as well. Google knows that the wireline providers, especially the cablecos who don't want their chokehold on content delivery loosened, would like nothing better than to move to metered pricing themselves.

A handset maker owned by Google can introduce a product without carrier backing and without the need to lock into any network. The product can be cheap to grab marketshare; the product can be subsidized through ads delivered rather than voice or data minutes sold. If the product is incredibly compelling as well, the major carriers will be forced to let it onto their networks as an open device. Customers who bought their phones from Googlerola will find it easy to switch between networks to get the best deal. Competition between carriers will then be based on service quality and pricing only; competitive pressures may well force them back to offering unlimited data. Google wins both as a content provider and as a client provider.

The announced at&t/t-mobile deal will, if approved, shift power to the carriers by eliminating a disruptive competitor and concentrating spectrum ownership. The Google/Motorola deal shifts the balance of power away from the carriers.

Dan Frommer speculates:

"If Google and Motorola can push the price of smartphones down even more, and if carriers can accelerate the uptake of mobile data plans, this could be good for them. But there's also the chance that Larry Page has a long list of wacky, disruptive ideas he wants to try, focused around handset distribution and pricing, ad subsidies, etc., which could take real leverage away from carriers. Their path toward dumb pipe status seems to be increasing by the deal. This will likely end up better for consumers but could be annoying for the carriers."

But it doesn't stop there. As Peter Kafka points out on All Things D, Motorola Mobility, the company that Google is proposing to buy, is the world's largest provider of set-top boxes. Suppose set-top boxes were not subsidized by or distributed through cable and satellite companies. Suppose they came from Googlerola and were so good at what they did and so cheap on the open market that the content distribution networks had to offer them without a specific lock to their content in order to stay in the broadband ISP business (even though they'd still be able to charge for content). That would be the end of any thought of metered pricing for wireline Internet service. Another threat to Google would be eliminated. More content opportunities would open up.

The acqusition be all about the patents as most people are saying and as Google broadly hinted; but, as Stacey Higginbotham and Katie Fehrenbacher writing on GIGAOM say: "if Google wants to use Android as a way into the home, Motorola's home automation, set-top box and broadband gear businesses now gives Google a platform from which to jump."

Related posts:

Subscription Pricing

Apple Fails to Reinvent Telecommunications Industry – Too Bad

AT&T Bids to Shut Down Mobile Competition

Telecom2018 Notes

Skip this post if you're not deeply into telecommunications issues.

These are my notes from the Telecom2018 workshop held last week in Washington, DC. My recollection is much aided by live tweets with the hashtag #telecom2018, which is well worth reviewing for its comment thread but I am responsible for errors and omissions. Especial thanks to @ruraltelcomment, @haroldfeld, @aswath, and @bobfrankston for prolific tweeting.

 

Richard Wiley, Partner, Wiley Rein - The opportunities and challenges of industry transition

Talked mainly about the DTV transition for which he had much responsibility for as FCC chair

Date certain (even though it changed several times) was key element in success

Important to outline objectives of the transition. Enhanced voice? Going digital?

PSTN transition will require clear, easy, transparent, acceptable education and info for consumer

thinks all IP will reduce gov oversight, eliminate "demarcation lines" that segment industry

Blair Levin, Communications and Society Fellow at the Aspen Institute – Surprise Appearance

Process for planning the PSTN transition has similarities to developing the national broadband plan

Question is how to exit gracefully from an old technology

It is not unrealistic to coordinate the two plans

Predicted that industry would file a USF plan on Friday [nb. Six carriers did]

Tom Evslin, Partner, Evslin Consulting - Why a date certain transition by 2018?

End of the PSTN being determined by consumers who are deserting, not by government or industry fiat

Doesn't matter whether some experts think the PSTN is more reliable than mobile or VoIP, consumers aren't buying the argument

Economics fast becoming unsustainable; subsidies growing and absorbing money which ought to go for transition

The choice we have is to plan or not to plan for the end of the PSTN

Planning without a date is an academic exercise

The choice the government has is when to transition subsidies, end mandates, and what to do about pstn-centric regulations

2018 may not be aggressive enough

In response to a question: TAC did not specify 2018, only that FCC set a "date certain"

Hank Hultquist, VP Federal Regulatory, AT&T - Opportunities associated with a transition to advance networks

Turning PSTN off means reinventingt he regulation of the PSTN

AT&T has already petitioned FCC to set a date certain for ending PSTN

Cost of keeping the PSTN is growing quickly and crowding out needed investment in broadband

Panel: Deconstructing the PSTN: What Does It Mean To Turn It Off?

Moderator: Harold Feld, Legal Director, Public Knowledge
Colleen Boothby, Partner, Levine, Blaszak, Block & Boothby
Hank Hultquist, VP Federal Regulatory, AT&T
Thomas Jones, Partner, Willkie, Farr & Gallagher
Valerie Wimer, Vice President, John Saurulakis, Inc.

Wimer:

Rural telcos use same facilities for POTS and broadband

Title II regulations will be critical for rural carriers

Continued access charge subsidy needed (my wording)

If PSTN shutoff today, RLECs will default on RUS loans, networks would shutdown

Must be a solution to VoIP peering

Carriers cannot make economic decisions to cut off rural areas re: arbitrage. All consumers must reach everyone in IP

Jones:

What is the meaning of retiring the network?

What about the rights of way?

Migrating to diff protocols and transport technology does not fix market failures, like access to last mile for CLECs

Immediate shutdown of PSTN means higher prices, less choice, less competition

Boothby:

Carriers are making marketing statements when they declare the need for changes [in regulation]

technology evolves but that doesn't necessarily make the market structure, need for regulation change as well

Consumers need to be protected from the danger of monopoly in the IP as well as PSTN world

FCC should hire less lawyers and economists and more engineers

Hultquist:

Phone number is really now a name used for routing

There is a database dip involved in almost every call-completion

Points of agreement:

Networks need to be interconnected

Current telecom law not perfect but FCC has the authority it needs for transition without a change to the law

Panel: Embracing Innovation Across the Ecosystem

Moderator: Glenn Richards, Executive Director, VON Coalition & Partner, Pillsbury Winthrop Shaw Pittman
Rick Whitt, Telecom and Media Counsel, Google
Ron Del Sesto, Partner, Bingham McCutchen
Barlow Keener, Principal, Keener Law Group

Panel format is to assume that it is 2018 and the transition has happened. What does the world look like now?

Keener:

Jon Stewart is President

USF has grown from $1.7B to $4.2B for "high cost"; total USF now is $8

Lit infrastructure (copper, fiber, or other) is owned by government and available to service providers

Local municipalities will provide free access like roads and sidewalks, paid by taxes

Net neutrality no longer an issue

Whitt:

Colbert is President after moving to Fox

Fiber and LTE are dominant layer 1

Layer 3 is IP instead of PSTN; SIP dominant protocol

Asks how will we accomplish this? Natural evolution, "industrial policy," public-private partnerships?

Need to restructure USF for an IP world

State commissions will have a key role in USF for broadband

Worried about ISPs exempting their own services from usage caps and disadvantaging competitors

Del Sesto

Praises HD voice

Mainly concerned with social implications of online all the time, social media

Mark Uncapher, Director Regulatory and Government Affairs, TIA - Market trends and projections

Showed chart with less than 50% broadband penetration in US; didn't know what the denominator is. Might be wireline broadband accounts divided by total population?

Showed chart with considerably less line abandonment than carriers have been claiming and very slow decline in business lines

Showed chart predicting steep decline in access line abandonment starting 2011. Didn't have underlying assumptions available

[charts should be available shortly on a website tbd]

Don Troshynski, VP Solutions Architecture, Acme Packet - Service creation opportunities with SIP carrier networks

Explained the role of session border controllers

Carriers see the benefit of offering additional services like group chat

Inter-carrier connections are slow to move to all IP because carriers make money from them

Sees a future of engineered network interconnections rather than all interconnected through the Internet cloud

Link Hoewing, VP Internet and Technology Policy, Verizon - The All IP Network

70% of Verizon access lines are fiber

Mobile penetration and data usage going up, voice minutes going down

Impossible to think in an IP world that you can do it all. You need partners, need to collaborate

New world is very competitive, evidence is VZW opening up to 3 party apps and app stores and a product cycle driven by smartphone releases

Jason Oxman, SVP, Industry Affairs, CEA - Lessons learned from the HDTV transition

A date certain was key to the success of this transition – even though it changed

Standards were also essential [nb. But in a way which might not apply to the PSTN transition]

Panel: Alternative Deployment Models

Bob Frankston, Principal, Frankston Innovating - Community driven network infrastructure
Aswath Rao, President, Enthinnai - Social Sharing via CPE

Note: Since I relied on tweets from Frankston and Aswath for covering other speakers, coverage of their talks is thin.

Frankston:

The community should own its own infrastructure – but not provide services

You don't want anyone telling you what to do with your bits

Regulation IS a monopoly

The future is very different from the past; telcos are rooted in the past

Rao:

It is possible to provide all the features of Facebook or Google+ without forcing both parties to use the same social networking service

Enthinnai is an existence-proof of that

Carriers could prosper – and compete with the social networking services - by running instances of an Enthinnai-like service in their clouds

Those who want to can host their own instances

William Manning, Consultant, Booz Allen Hamilton - Critical infrastructure

He still has a rotary phone

VoIP can't offer the same quality and reliability as PSTN; mobile doesn't

We need to have multiple ways to connect to the net including copper, fiber, and coax

Sridhar Ramachandran, Chief Technologist, Telecordia - Toward carrier to carrier IP network interconnection

Three things are needed: discoverability, interoperability, and routing

Mobile carriers are already using 3d party networks to route calls between them [nb. the PSTN is already not the only switch in town]

Cablecos are exchanging voice traffic directly as well

Jon Banks, SVP, Law and Policy, USTelecom - Getting organized for industry transition

[last minute noshow: probably working on the Friday announcement]

Wrap-up - Daniel Berninger, President, GoCipher Software - American communication leadership

Dan went around the room asking: Is 2018 the right date? What should next steps be from Telecom2018? Are you willing to continue involvement?

Rough guess 2/3 think 2018 is as good a date as any, small minorities think that it is too late or that no date should be set until USF and ICC issues are settled.

Followup suggestions include web site with presentations and mechanism for discussion, another meeting in six months, coordination with TAC, criticism of TAC critical transitions working group for not having carrier representation, another meeting in six months, formation of working groups around issues.

Reader Question: What Does the End of the PSTN Mean for DSL?

Customers are abandoning the PSTN (Public Switched Telephone Network) for wireless and VoIP communication. The TAC (Technical Advisory Council) to the FCC (Federal Communication Commission) has recommended that the FCC set a date certain to end government mandates for PSTN use and the ever-increasing subsidies which support it. Knowing that the loss of government subsidy means the effective end of the PSTN, readers ask what the demise of the PSTN will mean to DSL (Digital Subscriber Loop), which is delivered over the same copper infrastructure as the PSTN and usually sold by the same companies which sell you PSTN. (Sorry for all the acronyms).

Good question. The answer is important since, according to the OECD, almost 58% of wireline connections to the Internet worldwide at the end of 2010 were DSL; this number is twice as great as the number of cable modem connections and almost five times the number of fiber or local area network connections. Broadband, either wireless or wireline, is essential to replace and supplement the functionality we decreasingly get from the PSTN. Obviously we can't afford to lose a huge share of our broadband connections at the same time as the PSTN fades into oblivion.

Here are some speculations on what might happen to DSL absent the PSTN; the possibilities aren't mutually exclusive and different things may happen in rural and urban areas, for example. Note that removing the requirement that the existing copper carry analog voice is an engineering opportunity to use the copper more effectively for digital data – including digital voice.

A successor to DSL which uses the same copper wires may be developed and provide much higher bandwidth at lower cost and greater distances than DSL does today. DSL was developed under the constraint that it had to operate in the same copper pairs as analog voice without requiring that ordinary phones be changed in any way; that's a pretty severe constraint. If a successor technology (which I'm sure people are working on) can use the full bandwidth available in the copper, it may be fully competitive with cable-based products. Perhaps this successor product would also travel greater distances without signal degradation so that it could be a large part of the answer to filling the remaining gaps in US broadband coverage – the copper wires do, in fact, already go almost everywhere. This may be wishful thinking but is not an absurd hope. The requirement that PSTN still be served is holding back the development of successors to DSL.

The growing number of unused copper pairs in the telephony plant might be bonded together so that more than one pair serves each subscriber or into some sort of local area network. The number of PSTN lines in use is already down by 50% from its peak so lots of pairs are available. The objective of this bonding is to deliver greater bandwidth over greater distances at competitive prices.

The prime space on utility poles now occupied by the copper wire can be reused for fiber or coaxial cable. A substantial part of the cost of extending cable or fiber service to a new area is "make ready" – replacing poles which either don't have the room or the strength for yet one more line. If the copper comes down, something else can go up in its place without nearly as much need for expensive pole replacement.

Carriers do make money selling DSL – generally without subsidy. The income from DSL or its successor may be enough to keep the copper network in place, particularly in rural areas. Even in that case, though, it would be much more efficient to have an all-digital data network on the copper and use VoIP over that data network than to insist that analog voice (PSTN) occupy a big part of the transmission spectrum.

Better data transmission including cheaper and higher quality voice over existing infrastructure is another reason NOT to artificially perpetuate the life of the PSTN with subsidies and mandates.

Scheduling note: It's still possible to sign up for a workshop in Washington, DC this coming Thursday, July 28, on the future of the PSTN. Agenda and signup at telecom2018.com.

Related posts:

Telecom 2018 Guest Post by Dan Berninger

Reader Objection: The PSTN is Better than Wireless or VoIP

TAC to FCC: Set a Date Certain for the End of the PSTN

The Ugly End of the Phone Network

Planning for the Ugly End of the Phone Network

States Should Deregulate ALL Phone Services – Not Regulate New Ones

Whom Do We Regulate when the Phone Monopolies Are Gone?

Whom Do We Regulate when the Phone Monopolies Are Gone? – Universal Access

Telecom 2018 Guest Post by Dan Berninger

The post below is by Dan Berninger who was one of the most important people behind the early spread of VoIP. Dan understands telecom like almost no one else. Opinions in this post are Dan's alone, but Dan's opinions are always worth listening to.

Dan's post:

Organizers of the "Telecom 2018 Workshop", set for July 28, 2011 in Washington, DC, invite speaker, panel, and participation proposals (via email to dan@danielberninger.com). The free workshop explores the meaning, roadmap, and opportunities associated with the FCC Technical Advisory Council (TAC) recommendation for a "date certain" sunset of the PSTN . The track record strongly suggests working backward from a date certain represents the only means to discipline the diverse group of public and commercial interests with stakes in telecom sector transformation. Former FCC Chairman Dick Wiley will open the workshop with comments on the analog to digital transition associated with HDTV as a case study on how the move to all IP networks can enable HD voice and other new services.

The June 29, 2011 FCC TAC "date certain" recommendation represents a bookend to 100 years of telecom developments following the 1913 Kingsbury Commitment <link wikipedia - http://en.wikipedia.org/wiki/Kingsbury_Commitment>. A "date certain" finally gives the telecom industry permission to pursue a forward looking vision incorporating realities of the post-Internet communication landscape. The fact that telco stocks trade at 20% of the revenue-to-enterprise value multiple of infotech sector leaders owes to a decade fighting the wrong battle. There exists no path to rationalize or reform PSTN regulation in a manner suitable for the present landscape. The embrace of Internet-enabled modes of communication ended the exclusive franchise assumption underlying 100 years of regulation.

Information services may not offer precise substitutes for voice offers defined as "telecom services", but neither do "telecom services" enjoy the exclusive franchise used as justification for carrier of last resort and other public interest obligations. Voice no longer behaves as a market distinct from other forms of communication. Email destroys far more telephone calls than Skype.

Energies consumed in backward looking attempts to reform PSTN regulation do not help carriers compete in a communication market that includes Facebook, Twitter, and Google Voice. Twitter with less than 1000 employees generates six times the media coverage of AT&T. The daily proliferation of Internet enabled applications illustrates the unbounded demand for services that help humans communicate.

Carriers need not interfere with bits in order to avert "dumb pipe" Purgatory after 2018. Carriers can move up stream and offer new communication services (aka anything other than plain-old-telephone-service.) An antidote to over-the-top offers exists in offering HD voice, social media, or any new new thing as a federation of carriers. The managed federation aspect of traditional voice services need not disappear with the PSTN. The two modes of over-the-top offers in the form of open federation (email, web) and walled gardens (Facebook, Skype) representing two ends of the federation continuum. The carriers can use managed federations, well established brands, and a reputation for reliability to re-take the high ground in communications.

The longstanding focus on allocating scarcity with consolidation and background economic expansion as the only means to generate growth does deserve retirement. The scarcity formula still exists in the provision of Internet access; but, as a practical matter, end user time and attention represent the only scarcity in the present communication landscape. Major expansions of enterprise value require the type of revenue growth that comes from generating new demand. Net neutrality serves carriers by giving their new communication services de-facto global roaming. Carriers focused on generating new demand can start to serve a role similar to Cisco in networking equipment or Google in web services by acquiring the most promising communication startups.

A "date certain" end-of-life for the PSTN saves further investment in unwinding the Gordian Knot. The "Telecom 2018 Workshop" on July 28th represents a first opportunity for the telecom industry to dream and start to define a roadmap to the future. The morning sessions will include perspectives on questions that need to be addressed in setting the "date certain". The afternoon sessions will introduce experts with the answers promising to restore the telecom industry's status as the leading source of services for the communicating public. On June 29th the FCC TAC draft recommendation gave the multi-trillion dollar telecom industry the permission to find a new way forward. Please join us on July 28 at the "Telecom 2018 Workshop" to get started on this challenge.

You can watch and listen to the whole Council session if you'd like at http://www.fcc.gov/events/technical-advisory-council-meeting. The discussion of the end of the PSTN takes place during the first 75 minutes of the three hour meeting.

 

Related posts:

 

TAC to FCC: Set a Date Certain for the End of the PSTN

Reader Objection: The PSTN is Better than Wireless or VoIP

The Ugly End of the Phone Network

Planning for the Ugly End of the Phone Network

States Should Deregulate ALL Phone Services – Not Regulate New Ones

Whom Do We Regulate when the Phone Monopolies Are Gone?

Whom Do We Regulate when the Phone Monopolies Are Gone? – Universal Access

 

Related posts:

 

TAC to FCC: Set a Date Certain for the End of the PSTN

Reader Objection: The PSTN is Better than Wireless or VoIP

The Ugly End of the Phone Network

Planning for the Ugly End of the Phone Network

States Should Deregulate ALL Phone Services – Not Regulate New Ones

Whom Do We Regulate when the Phone Monopolies Are Gone?

Whom Do We Regulate when the Phone Monopolies Are Gone? – Universal Access

Reader Objection: The PSTN is Better than Wireless or VoIP

Last week I posted on a recommendation by the Technical Advisory Council (TAC) to the Federal Communication Commission (FCC) that the FCC set a date certain for the sunset of the Public Switched Telephone Network (PSTN). The discussion has been great: over 300 comments on slashdot; many more on gigaom, dslreports, fractals of change, and other sites. And lots of good issues raised; some of which I'll discuss in this and future posts.

Note: Although I am a member of the Critical Transitions workgroup of the TAC which made the recommendation, I speak for myself and no one else on this blog.

A common thread in many comments is the claim that the PSTN is better than any existing alternatives for voice communications including wireless and VoIP. Reader Scott wrote:

"Before even considering abandonment of the copper-based PSTN infrastructure, the reliability and quality issue with the alternatives needs to be addressed.   Both cellular and VOIP systems require electrical power at both the transmitting and receiving end.  When this fails, the service also fails.   By contrast, the PSTN is designed so that the system is powered by CO equipment, which tends to be massively redundant.  If the electrical grid fails, the PSTN should stay up for weeks, without requiring anything on the customer side.  The same cannot be said about today's alternatives.

"Also, voice quality is a huge issue.  Both cellular and VOIP systems introduce latency and compression, neither of which is desirable.  It is just said that my Western Electric 302 desk set from 1938 has better sound quality than a modern cellular telephone or VOIP telephone.   Also, home-type VOIP services tend to not support QoS [nb "quality of service"] routing, and performance can degrade based upon network traffic…

"Until these issues are addressed, discussion of the demise of the PSTN is premature…"

Scott's points aren't wrong. They are selling points for the PSTN. But the public isn't buying these selling points; customers are abandoning the PSTN and cancelling their landline POTS (Plain Old Telephone Service) at an incredible rate despite the fact that Scott and others think that the PSTN is superior to the alternatives. Below from a twice annual huge telephone survey by the Centers for Disease Control:

"Preliminary results from the July–December 2010 National Health Interview Survey (NHIS) indicate that the number of American homes with only wireless telephones continues to grow. Three of every ten American homes (29.7%) had only wireless telephones (also known as cellular telephones, cell phones, or mobile phones) during the last half of 2010—an increase of 3.1 percentage points since the first half of 2010. In addition, nearly one of every six American homes (15.7%) received all or almost all calls on wireless telephones despite having a landline. This report presents the most up-to-date estimates available from the federal government concerning the size and characteristics of these populations."

[BTW, in last week's post I ran a graph from this study which predicted that, by 2018, only 6% of residential landlines would be PSTN. Readers questioned the methodology of the study and I had carelessly omitted a link. Details on methodology and results are at http://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless201106.htm.]

Note that the NHIS survey is only about families abandoning landlines completely for a wireless alternative. They count VoIP lines as landlines, which they are although they are not part of the PSTN. The best estimate I can find of residential VoIP line penetration, including those VoIP services provided by cable companies, is from the FCC. They estimate that, at the end of 2008 (latest data they have), 20% of landlines were VoIP rather than PSTN (they don't count services like Skype but do count Vonage). The percentage has certainly gone up with the success of the cable companies in selling this service; one reputable source estimates that the cable companies alone serve 20 million subscribers with VoIP; Vonage advertises having 2.4 million subscribers (some not in the US). On the other hand, we know that some homes (mine, for example, for just a little while longer) have both VoIP and PSTN landlines. However, if 20% of the 70% of households with landlines actually have only VoIP lines, then PSTN penetration is already down to 56% - and falling. Note that a household with both a PSTN line and a VoIP line (mine for example, again) may be using the VoIP line for all calling and only have the PSTN line so that a home security system can continue to function; this means no toll revenue for the legacy phone company. Home security systems, however, now communicate both over IP networks and the cellular network, so even this need for PSTN is fading.

Back to Scott's points about quality: voice quality on the PSTN has been better than both VoIP and cellular. People have chosen price and mobility over quality; but we won't have to make that tradeoff much longer. New cellphones will support high definition voice – much better than what is available on the PSTN because they are not stuck with the bandwidth limitations which the PSTN coped with so well for so long. VoIP also can support high def voice when it doesn't have to interconnect with the low def PSTN. Have you noticed how good the audio is on a Skype-to-Skype call? That's only the beginning. I can't think of anything that would be better for E911 service than higher definition voice – less confusion between "got into the shed" and "shot in the head"!

The cost of running the copper-based PSTN is largely a function of route miles upon which trees can fall and across which strong winds blow. The revenue available to support the PSTN is dependent on the number of subscribers and the amount of calling they do. In rural areas the PSTN has long been subsidized by both the Universal Service Fund (USF) and a series of indirect subsidies. As people abandon the PSTN and email and text more and talk less, the subsidy required per subscriber goes up. Even if some users like Scott would prefer to keep their PSTN service, we all need to ask how long we will subsidize this once-great but now antiquated service and how much subsidy per user we will pay. People who have chosen not to use the PSTN anymore – regardless of its merits – shouldn't have to pay to subsidize those who do want to use it.

The decision of whether or not the PSTN should live on has already been made by the marketplace responding to better features, mobility needs, and the lower costs of VoIP networks. We need to recognize PSTN's demise and plan accordingly to make sure everyone has an alternative and to understand all the consequences of the end of this venerable network. I believe the best way – perhaps the only way – to have this discussion is set a date certain for the end of government support for the PSTN and government mandates that PSTN services be provided and work backwards from there.

Related posts:

TAC to FCC: Set a Date Certain for the End of the PSTN

The Ugly End of the Phone Network

Planning for the Ugly End of the Phone Network

States Should Deregulate ALL Phone Services – Not Regulate New Ones

Whom Do We Regulate when the Phone Monopolies Are Gone?

Whom Do We Regulate when the Phone Monopolies Are Gone? – Universal Access

I Was Wrong and Sloppy to Blame Safari on the iPad for Viewing Problems

I was sloppy in my debugging and wrong to blame Safari on the iPad for problems we had viewing web pages on that device in my post The Empress' New iPad. Although iPad, as is well known, doesn't support Flash, the problems I was seeing were caused by settings on the two WiFi routers I use; these settings don't seem to affect other devices. However, the problems are well known and the fixes simple unless you own a very old router. Details for those who may have a problem with broken web pages on an iPad – other than when trying to view Flash content – are below.

Mary got a new iPad for her birthday and it came with setup by me. When I was ready for her to play with it, she was immediately disappointed to find that she couldn't follow a link in an email to a special sale at Sears. The page displayed but she couldn't click away from it. I couldn't go to Sears.com at all; Safari (the iPad default browser) just said that the website couldn't be found. I tried loading NYTimes.com; got a crippled braindead version of the first page although other pages looked OK.

As I always do with a new problem, I googled it. Wasn't suspicious enough about not finding these symptoms exactly replicated. There was lots of discussion about lack of Flash (a web authoring tool used for animation and bling) and about servers sending pages meant for small cellphone screens to iPad's nice big screen. I decided that we were suffering from some variant of this problem and blogged and tweeted accordingly and wondered out loud why more people weren't complaining about such an obvious flaw.

I was wrong. Friends, relatives, and commenters quickly let me know that their iPads had no problem with these sites. Then I did what I should've done in the beginning – started to eliminate variables.

Used my Verizon Fivespot wireless device to create a local hotspot connected to Verizon Wireless and logged the iPad onto that. Now sears.com work and nytimes.com work flawlessly, so it's either my ISP or my local routers that are the problem. Then create a local ad hoc hotspot from my PC which is on an Ethernet connection to my router. That works, too; so looks like the ISP is not at fault. Hard to believe both my routers have a problem, but I google that seriously. PC Mag wrote about a spate of WiFi problems when the iPad was first released.

Turns out that iPad2 prefers a variant of WiFi known as 802.11n. It also supports a, b, and g; but it likes n. Moreover, it wants the official release of n and not some prerelease kluge. Apple suggests that, if you are having a problem, you make sure your router has the latest firmware release from the manufacturer and that you specify, if it is a multiprotocol router, you want to use 802.11n only (could be a problem for other old devices). Most people's symptom is inability to connect to a WiFi hub, but some did report intermittent connection issues. Still haven't found anyone who had our specific problem that some websites work and some don't.

My old Dlink router didn't support 802.11n at all. It had the latest firmware but that was from early last year. My Belkin N+ router has an option for which protocols it supports. Turned off everything but n. Voila – everything works.

Should have done more debugging and less blogging. Should've realized that problems as severe as I suspected with iPad Safari browsing would've left a google-able trail.

Lessons learned.

Related post:

The Empress' New iPad

 

TAC to FCC: Set a Date Certain for the End of the PSTN

According to the accompanying chart with projections from the National Center for Health Statistics, only 6% of the US population will still be served by the public switched telephone network (PSTN) by the end of 2018. [update: I should have given a link to the methodology and data behind this chart. It's http://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless201106.htm]. The Technical Advisory Council (TAC) to the Federal Communication Commission (FCC) recommended last week that the FCC set a date certain for the sunset of the PSTN rather than let the service fade slowly into oblivion as it is doing now. This is actually a big deal although it didn't get much public attention.

(I'm a member of the TAC and of the sub-committee which worked on the PSTN recommendation and was at the Washington meeting where this and other recommendations were made but opinions on this post are mine alone.)

People are making a free-market decision to abandon the PSTN for cellular or VoIP service. People are chatting and texting and emailing and tweeting instead of talking. Carriers can decide how long they want offer this service or try to find ways to extend its life. So, you ask, why should the government get involved with this transition in the first place?

Good question. The answer is that the government is already heavily involved with the PSTN. Without continued government support, the PSTN would probably disappear before 2018 since the carriers' cost to maintain the many miles of copper and the rest of the system doesn't go down nearly as quickly as revenue from subscribers declines. In rural areas, telephone service would have come much later than it did (if ever) without government support of various kinds. Like many government programs, this support never stopped. The Universal Service Fund (USF), which is collected by the carriers from phone users and redistributed by the government, still supports rural telephone service as do a variety of other subsidy mechanisms. Whether they should be or not, small rural carriers are dependent on this subsidy – most of which is for traditional phone service only and not for residential broadband. Now here's the rub: as the most lucrative customers leave the PSTN, the cost of subsidizing the remaining customers – who will be mostly rural with a sprinkling of the elderly and technophobes in more urban areas – will go through the roof. Revenue for the USF, on the other hand, comes mainly from the PSTN so it will dry up (already is happening).

So doing nothing is not an alternative for government. At the very least, preserving the status quo would require finding huge new revenue sources to keep USF and the other subsidies alive. Even if the money were relatively available, that would be a dumb idea. Why continue to subsidize the most expensive and least effective way of keeping people in touch?

We could just end the subsidies and let the PSTN die a natural and probably relatively quick death. But that means those who have no alternative to the PSTN will no longer be able to call 911 or each other. Remember the concern that some people wouldn't be able to watch television on their old sets when the transition to all digital TV happened a couple of years ago? What about leaving great grandma with no 911 and no way to call her daughters?

There needs to be a planned transition to avoid stranding people without voice communication. Government needs to be part of that plan at the very least because the transition will be driven by when government subsidies to the PSTN end.

Government also needs to make sure it transitions its own PSTN-dependent services like E911 so that they work with the technologies which will replace the PSTN.

Although it offends my free market sensibilities, I think government also must be involved in assuring that everyone who now has PSTN service has access to either a broadband or cellular communication alternative. The TAC recommended that the National Broadband Plan be synchronized with the PSTN sunset for just this reason. IMHO it will cost much less to subsidize the buildout of PSTN alternatives than to continue the subsidy of the PSTN (another reason for a sunset date certain is to assure that we don't pile subsidy on top of subsidy). The TAC is planning to work on putting real numbers behind these assertions.

This is only the beginning of a conversation. In order for this to more than academic, an aggressive date certain for the end of the PSTN (or at least subsidies to it and mandates for its use) must be set soon. The date, in my opinion, should be the earliest possible time we can assure that alternatives to the PSTN are universally available, so long as we spend less public money in providing these alternatives than it would cost us to keep the PSTN alive past the date certain. My guess is that we'll find this date is sometime in next five to seven years.

The session

You can watch and listen to the whole Council session if you'd like at http://www.fcc.gov/events/technical-advisory-council-meeting. The discussion of the end of the PSTN takes place during the first 75 minutes of the three hour meeting. The recommendation to set a date is at 14:12 of the video; at 20:25 a Council member asks what should happen on the date certain (the question will be answered fully at the next meeting); at 24:55 there is a question on what it means to sunset the PSTN (also TBD); and at 25.13 I talk about the need to synchronize the national broadband plan with the date certain to assure that everyone has a cellular or broadband alternative to move to.

Scheduling note: It's still possible to sign up for a workshop in Washington, DC this coming Thursday, July 28, on the future of the PSTN. Agenda and signup at telecom2018.com.

Related posts:

Reader Question: What Does the End of the PSTN Mean for DSL?

Reader Objection: The PSTN is Better than Wireless or VoIP

The Ugly End of the Phone Network

Planning for the Ugly End of the Phone Network

States Should Deregulate ALL Phone Services – Not Regulate New Ones

Whom Do We Regulate when the Phone Monopolies Are Gone?

Whom Do We Regulate when the Phone Monopolies Are Gone? – Universal Access

 

Policy Recommendations Today at fcc.gov/live

Should the PSTN (Public Switched Telephone Network) end with a bang or a whimper? What, if anything, should the FCC do about the transition to IPv6 ? What are best practices for wireless tower siting?

These are some of the subjects on which the FCC's Technical Advisory Council (TAC) will make recommendations to FCC Chair Julius Genachowski today at 1PM EDT at the FCC in Washington, DC. The meeting is public. If you happen to be inside the beltway, you can attend in person. For everyone else, it will be webcast at fcc.gov/live. I'd suggest using the hashtag #fcctac for twitter discussion during and after the webcast.

I'm a member of the TAC and am on a taskforce looking at the end of the PSTN. The recommendations we will make are far from bland; they will be controversial; they should be discussed. I'm looking forward to hearing the recommendations from the other groups which makeup the TAC.

The posts below were informed or inspired by my work with the TAC but are purely my own opinion.

The Ugly End of the Phone Network

Planning for the Ugly End of the Phone Network

States Should Deregulate ALL Phone Services – Not Regulate New Ones

Whom Do We Regulate when the Phone Monopolies Are Gone?

Whom Do We Regulate when the Phone Monopolies Are Gone? – Universal Access

Advising the FCC on Invisible Infrastructure

Whom Do We Regulate when the Phone Monopolies Are Gone? – Universal Access

Reprise of last post: After a more than 100 year run, the end is nigh for plain old telephone service (POTS). Through most of recent history POTS was provided by monopolies, which were regulated at both the federal and state level. The new world is much more competitive; we can talk via cell phones, computers, traditional phones hooked to a variety of devices instead of the old phone line, and a plethora of new gadgets like tablets. Voice service no longer has to be vertically integrated. Skype and Vonage, for example, are "over the top" services which use whatever broadband network you happen to be connected to. Voice communication is just another application on the Internet. Even if we wanted to regulate competitive services the way we used to regulate monopolies, it's not at all clear we have that choice. How would US regulation apply to a phone service provider headquartered in Luxemburg with a staff in Estonia and with no network assets in the US (Skype prior to purchase by Microsoft)? Do you regulate the ISP who provides the network, the software company which enables a service, the virtual operator of a service, or all of the above? Who is responsible to whom for what?

It is not only undesirable but probably also impossible to regulate the new voice world the way we did when voice was a vertically integrated service delivered by regional monopolies. But the old regulations achieved various social goals as well as controlling monopoly behavior; the most important things the regulation assured were connections to 911 emergency services; universal access regardless of location, income, or handicap; access for law enforcement; interconnection between providers; and quality standards.

911 service: the previous post opined that this could be left to a combination of residual FCC regulation of cellular carriers and a competitive marketplace. Government's role should be limited to setting a standard for 911 connectivity so that it will be clear what a service has to do before it can claim to be 911 compliant. Assuming that government will continue to subsidize lifeline services for the indigent, government can and should refuse to subsidize services which are not 911 compliant.

Universal access regardless of location: it made sense to require a company which was granted a geographic monopoly to serve EVERYBODY who wants service within the geography. Easy-to-reach subscribers end up subsidizing the hard to reach; but monopoly prevents a competitor from cherrypicking these cheap-to-reach customers and offering them cheaper service which is not burdened by the cost of subsidy. If a company enters a market without requesting monopoly status, there is no basis for imposing universal service obligation on that company. Moreover, once a competitor enters what used to be a monopoly market, it becomes impractical to force the former monopoly provider to have a universal service policy; eventually they'll end up with just the most expensive-to-serve customers and no other customers to cross-subsidize the service. (see States Should Deregulate ALL Phone Services – Not Regulate New Ones).

There are actually two forms of subsidy currently in effect for high-cost POTS subscribers: implicit subsidy through uniform rates as described above and explicit subsidy through the Universal Service Fund (USF) which is funded by as assessment on the earnings of cellular, POTS, and VoIP providers (only when they interconnect with POTS). The USF subsidizes POTS service in expensive geographies, POTS service to the indigent, and broadband service to rural health care providers, schools, and libraries. There are two big problems with the USF: 1) it will go broke if it depends on a percentage of revenues from services which interconnect with POTS since these revenues are declining and will disappear when POTS disappears, and 2) subsidizing POTS isn't going to keep people connected once there's no POTS

We should not walk away from the universal access we have achieved with POTS. But it would be incredibly expensive to keep POTS alive for just those relatively few users, mostly rural, who do not have either a broadband or cellular alternative to POTS. We need to assure that either cellular or broadband coverage is available everywhere POTS is available. A repurposed USF may be part of the answer to this. The main problems to be solved are middle mile fiber and towers to put radios on in places where the economics will initially be bad (see Planning for the Ugly End of the Phone Network). The good news is that, once some capital investment is made, ongoing subsidies should be much lower than they are with POTS. New communications technologies are a lot cheaper than the old ones. Moreover, aiming USF at broadband rather than POTS gives recipients what they need to be connected in the modern world. USF subsidies should NOT be available for POTS service in areas where there is a cellular or broadband alternative after a cutoff date – say 2013. No use subsidizing the past. (Where USF should get its revenue is a subject for another post on another day).

Universal access for the indigent: The new USF will continue to provide for the indigent by subsidizing their broadband or cellular connections. Assuming that we really have extended broadband and/or cellular coverage anywhere, the cost of providing service for the indigent should be LESS than it is today, especially in urban areas but in rural areas as well.

Access for the handicapped: Former monopoly providers are required to make various devices available to those who can't use ordinary phones; there are keyboard devices for the deaf, for example. In a monopoly there was no problem with spreading the extra cost over the whole network. Without a monopoly, a carrier who provides these services below actual cost will be at a competitive disadvantage. Some of the problem goes away with broadband access and computers and even cellphones which support chat. The marketplace will have solutions for broad cohorts like us elderly who are only a little hard of hearing and a little foggy of sight and a little clumsy with buttons. But indigent people and those whose handicaps don't attract market attention will need some sort of subsidy to replace the cost the monopolies used to bear. This is really no different than Medicaid and Medicare and private insurance paying for wheelchairs.

To be continued to talk about law enforcement needs, interconnection, and quality.

Related posts:

The Ugly End of the Phone Network

Planning for the Ugly End of the Phone Network

States Should Deregulate ALL Phone Services – Not Regulate New Ones

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