Archived Lafayette Pro Fiber blog – Read Only

Lafayette Pro Fiber has recently reflected on the difficulties that the Telco’s short-sighted allegiance to short-term profit and a constantly rising share price produce for the user. (Open/closed Systems, The Road to Innovation, and Fiber, Who builds it Matters) The worry there was that the divergence of interests between share-holder owners, concerned chiefly for near-term share prices, and customer, concerned chiefly for service and price, produces dynamics in private, monopoly-owned networks that lead to poor service, high prices, and throttling bandwidth among others problems.

TelephonyOnline in ETHERNET GETS ACTIVE IN ITS PITCH AGAINST PON reviews a consequence of this issue as it effects hardware choices: the choice between PON and active, ethernet fiber architectures. BellSouth, Verizon, and SBC, have issued a request for proposal centered on PON architectures. But is PON the best, or merely the cheapest way to go in the short term? Here’s the chunk that raises the question:

“The more subscribers you put on a passive network, the less bandwidth you’re delivering to the user,” said Kantner. “This is kind of the dirty little secret of passive optical networks. To be the most cost effective, you have to have the maximum number of users, which is the worst case from a bandwidth perspective. At some point you have so many subscribers, you can’t throw any more bandwidth at it.”

Indeed, much of the argument for PON rests largely on economics. In an effort to keep down civil engineering costs (the digging of the trench and actual construction elements), PON shares the most expensive network elements among all users. In areas where telcos want to minimize the amount of fiber deployed, PON architectures call for one fiber to be brought to a neighborhood node or optical line terminal where the signal is split up to 32 ways and sent to each home over another fiber.

In an active Ethernet network, carriers deploy significantly more fiber to neighborhood nodes, run all services over an Ethernet protocol and do an optical-to-electrical-to-optical conversion and include other active elements in the access network. By nature, active Ethernet architectures are point-to-point.In an active Ethernet network, carriers deploy significantly more fiber to neighborhood nodes, run all services over an Ethernet protocol and do an optical-to-electrical-to-optical conversion and include other active elements in the access network. By nature, active Ethernet architectures are point-to-point.

BellSouth is committing, again—as it has done with DSL and its flavors—to an incremental, limited, architecture that will require costly field upgrades to make available the full capacity of fiber optic networks. Given the demands of their ownership and the burden of a legacy system that choice may make sense for BellSouth. (Or not… it certainly does not acknowledge the impending bandwidth demands of HDTV which argue that those costly field upgrades will have to come sooner rather than later if they are to stand against Cox locally.)

We could do better for ourselves; and we should.

Wired has a story on the increasing resistence of cablecos and phone companies to municipal competition. It’s a worthwhile story in its own right, giving a national overview of the problem and the preferred tactics of the corporations. But the bit of the tale that will most interest those of us in Lafayette is the habit of misrepresentation betrayed by Tom Lenard of the Progress and Freedom Foundation. Lenard traveled to Louisiana to tell us at the “academic forum” (LPF analysis, report) that municipal telecom utilities could not succeed. Apparently he has now decided that Lafayette has already failed. He is on tour again for the corporations, telling Wired that:

“All the empirical evidence has been that they are losing propositions,” Lenard said. He said case studies of fiber-to-the-home projects in Ashland, Oregon and Lafayette, Louisiana, show that “telecom is a tough business” for private ventures who have more expertise than municipal agencies.

Of course there is no, and can be no, “case study” providing “empirical evidence” that telecom is either “tough” or a “losing proposition” in Lafayette since there has been no fiber-to-the-home project in Lafayette to study. This is the sort of thing that passes as evidence for Lenard and the Freedom and Progress Foundation, something well worth considering when their dog and pony show revisits Lafayette.

These guys are shameless.

Lafayette Pro Fiber posts its interview with Andrew Cohill, the former director of the ground-breaking Blacksburg Electronic Village in Virginia. C0hill, and the Blacksburg Electronic Village project, focused on community education about and community building using new communications technologies.

Monday’s New York Times carries a story on BellSouth that includes a look at the challenges and opportunities the company faces.

Cable is identified as the big threat. And it’s being pressed across BellSouth’s nine-state service area by the likes of Cox, Comcast and Charter. The story notes that BellSouth, like its Regional Bell Operating Company brethren SBC and Verizon, is scrambling to develop a video offering so that they can compete more directly with cable companies which are moving into telephony.

The infrastructure they will deploy to enter this business? Fiber optic networks. This tracks the BellSouth network road map presented a couple of weeks ago in Baton Rouge at the Louisiana Optical Network (LONI) conference.

The article also highlights the importance of Cingular to BellSouth’s financial wellbeing. And mentions the possibility that the company may pursue a merger with AT&T that it passed on earlier.

The overall theme of the article is that BellSouth is beginning to shed some of its reputation for stodginess. It calls to mind that advertising campaign for that GM line of autos: “Not your father’s Oldsmobile.” Worked well for them, didn’t it?

Actually, changing corporate culture is one of the toughest challenges in business. It’s made all the more difficult by a rapidly evolving market place like BellSouth finds itself in now. The degree to which BellSouth is able to succeed at this transformation will determine whether the company prospers, declines into a takeover prospect, or goes the way of Oldsmobile.

LUS’s fiber to the premises project is both emblematic of the challenges BellSouth faces, and the least of the company’s worries. It’s companies like Cox that pose the true threat. That’s why this Lafayette alliance between these two corporate adversaries is so unnatural.

A Reuters story surveys the Baby Bells, including our own BellSouth, and find that they are pleased to report that competition is down since an FCC ruling that promises to allow them to raise rates on new leased lines. The juicy parts:

Industry executives and analysts have said due to the rule changes, the Baby Bells could recapture most of the 17 million local lines that competitors now lease under federal rules, boosting earnings.

Toben said Verizon was having an internal debate about how many of the roughly 3.6 million residential lines leased by its competitors it might be able to eventually win back over the next several years, with some estimates running as high as 80 percent.

Morgan Stanley’s Dykes said BellSouth had also seen an impact “from AT&T, with their visible withdrawal, as well as MCI with their less visible withdrawal.”

To that Louisiana residents should add EATEL, a major local reseller who recently got out of the market.

The loss of competition and the return to more nearly pure monopoly control over the phone network should be of concern not only for those who will soon be paying more for phone service than they would if ATT, MCI and EATEL were continuing to compete but also to those considering the implications for future telecom, data, and video services over those lines. Competition will exist only between network owners (e.g. Cox and BellSouth) with no competitors allowed on their lines.

This Broadband Reports story notices that Lafayette is the only location in the Middle America Cox (MAC) district of Cox to get the upgrade that Cox has supplied to both coasts. The implication: Lafayette gets the upgrade because it is considering a municipal fiber network and Cox is trying to clean up its act.

Middle America Cox subscribers have long complained on discussion boards that they pay the same amount for their broadband connections that the more privleged sections of the country pay for much higher speeds. A major complaint is that most recent three upgrades applied in other Cox districts has not been seen in the less wealthy, less densely populated MAC district.

A CNET story covers some of the same ground. Alert readers of this earlier story will note two things: 1) at press time for this story Lafayette was not among the areas supposed to get the upgrade and in fact it was announced for Lafayette only later. 2) The speed everyone else got was to 4 Megs. Lafayette was told it was getting 3. 3 Megs is what the other districts got upgraded from. If the 3 megs story hasn’t changed then Lafayette really hasn’t caught up, it’s just not as far behind as the rest of MAC. Note: I am not seeing anywhere near 3 megs at my house. (I wonder if we could ask for a 25% discount on their “free” upgrade.)

Thanks LUS! The fruits of competition, even threatened competition, are sweet.

As I discuss fiber politics with folks here in Lafayette I often hear that it doesn’t matter who builds the fiber network as long as it gets built. Most of those people concede that only LUS will do so in the foreseeable future but want to make it clear that there is no in-principle reason to want our inevitable fiber network to be built as a public utility.

I, as readers might guess, think differently: a better price and universal service are excellent reasons to prefer a public utility.

But those aren’t the only reasons, and they flow from what is the central reason: A public utility is, in the end, motivated by service. Not merely as a result of noble ideals, but simply because in the utility game good service at a cheap prices is what defines success. And the successful career of its personnel depends upon succeeding using that definition of success.

A private company is playing in a different game and in their game it is all about profit. Yes, we are used to understanding that a healthy respect for profit usually leads to good service and cheap prices. And when you are looking at your local grocery store that is true. They’ve got competition.

But it is not true when you are looking at monopolies. As we are in Lafayette. It has been argued that BellSouth and Cox are not monopolies. But they are, at least in terms of their own networks. There may be some indirect competition for the services they offer. Cell phones and satellite TV are both eating into the established companies’ base. But that does not change the fact that they hold a monopoly stranglehold over their own networks and that recent FCC rulings have tightened that stranglehold. They can, and do, manage their own networks to maximize their profit. It’s only logical—they serve their owners well.

The problem here is that the private providers of monopoly networks often have good reason to deny the public valuable services that would eat into their private profit.

That brings us (finally) to the story that occasioned this bit of reflection, a short piece in the Cnet broadband blog: SBC: We’re fiberlicious. Really which is a good example of how this works.

All that the story really amounts to is a little bit of cynical musing about whether or not commercially provided fiber really makes the sort of difference in user experience that one would hope for. The heart of the entry:

In San Francisco’s Mission Bay development, SBC also provides fiber directly to apartments. But when Jim Hu and I visited, we were surprised to find that consumers still only had the option to get Internet download speeds equivalent to DSL–for the same price as DSL. To the consumer, the fiber made no difference at all. There might be video-on-demand services, but the technology’s blazing broadband potential was being virtually ignored. (emphasis mine)

The author merely notes the lack of much of a speed improvement. But we need to ask ourselves why this is true. Why should SBC throttle down the capacities of fiber? The sentence contains at least one answer—video-on-demand. Recent blogs and articles on this site have focused on the danger posed by IP networks for conventional telephony and video. (Skype, Open/closed Systems, The Road to Innovation) Both the telephone and the cable companies are banking on cable TV to pay the bills—and they should, profits are huge in that sector, contrasting dramatically with the margin in providing bandwidth for data and telephony. But that means that to protect their profit center they cannot allow download speeds to reach a level that would allow a Starz-RealNetwork or TiVo-Netflix deal to be practical. According to a graphic which accompanied only the printed version of a recent Advocate article downloading a DVD movie would take 13 days by fast dialup modem, 11 hours and 36 minutes by cable modem and 1 minute via fiber optics. 11 hours is way too long a time to tie up your internet connection; it simply won’t happen. But if the download time were 1 minute (or even 10) downloading would rapidly become the preferred way to watch video.

And that scenario—where people gradually abandon the cable model in favor of ordering a la carte from a list of movies or shows would not result in the owners of the networks making a profit off selling content, they would be reduced to simply providing transport—an increasingly low-margin commodity.

For a private, profit-making corporation this will always be true. They will always find it more profitable to use their monopoly control of the network hardware to set themselves up as sole providers of content over the network they own for a simple if brutal reason: In fact it will always be more profitable to take all the profit available for a product rather than share it with anyone. A company answers first to it owners. Making the best (meaning most profitable) use of their resources is a legal obligation for any manager.

A privately-owned monopoly network will always be closed. It’s just that simple.

Here some hard truths that we are having a hard time acknowledging and dealing with:

A fiber optic network, like the twisted pair phone and the coaxial networks that preceded it will always be a monopoly. Monopolies, like any profit-seeking business, will always strive to please their owners and this will always mean that private corporations will be obligated to act in the best interests of owners rather than customers. Their network will always be closed unless government forces competition on them. Throttling bandwidth to preserve the profits of cable TV is only one example.

The good, free-enterprise solution is to be an owner yourself. And that is exactly what a municipally-owned telecom utility will allow the citizens of Lafayette to be. It will be a locally—controlled, locally-owned business who will have to please its owners. The difference will be that pleasing the owners will be identical to pleasing its customers since they will be the same people. Its primary goal will be service, not profit. Such a business could, and such businesses regularly do, choose to forgo extracting the highest possible profit in favor of other values like low cost for customers or investing in ultra-reliable systems or choosing to use local providers rather than slightly lower cost outsider providers.

With a municipal utility the grounds for debating issues like how open a network would be to competing providers would be concrete and based on a simple principle: what is best for the citizen-owners. It makes sense to ask questions like the following: Would it be best to milk the huge margins of cable to secure funding for the build? Is that too risky considering the coming bandwidth/IP storm? Is there a way to build transitions between open and closed models into the network? Should we, in effect, subsidize pure communications between citizens (Data communications, Telephony) by lowering the margin on that portion and keeping it higher on entertainment (cable TV). None of these, and more that are similar, are comfortable questions. But they are real questions that can only be raised with a publicly-owned provider. No private provider will ever take such issues into account.

It matters who builds and owns the fiber network.

It isn’t a simple matter of supporting anyone willing to build the local monopoly fiber network. Only a locally-owned, public utility will ever have any rational motive for caring about universal provision, low prices, expanded bandwidth at the expense of profit, and a dozen other similar issues. It’s simple and painful: only if the public is the owner will we be assured that what is best for the public will be considered. It will then be up to us as citizen-owners to make sure it is. But if the provider is private we will simply never have a real right to an opinion. We will have to leave those decisions to Atlanta and knowingly concede that they will not be made with our best interests at heart.

That’s hard to look at. But shorn of any soft-hearted evasions that is simply the way it is. We should want to own the fiber network monopoly so that it will be operated to our advantage and not someone else’s.

As a survivor of numerous hurricanes, I can attest to the fact that those storms are not fun — particularly the cleanup. However, this story from eWeek shows that hurricanes — even devastating ones — can have an upside.

Homestead, Florida, flattened by the same Hurricane Andrew which struck Louisiana in 1992, used the near total destruction of that community to take a forward-looking approach to rebuilding itself. Using community development block grants (CDBGs), Homestead built a fiber optic system that is delivering 100 megabit Ethernet based voice, data and video services to residents there.

And, they’re looking well beyond the “triple play” concept. It’s a great story!

It also reaffirms the fact that not all companies feel threatened by such fiber projects.

This is a link to a November 11, 2003, speech by former Federal Communications Commission (FCC) Chairman Reed Hundt. Hundt’s tenure at the FCC produced landmark rulings that created the foundation for the explosive growth of Internet usage. Primary among those ruling was that Internet Service Providers (ISPs) could freely use the networks of telephone companies to deliver services to whatever customers they could win in homes and offices across the country. That was not a given, but it sure looks like a “no brainer” in hindsight!

In this speech, Hundt has a lot of interesting things to say about broadband deployment, the importance of it for the economic and community development of the country, and the role of regulation in the effort to bring broadband to every home and business in America. Oh, by the way, he still believes open network access is essential.

Ricky over at Timshel passed me the AP story “Philly Considers Wireless Internet for All”, it caught my imagination and I guest blogged on it over there. I used to live up in Delaware (don’t ask) and Philly was the “big city.” It had a tradition of masking and a strangely vibrant local politics that made a homesick Louisiana boy think wistfully of New Orleans. Mayor Street, a street fighter who didn’t bother to project a sophisticated air when fighting for his city also has a whiff of those old-time, mildly corrupt southern politicians about him. Long story short: I’ve got a soft spot for Philly.

So I was interested in Philly’s attempt to get cheap wireless broadband access for all. For most of the country the next hot thing is not our local passion, “fiber” but is instead “wireless.” Their hope for cheap, communal connectivity lies in clouds of WiFi hotspots tied through “mesh networks” into the internet. Its a nice vision, if not nearly so grand as our own, (they have to settle for current services while we can dream grandly of possible futures) and I wish them the best with it. Apparently, if backtalk on the net is any indication, they’ll need luck: both Verizion and Comcast, their local duopoly incumbents, are widely predicted to oppose it.

But a tidbit from the story touched off a little fantasy I though I’d share.

The tidbit:

One part of the 15-year deal is cheap Wi-Fi phones for neighborhoods where less than 95 percent of residents have home phones. IDT, which has agreed to market the cheaper phone service in those neighborhoods, would pay lower rates for poles there than other companies would in wealthier areas.

Sounds righteous, right? It is. But aside from simple justice there is a little secret being revealed in that innocent line. The city is going for a double play: wireless internet and wireless phone service. Whoever wins the phone contract to use the new wireless network will have a major leg up in the Philly metro area quite aside from having to give a little discount in the poorer areas that are Street’s stomping grounds. (Alert: this is where my “mildly corrupt Southern politician”-trained instincts are activated. I smell a little something here but will leave worrying about that to friends in Philly.)

Still a double play is even more fun that the nice fantasy of a cheap WiFi cloud over Philly.

‘ Course it doesn’t hold a candle to our own “Triple Play.” The talk in Lafayette has been about the fabled “Triple Play” the grail of recent telecom quests. Providing fixed phone, cable TV, and Internet is supposed to be the key to market dominance. Everyone in the game is struggling to achieve the necessary bandwidth—the quickest way to dismissed by financial analysts as dead in the water is for it to be obvious that you don’t have a viable business plan to get there. (Example)

No, Philly’s plan doesn’t hold a candle to our own triple play. But what makes it interesting is that it leads you to realize how easy it would be to turn a triple play in Lafayette in a quintuple play by adopting Philly’s plan. Imagine: superfast internet in the home, a WiFi blanket that covers the city with more speed than you can currently buy from the incumbents for home use, a phone in the home that has the same number as the one that you carry out to the mall, and gobs of digital HD TV. All for one low, low utility price.

It could happen; neither startup cost nor technology would be much, if any, barrier.

The incremental costs of adding a WiFi net to the fiber net would be small. (Or maybe WiMax if it actually matures.) Five percent of the fiber? I haven’t done the numbers but I’d bet no more and probably less. The costs of adding voice (VOIP) to that would be nil. All that needs is software which is already available—some of it is already there in free form (recall Mike’s recent blog on Skype, the free VOIP program that allows you to call into the local phone systems anywhere in the world for pennies). The monster bandwidth of fiber makes the additional cost of bandwith barely visible. Ok, there’d be some significant maintenance on all those little WiFi transmitters. So?

Possibilities roll pretty fast outta that imagined cloud: why couldn’t “push to talk” WiFi phone a la Nextel be free for “in network” users? Shoot, partner with Nextel or one of the others and make that a part of a contract that would probably net the cell carrier 75% or more of the local mobile market.

It’s not just new toys. Its the possiblity of integrating all these toys through a ubiquitous, cheap, high bandwidth network. Use your cell phone to address your settop box and order it to record that new show your friends are talking about at work. Or do it from your laptop, though the phone is cooler. Video phones? Sure. Video cell phones? Probably, at least on the WiFi to WiFi calls.

I could go on. But the message is simple: if LUS wants to kick the excitement up another notch: BAM!, they could do it. And having pissed off Cox and BellSouth what would it harm things to add Sprint and Cingular?

And wouldn’t that be a grand way to blindside whatever new program of disinformation the incumbents have planned for when you announce the full business plan?

It’s all just a fantasy….Yeah, I know it’s unlikely. But a man can dream. The Quintuple Play. And the CityCell phone (registered trademark) 🙂

PS: Dreams of converged networks don’t exist in just this fevered blogger’s imagination. The Koreans (who are waayyyy ahead of the US in broadband penetration) are dreaming of converged wired and wireless networks. But they need a final, essential piece according to a Korea Herald article. Can you guess? Sure you can: Fiber optics to the home. Read the story and have your illusions of American broadband dominance smashed.