AT&T Plans Gigabit Network in Research Triangle and Piedmont Triad in North Carolina

Many complain that there isn't enough competition in the U.S. fixed network high speed access market. But largely because of Google Fiber, the amount of competition is heating up. 



AT&T now says it is negotiating wtih municipal officials to build gigabit networks in areas of Carrboro, Cary, Chapel Hill, Durham, Raleigh and Winston-Salem, N.C.



AT&T says it is in "advanced discussions" with the North Carolina Next Generation Network (NCNGN) to deliver gigabit service "where there is demand." 



For those of you familiar with the ways municipalities traditionally have regulated either video entertainment or telecom services, that is a switch. 



In the past, regulators would have required ubiquitous deployment everywhere in a region, even if demand likely would not be high. That has the effect of depressing investment that otherwise would be made, in areas where there is demand. 



The more-flexible approach now seems to be to encourage gigabit network deployment as widely as possible by allowing Internet service providers to build first in neighborhoods or communities where the likelihood of uptake is the highest.



The hope is that demand in close-by communities will grow over time, as residents bcome aware of the value. Also, the initial deployments will help create a better business model for additional neighborhoods to be added to the network. 



At least in part, the new flexibility has been helped by other public-private partnerships that have focused on creating gigabit networks around anchor institutions. Google Fiber also has shown the wisdom of allowing new facilities to be deployed initially where uptake is expected to be greatest, allowing ISPs to build volume and reduce costs for follow-on deployments.



In part, the new flexibility will encourage other ISPs to make similar investments. The movement will be most crucial for ISPs such as AT&T and Verizon, which have bigger opportunities than most other providers, given their size and presence in major markets most conducive to gigabit deployments. 



CenturyLink has yet to make similar moves outside of some parts of its Omaha markets where previous owner Qwest had built fiber facilities that can be upgraded for gigabit access. 



The point is that competition is heating up, in the gigabit high speed access market. 

Mexico to Build Wholesale Mobile Network in 700 MHz Band

When the cost of building a new broadband access network is high, regulators and Internet service providers alike will consider wholesale approaches, as featured by the Australian National Broadband Network, as well as similar efforts in Singapore, New Zealand and the United Kingdom.

Now Mexico is creating a wireless broadband wholesale network using the entire 90 MHz spectrum in the digital dividend (700 MHz band), and hopes to have the network activated by 2018.

The wholesale-only network will sell capacity to retailers, according to Ernesto Flores-Roux, Associate Researcher, Centro de Investigación y Docencia Económicas - CIDE, Mexico, who spoke at a meeting organized by LIRNE Asia in March 2014, on the subject of broadband policy to bring broadband access to the poor in India.

Incumbent service providers will be able to buy capacity on the wholesale network, with one key trade-off. If they do so, such incumbents also must open up their existing networks to third party wholesale as well, on conditions similar to wholesale access terms on the new 700-MHz wholesale network.

The decision to build a wholesale-only network was driven by the belief that this is the best way to assure lowest-possible cost for consumers, said Flores-Roux.

It remains unclear how investment in the wholesale network will be made. At the moment, “any conceivable structure can be used for the ownership and financing of the network,” said Flores-Roux.

In other words, investment can be “private, public or both.”

But other approaches to getting low-cost broadband access likely will be tried as well.

As in the United States, where shared spectrum approaches now are being introduced, existing spectrum presently licensed to government users can be shared with commercial users.

That will allow Internet service providers to move faster in building networks, and at lower cost, to provide broadband services to unserved consumers, according to Professor Martin Cave, Deputy Chairman, Competition Commission, UK.

As has happened in the past, entirely new approaches to network infrastructure are the key to extending communications service to everyone. Nobody originally thought cable TV networks would become full-service communications networks.

Nobody originally thought mobile networks would be the way everybody, everywhere, got voice communications.

Likewise, it is likely new approaches, originally unforeseen, will help ISPs deliver broadband services to everybody, everywhere.

Which Will Win: Wi-Fi-First, Wi-Fi-Only or Wi-Fi Sometimes?

Republic Wireless and Scratch Wireless already offer discount mobile service on Wi-Fi-first basis. Google and  Comcast reportedly also are looking at the idea.

To be sure, whether public Wi-Fi can compete with mobile has been asked for a decade and a half. Until recently, the answer has been “not yet.” The question was asked of 3G networks and now is asked about 4G networks.

Arguably, two major hurdles will have to be overcome, first, ubiquity of public Wi-Fi access and second, the business model.

For the moment, ubiquity remains the biggest challenge, as it remains difficult to ensure coverage, let alone roaming, on public Wi-Fi today, outside the fairly limited universe of cafes, malls, hotels, airports and other areas where there is high pedestrian traffic.

Business models also are key, though. There is a key difference between services that provide full roaming and those that conceivably could be built on untethered access (hotspot based).

Though a “phone” service requires roaming, a service based on untethered access for Internet apps, used primarily when users are stationary, is different. The classic examples are mobile phone service and public Wi-Fi hotspots.

The developing opportunity is for something possibly in between, oriented around content consumption rather than real-time communications.

One might argue such concepts have been tried before, as with the Personal Handy Phone System. There was some thinking such a service might also develop in the United States, around the time Personal Communications Service spectrum was awarded in the 1.8 GHz band.

As it turned out, PCS wound up being “cellular telephone service.” But all that was before the Internet, before broadband, before the rise of Internet-based content consumption.

Though it is hard to tell whether all those changes, plus the advent of smartphones and tablets, small cells and more public Wi-Fi, will finally enable a Wi-Fi-only approach to services that appeal to a large base of consumers. In the past, rapid development of fully-mobile services has fundamentally limited the appeal of such less-than-fully-mobile services.

But you might also argue that consumer behavior already includes use of both modes: mobile for communications and Wi-Fi (at home, at work, plus public Wi-Fi) for PCs, tablets and offloaded mobile media consumption.

So some might argue the biggest opportunity is for Wi-Fi-first, rather than Wi-Fi-only, services. People already understand and use devices and networks in a “Wi-Fi-sometimes” or “Wi-Fi-frequently” mode.

So if Wi-Fi-first is to succeed as a major service, it will have to default to mobile mode, and use public or private Wi-Fi access simply to lower overall costs of operation.

The issue is that mobile operators can do this as well as attackers.

Is Apple TV With Managed Service the "Something Big?"

Back in September 2013, Apple hired a CableLabs exec who promised he would be working on "something big." Is it possible the "something big" is a version of the Apple TV box that is optimized for cable TV delivery, with quality of service mechanisms, for example?

Even at the time, the speculation was thatJean-François Mulé, former senior VP at CableLabs, the cable industry development organization, was going to be working on a cable-optimized set-top box.

Now there are rumors that Apple is in talks with cable giant Comcast about a streaming TV service that would offer live and on-demand content. In one sense, that might not be unusual. Lots of video streaming services are available today.  

The really big change would be if the offering wound up being a managed service, with quality of service guarantees, much as voice and existing linear TV services feature quality of service mechanisms.

According to a Wall Street Journal report, the service would enhance traditional cable channels and over the top, cloud-based video.

And the significant aspect is that Apple apparently wants to bypass the public Internet and deliver non-Comcast content using the same delivery methods Comcast already uses for its own video and data services.

In other words, Apple wants to provide a managed over the top video streaming service, with quality of service mechanisms.

Given Apple’s historic concern for quality and elegance, such management would be the only way an “Apple” premium experience could be assured.

In case the implications are not clear, this would mean Apple itself wants to deliver over the top Internet video as a managed service, not subject to congestion the best effort Internet encounters.

And the bandwidth demands could be substantial. In addition to supporting stall-free video on the “watching now” channel, what if Apple also wants to allow over the top video to be recorded on digital video recorders as well?

That could involve simultaneous delivery of up to five video streams. Even on a fast connection, that might be problematic.

Ironically, for some observers, Apple’s desire to create a managed service, with quality of service guarantees, points out the defects of “best effort only” network neutrality rules. Blocking is not the issue: quality of experience is the issue.

Telco High Speed Access is Defensive, Cable High Speed Access is Offensive in Nature

To some extent, cable operators and many telcos have different strategic imperatives where it comes to high speed access services. 

For cable operators and telcos owning only fixed assets--not mobile--the network is the foundation for nearly 100 percent of revenue.

For telcos with significant mobile assets, the fixed network represents less than half of total revenue, and little of the revenue growth. 

source: High Speed Internet

For AT&T and Verizon, mobile revenue has grown in the 30 percent annual range, in 2013.

For AT&T, fixed network data services revenue (enterprise, small business and consumer) represents about 28 percent of total revenue. 

In recent quarters, mobile has driven about 53 percent of revenue, and virtually all the growth.

source: High Speed Internet  

To be sure, the fixed network is becoming an important strategic asset for mobile service providers, as a way to supplement mobile data access.

Also, virtually everybody expects today’s linear video services to shift substantially to “over the top” delivery, which will add to the value of a high speed Internet access connection. 

So the fixed network remains a substantial asset, even for firms such as Verizon and AT&T that earn the majority of their revenue, and nearly all the revenue growth, from mobile services.

Still, strategic considerations are key. Cable companies and fixed-only telcos must invest in their core asset.

source: Seeking Alpha

Mobile-mostly service providers such as Verizon and AT&T, and mobile-only providers such as Sprint and T-Mobile, have to weigh the returns from investing in mobile, versus fixed access.

So it is that Verizon, which made a big bet on FiOS, has concluded it must presently avoid several new big city builds, as the financial returns are not deemed adequate.

AT&T, on the other hand, has stepped up the pace of its U-Verse builds, and even is upgrading some areas for gigabit access, in response to competition from Google Fiber.

source: IP Carrier

But the strategic imperatives are matched by results on the ground.

Since about 2009, cable high speed access has pulled away from digital subscriber line, in terms of top speed. The Docsis 3.0 standard supports top downstream speeds of about 105 Mbps. AT&T’s U-Verse (fiber to a neighborhood with copper drops) can achieve about 24 Mbps.

To be sure, telcos can install very high speed DSL or fiber to the home. At the moment, though, telcos are losing DSL customers faster than they are gaining subscribers for their faster broadband offerings.

During the second quarter of 2012, for example, cable companies took a 140 percent share of broadband new additions, according to UBS Research telecom analyst John Hodulik.

source: Seeking Alpha

In fact,  cable high speed net additions are soundly outpacing telco net additions. In 2013, for example, the top cable companies added a net 2.2 million high speed access connections, compared to 477,000 for top telcos.

Just how much telcos must invest--and where--is the issue. Fixed network operators, without mobile assets, have to invest to stay competitive, or risk losing their businesses.

AT&T and Verizon have to balance investment between the mobile and fixed segments. So for cable, investments in high speed access--as is the case for Google Fiber--are offensive in nature, designed to take market share.

For many telcos, such investments largely are defensive, intended mostly to protect market share.

"Managed Services" Fare Worse Under Amended Connected Continent Legislation

After initial passage of Connected Continent legislation by the European Commission, the proposals are now headed for review by the council of ministers. But key amendments now have been added to the proposed legislation by members of the European Parliament.

The original language allowed for exemption from the “best effort only” rules for consumer Internet access for “specialized services.” That language was meant to allow ISPs to create and sell managed services such as voice and video entertainment, with quality of service mechanisms.

To be sure, some might argue the changes of wording are subtle. According to the amended text, ISPs will be able to prioritize traffic for managed services, so long as the packet prioritization is not to "the detriment of the availability or quality of internet access services" offered to other companies or service suppliers.

The original text instead simply said that the specialized services could be provided as long as they "do not substantially impair the general quality of internet access services."

The amendments now specify that any managed services must not affect availability or quality of Internet apps, period.

Service providers obviously will object, since all services now are moving to delivery by a single set of physical assets, delivering best effort Internet access as well as managed services such as voice and video entertainment.

Almost by definition, setting aside bandwidth for managed services will affect the total amount of access bandwidth available for all purposes and applications supported by any access link.

“Specialized service” is defined as an electronic communications service optimized for specific content, applications or services, or a combination thereof, provided over logically distinct capacity, relying on strict admission control, offering functionality requiring enhanced quality from end to end, and that is not marketed or usable as a substitute for internet access service.

Perhaps nobody would argue that voice service and linear video subscriptions are prime examples of such services. But one also might agree that the amendments essentially ensure that future online streaming services could not be classified as “managed services.”

The amendments specify that “providers of internet access, of electronic communications to the public and providers of content, applications and services shall be free to offer specialized services to end-users.”

But “such services shall only be offered if the network capacity is sufficient to provide them in addition to internet access services and they are not to the detriment of the availability or quality of internet access services.”

In other words, using rules yet to be developed, it might be unlawful to create a managed video streaming service, if doing so negatively affected best-effort Internet services. The devil is in the details, one might well argue.  

What constitutes “sufficient network capacity?” What does “negatively affect” mean, in quantifiable terms?

Already modified since original passage, it is reasonable enough to expect further changes when ministerial officials start to grapple with the implications.

Might even the ability to deliver linear video services using Internet Protocol be impaired? What access bandwidth implications would follow, if service providers want to deliver linear video using IP?

To be sure, the legislation tries to deal with two separate problems, including ISP blocking of lawful applications, and the extent to which new managed services can be created. In the U.S. market, the former is dealt with under Internet Freedoms principles that already make unlawful any actual ISP blocking of lawful apps.

The Connected Continent legislation conflates the two problems, first outlawing lawful application blocking (a good idea) but also limiting the creation of new services that actually might need quality of service mechanisms (packet prioritization).

The outcome remains unclear, as further changes could come. That incentives to invest in networks will be affected is uncontestable, even if the impulse to constrain anti-competitive behavior also is reasonable.

Some might argue remedies for anti-competitive behavior already exist. If so, innovation and investment also could suffer, even if the reasonable goals of permitting consumer access to all lawful apps, and preventing unfair business practices, are the formal goal.

Will Google Fiber and AT&T Both Build Gigabit Networks in San Antonio?

Competition works. With Google considering building a gigabit network in San Antonio, Texas, AT&T now also says it is thinking about expanding U-Verse "GigaPower" service for San Antonio.



We should not be surprised. That pattern of Internet service providers investing either to capture a lead, or more commonly, to stay competitive, has tended to be the pattern in the competition between cable companies and telephone companie since the advent of high speed access.