Broadband Stimulus Package

Good News from Washington on Stimulus

Yesterday, The House approved a FY2010 supplemental appropriations measure in the form passed by the Senate last week, which eliminated previous House amendments that would have rescinded $302 million in BROP funding and $300 million in BIP funding.

The vote leaves intact the full $7.2 billion in broadband grants and loans funding authorized by the ARRA. The House�s action sends the bill to the White House for the president�s signature.

This shows a continuing commitment to rural broadband, and given the other legislation moving through committee shows that the voice of rural America is being heard. Keep it up! Keep talking to your congressmen and congresswomen.

We're moving! Come visit us at our new site

As some of you may have noticed, posting has been pretty thin on this site in the last few months, most especially the last few weeks. Happily, it's all been with a plan.

As of today, I'm pleased to announce that we're moving this blog to a new (easier-to-find) location on our website and giving it a new name: Industry Matters. As news/announcements regarding Stimulus-related topics have dwindled we've wanted to explore broader industry topics but didn't have the right venue. Now we do. Expect to see coverage of topics ranging from my upcoming OPASTCO trip to a new series of "telco services" posts giving real-world customer examples.

Please be sure to update your RSS feeds and/or bookmarks as all new posts will be available here: http://www.occamnetworks.com/solutions/blog/

A big thank you to all the loyal readers and customers. See you at the new site.

-Rebecca

Occam Networks Users Group Conference Update

We're wrapping up another successful week hosting the Occam Networks Users Group (ONUG) conference in Washington, D.C. It's been an eventful week full of collaborative discussions between our customers, our staff and partners. In addition, we've had some great debates about the future of the rural broadband industry highlighted by a keynote address by Blair Levin, chief architect of the National Broadband Plan (NBP).

And the discussion didn't end there. Blair Levin, Jill Canfield (Senior Regulatory Counsel with NTCA) and William Metts (President of Metts Engineering) explored the future of bandwidth in rural communities, the impact of the NBP on USF and other critical issues. Needless to say, there was much to talk about.

For a recap of the first day of ONUG, check out the video summary and let us know what you think. We're already looking forward to ONUG 2011 and helping our customers continue to shape the future of rural broadband.

Would You Sell Your Copper to Uncle Sam?

In Australia, it appears that Telstra, the national carrier, has reached an agreement to sell their copper infrastructure to the Australian government in exchange for partnership in the National Broadband Network that Australia is building. In effect, Telstra is agreeing to structural separation - focusing on providing telecom and data services, while letting a third party manage the network.

It got me thinking, what about your company? Would you be willing to radically rethink your business if it were possible to sell all of your installed copper plant to the US Government, in exchange for funding to build a 100% fiber optic network to every subscriber? Perhaps the Government would then pay a monthly fee for network upkeep and equipment upgrades (maybe something similar to rate of return), but your key revenues would be driven by the services you offer.

Is your company brand strong enough that your subscribers would request dial tone and internet services from you? Or would they be swayed to a offer from a Verizon, AT&T or Comcast that was freed to offer similar services over the fiber plant.

Funding broadband - whether wireline or wireless is a huge topic, and one that we will discuss on both my Market Vision panel and Industry and Regulatory panel next week at the Occam Networks Users Group in Washington DC. But the idea that a "trade out" of copper for fiber might be an interesting way to fund broadband and change business models.

I hope to get your perspective at ONUG.

Where is Cable in the National Broadband Plan Discussion?

The focus of a lot of the discussion on the National Broadband Plan has been Telcos. And given the Plan's focus on reforms to USF, ICC and some of the other funding mechanisms for telco rural broadband, this makes sense.

But where have the Cable companies been?

With broader deployment of DOCSIS 3.0, the goal of 100Mbps to 100M households by 2020 could be easily in reach. While it is more common to think that 100M = Fiber, if we are willing to accept the shared bandwidth of DOCSIS, customers are seeing rates of 100Mbps today. And given ten years to innovate, it is likely CableLabs could kick up that bandwidth significantly over the next ten years.

What is more interesting to me however is where Cable companies stand in the move to reclassify internet service as a telecommunications service. If this change occurs, what happens to digital cable? Clearly Cable Modems should fall under this new regulation, but what about the content that is delivered? How is digital TV program different than IPTV? How would reclassification change the fees associated with content and TV services? If it is a service delivered digitally, why could a Cox subscriber today not choose instead to subscribe to Comcast service? Or vice versa?

Other than IPTV and FIOS in select markets, there is no competition in cable. Andy Kessler, in an opinion piece in last week's Wall Street Journal states that according to SmartMoney.com, less than 1% of 30,000 cable markets had more than one provider in 2000 and 2005. It is not a whole lot better today.

Kessler speculates that the threat of opening up cable networks for competition and establishing low common carrier wholesale pricing, would spur the industry's broad endorsement of building fiber to every household.

Nearly half of US consumers, and a growing number of businesses get their internet service from cable. Isn't it time everyone worked under the same regulation? So why has Cable been so quiet?

Summarizing Round 1 Funding: RUS's Connecting Rural America Report

On Monday, the RUS released the Connecting Rural America report summarizing the projects funded in round one of the Broadband Initiatives Program. The report is primarily a summary of each of the awards (information that can also be found on the broadbandusa.gov Web Site) but there are some concrete numbers on the total jobs created (5,000+)and the number of anchor institutions served (3,000+) as well as some interesting statistics on the types of awards that were funded in the first round. These statistics were what I found most interesting about the report because they are a likely indicator to the round two applicants about funding trends. For example:

A full 70% of the funded awards included wireline fiber optics as part of the deployment
Of the 68 projects funded, 70%, or 49 projects, were last-mile non-remote and only 20% were remote
- Examining the funding for each of these types of projects, RUS remained fairly true to it's promise that non-remote areas would receive 50/50 grant/loan combinations while remote areas would receive a higher percentage of grant funding.

I acknowledge that the report isn't a wealth of new information, especially if you've been following stimulus funding closely, but if you have time to skim through, it's worth it. (And once you do, if you could explain to me what the picture on page 4 of the report has to do with rural broadband, I'd appreciate it!)

-Rebecca

Evaluating Broadband Stimulus Program Projects

For all of the commentary on the Broadband Stimulus Program (BSP), I thought I�d offer a few suggestions for subjectively evaluating BSP projects. Of course, not all BSP projects are the same and many leverage various technologies to deliver on plans outlined in the application process but I think these criteria help us put a project in perspective when gauged against the National Broadband Plan and the original intended purpose of the ARRA � create jobs.

1) The number one priority of the NBP is to achieve broadband ubiquity by any technology available. A BSP project that achieves this is admirable. An operator that achieves this objective for their entire network should be celebrated.

2) BSP projects that target underserved communities can provide a competitive offering that ultimately leads to innovation, cost savings and choice. Rather than criticize projects that foster competition, applaud the effort to bring competition to markets where incumbents under-invest.

3) Strategic plans to eliminate the rural digital divide by achieving the 100Mbps to 100M homes by 2020 goal is most typically associated with urban areas. But there are many examples of rural operators that strive to reach this goal and have diversified revenue streams that leverage the ultra-fast rates enabled by FTTP.

4) 1Gbps (FTTP) to anchor institutions and public safety is key to NBP objectives and assures public and national security in all communities. BSP projects that bring fiber to these locations can easily achieve this goal with the added benefit of middle mile capacity for consumer or business services in areas adjacent to these anchor institutions.

5) The original goal of the ARRA legislation was to create jobs. BSP projects that create local jobs sustain rural communities in an ever-expanding global economy. Applicants without local presence can still succeed but the impact on the targeted service areas may not be fully maximized.

6) BSP projects should be evaluated as much for the history of the provider as for the promise to provide broadband services. The experience and trust developed over decades of service has fostered an environment of customer loyalty.

To fully evaluate the ultimate impact of a BSP project today could be a bit premature. But analyzed with an open mind and with the backdrop of the NBP should paint many of these projects in a positive light.

And for those of you that missed yesterday�s news, Occam has been selected by long-time customer Rural Telephone/Nex-Tech to supply FTTH equipment for their BSP project. Applying the criteria in this blog to the BSP project should lead to a positive view of this innovative, far reaching project.

Are We Headed to a Rewrite of the Communications Act of 1934?

It seems like every day brings a new concern or point of contention with the National Broadband Plan (NBP). Like any far reaching regulatory plan, I wouldn�t expect complete consensus across the industry for the Plan as written but we�ve now reached a point of open disapproval from various members of Congress and that could potentially undermine the general intent of the Plan.

At issue is whether or not the FCC has authority to implement the National Broadband Plan as written which could necessitate the regulation of broadband. I�m no regulatory expert but this is far reaching and has the potential of becoming a case study of what happens when you peel back the proverbial onion in D.C.

Recall, this started with a noble exercise in using the broadband stimulus program (BSP) as a means to reach two end goals � job creation and broadband ubiquity. The understanding (and to some, a critical shortcoming) of the BSP was that it was an example of the cart leading the horse. Absent comprehensive and guiding broadband objectives (beyond those in the NOFA rules), the BSP took a life of its own with the promise of the forthcoming NBP and the regulatory clarity it would bring.

Now that the NBP is out, we have industry advocates and lobbyists coming from all angles trying to influence the actual implementation of the Plan. With many questioning the FCC�s authority on matters such as USF reform, net neutrality and even setting baselines for broadband services that could lead to a �rural digital divide.� This uncertainty, of course, leads to a wavering of support from some who originally supported the plan (i.e. members of Congress).

In fact, we�re now seeing calls to rewrite the Communications Act of 1934 so that the FCC has clear authority to implement the controversial portions of the NBP. Ironically, those calls are not coming from the FCC. They�re coming from Congress (Senator John Rockefeller (D-WV), the chairman of the U.S. Senate Committee on Commerce, and Representative Henry Waxman (D-CA), the chairman of the U.S. House Committee on Energy and Commerce, have recently announced plans to begin a major rewrite of the 1934 Communications Act). Does that mean we�re headed to an actual rewrite? It certainly seems like that�s a possibility.

Interestingly enough, rural broadband providers are not standing idle during this debate. We continue to see rural projects that move broadband forward while keeping a watchful eye on D.C. In my conversations with rural providers, one thing is common � they all have clarity of vision for their businesses and communities. All realize broadband is the foundation for their future as communications providers and they will leverage any means available (i.e. broadband stimulus) to reach the end goal of ubiquitous broadband.

What do you think? Are we headed towards a rewrite?

Over The Top Video Is The End Game

If you�re reading this, chances are OTT video needs no introduction. Most of you have likely downloaded some form of video for entertainment purposes as recently as today. Providers who offer television services are likely simultaneously excited and worried about OTT video as a potential complement or challenge to existing services. Needless to say, OTT video is here to stay.

There�s much uncertainty around OTT video. Today, much of the available content is free. And while you can find certain first run programs online, it�s still not a general practice in the video industry. Which is why OTT video is so uncertain � no one is willing to take the leap of faith and attempt to bypass the traditional video distribution means � movie theater chains, cable/telecommunications providers and DVDs.

That leap of faith will take content distributors directly to the consumer. Via OTT video, consumers could conceivably purchase just the content they want and not the content bundled together to justify ever increasing programming fees. Of course, that means many �non-mainstream� channels wither away but I can live without the Oxygen channel.

A la carte programming via OTT video distribution is in my opinion the end goal. But coming back to reality, OTT video faces skepticism and competition. Broadband providers � especially those that also offer television services � are challenged by the disruption that OTT video might pose to existing video based revenue streams. That may require a strategy that leverages OTT video as a complementary service to existing traditional television services.

Operators that do not currently offer television services may see OTT video as an opportunity to create new revenue streams. In fact, these operators may find themselves armed with a new competitive weapon as they take on traditional video providers.

Of course, each situation is unique so I encourage you to explore the opportunity OTT video might have for your business. In my search for OTT video information, I�ve come across what appears to be a very interesting conference called OTTcon East that will be held June 16-17 in Atlanta, GA. The topic alone is enough to pique my interest and after reviewing the event agenda, I am considering attending to get a firsthand understanding of how the OTT movement is shaping up.

Drop me a note if you�re planning to attend and I�ll keep an eye out for you.

Paying for Rural Broadband - Why We All Must Care

The final of the six sections of communications law that the FCC is looking to implement for broadband is Section 254 - Allowing the use of Universal Services Fund for broadband.

On the surface, this seems to be a good idea. Whereas today USF helps to make landline telephone service affordable for rural subscribers, this would enable the fund to instead ensure broadband is available at reasonable rates. The problem is in the details.

The USF gets its monies from a fee charged to urban and suburban telephone customers. As the number of telephone landlines in the US has declined, the rate or % of the fee has increased. It is now at historic levels. The FCC proposes taking those funds and creating a new Connect America Fund (CAF) that could be accessed by network providers in high cost areas. Other than saying the fund will not have more $$ in it, the method by which it gets funded is still murky. The National Broadband Plan also has a desire to open the Fund up for more broadband providers to access, thereby reducing the amount available per rural subscriber.

Based on Monday's post, if net neutrality regulation will require significantly more network investment, and consumers can not afford to pay for this, and if the funds for underwriting high cost rural areas are capped, we are headed to a deep digital divide where high speed broadband only flows to those where service can be deployed cheaply. This appears in the National Broadband Plan in the discrepancy between defining broadband as a 4Mbps service, but desiring 100Mbps to 100M people by 2020.

As I have previously stated, the government has a role in regulation. However, regulation has a cost. I encourage the FCC to bring a business perspective to any final rule making, taking into consideration the economic side of broadband deployment. If not, I fear the US will slip further down the list of countries in broadband deployments, consumer rates will significantly increase, and the internet, which has been a 10+ year success, will bog down like a Los Angeles freeway at rush hour.