Mobile operators are short term cure, long term cause of broadband divide

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Wireline upgrades get low priority on the wrong side of the divide.

Mobile broadband networks are increasingly ubiquitous throughout the world, and are the most widely used way of accessing the Internet in developing countries. But that’s despite high costs and stingy caps on data transfer. As a solution for increasing primary household access to broadband and encouraging people to use it, mobile networks have limited potential, according to a South African broadband policy study

Of the access mechanisms, mobile coverage is the most extensive, but mobile broadband access is limited to lucrative urban areas and data costs are relatively high. Extending broadband access is dependent on allocation of high demand spectrum. It is also dependant on higher tower density, which requires additional investments by mobile operators.

The problem isn’t limited to the developing world. The California Public Utilities Commission has put itself in a similar box by, on the one hand, recognising that it’s economically difficult, if not impossible, to rely on mobile operators for household or business Internet access but, on the other, giving mobile coverage claims equal standing with wireline networks in determining which communities lack minimum service and are eligible for infrastructure subsidies.

One company – Comcast – is tightening its grip on Californian cable customers and the two biggest telephone companies – AT&T and Verizon – are cutting off wireline support for less affluent communities and pushing subscribers toward more costly mobile data. All three are spending big money lobbying California legislators and policy makers in largely successful efforts to protect their turf. If you allow incumbents to write the rules for subsidising competitive infrastructure construction – rules that relegate low income areas to high cost mobile service – you will only increase the digital divide. Whether you’re in California or South Africa.

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U.S. supreme court considers limits on local barriers to broadband

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Some Roswells understand advanced technology better than others.

The U.S. supreme court will decide whether or not to set practical limits on the ability of local governments to stall – sometimes indefinitely – cell towers and other mobile broadband infrastructure deployments. When the court reconvenes in October, it will be hearing a case brought by T-Mobile against the City of Roswell in Georgia, which denied permission to install a tower disguised as a pine tree.

The specific issue in the case is whether a local agency has to provide a written statement detailing why a particular wireless project was nixed, or can it just stamped denied on the application and leave it to others to figure out the reasons by reading through council minutes and memos. Different federal appeals courts have ruled differently, and the supreme court could pick one and leave it at that.

Or it could go beyond a simple technical ruling and address the larger issues of how rigorous local agencies must be when they reject permits for mobile facilities and how much wiggle room federal law gives them. As T-Mobile put it in its pitch to the court

The object and policy [of federal law]…is to prevent local governments from imposing undue “impediments [to] the installation of facilities for wireless communications, such as antenna towers"…Issuing a denial of an application with no reasoning whatsoever – and thereby making the required expedited judicial review more costly and burdensome, if not downright impossible – is just one such impediment.

Roswell’s response is actually a prime example of the sort of telecoms policy micromanagement that the federal government says is its domain alone. After presenting a mangled interpretation of Moore’s Law, Roswell argues that it should keep cell towers out of town because…

Telecommunication carriers have and are working to develop better, smaller and cheaper technology to be used to increase coverage and capacity in their networks…It is more than conceivable, particularly as the infrastructure for true 4G LTE telecommunication service is put in place, that in as little as another decade multi-story cellular towers will be dinosaurs.

Presumably, the Roswell city council is OK with waiting 10 or 20 years to find out if anyone can figure out how to deploy 4G technology without towers. And live without the improved service it and its supporting fiber infrastructure can provide. Good luck with that.

A ruling in Roswell’s favor would give a blank check to local nimbys and tin foil hats. Or, depending on how far it goes, it could drop barriers to a low and uniform level, allowing broadband companies to spend money on infrastructure, rather than lawyers.

The excellent SCOTUSblog has more info and updates here.

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No reform this year for California’s environmental road blocks

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One of the useful, if frustrating, aspects of the California Economic Summit’s state capitol conference earlier this month was listening to some lawmakers defend the California environmental quality act (CEQA). It’s universally considered to be a needlessly complex and economically damaging impediment to any kind of infrastructure project. Except by environmentalists and their allies in the legislature.

The core argument in favor of CEQA in its current form is that even though it’s cumbersome, it has saved California’s signature natural assets – you get the idea it’s the only thing standing between the redwoods and a horde of chainsaw wielding loggers. And it’s true, CEQA has legitimately protected valuable resources. But it’s an indiscriminate weapon – the logic is essentially if you shoot them all, you’re sure to get the guilty.

The problem isn’t so much that the law aspires to high standards, but that it creates a battle ground for anyone to launch a never ending fight against infrastructure projects on the flimsiest basis. Any decision made by elected or appointed officials or agency staff can be taken to court on the basis of CEQA. Because of that, staff will frequently take a CYA approach up front – no one wants to be on the chopping block when challenges come in.

And it’s not always clear who takes the lead. Public agencies frequently arm wrestle over who has jurisdiction, if not for an entire project, at least for particular aspects of it. The Digital 395 project in eastern California is a case study: a $100 million fiber optic project that had to navigate more than 40 agencies and ended up exceeding its permit-processing budget by $25 million.

There won’t be any changes this year – the legislature’s term is all but wrapped up. But expect a renewed push to reform CEQA next year, hopefully, with better results.

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$160 million still available for broadband infrastructure subsidies in California

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When the California Public Utilities Commission starts accepting applications for broadband infrastructure grants later this year, there will be something like $160 available to hand out. That’s my estimate, based on the amount approved to date and expected administrative costs.

The overall cap on the California Advanced Services Fund is $315 million. Of that, $10 million is set aside for infrastructure loans, $10 million for regional consortia and $25 million for public housing projects. The remaining $270 million goes to the infrastructure grant account.

From the establishment of CASF in 2007 until now, the commission has approved $92 million in grants, not counting projects that were funded and then later canceled. Then there are administrative costs, which have been steadily rising as the CASF program grows and federal funding, particularly for broadband availability mapping, dries up.

As of the end of 2013, the running overhead total was $3.5 million. I don’t have hard figures, but based on previous cost allocations, a good, round guess is that $3 million is coming out of the grant account. Based on the CASF administrative budget approved last year, I estimated that from July of 2014 on, the total overhead hit to the grant account would be $10 million. Add in another $1 million for the first half of $2014, and the lifetime administrative bite out of CASF infrastructure grant funds is something like $14 million.

So, subtracting the $92 million in approved projects and $14 million for overhead leaves $164 million for future projects. I’m fudging a bit by pegging the range at $160 million – rounding down to allow for surprises – but that’s the range.

There are two grants still, technically, under consideration: the Bright Fiber FTTH project in Nevada County which is asking for $17 million and the $11 million ViaSat proposal. Given the CPUC’s decision to begin accepting new subsidy applications on a rolling basis in December, those two are effectively competing for the same pot of money. There might be a decision on the ViaSat proposal before the new window opens, but Bright Fiber is on hold for at least a year.

Another consideration is the proposal to kick in 10% of the cost of any approved FCC rural broadband experiment. But if California gets its share – 10% of the $100 million total, goes the argument – it would mean something like a million bucks, which doesn’t significantly change the round number estimate.

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California cable TV franchise renewals still behind closed doors

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Double secret probation.

A bare sliver of light will shine on cable (and telephone) companies when they renew statewide video franchises every 10 years. The California Public Utilities Commission is considering a process that effectively shuts out meaningful public scrutiny of cable companies when they file for renewal. The CPUC’s reasoning is that in writing California’s Digital Information and Video Competition Act, usually referred to as DIVCA, the legislature set a very low bar for granting and, consequently, renewing the statewide video franchises that replaced the original city-by-city and county-by-county process in 2006.

The latest draft of the new renewal rules would allow the commission’s office of ratepayer advocates (ORA) to confidentially review applications and offer comments on whether or not the paperwork is complete. Up to a point, that means there will be a semi-independent review of the claims cable companies make regarding how well they’ve met their obligations to, among other things, build out to homes in their footprint and follow local laws regarding use of the public right of way.

But that review won’t necessarily lead to action. If an application is incomplete, a do-over process kicks in. ORA will be able to make substantive comments about how well cable companies have met their obligations, “which the Commission will not consider as part of the franchise renewal process but may lead to further action outside the renewal process”. In other words, if ORA says a cable company hasn’t met its legal obligations, the commission will grant the renewal anyway and think about it later.

Only ORA can get involved in video franchise review, and that’s because DIVCA specifically grants it “authority to advocate on behalf of video subscribers regarding renewal of a state-issued franchise”. Local governments, other advocacy groups and members of the public are shut out by the law, at least as it’s currently being interpreted.

The CPUC is scheduled to vote on the new rules on Thursday, but it’s been on the agenda several times before and bumped for further review, so changes are still possible.

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AT&T says up is the new down

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The best kind goes both ways.

Call it GigaPower or GigaWeasel, AT&T is at least acknowledging that its much-hyped but little seen upgrade program needs to meet rising customer expectations for broadband speeds. And interestingly, according to a story by Sue Marek in Fierce Telecom, the company is also embracing the idea that upstream speeds are rapidly becoming at least as important to subscribers as downstream speeds…

AT&T Group President and Chief Strategy Officer John Stankey said that upstream traffic is growing at double the rate of downstream traffic thanks to so many users uploading photos and video content via social networking sites. Specifically, Stankey added that upstream traffic surges at venues such as concerts and sporting events.

GigaPower’s symmetrical capability, Stankey said, will be a differentiator against competitive services such as cable because DOCSIS 3.0 isn’t able to deliver a robust upstream due to difficulty with node splitting.

The catch, of course, is that AT&T isn’t anywhere near delivering gigabit speeds on its copper network, and likely never will. It’s managing to push, it says, 300 Mbps through some of its more modern plant, although the actual number of homes served that way is something of a mystery – a few, select neighborhoods in Austin, for example.

Years down the road, as fiber begins to reach more homes – new single single family home developments and fiber-to-the-basement deployments to multiple dwelling units in dense, lucrative urban markets – AT&T might be able to begin to make good on today’s GigaPower marketing promises for a lucky few.

But whether or not it’s backed up by reality, the fact that AT&T is moving the conversation toward the idea that high speed service needs to be symmetrical is a radical step forward. Particularly for a company that makes a habit of milking faster download speeds – 12 Mbps and above – out of crumbling copper networks by squeezing upload capacity to 768 Kbps or less.

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California Broadband Council leadership leaving the room

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As the final days of the current legislature term winds down in Sacramento, two departing lawmakers who play a key role in broadband development reflected on the the past few years. Assemblyman Steven Bradford and senator Alex Padilla (both D – Los Angeles) were participating as members of the California Broadband Council for the last time on Monday.

Bradford spoke particularly about two critical bills that he pushed and prodded through the legislature last year, despite occasionally nasty opposition from incumbents, particularly lobbyists for Comcast and the California cable industry. Assembly bill 1299, which directed California Advanced Services Fund money toward broadband facilities and marketing in public housing projects, was his baby. It was closely tied to senate bill 740, which added $90 million to CASF. As incumbent pressure mounted to kill or cripple the bill, Bradford successfully maneuvered both over the goal line.

Padilla added an historical perspective, talking about the emergence of broadband as a critical state policy concern ten years ago, and the development of CASF into a key source of money for broadband construction. The Digital 395 middle mile broadband project is a particularly good example of how CASF can get infrastructure built. CASF was “imperative as a policy venture to help create that backbone”, he said.

As chairmen of the assembly and senate committees that have primary responsibility for utilities, including telecommunications, Bradford and Padilla are automatically members of the council, as are CPUC president Michael Peevey, California Emerging Technology Fund CEO Sunne Wright McPeak and the heads of several state agencies, some of whom – Carlos Ramos, the state CIO and Mark Ghilarducci, the head of the state’s office of emergency services in particular – also took part.

Term limits mean that both Bradford and Padilla are leaving the legislature. Peevey’s term as CPUC president expires this year as well, and not many people are betting he’ll be reappointed. Of the four core leaders, only McPeak is certain to return. The council began life two years ago in a burst of energy that laid the foundation for the expansion of CASF, but the question now is whether new blood will reinvigorate it next year or if it will slide into a quiet and comfortable middle age.

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California senate weighs even more protection for incumbent telephone and cable companies

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The system is the solution.

There’s no love for independent Internet service providers in the California senate. A bill that would have made it harder for independents to put together broadband infrastructure projects that can be subsidised by the California Advanced Services Fund has been amended by the senate appropriations committee to make it nearly impossible.

Not only does assembly bill 2272 mandate union scale pay and union work rules

Under the [prevailing wage] law, there are multiple responsibilities of the awarding body, which is defined as the department, board, authority, office, or agent awarding a contract for public work. Responsibilities of the awarding body include, among other things, provide for prevailing wage determinations to be posted at each job site, provide notice of the project to [state regulators], report any suspected violations to the Labor Commissioner, and cooperate with [state regulators] in any investigation of suspected violations.

Tracking and enforcing the intricacies of union rules and California’s prevailing wage law is a bureaucratic nightmare. Not a problem for big incumbent service providers, which are themselves bureaucratic nightmares. But a total showstopper for independent ISPs that might want to compete against them.

The senate is likely to approve AB 2292 as amended this week – so far, there’s been no serious opposition to it – and kick it back to the California assembly for concurrence. Despite the bill’s leisurely pace, it’s still on track for approval before the end of the current legislative term next week.

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California legislature puts broadband infrastructure financing on par with water and roads

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Roads, water, sewers, broadband. You need it all to build an economy.

It’s up to governor Brown to decide whether broadband infrastructure gets equal treatment with transportation and water projects in California, at least when local governments want to build it. On a lopsided vote, the state assembly approved the final version of assembly bill 2292 yesterday, which explicitly allows local governments to use infrastructure financing districts (IFDs) to issue bonds to build broadband projects, and then pay the money back with property tax revenue.

Written and backed by assemblyman Rob Bonta (D – Oakland) at the urging of San Leandro mayor Stephen Cassidy, economic development is a primary goal of AB 2292, a point Bonta made yesterday on the assembly floor, saying the bill would…

…expressly allow local governments the ability to use infrastructure financing districts to finance projects related to broadband. Broadband provides cities and counties with an opportunity to stimulate the economic climate by providing businesses with the competitive advantage of being connected to high speed fiber optic networks. AB 2292 will help boost local economies, create local jobs and increase access for schools, libraries and other public facilities to state of the art telecommunications networks.

AB 2292 is not a magic bullet, though. To form an IFD requires the agreement of the local agencies involved and a two-thirds majority of the electorate. Then two more votes – including another one requiring two-thirds approval – are needed before any bonds can be issued.

Another approach – enhanced infrastructure financing districts – is still in the works in Sacramento. The idea is to reduce the super majority required to 55% and only require a single vote by the electorate to form an IFD. It would also allow more flexibility in putting financing packages and partnerships together. The specifics of that deal are being worked out behind closed doors at the Capitol, but if it’s to be approved this year, it’ll have to emerge soon – the California legislature adjourns in less than two weeks, and this Friday is a key deadline for getting bills into final form.

Tellus Venture Associates proudly counts the City of San Leandro as a client. I have talked to them about AB 2292, but it’s something I’d support regardless of whose idea it is. That said, it’s a bill that would benefit most of my clients. I’m not a disinterested commentator; take it for what it’s worth.

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California legislature can help and hurt broadband infrastructure development this week

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One step forward and two slides back.

Two bills with big implications for broadband infrastructure in California are queued up for votes in the state legislature this week. Assembly bill 2272 was blessed by the senate leadership last week and sent on for a floor vote. The date hasn’t been set yet.

That bill would put a huge dent in the California Advanced Services Fund by requiring all the projects it subsidises to follow an inflated statewide set of union work rules and pay scales, regardless of who is doing the job or what the going rates are in a particular area. Not only would the so-called prevailing wage requirement drain CASF faster, it would reduce the incentive for non-unionised independent ISPs to build new broadband infrastructure. Unionised incumbents might not even notice the difference.

So far, it’s moved slowly but steadily through the legislative process with barely a peep of protest. Democrats, who have a big majority in the legislature, have uniformly supported it and few republicans have opposed it. Neither side wants to upset the bill’s union backers in an election year.

On the other hand, assembly bill 2292 – would allow local governments to use infrastructure financing districts to pay for broadband projects. It was unanimously approved by the assembly local government committee last week, after listening to San Leandro mayor Stephen Cassidy outline the advantages. It’s scheduled for what could be final approval by the assembly today (the senate has already voted in favor), although it’s possible it could be bumped to later in the week.

The legislature has two more weeks left in the current session. Any bills now on the table will either be approved by the end of next week or die quietly.

Tellus Venture Associates proudly counts the City of San Leandro as a client. I have finally talked to them about AB 2292, but it’s something I’d support regardless of whose idea it is. It’s a bill that would benefit most of my clients. For that matter, AB 2272 would hurt many of my clients. So I’m not a disinterested commentator; take it for what it’s worth.

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Recent posts

\n\nWireline upgrades get low priority on the wrong side of the divide.\n\nMobile broadband networks are increasingly ubiquitous throughout the world, and...
Some Roswells understand advanced technology better than others.\n\nThe U.S. supreme court will decide whether or not to set practical limits on the abi...
\n\nOne of the useful, if frustrating, aspects of the California Economic Summit\'s state capitol conference earlier this month was listening to some law...
\n\nWhen the California Public Utilities Commission starts accepting applications for broadband infrastructure grants later this year, there will be som...
Double secret probation.\n\nA bare sliver of light will shine on cable (and telephone) companies when they renew statewide video franchises every 10 yea...
The best kind goes both ways.\n\nCall it GigaPower or GigaWeasel, AT&T is at least acknowledging that its much-hyped but little seen upgrade program...
\n\nAs the final days of the current legislature term winds down in Sacramento, two departing lawmakers who play a key role in broadband development ref...
The system is the solution.\n\nThere\'s no love for independent Internet service providers in the California senate. A bill that would have made it harde...
Roads, water, sewers, broadband. You need it all to build an economy.\n\nIt\'s up to governor Brown to decide whether broadband infrastructure gets equal...
One step forward and two slides back.\n\nTwo bills with big implications for broadband infrastructure in California are queued up for votes in the state...

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