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Insights into Public Policy as it affects Telecommunications Industry & Clients we serve.
The Truth About USF
Tue, 07/13/2010 - 11:34 | by Paul KouroupasKudos to the House Energy and Commerce Committee for exposing the excess in the Universal Service Fund. The Committee asked the FCC for data on the largest recipients of USF funds and has posted the responses it received from the FCC. It is pretty startling data. Consider that Westgate Communications out of Washington (the state) receives ON AVERAGE $17,763 in support payments per line. ON AVERAGE!!! That means it actually receives more than that for some lines. I’m sorry, but I don’t see how in any rational world that a phone line is worth $17,763 plus per year. Under what theory do the residents of Chelan, Washington derive their entitlement to such an enormous subsidy? Why is it that the rest of the country has to pay over $17,000 for someone who chooses to live in Chelan, Washington to have phone service? Now one may think that Chelan, Washington is the Appalachia of the Northwest, but from what I can gather from the real estate listings , it is more like the Palm Beach of the Northwest.
So as not to pick on poor Westgate Communications, let me also note that the top recipients of USF funding as reported by the FCC.
Annual High-Cost Payments by Year-End Holding Company Structure: 2009 Read more and comment...
Can we let the market decide this one?
Wed, 06/02/2010 - 14:14 | by Paul KouroupasAT&T’s announcement that it will stop offering its new wireless customers an all-you-can-eat Internet access option is going to be an interesting case study in the politics of Internet access. Of all the carriers, AT&T has come under probably the harshest criticism for its inability to keep up with consumer demand, resulting in dropped calls and a generally unsatisfactory wireless experience for its customers. No doubt, the iPhone is the driving force behind AT&T’s problems and the consumer outrage.
Huh? Another Interesting Turn
Wed, 04/28/2010 - 12:38 | by Paul KouroupasNews yesterday that Vodafone “has asked the EU to facilitate bilateral agreements between telecom operators and online content providers like Google” just has me scratching my head. The report goes on to say that Vodafone is asking permission to “charge online content providers variable prices, depending on the network quality they desire.” For the life of me I cannot figure this one out. If Vodafone has Google as a customer (for Internet access), then what’s preventing Vodafone from offering variable pricing for its services? If Vodafone does not have Google as a customer, then how exactly is it proposing to charge Google for “access and use of its networks?”
If a Vodafone customer goes to view a YouTube (which is owned by Google) video, on what basis will Vodafone charge Google? How exactly would Vodafone bill and collect? If, for instance, Google is a customer of Global Crossing’s (for Internet access) and a Vodafone customer goes to view a YouTube video, Global Crossing will be delivering the video to Vodafone. Is Vodafone going to tally the traffic and render a bill to Google at the end of the month? I can only imagine what Google would do with that bill, but I bet they don’t pay it.
Internet Freedoms
Mon, 04/12/2010 - 15:08 | by Paul KouroupasA report today that a group of European incumbent network operators including Telefonica, France Telecom, and Deutsche Telekom are calling on Google to start paying them for the transport of its content such as YouTube videos highlights a number of problems in the Internet “ecosystem.” First, incumbent network operators continue to have a monopoly mindset and have not figured out how to compete. Only a monopolist would look at a company like Google and demand a cut of the action rather than compete with them. We have seen this repeatedly throughout history. Every time someone figures out an innovative use of the telecom network, the network operator demands a cut (usually in the form of access charges). They talk about what a burden the service is on the network, how such usage will discourage network investment, how unfair it is to ‘free ride” the network, all the arguments that are being made today by these operators. This makes no more sense than if UPS were to tell Amazon they need a cut of Amazon’s sales. Amazon’s business model depends on the distribution network UPS has developed. Amazon’s sales have dramatically increased the volume of packages handled by UPS. UPS no doubt had to invest in more trucks, people, and back office systems to handle Amazon’s volume. Did UPS respond by demanding a cut of Amazon&
Back to Basics
Fri, 04/09/2010 - 15:46 | by Paul KouroupasLots of folks are asking how the FCC is going to advance its National Broadband Plan in the aftermath of the federal court’s ruling reminding the FCC of the limits of their authority. The answer is simple. Go back to basics. The FCC can do more to advance its National Broadband Plan by addressing fundamental issues associated with traditional telecommunications networks that are squarely within its authority – universal service reform, inter-carrier compensation reform, special access reform, and rights of way reform. The FCC’s efforts to address net neutrality and other issues associated with the Internet were problematic from the get go and would have only led to litigation, uncertainty and delay.
You would think the FCC would have learned its lesson from its implementation of the Telecommunications Act of 1996. Many of the same players that created the fiasco known as the “Local Competition Order” were involved in the production of the National Broadband Plan. With the Local Competition Order, the FCC tried to micro-manage a theoretical business model (unbundled network elements) rather than make meaningful changes to fundamental policies that were necessary for competition to flourish. As a result, the industry was mired in litigation for six years and little progress was made towards eliminating real barriers t
Now What?
Tue, 04/06/2010 - 16:43 | by Paul KouroupasIt appears the powers of the FCC are limited after all. A federal appeals court struck down the FCC’s attempt to enforce its net neutrality principles against Comcast. If you recall, Comcast was alleged to have disrupted file-sharing attempts by its customers. This caused an uproar and the FCC sanctioned Comcast on the grounds that it violated its net neutrality principles. The FCC subsequently has attempted to codify these principles (plus two more) in a rulemaking.
So with this decision, what is the FCC to do now?
Another Profile in Courage
Tue, 03/16/2010 - 12:32 | by Paul KouroupasFor all the urgency with which the FCC touts broadband, you would think that America’s economic future hangs in the balance. So it was rather curious to see in the FCC’s National Broadband Plan (“NBP”) that the FCC is going to take TEN YEARS to address the two issues that impact broadband deployment most – inter-carrier compensation and universal service reform. I single out these two issues because they are the worst example of a system of subsidization for legacy narrow-band service providers. How can carriers be expected to invest in broadband when they are either (a) paying massive subsidies to narrow-band operators or (b) receiving massive subsidies to maintain narrow-band networks?
I think the fact that the FCC is proposing a ten year transition undermines pretty much everything else in NBP and robs the FCC of any credibility on broadband. If broadband is so important to our economic future, education, energy, and general welfare, then why we are willing to wait ten years to eliminate the subsidies to narrow-band carriers? Evidently broadband is so important to our economic future, but not so important that we are going to upset the rural telephone companies who are the primary recipients of the narrow-band subsidies.
Home Appliances, Wireless, FCC, FDA and more
Thu, 03/11/2010 - 10:52 | by Adam UzelacHome Appliances, Wireless, FCC, FDA and more
Recently I was provided the opportunity to “get my geek on” in the home appliance category. As our 5+ year plan for a kitchen renovation started a couple months ago, I was tasked with finding new appliances by the boss (wife). This was a very enlightening exercise. If you have read up on technology trends over the past decade, no doubt you stumbled across an article or two regarding built-in WIFI in home appliances. It’s really only recently that this is starting to show up in the appliances peddled at your local Lowes or HomeDepot. See Samsung’s latest creation - - as an example. Not only does it have WIFI, but a picture frame. Odd or not, it’s out there, and it actually makes some sense to me.
At a recent meeting I had a “hallway” conversation opportunity with Julius Knapp, who is the current Deputy Chief of the FCC's Office of Engineering and Technology (OET) . The informal conversation started on the soon to be release Network Broadband Plan, and moved into the motivation of behind the plan. Among many other things, there is an open acknowledgement that there will be a monstrous increase in wireless devices everywhere, including homes like refrigerators. The Samsung mentioned above would be a wireless network element in the unlicensed spectrum, but we should expect there to be built-in licensed wireless chips in appliances. See Amazon’s Kindle as a prime example.
Read more and comment...
An Inconvenient Truth
Mon, 03/01/2010 - 17:22 | by Paul KouroupasThe Federal Communications Commission released a survey which found that “affordability and lack of digital skills are the main reasons why 93 million Americans - one-third of the country – are not connected to high-speed Internet at home.” The survey identifies three main barriers to broadband adoption.
· Affordability: 36 percent of non-adopters, or 28 million adults, said they do not have home broadband because the monthly fee is too expensive (15 percent), they cannot afford a computer, the installation fee is too high (10 percent), or they do not want to enter into a long-term service contract (9 percent).
Revisiting the iPhone
Tue, 02/16/2010 - 16:57 | by Paul KouroupasWay back in January 2007 when the iPhone was first introduced, I raised the following questions about what the iPhone would mean for the telecommunications industry.
- At a time when both Cingular (now AT&T) and Verizon Wireless are competing on the network (“fewest dropped calls” vs. “it’s the network”), what does the iPhone portend for the future and how is Verizon Wireless going to respond to the iPhone? Will the iPhone usher in an era where the network is irrelevant and it’s all about the handset?
- Are communications services of the future going to be defined by the customer equipment? If so, will they be exclusive, proprietary equipment like the iPhone?
- What will the role of iTunes be? In his keynote, Steve Jobs said the iPhone can be synched up with your computer through iTunes. Is iTunes going to keep a copy of the contents of everyone’s computer on iTunes? Talk about a treasure trove of information.
- How do two leading proponents of net neutrality –|Google and Yahoo!
Net Neutrality Comments in the FCC’s “Open Internet” Docket
Fri, 01/15/2010 - 10:23 | by Paul KouroupasGlobal Crossing filed its comments in the FCC’s “open Internet” docket, commonly referred to as the net neutrality docket. In our comments, we oppose the adoption of net neutrality rules on a number of grounds which are summarized below.
- The FCC’s jurisdiction is unclear and potentially boundless. This amorphous jurisdiction can only lead to more uncertainty and confusion and negatively impact investment in IP.
- There is a vibrant competitive market in the Internet ecosystem for backbone and hosting services. The FCC needs to be sure that any rules do not negatively impact that competition.
- The proposed rules, specifically the rule that prohibits carriers from charging content providers for prioritized access, undermine the FCC’s objectives with regards to the Internet. If content providers cannot pay for prioritized access, then they may not be able to offer high-capacity, high-resolution applications such as telemedicine, distance education, etc. (Some parties believe this rule will eliminate CDN providers.)
We need more Change
Fri, 11/20/2009 - 18:50 | by Paul KouroupasThe FCC recently identified what it calls “critical gaps in path to future universal broadband.” First on the list was the “federal Universal Service Fund structure.” I applaud the FCC for grasping the obvious and I hope that they are not just paying lip service to the issue. But based on the FCC’s Public Notice #19 in the Broadband Notice of Inquiry (“NOI”) the FCC is still thinking only about incremental rather than fundamental changes to the current USF program.
First, the FCC clearly wants to migrate USF support to broadband. This means it continues to believe (either as faith or as political necessity) it is necessary to maintain subsidies. Worse yet, the FCC continues to believe companies should be subsidized. (Why is it that when individuals are subsidized it is looked upon with such scorn that someone would take public handouts, but when companies are subsidized it is looked upon as “pro growth.”) Why don’t they consider direct subsidies to consumers (broadband stamps!)?
Subsidies for broadband is a tricky issue. Consider first that the nationwide penetration rate for telephony is about 95% and has remained around that for over a decade. The rate is under 100% not because of affordability or availability, but basically because 5% of the population just doesn’t want phon
Re-thinking Net Neutrality
Tue, 11/10/2009 - 22:47 | by Paul KouroupasI resisted immediate reactions to the FCC’s Notice of Proposed Rulemaking (“NPRM”) because there is enough hyperbole and misinformation on the issue already. But now that I have taken the time to digest the NPRM and reflect on it, I can calmly and dispassionately say THE FCC IS GOING TO DESTROY THE INTERNET AS WE KNOW IT!!!!
Seriously, based on what I read, the FCC fails to fully appreciate the dynamics of Internet peering and the arrangements between backbone operators, ISPs, and content providers. Instead they have this simplified view that resembles more the arrangements in the telephony world than the Internet. The FCC needs to understand that the Internet is a dynamic multi-party “ecosystem” not easily held hostage to bi-lateral dealings. If the FCC is going to proceed to enact policy based on faulty assumptions then indeed there is a risk that they are going to alter the development of the Internet in profound and unnecessary ways.
Beyond the conceptual, however, there are real practical problems with the NPRM. Two areas in particular are peculiar and should call into question the FCC’s goals. First the FCC appears to allow anyone but a facilities-based ISP to modify a consumer’s Internet experience. The FCC states that “our proposals should have broad application so that the protections we propose are widely enjoyed.” They therefore propose to define broadband Internet access services as “any communication service by wire or radio that provides broadband Internet access directly to the public, or to such classes of users as to be effectively available direc
Bold Steps or More of the Same?
Sun, 10/11/2009 - 23:58 | by Paul KouroupasThe FCC Chairman has been busy lately. First came the announcement in September about his desire to codify the FCC’s four net neutrality principles and add two more. Then on Wednesday came the FCC’s notice that it wanted to better understand the impact of “second mile” and “middle mile” services on broadband deployment. And then yesterday we find out the Commission intends to issue a notice seeking comments on “the appropriate analytical framework for examining the various issues that have been raised in the pending Special Access proceeding.”
Bold steps or more of the same? In the case of net neutrality, it certainly was bold, but not necessarily very bright and will probably result in a series of law suits unless Congress provides some air cover. In the case of the inquiry into second mile and middle mile services, it shows that the FCC is still struggling to figure out how to stimulate broadband deployment. And with the special access inquiry it shows that the FCC still doesn’t want to confront this issue and is looking to put it off for another year. All the while the FCC is ignoring the critical open dockets before it that, if decided, would rationalize the investment incentives in the telecom sector.
First Blood
Tue, 09/29/2009 - 22:24 | by Paul KouroupasThroughout the net neutrality debate I have consistently warned that carriers would use net neutrality rules to thwart their competition, making the net neutrality “cure” worse than the discrimination “disease.”
AT&T’s letter to the FCC concerning Google Voice is proof positive of that and the first shot in what looks to be a misguided war.
AT&T is essentially arguing that Google Voice violates the net neutrality principles Google advocates because Google Voice blocks calls to certain high-cost areas. It is exactly this type of assertion that can be made every time a competitor launches a new product or enhances an existing product. So far Google has only had to defend itself on their blog, but it could very well be that they will have to answer to the FCC.
