According to New America Foundation's Open Technology Institute, affordable broadband access at high speeds is a rare combination in the United States. While noting the efforts of Google Fiber and municipal fiber projects across America, the report found that high speed broadband was more expensive and less available in U.S. cities.
U.S. Telecom, a trade association representing American broadband providers, was critical of the New America Cost of Connectivity 2013 report. The association countered a number of the conclusions reached by New America.
The New America report summed up their findings:
"The new data underscores the extent to which U.S. cities lag behind cities around the world, further emphasizing the need for policy reform. Rather than allowing American cities to fall behind, policymakers should reassess current policy approaches and implement strategies to increase competition, in turn fostering faster speeds and more affordable access."While the U.S. Telecom defense of the broadband industry notes a number of technical critiques regarding how New America formed their conclusions, the aim of the rebuttal seems to be a preemptive strike. New America's report merely reported the data collected, and an interpretation of the results, to be followed by policy recommendations. In its response, U.S. Telecom is advising restraint from governmental intervention:
"The paper nonetheless promises to follow up with policy recommendations. But, the critique below suggests that the presumption the U.S. is falling behind is a false premise and therefore does not justify more aggressive government intervention in broadband markets. . .Consumer prices standing alone are inadequate to make apples-to-apples international broadband comparisons.The New America paper does not acknowledge these variations in cost and government support."
According to Leichtman Research Group the first quarter of 2013 yielded 1.1 million new broadband subscribers for the largest U.S. cable and telephone providers. The LRG study noted that these same U.S. cable and telephone providers have over 82.4 million subscribers, with the top five cable companies having more than half of that total.
Fast-forward to third-quarter 2013 and we find Frontier and Windstream, two of the telephone company broadband providers struggling for subscribers in the first-quarter still experiencing a decline in customers and profit.
The three areas of focus in Winstream's new business strategy noted by Gardner include:
- Advancing Windstream's business capability
- Investing in capital and strategic opportunities such as increasing the company's fiber footprint
- Implementing accounting strategies by refinancing and paying down existing debt
Gardner summed up the company's third-quarter results: "Windstream's going to get better."
Broadband has been transforming the way consumers watch regular television programs, as well as all forms of video content. With the ability to watch shows when and where you want, and on any number of portable electronic devices, new business opportunities are created and traditional revenue models evaporate.
According to Sandvine's newest Global Internet Phenomena Report, more than 30% of all peak downstream content is generated by Netflix. The next highest application was YouTube traffic, accounting for 19% of all downstream traffic. Competitors like Hulu and Amazon Video were not even close - comprising 1.29% and 1.61% respectively.
As viewing trends continue to evolve and new players enter the streaming video market, Netflix will have to stay ahead of the curve to preserve subscribers and future revenues.
Netflix now faces competition from many different fronts. According to Netflix - its toughest competition may come from "multichannel video-programming distributors" (MVPD), such as Comcast, Time Warner Cable, satellite providers like DirectTV and Dish Network; and even wireline video providers, like Verizon Fios.
Competition from companies in the video streaming field includes Hulu Plus, Amazon Prime, and even network television studio sites such as CBS and NBC. Although traditional style video rental stores are almost obsolete, the Redbox model of low-cost video rentals from kiosks airports, grocery stores, and convenience stores -- and in some markets, Blockbuster Video also are competitors.
T-Mobile, the fourth largest U.S. mobile broadband provider, announced plans to sell 66.15 million common shares (9% of existing outstanding shares) to buy airwaves to boost wireless data capacity.
As AT&T's bid to acquire T-Mobile in 2011 demonstrated, cash is no longer king when it comes to mergers and acquisitions in the telecommunication world. The currency of choice in today's broadband market is wireless spectrum - and lots of it. With wireless spectrum being a limited commodity - the issue has become a national priority, as well as a valuable trading commodity between telecommunication companies.
In addition to T-Mobile's wireless spectrum news, a London mobile broadband provider acquired wireless spectrum from an Ofcom auction in early 2013 - setting the stage for the company to offer the highest broadband speeds available over a wireless broadband network. EE currently offers mobile wireless speeds of between 24 and 30Mbps to existing customers, and expects to reach 300 Mbps speeds for select customers this year, while preparing to offer all existing customers the same high speeds in 2014.
In 2011, AT&T sought approval to acquire T-Mobile. Although the acquisition was ultimately abandoned. the terms of the deal emphasized the importance of wireless spectrum. The center of the proposed merger was use of T-Mobile's AWS spectrum to add to AT&T's 700 Mhz licenses, which would have created a huge LTE footprint. In fact, the combined LTE footprint would be 95% of all Americans, more than 46 million more people than if AT&T did it alone.
This would place the combined AT&T/T-Mobile company in a very strategically beneficial position, as the national interoperable public safety network envisioned by the Obama administration is being implemented. With President Obama's recent support of allocating the D-Block to public safety, the merger would pay big dividends in terms of staking a claim to the national public safety network.
With rural broadband deployment being a policy priority of the federal government, the FCC has been focused on overhauling the Universal Service Fund program to bring broadband to rural areas of the country. In addition to the FCC, a series of recent announcements from rural broadband trade associations have once again highlighted the importance of broadband for rural areas.
Earlier this year, the Universal Service Fund (USF) which was designed to ensure that every American had access to affordable telephone service was debated. The FCC announced a series of sweeping changes to the $5 billion fund - which were initially widely welcomed for fighting fraud and closing loopholes.
However - after analysis of the complex compensation models for rural carrier reimbursement, opposition began to mount.
As states as forced to step in and fill any funding gaps caused by the reform measures implemented by the FCC, the agency may have to once again consider new regulations to rapidly increase broadband deployment.
Not soon after Google announced that Austin, Texas would be the Internet giant's next metropolitan region to become a Google gigabit city, AT&T said it would also deploy an ultra-high speed broadband network. However, AT&T's offer came with a simple condition - that it would receive the same concessions and terms from local officials.
Earlier this month a Google Fiber Project executive offered advice to municipalities seeking providers for gigabit networks:
The AT&T announcement was significant not for being a double gigabit city, but because the company was trying to emphasize how regulations encountered by traditional phone companies are a significant barrier to broadband deployment.
When Google announced the company's first Gigabit broadband network in Kansas City the benefits of ultra-fast Internet speeds were touted: "Over the past decade, the jump from dial-up to broadband has led to streaming online video, digital music sales, video conferencing over the web and countless other innovations that have transformed communication and commerce. We can't wait to see what new products and services will emerge as Kansas City moves from traditional broadband to ultra high-speed fiber optic connections."
I recently wrote about State efforts to expand access to broadband and spur adoption and utilization. I mentioned Governor Terry Branstad of Iowa directing a state task force to look at impediments and possible federal funding or public-private investments to significantly increase the access, adoption, and use of broadband technology for all Iowans.
I wrote about Alaska's announcement of an ambitious plan for achieving universal access to 100 Mbps broadband for Alaskans, and reported on New York State's approach to increasing deployment for residents of the Empire State (of which I am directly involved with.)
This month I write about the State of Maryland's approach to broadband deployment.
Maryland's approach - and ultimately the level of success they achieve - is particularly interesting because it involves a large "open-access" network model. This means a public entity (in this case the State of Maryland and other government partners) builds a middle-mile network for last-mile providers to use and extend to their customers. The intent of building the middle-mile network is to facilitate connections to remote areas by building a foundation for broadband providers to connect to.
In 1997 the goals of the Universal Service Fund (USF) made a lot of sense - ensure every American had access to affordable telephone service. Fifteen years later, with many Americans relying on cell phones or VOIP (Voice over Internet Protocol) to receive primary phone service, the USF was due for major overhaul. The FCC responded with sweeping changes to the $5 billion fund - which were initially widely welcomed for fighting fraud and closing loopholes.
The warm welcome quickly turned to organized opposition after analysis of the complex compensation models for rural carrier reimbursement:
In addition to private telecommunication providers, State utility regulators, and Members of Congress, the largest national rural telecommunication association, the National Telecommunications Cooperative Association (NTCA) also weighed in with a letter to President Obama.
With federal funding from the FCC's Universal Service Fund in jeopardy for many rural areas of the country, State's are now faced with either jeopardizing broadband availability for rural residents, or finding ways to fund the gap.
If opposition from NTCA wasn't enough to keep the FCC in defense mode, a federal lawsuit against the FCC in opposition to FCC USF reform has 29 petitioners listed, including state utility commissioners, telecom coops, as well as tribally owned, regional, and national telecommunication providers. U.S. Congressman Jeff Landry (R-La) also introduced a bill in the House of Representatives to dilute many of the new USF reform regulations.
Several recently released reports regarding broadband adoption and Internet-connected devices have emphasized the growing importance of smartphones and other portable devices in bridging the digital divide. The most recent Pew Broadband Adoption study highlights include the following:
- 70% of American households report a home broadband connection
- 56% of Americans own a smartphone of some kind
- Attesting to the importance of the emergence of smartphones, 10% of Americans state they do not have broadband at home, but own a smartphone
- 46% of Americans have both a home broadband connection and a smartphone
- 24% have a home broadband connection, but not a smartphone
- 20% of Americans have neither a home broadband connection nor a smartphone
According to a Leichtman Research Group (LRG) report entitled Broadband Access & Services in the Home 2013 approximately 78% of US households receive broadband service at home. The LRG report reported that 83% of households receive Internet service at home, with 55% of adults accessing the Internet on a Smartphone.
Another recently released report, entitled "Connected Devices," published by Nielson, demonstrates that connectivity at home via connected devices such as smartphones is equally as important as access in schools. The Nielson report notes: "As students across the nation return to school, broadband-backed devices are playing an increasingly important role inside the classroom and at home."
J.D. Power and Associates, a global marketing information services company, released a study measuring customer satisfaction of broadband providers across five critical factors: price, billing, packages and promotions; and customer service. Some of the most significant findings include the following:
- Overall customer satisfaction among Internet service customers is 683 on a 1,000-point scale
- Verizon Ranks Highest in Customer Satisfaction in the East, West and South Regions, while WOW! (Wide Open West) Ranks Highest in the North Central Region
- Customer satisfaction increases to 712 among customers who upgrade to premium speed package--41 points higher than among those who have not upgraded their Internet service (671).
To read more about J.D. Power's conclusions read my entire article: J.D. Power Customer Satisfaction Report on Internet Service Providers