Old Technology! Get your old, tired technology here.

As one third of Verizon’s landlines might go up for sale the question becomes what will this do for us?

In a move that has more than a few people shaking their head’s in stark disbelief, Verizon has announced that they are “considering” selling off roughly 1/3 of their landlines. This is apparently due to them noticing that these lines are not profitable!

Even with many of the little additional charges added on (as highlighted in this article.) Verizon announced a flat third quarter profit for this year.

So, what’s going on? The short story is that Verizon is losing landlines to the tune of 666,000 business and consumer lines in the third quarter. Let me put that in perspective for you. Verizon lost almost two thirds of a million landlines in three months! All total Verizon currently has roughly 54 million landlines so this number while disturbing isn’t really all that significant while it is still noteworthy.

Where does Verizon see the future? Interestingly enough, wireless and broadband is where they will now put their money. I find this amusing knowing that looking back ten years ago the phone companies weren’t really interested in the net. I also have to wonder how they are planning to compete with less expensive WISP technology especially when the newest generation of cell phones will attempt to locate a WiFi connection for a VoIP call before they will use the cell phone network.

The answer is that the ILECs believe fiber is going to be the choice of the future. I don’t see this as happening based on the age old question, “Where is the money?” If people are not continuing their landline service they can't get DSL because landline service is mandatory in order to get DSL, I don’t see a lot of revenue being generated there.

Even in the most lucrative markets fiber still cost a lot of money to bring to each building. Depending on how you factor it, the return on fiber is enormous as compared to wireless. The maintenance is substantially more expensive and no matter how you cost this out the customer is going to have to absorb this expense.

Once again, it appears that Ma Bell is still suffering from the same old mindset that she has forever been cursed with. Any time anyone constructs a business model there needs to be some notice to the impact the competition will have on the model. Where is the accounting for the erosion of revenue directly due to VoIP and specifically VoIP over wireless? What about the onslaught that BPL deployment will have as the utility companies start to flex their muscle? And what about WISPs? We have always been the great unknown in this equation.

I guess the real question is are we once again financing another great failure with our money? Can this plan the ILECs are now implementing succeed or will we once again be asked to bail them out with tax breaks?

I am beginning to believe that the FCC has a plan to take care of this. It’s called stimulation real competition and if I am right the long-term plan is to make sure there is more than one viable network in place to handle this country’s communications needs. If that is the case, this very well could be the ILECs final attempt to stand on their own feet and succeed.

Based on their century plus history, what chance do I give them? Not too promising. The funny thing is that an industry that was almost unknown five years ago could be the one that displaces them. Of course, you’d expect that from a wireless proponent.

A hard look at the politics behind broadband deployment.

The Consumers Union and the Consumer Federation of America recently released a report that really tears into the Bush Administration's policy concerning the Telecommunications industry and broadband deployment. I was directed to this report by an article on CNET (News.com) and I was suspicious that I was reading a politically motivated hack job. (Perhaps, I am a little suspicious of everything I read based in the partisan politics that seemingly taints everything in this election cycle.)

However, as I read the report I started to realize that there were many carefully researched insights being brought to light that seemed to ring true.

As quoted from the report,

"The policy of relying solely on the market to make communications services affordable to all Americans represents a radical shift. The deployment of the telecommunications network over the 20th century was accomplished under a policy that embraced the availability of service at prices that ensured affordable access to a basic level of service. Local connectivity was the basic launching point for network access and the costs of the network were recovered from all of the services that used it.

Under the Bush Administration, the FCC has turned this approach on its head. The basic connectivity costs for advanced services are set by commercial interests and remain extremely high, undermining the affordability of access. Add on services are relatively inexpensive and make little contribution to the costs of the network.

The claim that broadband will solve the universal service problem by delivering services like Voice over Internet Protocol (VoIP) ignores the fact that in order to get VoIP the consumer must have a broadband connection, which costs more than basic telephone service, itself. Broadband-based alternatives are two to three times as expensive as narrowband Internet service."

Okay, I have heard everything from the USF is the devil himself all the way to it is a necessary tool to make sure we ALL have decent and affordable communication services. However, as the three paragraphs above describe, what has happened in the last few years? Have all Americans seen the same quality of service deployed to them? In fact, haven't the wealthiest communities been the benefactors of these deployments while the poorer communities have been left to substandard dialup service? Doesn't this create a real problem from the standpoint that the wealthier communities can now take advantage of such services as VoIP and the poorer communities will continue to pay the more expensive rates that POTS provides?

Here's what the paper has to say about that,

"The impact of being disconnected is readily apparent. Those without the Internet at home are much less able engage in information gathering, communications and political activities than those with the Internet at home. Narrowband users engage in about 1.5 times as much of these activities and broadband users are about twice as likely to engage in these activities as those without Internet access at home. In physical space, there are only minor differences between households in these activities, suggesting that if the disconnected had access to the Internet they would engage in a similar level of activity as the connected.

To summarize: about 55 to 60 percent of the population has access at home and uses it for many purposes. Another 10 percent does not have it at home but uses it much less often for these purposes in public places. The households that can afford broadband are overwhelmingly upper-income and make much more intensive use of the Internet at home. In this sense, the needs of the Mercedes Benz class are being well-served by the current system, at the expense of the low- and moderate-income Americans who, if they have access to the Internet at home at all, have access through the much-slower, but more affordable, narrowband connection."

So, everybody pays an equal share to the Universal Service Fund but the wealthier neighborhoods get almost all of the return?

We have a lot of work to do. If this country is to keep its cutting edge reputation a solid, reliable and inexpensive communications infrastructure must be put in place for every American.

I see this as an opportunity, a business opportunity, in fact, if we choose to take this on. In order for a ubiquitous broadband deployment to occur we need to make a few changes that I believe will be good business for us all. First, the price of large upstream pipes needs to be dramatically reduced. I believe we need to mandate that DS3s need to be priced at $100/month everywhere. In exchange, we will relieve the ILECs from having to supply service to all the places that their business model doesn't make financial sense. Give us the connection - we'll take it from there. They no longer have to supply service to every last building in the US and lose money.

Will they do it?
Not in your life.

Why? Probably because, to put it simply, they can't seem to let go of their monopoly mindset. And, we as Americans are paying for their shortsightedness - and paying dearly.

This is not a problem with the political system as much as one of educational. I do not believe one party is for ubiquitous broadband deployment and the other is not. Rather, we need to explain to these people there is a far better way of answering this need.

Respectfully,

Ken DiPietro
New-ISP
NextGenCommunications

The CNET article can be found here:

The full report from the Consumers Union and the Consumer Federation of America can be found here:

The digital divide in easy to understand terms.

The digital divide is still a serious problem in this country. I know it hasn’t been in the news lately but that doesn’t mean the problem is going away. In fact, the problem has quietly been getting worse.

According to this article the problem can be clearly articulated by the following statement.

” One out of every two American households with incomes above $75,000 have high-speed Internet connections at home. One-out of every two American households with incomes below $30,000 does not have any Internet connection at home at all.”

As I sit here thinking about that statement taking into consideration the critical function the internet provides I have to wonder if this isn’t something we, as a nation, should be deeply ashamed of. Is it possible that we have created a society to become so split, so divided that the middle and upper classes can have nearly unlimited access to information along with a means to communicate while the poor cannot? How does this benefit society as a whole?

Would we allow the bottom rung of society to not have telephone or electricity?

According to this study, an estimated 1.2 million new and permanent high paying jobs would be created if the US would build out a ubiquitous next generation network!

· 166,000 jobs in the telecommunications sector;

· 71,700 manufacturing jobs generated by the direct purchase of network plant and
equipment and customer premise equipment; and

· 974,000 indirect jobs created if a next generation network were built.

Here’s the rub in my opinion. To build this network out so that every American would have some form of connectivity my guess is that this network would have a zero cost to the taxpayer! That’s a bold statement so let me back it up.

We have reached a point in the development of technology that the actual cost per household to connect it to the net is negligible. Daily Wireless credits TechNet with an estimate that it would cost $35.2 billion annually to bring fiber service to all Americans. They also claim that wireless could cost 1/10th of that total.

How does that break down in real numbers that make sense to people like you and I? Well, based on the original estimate of $35.2 billion annually divided down by 300 million Americans (plus or minus) we find out that it would cost roughly $120/year per American or $10/month! Now, if the estimates that deploying wireless are correct in assuming it would only cost 1/10th of the over all cost we are looking at a cost of $1/month per American for high speed access to be provided to everyone in this country.

So, in my three person household my family's total cost for this service and the creation of 1.2 million jobs would be $3/month? Damn, where do I send my check?

So, what’s holding this up? I can honestly say that the only two reasons I can see are regulatory roadblocks and greed.

How do we change that?

I honestly don’t know but I can say with some certainty that these two problems have been affecting mankind since the beginning of recorded history and probably before that.


Respectfully,

Ken DiPietro
New-ISP
NextGenCommunications

Another possible glimpse of the future?

I was just wondering about all the fun I could have with a 1Gbps connection for $38/month. Maybe I should ask some of the lucky residents of Tokyo who will soon be able to take advantage of just such a service according to this article.

I suppose we could add an inexpensive VoIP service, which according to this article is getting cheaper by the minute.

Or perhaps, the introduction of the very immature IPTV and streaming video will start to become mainstream as there will be plenty of bandwidth to deliver multiple channels of HDTV and DVD quality movies to the home. But even as IPTV is being talked about as a viable way of delivering video a new disruptive technique is being debated. Why wait for "them" to create something for you when in this digital age just about anyone with a decent PC can create content and now distribute is across another viable P2P network. This article tells you everything you need to know about how to create (or capture) programming while this one explains how to distribute the content you just created.

After all, we just found out that people with access to broadband spend more time with their connection than they do sitting in front of the television set channel surfing while they complain about there being nothing good on. This article explains that the line has finally been crossed where people are now understanding the potential of the net far outstrips anything the television can offer us

How about video conferencing, shared remote corporate LAN access or distance learning? Will this mean an eventual change in the way we work and educate our children? If a fair portion of the work force no longer has to commute to work and the corporation does not have to build, heat and maintain a building, will these businesses become more productive? If there is no longer a need for a centralized school and children no longer have to travel to school what is this going to do towards lessening the average tax burden for the Japanese taxpayer with regards to school taxes? I think this will also lessen the demand for imported energy thereby making the Japanese economy more competitive and efficient.

There is also this story from Daily Wireless that briefly discusses location based services like always knowing where the cheapest gas for your SUV is located relative to your location.

Perhaps, the biggest question is how long before the difference starts to become a competitive disadvantage for us and the economic dismemberment begins? What will these innovations do to the standard business models we have all gotten used to? Will anyone keep paying “The Phone Company” if substantially less expensive alternatives exist?

I don’t know but one thing I do know is that the innovations are now happening at such a rate that it is difficult to understand how these changes will impact the way we live our lives. One thing is for sure, things are changing at a substantially faster rate than they did for either our grandparents or our parents.

We will either have to adapt to these changes or be obsoleted long before our time.

Respectfully,

Ken DiPietro
New-ISP
NextGenCommunications