Make California broadband subsidy decisions on basis of impact, says CPUC draft

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Given that there’s limited state subsidy money available for broadband infrastructure upgrades in California, it makes sense to spend it in a way that’ll have the greatest impact on the greatest number of people. That was a major concern at the last California Public Utilities Commission meeting, when some commissioners pushed back on proposed infrastructure construction grants from the California Advanced Services Fund, at least partly because it wasn’t clear how the projects that were on the table fit within overall, statewide priorities. Or what those priorities might be.

A possible methodology for making those decisions was floated by CPUC staff, in a whitepaper published last Friday. You can read the details of how the data was crunched in the paper itself. In general terms, the analysis began by comparing the housing density of areas that lack acceptable broadband service – the CPUC’s baseline standard is 6 Mbps download and 1.5 Mbps upload speeds – and coming up with 46 Californian communities with population density greater than 150 households per square mile. That list was narrowed down by filtering out areas with problematic terrain, or that don’t meet the CASF “unserved” legal requirement, or where a fixed wireless operator is present, regardless of the standards (or lack thereof) those operators meet, or that have broadband service that meets the federal government’s lower standard of 10 Mbps down/1 Mbps up (boosting upload speeds requires a higher level of technology and greater service provider diligence than improving download speeds).

That left 13 communities that were designated as “high impact areas” and would move to head of the CASF subsidy line if this preliminary methodology is eventually adopted.

The whitepaper’s analytical approach is very similar to the one that the Central Coast Broadband Consortium used in 2014 to identify the areas in our region where broadband construction subsidies would likewise have the greatest impact. In fact, it uses our initial density-based screening criteria, with much appreciated due credit. There’s a fair debate to be had over which metrics to use and how to weave them into an analytical framework, but the basic approach is correct. With dwindling funds and dimming prospects for getting more, CPUC broadband subsidy decisions should be driven by objective data and systematic analysis.

California broadband subsidies back on the table in Sacramento

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The California Advanced Services Fund (CASF), which is California’s primary tool for subsidising new broadband infrastructure in under and unserved areas is once again in play in Sacramento. Friday was the deadline for lawmakers to introduce new legislation for the 2017 session, and four CASF-related bills are now in the hopper.

However, none of the bills are substantive at this point. All four are simply placeholders, awaiting agreement, action or obstruction from the players involved. Friday was the deadline for new bills, but once a bill has been introduced, it can be amended without limit, including replacing the text completely and substituting what amounts to a completely new bill – also known as gut and amend – almost right up to the end of the legislature’s session in August.

Assembly bill 854 was introduced by assemblywoman Cecilia Aguiar-Curry (D – Yolo County). Aguiar-Curry is new to the legislature, having formerly been mayor of Winters, where she was a strong advocate for broadband development. As written it makes a couple of meaningless edits to the law that authorises CASF. That might not be its final form, though – now that it’s drafted, it can be edited as the year goes on.

The same is true of AB 928 by assemblyman Bill Quirk (D – Hayward) and senate bill 460 by senator Ben Hueso (D – San Diego County). Both make the same small edit – changing a notional deadline from 2015 to 2020.

Last year, Hueso, who is the chair of the senate’s energy, utilities and communications committee, used a CASF-related bill to allow more time to use the money to install broadband facilities in public housing properties. Quirk also rocked up with a CASF-related bill last year, but it was an AT&T-written counter move to a bill that would have added more money to CASF and increased the opportunities for building new infrastructure. It’s likely that Quirk, who has shown no real interest in broadband development beyond what AT&T and other incumbents prefer to do, intends once again to use his bill as a bargaining chip if and when a fully fleshed out CASF bill is under serious consideration.

The final bill, AB 1655 by Eduardo Garcia (D – Riverside County), has more new text in it, and even goes so far as to create a new pot of money to fund broadband marketing efforts – adoption programs is the term used – and generally restructure the program, but it is simply a framework for discussion at this point. As written it contains no new money for CASF, which is dwindling down, and doesn’t have specifics about how the program would be run.

None of the bills are ready to be considered, but the placeholders are on the table and the backstage wrangling can begin.

4K TV sales growing, with 20% U.S. market share in sight

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About three-quarters of all large screen televisions – those more than 50 inches – that were sold last year in the U.S. (and worldwide) were 4K, ultra-high definition (UHD) sets, according to Paul Gagnon, the director of tv sets research for IHS Markit. By 2018, all but 100% of big screens sold will be 4K-capable. In raw numbers, the Consumer Technology Association – the trade association for the U.S. consumer electronics industry – estimates that more than 80 million 4K sets will be sold worldwide this year, and next year the total will be in the 100 million unit range.

Adding CTA’s numbers up, by the end of 2018, there will be something like 300 million 4K television sets in homes and business worldwide. We don’t have sales figures for 2016 yet, but in 2015 the U.S. accounted for about 20% of 4K sales. That share appears to be dropping, though. According to CTA, 4K sales in China have been accelerating and account for the largest chunk worldwide. But even if you discount the U.S. share by half – make it 10% – we’re still looking at something like an addressable universe of 30 million 4K sets.

If you make another back-of-the-envelope cut and say that about a fifth of those – 5 or 6 million – are used in commercial establishments or for industrial purposes, then the ballpark estimate is that within two years, 20% of U.S. homes will have 4K UHD sets.

That’s good news for the consumer electronics industry, which has seen falling television sales. CTA estimates that worldwide TV sales have slipped by about 20 million units since 2014 and the dollar value is dropping even faster, at more than 10% per year. A quantum jump in picture quality will be a good reason for consumers to replace HDTV sets that are still working just fine.

Artificial intelligence naturally ignores bicycles

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As someone who regularly spends several hours a week on a bicycle, wondering if the diesel rumble of a truck coming up behind me is the last sound I’ll ever hear, I was sorely disappointed to read that help, in the form of robotic vehicles, might be a long time coming.

A story by Peter Fairley on the IEEE Spectrum blog looks at the successes that self-driving car companies have had in developing software and sensors that can recognise other cars and predict their movements, and contrasts it with the failure to do the same with bicycles…

Nuno Vasconcelos, a visual computing expert at the University of California, San Diego, says bikes pose a complex detection problem because they are relatively small, fast and heterogenous. “A car is basically a big block of stuff. A bicycle has much less mass and also there can be more variation in appearance — there are more shapes and colors and people hang stuff on them”.

The autonomous vehicle technology is already starting to appear in automated emergency braking (AEB) systems, which is great for avoiding collisions with other cars, but not so helpful for cyclists

AEB systems still suffer from a severe limitation that points to the next grand challenge that [autonomous vehicle] developers are struggling with: predicting where moving objects will go. Squeezing more value from cyclist-AEB systems will be an especially tall order, says Olaf Op den Camp, a senior consultant at the Dutch Organization for Applied Scientific Research (TNO). Op den Camp, who led the design of Europe’s cyclist-AEB benchmarking test, says that it’s because cyclists movements are especially hard to predict.

[Computer scientist Jana ]Kosecka agrees: “Bicycles are much less predictable than cars because it’s easier for them to make sudden turns or jump out of nowhere.”

It’s not completely out of our hands, though. As artificial intelligence systems slowly learn to cope with bicycles, cyclists can try to see the road as a self-driving car might see it and do their best to ride predictably. At least it’s more comforting than just hoping the guy who’s about to pass you is looking at the road and not at his smart phone.

Verizon could close a big competitive gap with Charter’s fiber

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Verizon needs to build more than 100,000 new cell sites and add more fiber connectivity to close a capacity gap with its U.S. competitors, according to a report from New Street Research. And, the report concludes, buying Charter Communications – as rumors say it might – could help solve some of Verizon’s problems. It wouldn’t be much benefit to Charter, though.

The report estimates that when the number of cell sites and the amount of spectrum used is taken into consideration, Verizon has a bit more than half of the capacity per subscriber that AT&T and T-Mobile have. In order to catch up, Verizon would have to build 69,000 new macro – traditional, big – cell sites, or 138,000 or more small cell sites. New Street estimates that if small cells are properly located to reach high concentrations of subscribers, it would only take two to replace a big cell site. To fully cover the same geographic area, though, the ratio is more like ten to one.

Those sites would all need back haul, of course, which is where Charter comes in. Verizon still has some wireline assets of its own, but Charter’s footprint is much bigger and U.S. cable companies have more fiber – and more easily accessed fiber – than telcos. “Cable has much greater fiber density than their wireline competitors”, the report says. “To put this in perspective, the Cable industry has 320,000 nodes today, the vast majority of which are fed with fiber. By contrast, telecom carriers have 23,000 fiber fed central offices”.

So a cable acquisition would be an advantage for Verizon. From Charter’s perspective, the benefits aren’t clear. New Street discounts speculation that a cable-mobile merger would reduce churn, concluding that Verizon’s is a low as it can go and there’s no hard evidence that it would have much more than a marginal impact on Charter’s.

The report makes several other good points about the cable and mobile sectors, and telecoms in general, and is worth reading. New Street’s top line conclusion is that an acquisition is less likely than originally thought, and “our working hypothesis is that it will be very tough for Verizon to structure a deal that Charter will find compelling”.

The worse your broadband, the harder price hikes hit, FCC data says

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Broadband service is getting more expensive, particularly if you’re on the slow side of the digital divide. The Federal Communications Commission just published its 2017 urban benchmark rate survey, which it uses to set prices and data caps for subsidised rural service – via the Connect America Fund, for example – as well as standards for lifeline service.

In 2016 (which is the benchmark year for 2017 rates), urban customers subscribing to packages with download speeds of 10 Mbps, upload speeds of 1 Mbps per second and a data cap of 100 gigabytes per month – in other words, the slowest and lowest service – paid $76.49 per month. That’s $7.33 more than a year before, an 11% increase. Customers with the highest end service in the survey – 25 Mbps down, 5 Mbps up and no data cap – saw their bills go up only $1.52, increasing 2% to $90.76.

As the table above shows, the lower the level of service you buy, the greater the price increase you have to bear, both on an absolute and percentage basis.

One caveat: the benchmarks are based on the prices and terms that are offered by Internet service providers, and not on the average price that consumers actually pay. In other words, customers with low end packages might be – probably are – paying less on average than the benchmark price because when presented with a choice of comparable packages, the microeconomic assumption is that they’ll opt for the cheaper one.

Urban and suburban residents in California can typically – but not always – choose between service from a cable and a telephone company, for example, so they can make that choice. On the other hand, the benchmark rate, which also factors in expensive fixed wireless prices, would be the best that many rural residents might be able to get from the single, federally subsidised provider that serves their area.

Competition, and something more, drives Comcast upgrade in Huntsville

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Demand.

Chalk up another win for broadband competition. Comcast announced that it was expanding its next generation – DOCSIS 3.1 – cable modem footprint to Huntsville, Alabama, and would be offering gigabit-level service to at least some customers. Details on service locations, roll out schedule and prices were lacking, though.

What clearly isn’t lacking is a competitive threat. Huntsville’s publicly owned electric utility is in the process of building a fiber to the home network that will be operated by Google Fiber and offer gigabit service at about half the price that Comcast charges in the four cities where it’s already offering it. Those cities include Nashville and Atlanta, where Google Fiber is also deploying fiber to at least some neighborhoods, Chicago, where Google-affiliate Webpass is present, and Detroit, which has neither.

Comcast similarly responded to plans in Santa Cruz to build a municipally-backed FTTH system by upgrading its plant.

AT&T previously announced that it would be offering gigabit service in Huntsville. It, too, has reliably followed Google Fiber’s lead as it prioritises the capital investments it makes in service and infrastructure improvements.

Although Comcast and AT&T are certainly playing defence and trying to prevent competitors from gaining a foothold, there’s also something like a virtuous circle effect going on. Google is – or, at least, was – identifying communities that were favorably disposed towards ultra-fast Internet service and then pumping up enthusiasm even further. For example, according to a story by Lee Roop on Al.com, Google reps spoke at a recent meeting of Huntsville entrepreneurs. One talked up the potential for small businesses and “another Google representative said homeowners can expect a $5,000 increase in their homes’ value if they add fiber optic cable”.

The more enthusiasm and awareness, the greater the market potential for high end broadband service. Competition feeds demand which draws even more competition. That’s how Huntsville is staying on the right side of the digital divide.

No common carrier rules, but draft bill leaves room for net neutrality

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Say goodbye.

A republican-backed bill introduced in congress in 2015 might be the best clue we have regarding where broadband regulation is headed at the federal level. Shortly before the Federal Communications Commission redefined broadband as a common carrier service, and then used that authority to establish a code of conduct for Internet service providers – the network neutrality rules – senator John Thune (R – South Dakota) and representative Fred Upton (R – Michigan) circulated draft legislation aimed at short circuiting that action.

The bill didn’t go anywhere and there was no chance that president Obama would have signed it anyway. But it’s resurfaced recently as the Trump administration and the new republican majority at the FCC start peeling back the net neutrality decision. A story by Ali Breland in The Hill says that Thune is willing to move ahead with a compromise that would leave some restrictions in place.

His 2015 draft is a likely blueprint. It would keep the headline elements of net neutrality, such as requirements that Internet service providers “may not block lawful content, applications, or services” and that they “may not throttle lawful traffic by selectively slowing, speeding, degrading, or enhancing Internet traffic based on source, destination, or content” or “engage in paid prioritization”. All “subject to reasonable network management”.

But that’s about it. The bill would have also banned the FCC from treating broadband as a common carrier service or otherwise expanding its authority over the Internet.

Some in congress – in particular, Marsha Blackburn (R – Tennessee), the chair of a key house subcommittee – would prefer to wait and see what the FCC does. Even Thune’s approach, which he considers to be a compromise that’ll attract bipartisan support, might be too much for other republicans. Whether or not remnants of net neutrality rules remain, it appears increasingly certain that the classification of broadband service as a common carrier utility will not survive much longer.

Mobile carriers buy 70MHz UHF slice for $20 billion

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The auction is over and mobile broadband carriers gained 70 MHz of spectrum in the 600 MHz band, at a cost just under $20 billion. After four cycles of downward bidding by television companies willing to sell their channel assignments followed by upward bidding by wireless companies wanting to buy them, the Federal Communications Commission’s incentive auction ended on Friday.

The downward, selling price auction ended last month, with TV stations willing to accept $10 billion in return for giving up 84 MHz of UHF spectrum. After setting aside 14 MHz for unlicensed use and guard bands, the FCC opened the bidding for the remaining 70 MHz. The final buying price was $19.6 billion, just a bit less than wireless companies were willing to pay for the 80 MHz slice on offer in the third round.

The FCC produced a tidy profit of about $7 billion for the federal treasury, money that’s assumed to be going toward upgrading public safety communications networks. It’ll cost about $2 billion to “re-pack” remaining UHF television channels, in order to produce contiguous mobile broadband frequency assignments. The balance goes towards administrative overhead.

The final bid total was significantly less than hoped. Original estimates were that carriers would pay somewhere in the $30 billion to $40 billion range for 100 MHz. Broadcasters had their eyes on an even bigger payday, starting with a $86 million selling price in the first round, $57 billion in the second and $40 billion in the third – with the amount of spectrum cut each time – before collapsing to $10 billion on the fourth and final try. Carriers, on the other hand, were pretty consistent, bidding a total of $23 billion for 100 MHz initially and walking it back about a billion at a time until the end came on Friday.

The wrangling isn’t over – the next step is to figure out which exactly frequencies TV stations will surrender and which will go to the winning bidders, whose identities haven’t been released yet.

Two nuggets of broadband policy gold offered to Trump administration

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It’s in there somewhere.

So as not to throw the baby out with the bathwater (although it’s a small baby in an ocean of bathwater), it’s worth highlighting a couple of genuine wins in the last gasp “progress report” from the Obama administration’s federal broadband opportunity council.

The acknowledgement by the federal economic development agency (EDA) that broadband infrastructure is eligible for grant funding is particularly valuable, since it’s backed up with cash. EDA is now encouraging local agencies to “incorporate broadband investments (if applicable) into their regional economic development strategies along with other assets such as transportation infrastructure, energy, land use, etc.” Whether or not that beneficence will continue into Donald Trump’s reign is still an open question, but at least it’s standard operating procedure for now.

Contrast that to the USDA’s broadband funding programs, which are largely restricted to incumbents (although that includes electric utilities, under some circumstances) and mostly involve loans, which also favor current monopolists over competitive start ups.

The second small victory comes in the form of a memo from a federal environmental protection agency executive telling staff to try to be efficient when evaluating infrastructure projects. Such efficiency…

Includes allowing entities laying cable to take advantage of trenches opened for EPA-funded projects or projects under EPA oversight where feasible, appropriate, environmentally sound, and consistent with statutory, regulatory or court-ordered requirements.

I appreciate your efforts to ensure that agency employees, grantees, contractors and our state and tribal partners all understand that the EPA supports a “dig-once” approach to environmental and human-health infrastructure investments when projects can also support greater broadband access for the American public.

Yes, there’s an abundant supply of weasel words in there, but the good news is that it leans in to the Trump administration’s regulatory fast track mind set. If anything gets chopped, it’ll be the weasel words.