Monday
Jul152013

Report shows important role competitive carriers play in telecom innovation

Competitive telecommunications providers continue to drive innovation in the broadband age. Investing in the latest technologies, these industry leaders bring faster Internet and improved voice and data services to the enterprise market all while lowering costs.

A new report by The Broadband Coalition details how competition is an essential part of the telecom industry. It leads to reduced prices, higher broadband speeds, increased investment, better customer service and continued innovation within the sector. Since the 1996 Telecom Act, competitive carriers have helped spur the marketplace further ahead, and as of 2012, made up 43% of total U.S. wireline expenditures. That’s up from less than 40% just four years earlier.

Using networks that some of the nation’s largest telcos want to dismantle, competitive carriers have moved heavily into the Ethernet space. As the report shows, business Ethernet bandwidth exceeded legacy bandwidth for the first time in 2011, and it is expected to soar ahead in the years to come. Meanwhile, 63.9% of businesses still had no access to fiber networks as of last year.

Ethernet brings high-speed Internet to businesses large and small at increasingly faster speeds and affordable rates. Competitors are at the forefront of providing 100 megabit broadband service and beyond to the enterprise market. Besides the boost this service brings to businesses, it also helps fuel the bottom lines of other segments of the industry such as equipment manufacturers.

Competitive carriers are also at the forefront of voice innovations. Using Voice-over-Internet Protocol (VoIP) technologies, competitors have been lauded for their products and services using VoIP over the existing copper network and leading the way on flat-rate VoIP service plans and online billing that have become the industry norm.

Customers benefit from the use of these competitive carriers not only through innovative technology but also through dedicated and customized support. Competitors lead the telecom industry in account support; consolidated billing and other customized reporting for customers.  Put simply, competitive providers help customers save time and money when managing their telco expenses.

This history of innovation continues as services move increasingly to the cloud. Competitive telecoms are taking the lead in developing cloud services—creating new platforms and network management services that optimize the performance of critical applications in real time. Carriers also are involved in the ongoing development of software defined networking.

All of these advancements, however, could be threatened if the FCC makes the wrong move with its network transition plans. This nation needs advanced telecom services, and ensuring robust competition should be aim of policymakers working to undergird America’s pro-competitive telecom framework.

Read the full report here.

-TBC Editor

Wednesday
Jul102013

Unbundling brings competition, innovation to enterprise marketplace

A think tank that serves as a mouthpiece for its Bell funders recently released a report that declares unbundling a policy failure in the wake of the cable and wireless competition that emerged during the first decade of the 21st century. While that view, which will be debated at a July 10 forum, may have some validity when it comes to residential service, it completely overlooks the business market.

When it comes to serving the enterprise marketplace, unbundling is far from a failure. In fact, it continues to be a necessity to ensure a truly competitive business broadband marketplace. Cable operators serve relatively few business locations with business-quality, high speed broadband, while wireless simply cannot meet the data needs of most businesses require in terms of quality of service and consistent speeds.  In instances where cable does “pass by” a commercial building, the extraordinary construction cost to run the cable into the building is often borne to the customer -- making the cable option economically unfeasible for that business.  The reality is that the vast majority of buildings are only connected by one wire – under the control of the local incumbent carrier, setting up a monopoly situation. Absent unbundling, only a few businesses would have a choice of providers.

Competitive carriers today are using these critical links to provide a whole suite of advanced services to businesses across America.  From cloud computing services and Ethernet to voice-over-Internet protocol and dynamic bandwidth offerings, the innovations that competitors have brought to market make them an appealing alternative to the legacy incumbent.

The value of having multiple carriers with access to last-mile facilities in order to offer enterprise services doesnt just end with customers. A recent report, The Benefits of a Competitive Business Broadband Market by Susan Gately, found that tweaking the rules to make them more competition-friendly could result in the creation of 650,000 new telecom sector jobs within the next five years and spur $184 billion in private investment.  Thats real economic growth that would benefit the whole country.

That won’t happen, however, if the FCC doesn’t recognize the critical role wholesale access plays in providing competitive alternatives to US businesses. This should be an important consideration as the Commission’s Technology Transitions Policy Task Force continues its deliberations on the evolution to an all-Internet Protocol world.

The true solution lies in a continuation and strengthening of pro-competition policies that have allowed American businesses a choice in network providers. Competition spurs innovation and lowers prices. The marketplace needs the FCC to maintain a technology-neutral policy that not only allows, but also encourages competition to continue to flourish. 

- TBC Editor

Friday
Jun212013

Wheeler says competition is essential to the future of telecom

At his confirmation hearing Tuesday, Tom Wheeler articulated what policy makers all claim to agree on: the importance of competition because it is a “power unto itself that must be encouraged.”

He should know. As the former chief executive officer of both the cable and wireless industry’s largest trade groups, Wheeler was involved in each sector at a time when they were both nascent technologies. He oversaw their development into industries that offered services which were ultimately adopted by the vast majority of households across the nation.

Competition in the wireline business market is in a similar position now—with the opportunity to develop a more robust competitive market place and increase the number of business customers that are able to benefit from having competitive alternatives to choose from. Competitive providers have tapped into technologies such as the cloud, Ethernet and voice-over-Internet protocol and are offering innovative services using platforms often overlooked by others. But while the road ahead ultimately holds promise, it is fraught with uncertainty.

The FCC’s Technology Transitions Policy Task Force will play a key role in helping determine what telecom policy will look like in the years to come. While the Coalition agrees the move to IP networks is essential– after all, our companies have been leading the adoption of IP technology for years – they can only continue to do so if the FCC updates its competition policies (i.e. last mile access and interconnection) for an IP environment.  It’s important for the Task Force to embrace the technology-neutral underpinnings of federal law to protect the role competition and competitors play in the business broadband marketplace.

Wheeler today called himself “an unabashed supporter of competition,” stating that the Commission is charged with “promoting and protecting competition with appropriate oversight to see that it flourishes.” The Coalition is hopeful that means competition will continue to thrive under his watch.

Innovation, faster broadband speeds, lower prices and increased investment are what U.S. businesses need to succeed.  These are all things supplied by a robust competitive telecom industry. The Coalition looks forward to Wheeler’s leadership to help the industry attain those goals.

-TBC Editor

Monday
Apr222013

Forbes Needs Facts Checked

In an article penned by Steve Forbes on April 11, 2013 and posted on Foxnews.com, Forbes posits, “Traditional copper networks are no longer applicable to the needs and benefits of today’s technologies.”  Well, we would respectfully submit that he hasn’t done his due diligence on this topic. 

Today – apparently unbeknownst to Mr. Forbes – copper connects millions of businesses in America to the advanced IP services that he so glowingly describes in his column.  That’s right, the IP revolution isn’t coming in some far-off future where America has to rewire its infrastructure, but it’s here today thanks to American ingenuity. 

But don’t take our word for it, just look at those that are using the copper to provide advanced IP-based broadband services today. In fact, today’s copper network is capable of broadband connections at up to 220 Megabits per second (Mbps), which last we checked was enough speed for the vast majority of users to consume the IP services they need.  This is thanks to innovative technology that was pioneered in America.

As one who studies markets, Mr. Forbes should understand the benefit of fully utilizing assets, and the benefits of the existing copper networks in America can be leveraged  for the foreseeable future.   That’s just the opposite of Mr. Forbes’ claim that it doesn’t make any “economic sense” to continue using this medium.  Last time we checked, increased speeds at lower costs fit right into the definition of market efficiencies that make plenty of economic sense to justify the use of copper.  And regarding his argument that it’s inefficient to use copper, well, we would invite him to visit any telecom central office today to see just how deeply ingrained copper is in our networks, and just how efficient it is to deploy broadband over copper.

Mr. Forbes likes to describe copper as yesterday’s technology, but the reality is that the telecommunications networks of America are all a combination of copper, fiber and wireless.  Just like we can read Forbes Magazine in print, online, or watch Forbes on Fox, we can consume that content on a variety of platforms.  That’s just like IP, it too is platform agnostic and its benefits can be enjoyed over multiple, differing connections.  In fact, copper, wireless and fiber probably play a significant role in our consumption of all but the printed version of Mr. Forbes’ magazine. 

And when it comes to reliability and redundancy, copper provides a myriad of additional benefits.  When disaster strikes (and we’ve seen several instances of this in recent years) wireless  is often either overwhelmed or rendered useless by a loss of power.  Copper still works in many instances as it conducts electricity.  Moreover, the readers of Forbes Magazine, or any Fortune 1000 company, realize the importance of reliability when it comes to running their businesses.  No major – or aspiring – company would trust their connectivity only to mobile wireless.  It’s indispensable as a complimentary service, but the dedicated, fast and reliable connections are what customers expect.  

To sum this up: Copper allows for blazing fast broadband speeds, it’s ubiquitous across America, it’s still in use in large quantities by virtually every telecommunications company, it facilitates competitive market entry for broadband providers and it’s a crucial ingredient in the provision of IP-based services to millions of businesses.  Before Mr. Forbes encourages the expensive removal of this vital national asset, we would encourage him to do more research get a better grasp on the construction of America’s broadband infrastructure.  The democratization of broadband has helped our country lead the world in the 21st Century economy.

-TBC Editor

Tuesday
Apr092013

New paper released by The Broadband Coalition

The Broadband Coalition released a new paper today, The Benefits of Competition in the Business Broadband Market by Susan Gately, affirming what competitive broadband providers have been saying along---that prompt adoption of pro-competitive policies by the FCC would stimulate the hiring of as many as 650,000 new employees into the ranks of the telecom sector over the next five years.  And, more importantly for the long-term economy, it would result in the investment of an additional $184-billion in private funds into US telecommunications networks.  The alternative scenario as proposed by AT&T in its proposal to sunset the public switched telephone network (PSTN) would result in the telecom sector to shed as many 300,000 (40%) of its current jobs and reduce investment by as much as $30 billion per year.  It is also noteworthy that AT&T has proposed only a minimal investment of $6 billion in its wireline network in exchange for sunsetting the PSTN and killing off competition.   So what we’re facing is either a $6 billion investment with the promise of no competition, or real competition and $184 billion dollars of investment.  That’s not much of a choice.

The Gately paper highlights the innovation benefits that competition in the market for Business Broadband Services have brought to business customers are undeniable  -  a whole host of services that America’s businesses now take for granted were introduced by competitive, not legacy, providers.  But the benefits of competition don’t stop with innovation or efficiency – they extend to job creation and investment – and this is as true in the market for Business Broadband Services as it has been in the telecommunications industry as a whole.  Ensuring that the FCC does not fall for false promises and adopts harmful changes to competitive policy is essential to fostering continued innovation and spurring additional investment and employment growth. 

The Gately paper discusses empirical historical data demonstrating that pro- competition policies by the FCC created the proper incentives for both competitors and incumbents to increase investment of private capital and to employ more workers.  During the most pro-competitive FCC (1996-2000) capital investment in the telecom sector grew at two and a half times the rate of investment growth throughout the rest of economy and employment levels increased three times as fast as the economy generally. The Benefits of a Competitive Business Broadband Market further reveals the results of modeling the potential positive changes in the levels of employment and private capital investment that can be expected from improvements in the competitive policy underpinning the Business Broadband market in 2013.  It also models the potential loss of jobs and reduction in capital investment that can be expected if the policies that allow competition to exist today are weakened – either purposely or through inaction.

The Gately paper recognizes that not all markets exhibit the same level of natural opportunities for competitive activity (a fact that historically has caused US legislators, regulators and the Justice Department to take affirmative steps in markets that otherwise would exhibit tendencies toward extreme concentration or even monopoly). Today, the market for Business Broadband Services remains the segment of the broader telecom market that retains the most persistent barriers to entry.  It is also the market sector where there is the greatest potential risk to competition if the FCC does not update its last-mile regime in a timely and pro-competitive way.  The future of the economy depends upon it.