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

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.

It’s not just the products themselves that are innovative, but it’s how they’re delivered and packaged as well.  Back before AT&T was broken up, consumers had difficulty attaching a device of their choice to the network; there was no incentive for efficiency or price competition because AT&T owned all the customers; and long distance calling was so expensive, people would start timers to not exceed their budget.  Now, thanks to competitive entry after the breakup and the ’96 Act, long distance charges are an afterthought, people and businesses buy their services in bundles, and users churn through telecom devices at a pace that outstrips seasonal fashion turnover.  And what we consume over broadband and the business we conduct is beyond the imagination of anyone that tried to predict what the 21^st Century would look like from their insular monopoly surroundings of the early 1990’s. 

Thankfully, times do change and hopefully we’ve left those monopoly days in the past.  What doesn’t change is the reality that competition produces innovation – regardless of industry.  In fact, comparing the last 17 years of unprecedented telecom innovations and number of new companies to the staid century that preceded it is evidence of this innovation and the benefits that flow from it.  It’s also evidence that the pro-competitive framework that was established in 1996 is worth preserving.  It seems obvious, but as we celebrate the Act’s 17^th anniversary, and take a measure of the state of the union of these United States, we must be watchful of the threats over the horizon by big telecom; one that is desirous of reassembling the monopoly it felt was wrongly ripped away.  Only now instead of a chokehold on telephone calls and long distance, it will now control broadband, video and wireless services.  In short, it would be a telecom juggernaut so massive as to dwarf the monopoly that was broken up nearly three decades ago, bringing back the bad old days of stranded innovation and lack of choice.

Ronald Reagan famously said that “Freedom is never more than one generation away from extinction,” and that “It must be fought for, protected, and handed on for them to do the same, or one day we will spend our sunset years telling our children and our children's children what it was once like in the United States where men were free.”  Truer words could not be spoken, and frankly they also apply to today’s state of the telecom industry.  We must preserve the very competition the spurs innovation today, or we may one day describe to our children an industry that once flourished and produced fruit for millions of Americans, but has fallen into stasis because the important competitive framework that led to those amazing, innovative achievements was dismantled.

-TBC Editor

Unfortunately AT&T is now trying to roll back the very policies that led to competition.  As we look to the future, while being mindful of the past, we think a few key facts about AT&T’s latest attempt to eliminate competition are in order. 

• The IP evolution has been occurring for many years – and it’s driven by competition

            The evolution of the circuit-switched public switched telephone network (“PSTN”) toward a packet-switched, Internet protocol-based network is already underway – thanks in large part to competitive innovators.  AT&T is late to the IP world, and now wants to remake the rules in its favor.

• The FCC should focus on competition rules rather than returning to monopoly policies

Since competition is driving the IP evolution, it’s clear that in order to accelerate IP adoption the Commission should focus on protecting and updating its pro-competition policies where necessary.  Protection of consumers, emergency communications, network architecture and access are matters already before the FCC in pending proceedings.  New proceedings are unnecessary  —AT&T’s proposed return to monopoly is a redundant, harmful distraction.

• The Telecommunications Act of 1996 is technology neutral

The Commission can and should address the IP evolution using the technology neutral framework established by Congress in the ’96 Act to promote continued competition through reasonable access to last mile facilities and interconnection.

• Managed IP voice interconnection is separate from the Internet

Adoption of all-IP networks does not mean a convergence where all communications traverse the public Internet.  The public Internet and managed IP communications will remain distinct for the indefinite future, primarily because of the need to ensure high quality of service for communications when the “best efforts” nature of the Internet will not do.

• Changes in technology do not alter the need for network access rules

The FCC and DOJ have recognized for decades that ensuring access to last-mile connections to businesses is necessary because most business locations are served by only one wire.  This will not change in an all IP world – only the electronics attached to the wires will change.  The FCC must therefore update its policies where necessary to ensure reasonable access to last mile business connections in an IP environment.

 -TBC Editor

This month’s fairy tale is, “we will only invest in our network if the FCC eliminates the pro-competition and consumer protection rules in the communications marketplace.” 

Of course the truth is that AT&T will continue to invest in their network, because any company that wishes to remain in business must do so.  Companies are forced to innovate and invest in their networks because of competition, not in spite of it. 

Lately, AT&T and its legion of honk-for-hire policy shills have been publishing blatant misrepresentations of both our business models and our legal filings. 

Unburdened by the need to rely on facts, a recent “Communications Liberty and and Innovation Project” creative writing exercise asserts that competitive carriers oppose the transition to IP networks because they want to continue to exploit purportedly ill-conceived government regulation.  That’s false:  we all support AT&T's belated decision to join  the all-IP world—we just don’t think that this important transition should be exploited as a means of eliminating competition and consumer protections.    

The facts are important here.  Here are some for AT&T’s consideration.  Competitive carriers have invested billions of dollars in state-of-the-art, next generation IP networks for decades, pushing the envelope on product and service delivery to the business market.  Competitors have been innovation leaders – recently adding another to their list of “firsts” by deploying the first coast-to-coast 100 Gigabit network in America and aggressively pushing the deployment of Ethernet to businesses throughout the country. AT&T is now jumping on the IP bandwagon and making much-needed investments in their wireline business because it must respond to its competitors’ innovative offerings. 

History is also important.  AT&T has a long and well-documented track record of blocking competition and engaging in unfair marketplace tactics; that’s the reason the Reagan Justice Department broke AT&T up, opening a floodgate of competition which led to innovation, lower prices, and eventually to the creation of the Internet backbone.  Absent this competition, AT&T would have delayed (likely for many years) the deployment of technologies such as Ethernet, a technology with such obvious potential to cannibalize AT&T’s existing revenues.   

Tim Wu (in his book “The Master Switch”) describes an AT&T campaign to protect its monopoly last century: “AT&T as a matter of course refused to make connections between the Bell system and the Independents, but it would go much further to protect its monopoly.  Relying on its profits in stronger markets, Bell would dramatically undercut the rates of local independent telephone companies in any contested area, a tactic known as predatory pricing. . . According to one account, Bell would rip out wires and phones, and ‘in truly medieval fashion, pile the instruments in the street and burn them, as a horrible example for the future.’” (Wu, p. 49).

AT&T must respond to the innovation competitive carriers bring to the marketplace.  It is doing so by investing in its network, but it also claims that its (rather exaggerated) investment somehow justifies eliminating rules that protect against anti-competitive and anti-consumer conduct.  We have no quibble with AT&T’s investments or its transition to IP; we are ready to compete with investments of our own.  But there is simply no basis for using AT&T’s business plan as the pretext for eliminating the rules that make competition possible and that safeguard consumers. 

We all agree that changes are necessary to get to an all-IP world—we just disagree on the role competition plays in getting us there.  AT&T would like to eliminate competition; competitive carriers would like to expand it and we believe that Members of Congress, the FCC and the Administration will rely on facts, and not the hollow protestations of AT&T's policy shills.

- TBC Editor

- Former U.S. Congressman Chip Pickering

AT&T and Verizon want to label everything as the “Internet” in order to advance their agenda of eliminating their competition.  They claim that Congress didn’t anticipate the Internet or even that technology would continue to evolve as it always has.  It follows, they assert, that the Telecommunications Act of 1996 does not apply to evolving technologies, including IP.   In other words, following to their arguments, Congress passed a law that was outdated almost the moment it was passed.  This flies in the face of logic and fact.  This nation has witnessed awesome advances in technology, innovation that was unleashed, as anticipated, with the passing of the Telecom Act and other market-opening policies.  It is true that the FCC has some outdated and misguided policies -- those that are not technology neutral need to be addressed, and competition policy does need to evolve.  We can all agree on that.  But this isn’t about the public Internet.

So, if it’s not the Internet, what is it?  Communications providers are quickly replacing older transmission protocols with “packet-mode” technology.    Packet-mode technology refers to the way information is passed along a communications network.  Again, IP is a common packet-mode “protocol” used to pass different types of communications (our email, our telephone calls, medical images between health care professionals, music downloads) from one place to another.   And while IP technology is used to pass information along the public Internet, this technology is not limited to the Internet.  This and other evolving packet-mode technologies are used to complete voice calls and transmit data on networks that never touch the public Internet. 

Although AT&T and Verizon devote a great deal of resources to confusing this issue in their political advocacy, when it comes down to actually describing their services, they are clear – some services never touch the public Internet. [1]  Many of our critical communications never touch the public Internet.  And for good reason.  Despite the enormous value provided by the Internet, it is a not a secure network.  In order to access secure cloud-based services, to ensure medical images are securely sent between health care professionals, to back up and secure financial transactions, and to exchange voice traffic, service providers deliver communications products over managed networks – not the public Internet.    

The Broadband Coalition is dedicated to ensuring businesses across the nation continue to have competitive options for their communication needs.  As the new entrants to the local business markets, we have driven innovation by deploying networks and products using today’s advanced packet-mode technologies.  We strongly support updating the nation’s communication policies to ensure a transition to packet-mode technology, including IP, for communications networks other than the public Internet.  But, these decisions need to be based on fact, not on misleading advocacy tactics designed to confuse the conversation. 

- TBC Editor

[1] “AT&T U-verse Voice service is provided over AT&T's world-class managed network and not the public Internet. Using one network to provide U-verse services enables AT&T to provide high quality service. Voice over IP ("VoIP") providers who utilize the public Internet are less able to control the traffic and ensure voice quality…. With AT&T U-verse Voice, although you can use your high speed Internet service to manage your AT&T U-verse Voice features, the voice packets do not traverse the public Internet.”

http://www.att.com/u-verse/explore/home-alarm.jsp (emphasis added).

“To understand the features and quality of FiOS Digital Voice, you first need to know that the service is not the same as the services you get with a little Internet adapter for your modem and phone, and it does not ever touch the public Internet.”

http://newscenter.verizon.com/press-releases/verizon/2010/fios-digital-voice-heres.html (emphasis added)

Just when you think the hypocrisy of the big, legacy telephone companies can’t get any worse, along comes the “The Internet Transformation Panel.”  If you believed the panel was providing the public with unbiased opinions, don’t feel bad: it was designed to create that impression.  But since this is DC, the truth is a little more complicated.  In fact, it’s pretty much the opposite.  The Internet Transformation Panel was hosted by an organization funded by the phone companies, was stacked with people paid by them and the “discussion” was a scripted reading of the giant phone companies wish list.   

Even the name is a lie.  The panel wasn’t about the Internet at all.  Instead, it was a front for phony phone company arguments designed to eliminate the competitive policies that govern such basic obligations as connecting networks to one another so everyone can talk.  This shouldn’t be surprising since the long-term Bell plan has been to avoid the cost of innovation by using government to beat their competitors rather than fighting it out in the marketplace.  It’s a shame they would rather invest in lobbyists than new technologies for their customers, but there you have it: the attitude of companies that have monopoly thinking baked deep into their bones.

So where is innovation today coming from?  Competitive technology providers.  We are the companies that drove the big, legacy telephone companies to deploy DSL and Ethernet, drove down the price for residential broadband, built the first all-IP networks to serve small and medium businesses with cutting-edge technologies, developed products that allow customers to purchase the amount of bandwidth they need for the day, the week or the month – on demand; launched—just recently—the first nationwide 100G services and began providing innovative cloud solutions to the small and medium businesses responsible for generating most of our nation’s new jobs.

There’s a pretty simple lesson in here: competition drives innovation.  Thankfully, Congress had the foresight to make sure the 1996 Act and all that came with it is technology neutral.  It doesn’t matter whether packets are traveling over copper or over fiber, and it also doesn’t matter if those packets are organized using TDM or IP technology, or some future, yet to be invented protocol.  It’s all the same to the 1996 Act and to the wires.  The FCC simply needs to continue enforcing technology-neutral policies governing last mile connectivity and interconnection.   This, in turn, will enable America’s most innovative technology providers to offer lower prices and the kind of technology breakthroughs that can truly transform business and create new jobs.  If the FCC fails to enforce the law, hundreds of thousands of American businesses will lose their service provider and lose the opportunity to be part of the next wave of technology innovation.

Don’t let the big, legacy telephone companies fool you.  Their paid consultants may be staging little community theater performances as another venue for trumpeting their tired refrain of “subsidize us and eliminate our competitors,” but that’s all they are: performances.  What they want today is the same thing they have always wanted: a world in which the rules just don’t apply to them and competition is a thing of the past.  We can’t let them get their way.  America’s job-generation engine—the small and medium businesses of the United States—are counting on us to help them reach the future by connecting them to the world with the most advanced technologies available.  We can’t let them down.

- TBC Editor

If the course of telecom “evolution” had been left on its former path for most of the 20^th Century, America could have been light years behind in technological progress instead of the global broadband pioneer we are today.  Fortunately, there were two seminal events that changed the course of history, igniting competition and unleashing the innovation that connected everyone, everywhere, all the time.  Starting in 1982, when Judge Harold Greene oversaw the break-up of the Ma Bell monopoly, the result was seven regional providers that couldn’t provide long distance (but still had a choke hold on the local market) and a long-distance provider that couldn’t offer local service.  New entrants were then able to provide an alternative long-distance service, and with competitive options for businesses and consumers we saw the beginning of the demise of high prices for long-distance calling.  Fourteen years later, Congress passed the Telecommunications Act of 1996 (“the ’96 Act”), which finally broke the local monopoly by allowing competitive access to the customer premises in exchange for local incumbent entry into the long-distance market.  This change accelerated the affordability of long distance – where today people don’t even think twice when calling across the country.  The ’96 Act also unleashed a whole new class of carrier, one that didn’t grow from the legacy monopoly tree and as a result had to win every customer through innovative offerings, more affordable products, or tailored services.    

But what does that innovation look like and how has competition helped?  Before competition was introduced into the telecom market, old Ma Bell had developed DSL as a means to transmit data at faster speeds than dial up.  Only, if they chose to sell this service to customers, it would have meant cannibalizing another, more expensive product: Integrated Services Digital Network or ISDN.  ISDN was a premium priced and very profitable service, where consumers were charged significant fees to connect an extra wire to their homes at expensive monthly charges.  After the passage of the ’96 Act, a new competitive entrant to the market, Covad, was the first carrier to deploy DSL to residential customers.  It was a huge hit.  People flocked to the new, fast and affordable broadband connection, causing incumbent telephone providers to abandon their more expensive plan requiring an additional line and were forced to offer DSL themselves.  Competition worked.  A decade later, after successfully closing off wholesale access to fiber optic lines, the Bells thought they’d have a monopoly on broadband connections to businesses.  But the competitors innovated again and worked with US-based companies to develop new technologies using the copper network and created super-charged connections.  Today over copper the copper network, we are seeing speeds up to 50 megabits per second (Mb/s).  In fact, some companies have even been providing connections at over 100 Mb/s, with engineers testing equipment that allows for connections even faster.  And once again, the Bell companies have followed and adopted this fast, affordable technology.  Simply amazing.

Broadband innovations continue to emerge in today’s competitive environment.  The most recent example is XO Communications’ launch of coast-to-coast 100 Gigabits per second (100G) backbone service in America.  XO is the first to reach this milestone coast-to-coast, and it’s the fastest broadband transport speed yet.  But this latest break-through is not being provided by one of the big, legacy telecom companies; it’s being provided by one of the upstart competitors.  These speeds will help address the growing demands driven by Internet video, higher speed Internet access, mobile wireless data, and the increasing number of Internet-connected smart devices.  It’s like water for those thirsting for faster speeds and greater capacities.  And it will spur even more innovation, and most certainly imitation.

What does this mean for the future?  Well, first it means that competition is a crucial ingredient in telecom innovation.  And based on what we’ve witnessed since the passage of the ’96 Act, we can clearly expect that competition will continue to spur positive change and consumer benefit in the telecom market.  In order for that to happen, the legal framework that ensures a competitive broadband market must be preserved.  Also, it means that policymakers should not buy the snake oil that the Bells are selling, that says only fiber can provide broadband speeds and that the copper network ought to be decommissioned.  Nor should regulators fall for the Bell argument that if the government simply subsidizes the incumbents and cuts off competition, the legacy companies will innovate in a vacuum.  History does not bear this out.  And of course such short-sighted, backward-looking policies are the exact opposite of what would benefit the US economy, and actually hurts technological innovation.  More wires, more connections, more competition is the correct telecom policy for this country, not fewer.  After all, if Ma Bell had her way in the 1990s, we’d probably still be overpaying for Internet access using an ISDN connection.

 - XO Communications