Fast Net News, DSL Prime, DOCSIS Report

At least one FCC commissioner was uncomfortable voting for the present draft and it looks like they will have to push it through without a vote. Then it goes to Congress for more changes.

It's worth losing a friend to make a last attempt to get the plan back on track. I know how hard some very good people worked on the plan  they were all in the office when I stopped by on a holiday, and answered emails late at night. The analysis of the problem is extraordinary, but the solutions are not.

The constraints they faced were too much, the power they had too little. They didn't have money, political backing for anything tough, the tool of regulation or other direct government action, or backing for antitrust. http://bit.ly/dzUClM for the constraints they faced or below. It was an honor playing a very small role.

Re-allocating 20% of the USF/ICC subsidies to helping the poor could connect the majority of those without broadband, but that's not likely.  A simple change in "special access" rules may have a huge affect on the worst served areas. The huge “Internet Tax” is a mistake if it just pays for more subsidies to the telcos at a time America is cutting schools and hospitals.  I'm told they are avoiding a vote on the plan because the Republicans are thinking the Internet tax is a campaign issue.

Skip this special report unless you're interested in D.C. wonkery. A DSL Prime is also coming: Silvio Scaglia is in jail, Henry Nicholas isn't, Australia's cutting the cost of fiber home in half, 50 meg DOCSIS upstreams will change the Internet, AT&T forecasts severe problems raising capital, and the latest claims from chipmakers on faster DSL.

The Results of the Plan
The U.S. broadband plan accomplishes very little for affordability, quality, speed, or availability of broadband in the U.S., although it has other important achievements I describe below.

In particular
The “100 megabits to 100 million homes” is right on target  for what will be achieved by 2015 without any broadband plan. (FCC/Columbia CITI November 2009). Based on cable company's official statements, I reported in August 2009 102 million homes would have 100 megabit capable DOCSIS by around 2013. http://bit.ly/c7jMuJ
Fewer than 4% of U.S. homes that can only get satellite (“unserved”) will be reached because of the plan. It's more likely only 1-2% of homes will be upgraded.
Broadband prices are more likely to increase than decrease because of the plan, especially if a multi-billion dollar Internet tax is included. There's nothing wrong with taxing the Internet like anything else, but this “fee” goes to the shareholders and bondholders of phone companies, not re-opening closed hospitals.
Only a small fraction of the poor will get substantial help according to the best information I can find. In particular, the much-touted cable A+ plan provides “back of the bus broadband” throttled to a tenth the normal speed, available to less than one in five of the poor, and actually more expensive than Verizon's recent promotion. AT&T has offered similar, but I don't know if it's included.  
Since nearly all mobile phones will include broadband in a few years and far more than 90% of families have a mobile phone, the 90% take rate in 2020 would almost certainly be achieved without the plan, probably several years earlier.

I sent the data above to Julius for factchecking. He sent back no contrary facts. http://bit.ly/9v0dRM

The constraints that held back results
The first constraint: No money
By August, Blair was saying publicly that they needed to look at existing resources, not new funding. I remember December 2008 when, the economy was in free fall. The best economists in the world weren't sure it would stop. So they created the stimulus, using essentially all the discretionary money they had for Obama's four years. So there wasn't going to be any way to get much funding in the budget. This meant that anything large, such as fibering America, wasn't on the table. The September slides mentioned a $350B fiber project that the press picked up, but the real possibilities were in the $20-$35B range, and it wasn't clear if even that was possible.

The second constraint: Weak political backing
“The FCC Chairman just does what [AT&T uber-lobbyist] Jim Cicconi tells him to,” one of the most senior D.C. officials told me in a different context. That's exaggerated, of course, but it requires political courage and strong support to challenge the power of the carriers. That hasn't changed since Obama won the election. Century-Embarq and the Time Warner spinoff with a $billion tax break breezed through, and Verizon-Frontier (with another huge tax break) is on target.

Julius has adopted a policy of relying on voluntary cooperation of the carriers to get things done rather than using the authority he has. Except for net neutrality  -- promised repeatedly in the campaign -- he hasn't been willing to make a decision they would strongly oppose. Mike Powell and Kevin Martin made the same mistake for their first three years as Chairman. Both left office bitter because of how little they achieved. High speed Internet in the U.S. is telco and cable both watching each other closely for how high they can raise prices. Verizon and AT&T have raised basic DSL rates 30% recently despite their own costs going down.

A chill went through the FCC building when Cicconi trotted out 70 Democratic Congressman to question net neutrality. AT&T has a robust network and net neutrality is a minor issue for them; if they can persuade 70 Dems (and all Republicans) to go against the public interest on that, imagine what they might do if the plan required something more significant, like lower broadband prices for more than a very few.

The third constraint: Thou shalt not
Julius doesn't know networks but he's a smart guy. He caught on early that duopoly and weak competition meant he couldn't rely on the market to get results, except possibly in wireless. Where the market doesn't work, you need to use government power to get results. That could be direct regulation or indirect influence. Companies that large are constantly coming to government for favors, from tax breaks to merger approvals. Refuse those occasionally and they have to make a deal. Almost every government except the U.S. sees the regulator as a negotiator for a better deal for consumers.

Companies are in business to make money and squeeze maximum profit where they have market power. So Julius' “voluntary cooperation” is not enough. He knows this intellectually but hasn't translated this into action. Blair Levin explains how it works in most countries http://bit.ly/ayHJFu “when a regulator says to do something, what happens is that within a very reasonable, short timeframe, those things are done.”

Genachowski made it almost impossible for the plan to accomplish very much when he pulled strong government action off the table. His WSJ comment “No one is spending time working on the broadband plan saying ‘how can we re-regulate?’” points to the problem. If he won't regulate, what are the other levers he has? The policy actually goes much further, dismissing other choices (“Use it or lose it” wireless license renewals, tough merger conditions, refusing government favors, tough audits of subsidy programs yielding fair pricing) as “really just another form of regulation.” By January, it was obvious strong action would be needed for results. I was horrified by the NTIA/DOJ statement that rejected taking any firm action or bringing antitrust into play. I said Larry Strickling should have resigned rather than signing because I saw no possibility the plan would achieve the main goals of more and better broadband. Antitrust needs to be on the table as long as there is obvious evidence of market failure. High-speed Internet in the U.S. costs twice what it does in France and Britain, pretty good evidence to an economist our competition is too weak.

By eliminating anything that even smelled like regulation or antitrust, Julius left himself without the stick he needs for results.

In private, Genachowski worries whether even duopoly will continue. Like most of us, he fears wireline telcos except Verizon FiOS don't have the capacity to compete with cable DOCSIS and the companies will fade away. Fortunately, the last year has made clear AT&T and Verizon will maintain wireline because they need the capacity to support their wireless offering. Their 70% of the country is not threatened. Beyond that, wireline only companies with large debt are generally expected to need to go through bankruptcy.  I've looked at debt maturities, and the problems are mostly 4-7 years away. For the consumer, however, early reorganization is probably best. Nobody in D.C. is saying this out loud, of course.

Bankruptcy reorganization hurts bondholders but doesn't need to be a tragedy for consumers. Fairpoint is on the way out of bankruptcy and is only a few months behind on their broadband buildout. The opex of a network once built is low and operating profits likely for decades most places.  

*** Columbia University Thursday, March 11 – Friday, March 12
Media Concentration Around the World: Empirical Studies
A remarkable event with over 40 scholars from over 20 countries. Modest cost.
http://www4.gsb.columbia.edu/citi/events/mediacon2010/reg2010 (psa)  


Expected but not yet announced
Everyone who hasn't seen the plan is still asking “What's in it.” The Wall Street Journal and Washington Post today had apparently contradictory stories despite probably getting their leaks from the same sources. Most of it is public already if a reporter digs. I've based the on public statements and non-FCC sources, not “leaks” from the FCC. Expect a few errors.

Highly likely to be included:
Microsoft and Dell will have a computer discount program probably implemented by One Economy and Connected Nation.
“Lifeline broadband” will be called help for the poor but could be corporate welfare in disguise
Discounts on service from the cablecos (A+) and probably AT&T. A+ as announced is a shallow pr exercise to prevent real price drops.
USF totally re-focused, with the recipients being pushed to convert to all IP. Free.fr, Verizon FiOS, and AT&T U-Verse are showing how for much less expensive IP networks can be compared to the PSTN. Most details not yet announced, but there's an internal push to use the broadband plan to reduce some of the obvious waste in the program.
A focused program for the last 3-5% that will include wireless. Most of the remaining “unserved” are so scattered there is no easy way to reach them except through the existing local telco or cableco.
Satellite (5 megabit, somewhat reduced latency) for the last 1% or so very expensive to reach with terrestrial broadband. $91K/home for Hawaiian politicians and Sandwich Islands illustrate how USF can be wasteful/abused, and they are trying to avoid similar. Note that serving 1% by satellite reduces the $20-35B estimates in September possibly in half. The $350B, beloved of lobbyists and uninformed reporters, never was on the table.
Some school and library program put forth in the name of broadband adoption.
Some transfer of spectrum from defense etc. to commercial, but this could be minimal
Pole attachment and other rules that are important but I don't understand
E-rate and ideally USF spending details made public on the web, including improved public bidding for e-rate contracts
Proposals on better but not complete disclosure of the details of different carrier’s broadband offerings

Good chance for inclusion:
Rule changes on spectrum use for efficiency, probably limited
Special access pricing for rural backhaul. Speaker after speaker talked of rural prices of $100-$200/megabit where competition is weak compared to $5-15 across most of the developed world. This is by far the most effective way to help rural areas without taxpayer money, so I've pressed hard for it. (Below)
ICC (InterCarrier Compensation) for companies changed with unclear details.

Should be included:
Measures taking advantage of the 10 year term of wireless licenses, the easiest way to near-universal service and more competition. Jonathan Adelstein was the first voice I heard for “use it or lose it.”
Use of antitrust with the duopoly
Some actions likely to substantially reduce prices during Obama's administration. Very, very few of the recommendations are expected to have an impact before 2015 or so.

The Basics: By 2013, 90% covered 50 meg by land, 95% 5 meg wireless
To me, that means the broadband plan should be about availability for the last 5-10% and focus on affordability for the 90%. Although the U.S. is behind some countries by most measures, the difference is small and insignificant in relation to underlying goals such as economic growth.  Soon, only 5-10% of homes won't be able to get 50 megabits and 95% will be able to get 5 meg or higher LTE wireless (capped). For 90% of the U.S., the issue is price. The U.S. charges twice as much as Britain and France for high speeds, although other comparisons are not as dramatic. Helping the poor and the remaining unserved is good policy, as is bringing down monopoly-like prices. But the “crisis” has been created by companies and groups as a justification for giving out federal money or other favors. As the CITI Columbia report to the FCC noted

“By 2013-4, broadband service providers expect to be able to serve about 95% of U.S. homes with at least a low speed of wired broadband service and they expect to offer to about 90% of homes advertised speeds of 50 mbps downstream. Wireless broadband service providers expect to offer wireless access at advertised speeds
ranging up to 12 mbps downstream (but more likely 5 mbps or less due to capacity sharing) to about 94% of the population by 2013. … a significant number of U.S. homes, perhaps five to ten million (which represent 4.5 to 9 percent of households), will have significantly inferior choices in broadband” http://bit.ly/d15BHs (summary)

Two-thirds of broadband policymakers at a recent event did not know this. The $500M/year carrier influence budget has drowned out the facts.


Definitely Included: “Lifeline” Broadband
The “lifeline broadband” in the plan could be substantial aid for the poor or just another corporate subsidy. It's not hard for any reporter to tell whether this is a program for the poor as it will be proclaimed.  Done like the current USF program, they may only reach a tenth or so.

The first question reporters should ask is how many of the 35M families without broadband will sign up because of the lifeline plan? Done right, half or more of the 20M poor who don't take broadband will have it.  The broadband planners have the most extensively researched model of demand ever created. They can do a decent estimate. Only a lazy reporter would accept “up to” or “possible” figures here.  

The second question is “Cui Bono?” Will the money go to helping the poor or plumping up company profits? That's not an easy one to answer, but every reporter in D.C. knows there's going to be some lifeline program and has had plenty of time to do the research. C'mon Amy and Cecilia  I'll happily share data and sources. If the family payment and the subsidy combined totals between $10 (Free Press request) and $20 (generous profit margins) for 3 meg DSL or 10 meg cable, it's a program for the poor.  If it's throttled to a meg or so, or the total payment is more than $20, we're in corporate welfare territory.  If the government is buying millions of lines, paying retail is ripping off the taxpayer. http://fastnetnews.com/stim/179-s/2188-save-half-on-broadband-subsidies-dont-pay-retail-for-a-million-lines If the government buys 500,000 broadband connections through the USF Lifeline program, they can and should get a “wholesale” price. The carriers would sacrifice some margin but will still be very profitable because of the volume. Broadband is a high fixed cost, low marginal cost business. That means additional customers, such as those added through a lifeline subsidy for the poor, have high margins.

Save half. Don't pay retail for a million lines.

The third question is whether the poor are being offered regular speeds or “back of the bus” broadband slower than standard a decade ago? Congressman Serrano tells me that's “absolutely unacceptable.”

Congressman Serrano Low Speed Lifeline "Absolutely Unacceptable"
"Is it acceptable that the proposed lifeline broadband program only offer low speeds," I asked Jose Serrano, pointing out the cable and AT&T sponsored plan runs at a tenth the regular speed.

"Absolutely not!" the Congressman replied. "Our students need the highest speed possible."

I fear the broadband plan will limit the poor to this kind of "back of the bus" service, because no one around the plan will say otherwise. It might be like the cable association's "Adoption Plus" or "A+." which only offers the lowest tier of service, too slow for ordinary TV quality. They've said they'd revise their proposals, but with most of the broadband plan written I haven't heard any change. http://i.ncta.com/ncta_com/PDFs/AdoptionPlus_Overview_12.02.09.pdf

10 megabit cable broadband costs the carrier $8/month at the margin. http://bit.ly/9w9PaS There's little saving cutting the speed to a meg (as cable proposes for the poor), at very most $1/month and probably pennies with current systems.  Drug dealers proverbially offer a free hit to get you addicted, and carriers know most low speed customers will crave the real thing. Verizon and AT&T offer slow service for $10/month to new customers.

In 1999, all the U.S. cable modems ran at 10 megabits. In 2010, Comcast, Cox, and Cablevision have upgraded fifty millions homes to be able to get 50 megabit DOCSIS 3.0, leapfrogging all the telcos except Verizon. It's absurd to suggest 1 megabit as the right speed in 2012. That's especially true because the cablecos have 80% margins on broadband, per Wall Street's Craig Moffett. Bandwidth isn't free, but it's remarkably cheap. The difference in cost for the carrier of 1 megabit and 10 megabit service is a few dimes. In more competitive countries, like France, everyone gets full speed.   More at http://bit.ly/a4eGXm

$150 Billion Woman with the $400 Billion Problem
Carol Mattey is in charge of ICC/USF for the broadband plan, which runs over $15B/year or $150B for the decade. She's very sharp, her colleagues tell me, but she'd need the wisdom of Solomon to equitably split this baby. If you combine the goals of the plan and the strong expectations of powerful carriers she'll need another $250B or so. While the FCC since at least 2002 having been reporting cuts are inevitable, Qwest CEO Ed Mueller just told investors he expects a big increase. A top lobbyist told me the Verizon and AT&T alone expect about $2B/year more. (It's buried in technicalities like “non-rural” exemption and “statewide cost averaging.) …

Simple, cheap way to deliver broadband to half of those without
I didn't believe it until I ran the numbers, but 20% of annual USF/ICC spending is enough to reach easily half of  the 35M or so homes - about 100M people - don't take broadband in the U.S.  Personally, I think the money is better spent on the poor, especially given that almost everyone believes 50-90% of ICC/USF is wasted except those collecting the cash.

The trick is not to over-subsidize. About $15/month provides a normal profit (? 40% EBITDA) to the carriers, because the marginal cost of broadband is generally $8/month.  That figure is from leading Wall Street analyst Craig Moffett, presumably direct from internal numbers at the big cablecos, confirmed by my own research. Telcos accustomed to huge subsidies will scream, as will their captive Congressmen, but it's the right thing to do. Each family enrolled would pay say $7/month.

Here's the numbers for 3 to 10 megabit service for most of the poor in America. The difference in bandwidth cost between "back of the bus" speeds and real service is well under $1 (large carrier).
$8: The marginal cost/month of broadband in 85+% of U.S., essentially all large carriers.
$15 A reasonable price for the government to pay when buying millions of lines for lifeline service. That provides the companies with a reasonable profit, perhaps 40% EBITDA.
$7 Customer pays (a bargain)
$8 Subsidy/month to get to the $15 total.
< $100 Subsidy per family per year
10,000 families served per million of subsidy. 10,000,000 per $B.
20-30B homes for $3B/year.
That's a lot of money to you or me, but less than 20% of the current USF/ICC total, Verizon or AT&T annual cash flow, etc. To extend this to the last 5-10% requires bringing down ripoff rural backhaul costs via special access.  

It's ridiculous to pay retail for millions of lines. We know $15 is reasonable because both Verizon and AT&T charged $15 price for basic broadband until recently and always said they were profitable.

I come to a figure of $5-12/month by adding up the cost of bandwidth, customer support, modems, and the other main inputs required to add a customer to an existing network. Moffett's $8 is about right for the large carriers serving 90% of the U.S.  Since the networks are already in place  no one is building a new network in most of the U.S.  the $8 marginal cost is the right one in this context. Higher numbers either assume a new network buildout, are the last 5% of rural homes, or simply errors. I hope Rob Curtis gets this one right, because it will inform $billions in future spending.

For the record: I've been urging this on everyone in power I can contact, many of whom are DSL Prime readers. Almost everyone at the FCC reads their own email except the Commissioners, so you too can petition them. In the spirit of the ex parte rules, when I make recommendations at the FCC I write them up like this publicly as soon as practical.  Far more, including speculation why something this obvious isn't in the plan http://bit.ly/95ddri

Expensive Rural Backhaul: 1/3rd of the problem, actually solvable
There's nothing on the agenda likely to do more for the remaining unserved than bringing down some exorbitant rural backhaul costs, so this is one to concentrate on.
Cogent, a primary Internet backbone, sells bandwidth for $4/megabit in Saint Louis; Sacramento; Sofia (Bulgaria), Tallinn (Estonia), Almansa (I don't know), Bilbao (Spain) and 130 other cities. Laramie, Wyoming, pays $110 for the same megabit. This is the second biggest rural broadband problem, the bright blue bar on the right in the FCC slide 44 in September: rural bandwidth costs, also called middle mile backhaul. Almost everywhere, there is fiber in place built years ago for the phone network. Nearly always, it has spare capacity or can inexpensively be upgraded. The high cost is because there are only one or two suppliers, and they can ask whatever they want.

The government can either spend tens of billions to duplicate the existing fiber or use the "special access" rules very narrowly only where there is proven high costs. Forget arguing the rights or wrongs of this; it's impossible to find tens of billions in the budget after the stimulus is used up. The "unserved" are only 3-6% of U.S. homes, almost all rural. The FCC is deciding on possibly ten billion dollars or more in the urban special access proceeding. The rural part is a fraction of that, especially if it is narrowly tailored only to the places where the $100 or $200 prices provide strong evidence of market failure. Apply this very narrowly, only where there is very limited competition and very high backhaul rates. Much more http://bit.ly/7qAKwg

Unproven claims about broadband
40,000 people losing their jobs at Verizon know the job impact of broadband can be negative as well as positive. Verizon has the most advanced broadband network in the Western world and is massively cutting staff. The local bookstore that dies when people order from Amazon, the newspapers dying across the country as readers shift to the web, and eventually the schools displaced if on-line education actually grows are further evidence that broadband destroys jobs as well as creates them. Honest academics find a very mixed picture that suggests the net effect is very modest at best. The only honest answer looking at the data is Professor Shane Greenstein's "We don't know the effect of broadband on the economy." (I wish it were otherwise, of course.)

Evidence-based medicine is transforming medical practice and research, undoubtedly savings lives, and I've been working to develop evidence-based policy. Washington is talking "data-driven decisionmaking but that's worthless if the data are corrupt and untested. There are claims being made in D.C. that range from unlikely to almost certainly untrue. Many originate from work paid for by the Bells then picked up and repeated by others who want to believe and won't examine the evidence.

Huge economic and job impact of more broadband
The data show otherwise, no matter how much I or advocates would like to believe this. Julius should never have said "that even modest increases in broadband adoption can yield hundreds of thousands of new jobs" based on a couple of Verizon paid studies essentially discredited by independent scholars.

The author of one he cites, Bob Crandall, has several times has pointed out in prominent D.C. events that the 2003-2005 data in his work probably does not applytoday. During that period, broadband was first reaching many homes and businesses, many of whom couldn't connect at high speeds. In 2010, 95% of the U.S. can get landline and the remainder satellite. 65% of homes are connected and nearly any business with a major economic return is likely online already. It's a good thing to help the poor, elderly, and possibly even the illiterate get connected; there's no reason to believe these additional connections will have a major impact on the economy.

The original Verizon funded claims have been strongly challenged by objective researchers. Shane Greenstein, the Elinor and H. Wendell Hobbs Professor at Northwestern told a recent NTIA hearing "We don't know the economic impact of broadband" and I know visited the FCC that day as well. Raul Katz of Columbia presented a paper in D.C. that pointed out broadband could either create or destroy jobs depending on which of several plausible assumptions one makes.

As Raul notes, "First, a "saturation" effect (i.e., when broadband adoption reaches high penetration levels nationally) might limit the economic impact of broadband. Second, ongoing research on the productivity impact of broadband indicates the potential for capital-labor substitution and consequently, the likelihood of job destruction resulting from broadband deployment. Third, since broadband tends to enable the outsourcing of jobs, a potential displacement of employment in the service sector from the area targeted for deployment might occur. Fourth, some job creation in the targeted areas could be the result of relocation of functions from other areas of the country, and therefore, should not be considered as creating incremental employment." http://www.elinoam.com/raulkatz/Dr_Raul_Katz_-_BB_Stimulus_Working_Paper.pdf

Most dramatically, the most careful study of the economic impact of broadband was presented in D.C. in January. http://bit.ly/4SoNQL Jed Kolko finds a "positive empirical relationship" between availability of broadband in the U.S. early this century and economic growth. He goes on to point out that doesn't imply "broadband expansion causes economic growth." "The reverse might actually be true," he points out, "if broadband providers choose to offer or expand service in areas that are growing faster." During that period Bellsouth emphasized a "smart build" that looked at factors like the local economy. That might be a substantial confounding variable, although Kolko looked for effects like that and sees little evidence they are the explanation.

"The overall relationship between broadband expansion and employment growth, as measured by the NETS, is positive." That's good news, and corresponds to my belief that broadband is a good thing. However, "both the average wage and the employment ratethe share of working-age adults that is employedare unaffected by broadband expansion. The economic benefits to residents appear to be limited. ... Broadband expansion is associated with no change in average pay per employee and a decrease in median household income. Broadband expansion has no statistically significant relationship with the employment rate. ... the economic development benefits of broadband are ambiguous." Jed, like I, believes broadband is a good thing and he was looking for a major economic impact. Unfortunately, the impact is not large enough to be clear from available data.

Huge benefit from electronic health records and telehealth
Legendary medical professor Jerome Groopman calls it "Obama's $80 Billion Exaggeration," and while that may be going too far the claims of $700B in savings rest on almost no evidence. Even if the returns from EHR are true, the broadband plan will do very little for their success because most medical facilities are already connected. (below).

Actual speeds are typically 50% lower than advertised
Bad Comscore data, cited by the FCC, has now been copied over the world and the refutation never seems to catch up. The 50% speed drop was higher than the results of the best survey in the world, Britain's OFCOM/SamKnows, although the U.S. has much less of a problem than the U.K. Cable is not affected by distance and is closer to promised speeds. The U.S. has twice as much cable as Britain and our advertisers are not as extreme. The same DSL line sold as "up to 8 megabits" in Britain is sold as "up to 6 megabits" in the U.S. so is more accurate.

Our Verizon DSL line is rock solid at 3 megabits down and my Time Warner cable line is consistently close to the promised ten megabits. I’ve confirmed with the actual data on major networks that except for long loop DSL lines, speeds on any decent network tend to be within 20% of advertised. Even the feared "prime time dip" is generally exaggerated. Slowdowns are more often due to the servers, not the network. http://bit.ly/9gpAje bit.ly/cYu6Uv     

Any form of "demand stimulus" or broadband promotion works except bringing down the price
Telcos learned years ago that promotion did little for broadband sales without a price break. This could be direct, in indirect in the form of a cheap computer, time payments, etc. So I looked closely at the claims that "promotion" made a difference in broadband take rates.

There is no evidence that talking up broadband - demand stimulus - has ever worked. The most cited "study" - Connect Kentucky - falls apart when you look at the data and by their own criteria was worse than useless. (Availability went from 60-95% in the period. Adjusted for availability, the adoption in Kentucky was less than the national average.) I've asked expert after expert whether they have any solid evidence this kind of thing works. Nada. I'd like to think a little training would make a difference, but I can't find proof of that either.

Most people in 2010 know what the Internet is, after all.

Education:
The planners cite data that kids with computers and broadband connections do much better in school as though the broadband connection is the primary reason the kids did well. It's far more likely that the more motivated (or less poor) kids are the ones with broadband, not that broadband is the primary cause of their success.

Decades ago, Apple CEO John Scully told me that computers would transform education and solve most of the problems of the schools. Last I looked, U.S. schools aren't doing much better despite decades of computer use. Computers, with or without broadband, are good things but not transformative. There's a good discussion on how most interventions have little effect on schoolchildren http://nyti.ms/9SU5DF

Inappropriate Claims
The broadband planners are making several claims for benefits from the plan that will not be realized because of the plan. This is disingenuous.

$513B saving from health records:
Nearly all medical facilities are already connected at a speed fast enough for electronic health records. So whatever the benefits of health records, additional broadband won't have much effect. Attributing most of the $513B claimed benefit of electronic health records to anything in the broadband plan is unsupportable. Sufficiently fast lines are in place.

Business web sites need more broadband like the plan would bring
Julius credited web site orders for doubling the volume of a small business. "So it is that Blue Valley Meats in the small town of Diller, Nebraska doubled its employees and saw 40 percent growth by setting up a Web site and selling its beef online. But only once Diller got broadband." That's a good thing, but they could have done it previously by satellite without any problems.

Nonsense. Most small business websites are hosted on servers like BlueHost, Rackspace, and GoDaddy, which cost as little as $10/month and are far more reliable than doing it yourself. There's no problem using a satellite connection - available almost everywhere - for updating the site and handling orders. Latency has little impact on creating a small business web site.

Further examples welcome.


AT&T, Verizon, Qwest: 82% of DSL “Unserved”
There's a bombshell buried on FCC broadband slide 47: three companies are responsible for the bulk of the problem. People gasped in D.C. when I said the Bells had been treating much of rural America “like the Romans treated the Sabine Women” but even I didn't realize the percentage was that high. Bell rural coverage is often 50-60%, far lower than other U.S. rural carriers or the rural coverage of any Western European telco.

Any U.S. broadband program will therefore failbadlyunless there's a strategy to reach the homes unserved in Bell territory. Working with the companies is ideal, but if they won't co-operate Larry, Jonathan, and Blair need to find an alternative. more http://bit.ly/c9gReR

A Bronx Tale: The Amazing, Unknown Free Wireless
One million New Yorkers can get free WiFi through 187 access points across Harlem, the South Bronx, and Brooklyn in the neighborhoods that need it most. If your WiFi can see smartnetnyc, urbanwifitv or smartnetnych, you should be able to register on the splash page that comes up. When I visited them Saturday, 392 users had logged in by 1:30, although until now they have had zero publicity. more http://bit.ly/5hJbaY

Great Things Possible in the Plan
Some ideas seriously discussed in D.C. I don't know what made it to the final plan.

The last 2-5%: Obama promised to bring broadband to all Americans, a good thing. There are about 5% of homes that can only get satellite, and these have been a prime focus for Stagg Newman, Rob Curtis, and Jim Stegeman. Early on, they (and the broadband stimulus people) discovered very few of them were in towns or areas of even a few hundred homes, natural for a new build of broadband. Most are 6 her, 20 there, and sometimes 3 on an island. There’s no public information about what the plan will propose. I'd guess 1% or so will be offered the new 5-10 megabit satellite service. Where cable TV but not broadband is available, that's a cheap upgrade especially if the plan solves the backhaul ripoffs (below). Wireless will play a large role, although I don't know whether they will clear the 100 MHz or more of spectrum that would be ideal in rural areas for broadband. Look for a thoughtful move, probably tied into USF funding.

Open set top boxes: Verizon has been talking about this since 2003 but done nothing, and D.C. hasn't even been thinking about it. Put a gigE connection and a decent browser on the set top, and suddenly I can watch everything over the net. Add a USB port for expansion and ideally Linux like the Sony Playstation and the possibilities are remarkable. Cable quietly has been demonstrated that the program protection can be downloaded and done in software. That's an important breakthrough, promised for many tears as part of Tru2way, etc, that should allow people to buy/build their own set top with capabilities far beyond what the company includes. Cable isn't very resistant, because customers buying their own set tops save them a great deal of capex.
"Extending outage reporting to broadband service providers:" Good for reliability and requiring reporting identifies problems and possibly persuades the companies to reduce them.

Ending the huge backhaul ripoffs.  See above or  http://fastnetnews.com/dslprime/42-d/2363-backhaul-3rd-of-the-problem-actually-solvable I don't know if this made the last draft, but it's so clearly true to the planning team it would be a bad mistake if it didn't/

"Ensure survivability of critical infrastructure." In particular, as half the population drops landlines it becomes critical that wireless continues working in emergencies. Most cell sites have severely limited batteries and no generators. CTIA, to their shame, is fighting the FCC in court to prevent sensible requirements. After Katrina, we all know how critical keeping the lines live can be.

"Require participating institutions to meet outcomes-based performance measures" Right on. This will immediately kill most of the "demand stimulus" programs because the results simply haven't been there. I wish it were otherwise, but most accomplish little.

"Address networks’ preparedness to deal with pandemics or incidents of high network stress/overload" To save what's comparatively pennies, many networks simply don't have sufficient reserve capacity. We're seeing that now as modest success selling iPhones is causing major problems for AT&T. They are exaggerated but real. At least since 2003, SBC/AT&T top tech people have been warning management they are cutting capex too far. Most years, it's actually below depreciation.
All the old time engineers are afraid the cutbacks in reliability the last decade are inviting disaster. "Commercial data networks are not ubiquitous or universally reliable during emergencies" is important.

"Creating a nationwide interoperable broadband wireless public safety network" Carlos Kirjner of the plan did the post-mortem on the communications during 9/11. The belief in New York was that lives were lost because the police and fire departments had trouble communicating. This should be a no-brainer, but hasn't happened. I pay particular attention to the word "nationwide". One of the biggest gaps in broadband coverage is the last 2-3% where there are no cell towers. Erecting towers with backhaul for public safety purposes can also provide broadband wireless for the last few %.

"Improve program efficiency" Between 40% and 90% of the money in ICC/USF is wasted or corporate welfare, depending on whose figures you believe. This has all been under a veil of secrecy at USAC, NECA, and state regulators. I believe that you could save enough to give 10 megabits to all the poor in the U.S. by cutting waste, but I can't get the solid information to be sure

Other announced features
Very little of substance on better broadband for more people, but plenty of moves in other areas, many admirable. This is here
$18B for “interoperable public safety everywhere.” If done right, the everywhere part will include erecting towers for nearly all the last 3% of homes.
A small increase in e-rate for schools and libraries. (Inflation based on CPI)
Universal service funding will not be increased. That can't be done while giving the telcos what they expect from non-rural, broadband lifeline, Fairpoint/Iowa/Puerto Rico, “middle mile RLEC funding” and other parts of the program.
Some program for spectrum resale, especially by broadcasters.
Some limits on local government right of way, etc.
A universal service goal of 3-5 megabits. (Does that include connections for the poor?)
“Universal digital literacy so that all of our kids have the tools they need to learn and compete in a
21st century economy.” 100% digital literacy would be particularly remarkable considering that our current educational system results in only 86% of Americans functionally literate by one government estimate.
E-care pilots that evaluate cost savings & clinical outcomes. Beneath the rhetoric, most telehealth and electronic medical records programs have not done well. Legendary Harvard Medical Professor Jerome Groopman is eloquent on how the claims for e-health are exaggerated. http://bit.ly/aFgpWt
Ensure patients have access to and control over their health data. Sounds great to me.
Require participating institutions to meet outcomes-based performance measures
Consider open license as option for federal investments. Good idea.
USF: Develop standards for financial data transparency
USF: Create an online RFP broadcast service to increase market information. Done right, this can dramatically save money on e-rate.
Open federal NETWORX contracts to state and local governments
Target federal funding to areas where broadband solutions are outcomes-oriented and holistic
Explore extending outage reporting to broadband service providers