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Summary:

Wired broadband is in trouble. And ISPs and Silicon Valley are to blame. The idea that wireless could be a real substitute for wired broadband showcases how crappy our current broadband is. We need fatter pipes, but we also need applications that take advantage of them.

Google last week said it plans to build an experimental fiber-to-the-home network that would deliver speeds of up to 1 Gbps. And this week FCC chairman Julius Genachowski outlined a goal of delivering 100 Mbps broadband to 100 million homes as part a “2020 vision” associated with the National Broadband Plan. However, amid what many perceive as good news for the wired broadband industry, the Telecommunications Industry Association and United States Telecom Association said they would not produce Supercomm, an industry trade show, due to “financial projections.” Translation: Wired broadband is in trouble. And it’s the fault of ISPs and Silicon Valley.

Despite a rollout of faster technology from some cable providers, and Verizon’s continued fiber-to-the-home buildout, the wired broadband world isn’t looking terribly exciting outside Google’s testbed project. A close inspection of the long-range FCC plan doesn’t have me overly inspired, especially as other areas of the world invest in 1 Gbps networks today.

Meanwhile, in the same time two-week period as all of this wired broadband news, the mobile industry’s largest trade show, Mobile World Congress, took place. It was chock-full of the usual mobile players as well as a who’s who of anyone in the tech scene. And issues associated with mobile broadband, from new networks to spectrum shortages (GigaOM Pro, sub req’d) and how to build applications for mobile handsets (GigaOM Pro), were all anyone could talk about.

Who Needs Wires Anyway?

Wired was tired, and mobile was basking in the glow of the spotlight and investment. But even amid the mobile lovefest, a few discordant notes were sounded. For example, Stephen Bye, VP of wireless services at Cox — a cable company that’s deploying a 3G and later a 4G wireless network — emphasized the limits of wireless broadband.

Sure, Cox has a wired network to sell, but Bye has a point when he notes the shortfalls of wireless when compared to wired broadband. Cox’s wireless  LTE tests offered speeds between 10 and 25 Mbps, which are much slower than Cox’s wired Docsis 3.0 network that can deliver 50 Mbps or more. He also mentioned the increased demands Cox has seen on its wired network and said that sending that kind of traffic over wireless networks wouldn’t work. And wireless broadband traffic is only going to rise. AT&T  already saw its double from 2008 to 2009 and doesn’t expect that rate of growth to slow, even as it uses more and more of its spectrum. And Cisco released information this month expecting mobile traffic to reach 3.6 exabytes per month — 39 times what it was in 2009.

I happen to agree with Bye, and I don’t have a network to sell, but I think the events of the last weeks  paint a pretty depressing picture of broadband in America. And we can only place some of the blame for the lackluster state of broadband on carriers. Some belongs with Silicon Valley and the tech community at large.

Wireless Isn’t The Answer.

For example, the idea that wireless broadband could be a real substitute for wired broadband showcases how crappy our current quality of broadband is. I’ve even weighed whether or not LTE or WiMAX would make a good substitute.

How could I not, when I’m stuck with residential broadband service that delivers 7 Mbps down and 400 kbps up? Wireless services are within striking range of that offering right now. It’s possible I might even get better upload speeds on some wireless networks within the year. My husband is even preparing to dump his pricey T-1 at the office in exchange for WiMAX service from Sprint.

Yes, I have limited choice on the wired side thanks to ISPs failing to invest, but why haven’t tech innovators and entrepreneurs given me something so compelling, and requiring so much bandwidth, that I wouldn’t even consider dumping my wired connection, lest I give up that killer application.

Think Big. Build Big.

So I will blame my willingness to cut the broadband cord on the ISPs’ failure to invest in their networks, but also on a failure of innovation and imagination from technology firms trying to deliver services over fat pipes. Give me something that needs 100 Mbps, so everyone knows why faster broadband is important. Much like Foursquare gets everyone stoked about location, we need an application that requires multiple megabits per second.  I understand that there’s a bit of a chicken-and-an-egg issue here, since delivering a service before too many people have fat pipes will slow adoption, but at least 55 million homes already have the infrastructure to get 100 Mbps. Build something for them.

An emphasis on building products for fat pipes will help make wired broadband exciting again. And despite the investment required by ISPs, many — especially those with mobile networks — will win. After all, as wireless speeds get faster, consumers think they should be able to do just about everything on a mobile network that they can on a wired one.

And for most of today’s applications, that’s actually true. But if we had a bigger performance divide and different applications between wired broadband and mobile broadband then consumers might have an understanding that sometimes the mobile web just can’t compete with the wired one, and that we really need both. For carriers and consumers, that could be a winning proposition.

To learn more about this topic, join GigaOM Pro on Wed., Feb. 24, for the latest Bunker Session event: The New Broadband Buildout.

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  1. Well, one application may be cloud computing. That would require a lot of bandwidth if it’s ever going to happen.

    For me, personally it’s just a pipe dream. I’m older and may not make it to 2020. My needs will never be met because those capable of providing the pipe dream, have absolutely no reason to spend a single dime that doesn’t promise a 50-100% return on their investment. So, it’s just a dream. Today’s society is built on promises not actual performance. So, go ahead and drag feet AT&T, Verizon, Hughes, etc. while you pay yourselves multi-million dollar bonuses for imaginary performance.

  2. What’s the point in getting faster service when your ISP has download caps? So that I can hit the my cap in one hour instead of 24 hours?

    1. Stacey Higginbotham Jon Smirl Monday, February 22, 2010

      Jon, that’s another post, but obviously it’s a big reason we’re against caps, especially low caps.

  3. Is this the same Stacey who has written numerous articles that the gov’t should be taking other citizens money and spending it subsidizing faster and faster networks?

    But when it is her own money – she doesn’t see the value in faster?

  4. Bryan Coe – Blackbird e-Solutions Sunday, February 21, 2010

    Part of the main problem as to why the US continues to be behind other countries (Asia, Europe) in both broadband and wireless is the lack of a standard. This is particularly evident in wireless. In the US each carrier has developed their own network, network standards, even devices, so that they can lock people into their network. But in the end this is counter productive because each company is competing against the other in way that slows down development over all. By using a standard for the industry, development for the overall network will be increased rather than disjointed and counter productive.
    Actually it might even get worse, and this is where I definitely blame the ISPs for hampering development. If the big carriers, Comcast, Verizon, Sprint etc. have their way they will be able to filter data. They will be able to slow down any data that is not part of their service. So, what’s the point of faster connections if the ISPs are going to slow down traffic because they think it will give them a competitive advantage. This will only create more and more islands within the internet. If I have Comcast as my ISP and Vonage as my VOIP provider. Comcast would have the ability to destroy the quality of my phone calls. Or if I Google something it takes forever for it to come up because my ISP thinks Google is making money off their network for free. Do they really think Google is not paying to connect to the internet? Am I not already paying them to use their network?
    Bottom line is if the US wants to compete with other leading countries in broadband and wireless, carriers/ISPs need to stop being counter productive and concentrate on their service instead of ways to sabotage each other.

  5. What I think we should embrace is the ‘convergence model’ which takes into account multiple levels of bandwidth, multiple deployment and data endpoints and multiple usages of the same technology.

    Getting deep, rich, scalable connectivity is key to a certain few apps and services, but it also improves infrastructure across the board. Any home or apartment with a fast line – can then attach a wireless ‘repeater’ to it – and share the bandwidth wealth.

    There are still neighborhoods without ANY bandwidth what do ever. So pushing the envelope further, while also raising the bar of our expectations – are not mutually exclusive.

    The mid-mile solutions that OneCommunity has installed in Cleveland can now be leveraged into lots and lots of full fiber 1G connections throughout the city. So instead of wiring up remote rural hamlets, we’re now bringing 1G connectivity to city dwellers.

    But that doesn’t mean they won’t use the wifi at the local Starbucks or browse the web on their iPhones.

    It’s all good.

    1. I agree. We need a wide variety of broadband connections wherever we are.

  6. Let’s go to utopia. What could we do? How about a personal search engine, which is a partial part of a large engine in the cloud. Which would take ones data and learn parallel to one how to organize ones data. It would actually work for you instead of you clicking like mad to gather some information.

    Problem is this would require some more innovation, massive parallel programing. We will get all these cores,any time soon now. But what are we going to do with them? Run a click happy browser?

    Or we all can just build and distribute our own reality shows for everyone to watch. Question is how sustainable that is in an advertising world. Or crap content is the enemy of advertising. Not that my reality show would be crap, how about an Elk walking slowly through my back yard? Or watching the snow fall, with or without the Elk herd.

    Point is it’s not only pipes which need some innovation. But companies seem to be more oriented to the Elk scenario.

    1. South Korea has “BJ”s (I think it’s for blog jockey) streaming hi-def home television stations, 7×24. Video UGC may be a killer app.

  7. Stacey — ever play World of Warcraft? Or basically any other online offering? The apps are there to take advantage of super-fast connections, but they are hobbled trying to navigate slow internet speeds without a huge loss of perceived performance.

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    p>The apps are there already – the ISPs are not.

    1. We are still living with low fidelity video and calling it high. Look at what you can buy in a Red video camera for around $10k: 4.5K WS (4480×1920) [about ten times more bandwidth]; 120 fps [four to six times more bandwidth]; 3-D [doubling bandwidth]. That strikes me as 50-100% more bandwidth than streaming an HD video now would take.

      We are suffering through images with easily identified pixels, motion artifacts, screens too small to walk through or sleep on or that force us to turn our heads to see the whole thing, and video glasses where the difference between CGI and reality is obvious.

      1. Tee Hee Hee – spoken like a true Silicon Vally guy who can walk to Pixar.

        Out here – in the real world – they wouldn’t know pixel from a pixelated. Mobile bandwidth seems fine and as long as they can get their movies on iTunes, NetFlix or Hulu – everyone is happy.

        And besides – WalMart just bought Vudu – so now we REALLY can get movies on-demand – with shitty bandwidth!

        But Phil is right – the Red Camera ROCKS! Can you send me a free one – please?

  8. BuildMoreBroadband Sunday, February 21, 2010

    What you’re describing isn’t an innovation problem. It’s an investment problem.

    Telcos are in the business to make money. They weigh every investment against its perceived returns. It’s like any other business. I might say “I think there should be 10 great restaurants in my neighborhood, within walking distance.” Great. It means nothing. If there is a market for it, supply emerges.

    Telcos (and any other broadband provider) are generally afraid of making investments today, even if they think there may be demand. They see the risk of government regulation (“net neutrality”), higher taxes and all sorts of other kinds of red tape. AT&T CEO Ed Whitacre went to become CEO of Government Motors, where he now gets paid $9 million a year, courtesy of the taxpayer. I guess that was a cushier environment.

    If you want more broadband — and we all do — let’s remove the regulations on operators otherwise seeking to build networks. Tell them there will be no “net neutrality”, no FCC mandates of any kind, and no local politburos asking for “franchise fees” and other extortionist regulations. If you stop penalizing free enterprise, you will get more of it.

    Recipe for a broadband boom:
    1. Take away the threat of “net neutrality”.
    2. Abolish the FCC.
    3. Declare that all telecom/tech is to be 100% unregulated by the Federal government.
    4. Abolish all taxes on telecom/tech.
    5. Repeat the equivalent of 1-4 above on the state/local level.

    1. So tell me, where is this Libertarian paradise working on this planet? You think Korea and Japan have less regulations than we have and that is why their BB speeds are higher than ours? I’ve lived in Japan and did business in Japan, Korea, Taiwan and China and I can tell you that that is not the case.

      My take is that the ISPs don’t see themselves in the business of being ISPs. They don’t want to be a utility like the water company. They want to somehow be content providers and sell that content over their privately owned networks. They haven’t figured that out yet and it is that lure of mega-profits that keeps them from simply doing a good job as ISPs.

    2. “If you stop penalizing free enterprise, you will get more of it.”

      Haven’t you “Don’t regulate anything, and everything will be great” guys had your shot? That neo-con notion didn’t work in our banks, and it won’t work in telecom either. Markets are good…but only when they are competitive. Oligopolies and monopolies are NOT free markets.

      Do you think telecom in the US is free enterprise? Don’t you suppose that there are significant barriers to entry that prevent a competitive market. Spectrum licensing is a regulatory limit to new wireless carriers. Local franchising rights are limitations to last mile competition. There are natural monopoly characteristics to an industry that needs to provide service to every home in the nation. A good policy would regulate such as to provide a competitive market for service over some fixed, unbundled infrastructure.

      The evidence, also, is against you. Above someone mentioned that Korea and Japan are more heavily regulated, and also get better results. I would cite Britain or France, also much more regulated, where local line unbundling has created phenomenal competition, much better services than we enjoy, at shockingly low prices from a US perspective.

      Your argument that carriers won’t invest in such an environment is proven wrong by the fact that the UK incumbent, BT, is forced to compete as a wholesaler, and as such has made some of the largest R&D and capital investments in global telecom, namely the 21 Century Network.

      I agree with you only on this: forget Net Neutrality. Let’s, instead, copy the worlds proven successful regulatory schemes and get a competitive environment where Net Neutrality is easily dealt with by the market using supply and demand. Net Neutrality isn’t even a subject worthy of discussion in a highly competitive broadband market like the UK. It exists because the market demands it.

      Your 5 point approach is just silly. Why would you propose an experiment in dubious (banking crisis) de-regulatory theology, when we could instead just copy the wildly successful models of so many other nations?

  9. Unfortunately, weak government regulation has led to a duopoly control of wired broadband almost everywhere in this country, and as a result there’s little incentive for those duopolies to invest because the money will keep rolling in no matter what. In most other western countries, governments did a much better job of creating an environment in which isps need to compete and innovate to survive. If it wasn’t for Verizon’s aggressiveness (ie. if they had taken AT&T’s approach, which many advocated, or worse, Qwest’s), our national broadband situation would be much, much worse. Still, the resulting inconsistency of broadband around the country has led to the justified reluctance of companies trying to create businesses using that broadband. Given that and the crap that Google gets for “taxing” the resources of ISPs, who in their right mind is going to invest in anything that is heavily dependent on the kind of bandwidth you are talking about? With the future of network neutrality still very much in doubt, I wouldn’t want to invest my money in anything that depended on the whims of the broadband duopoly; that’s for sure. Other than a select few games, no successful businesses have been built on true broadband in this country.

  10. I was at a startup working on Ethernet in the First Mile. It closed up shop in 2002. The choice quote from VCs: “The telcos are your only customer, and they will find a way to screw this up.” So yes, in my experience there is little to no VC investment in wired broadband. It seemed to be a general consensus amongst investors we talked to that telecommunications was not a viable market to develop new technology for.

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