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Viodi View Newsletter - March 2nd, 2005

Local Content Workshop

FCC - Listening and Leading

By Ken Pyle, Viodi, LLC

After a day and a half of listening to some pretty dynamic speakers talk about cool new services, the latest technological advances and the outlook for telecom in 2025, a workshop with the FCC sounded pretty boring. I was wrong! The trio of Dr. Robert Pepper, Chief of the FCC Policy Bureau, Ed Thomas, Chief Engineer of the Office of Engineering and Technology and Robert Tanner, Assistant Chief of the Wireline Bureau captured the undivided attention of the approximately 40 people who attended the workshop.

What impressed me was that they are advocating more market regulation and less regulation by command and control. At the same time, they seem to be trying to find ways to create true competition, so that the market can be free to regulate price and quality. The amazing thing is that these FCC officials understand the business and the big picture so well. Ed Thomas put it best when he stressed the importance of knowing, “what business you are in.” He gave the example of the railroads not realizing the significance of inter-modal competition from airplanes and trucks and how they failed to diversify into those other modes of “transport”.

To be sure, they believe that wireless and broadband over powerline offers the opportunities to provide alternative ways to reach the house. Thomas pointed out that wireless is a fairly flat cost regardless of whether the customer is fifty feet or five miles from the base station. Much of the cost is marginal and only required when a subscriber signs up for service. This sort of architecture allows a new carrier to deploy with a very different cost structure than an incumbent.

Of course, critics would suggest that there is not perfect substitution with wireless products and that people trade-off quality or through-put for the advantages of mobility. Apparently, wireless telephony is a good enough substitute for the 3 to 7% of the population who have already disconnected from landlines. Similarly, some folks are using Wireless ISPs for high-speed Internet access as an alternative to cable modems or DSL. Again, wireless may not be a perfect substitute for all people, but it is good enough for many.

It is also easy to be somewhat jaded, as real-world experience, with things like interference, can chip away at the confidence one has in wireless solutions. Ed Thomas made a very strong argument for the increased use of “cognitive radios” (radios that change their characteristics to match their environment…e.g., maybe they move to a different frequency, use different modulation, etc. based on application or signal characteristics). Probably all of the telcos in the room have some sort of radio system installed, so the concepts Thomas and company were touting were not too foreign to the group.

I came away a believer that Broadband over PowerLine is real. This could be a real competitor, but it could also be an opportunity for independent telcos to open up new markets.

Pepper narrated a tour of wireless installations around the U.S and the world. Many of these were in locations where there had been no broadband access prior to some entrepreneur who was willing to go, where no other telco carrier would venture, and build a network. The operators included a WISP located in Grand Haven, Michigan, which faced some decent broadband competition from both the incumbent telco and cable operator.

Another operator, Roadstar Internet serves a mountainous part of Virginia. They beam their signals into clusters of homes. Apparently, their business model works when they have as few as 10 to 12 homes per base station. They now cover the entirety of Louden County and they did so without any sort of matching funds. Granted, the cost of high-speed Internet is approximately two times what one would pay for SBC Yahoo!, but mortgage payments for an equivalent house are probably half as much as the city.

The most encouraging example given by the Pepper was the one of the Indian Nations in southern California that formed their own network using wireless as the backbone and last mile access. With a corporate grant as seed money, this group boot-strapped their network and provided service where there was none. Many of their remote sites did not even have electricity. The inspiring thing is that individuals from the Indian Nations were the ones who did all of the construction, installation and maintenance. This network has been extremely helpful in improving the education system in these remote areas.

These are pretty compelling messages as to the power of wireless broadband to dramatically reduce the cost of bringing communications to rural areas. Some Lawmakers will look at these sort of messages and suggest that USF is not required to provide broadband to rural areas. Pepper and Thomas both stated that the FCC wants to hear from and understand the perspective of Independent Telcos, especially as it relates to wireless. There are some good wireless stories out there from independent telcos, so be sure to share them with the FCC, as well as the appropriate Lawmakers.

Lastly, thank you to Dr. Pepper, Mr. Thomas and Mr. Tanner for the job well done. I strongly encourage Independent Telcos to catch their next workshop!

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