Today is a day that regardless of your political leanings was way overdue. It’s the day the U.S. finally joined the rest of the world in the recognition that having a national blueprint for broadband deployment is in the public interest. The release of the National Broadband Plan will spur copious amounts of digital ink and plenty of bloviating by partisans on all sides of the political spectrum. It’s a huge document and I’ll admit to the fact that I haven’t read all 376 pages. But this morning’s FCC meeting and a quick glance and we can provide some initial thoughts.

Let’s start with the positive:

• One of the best elements of this document is that finally equates broadband with more than just surfing the web. There’s an entire section on societal and economic benefits of expanding broadband access to unserved and underserved communities. This linkage also blunts the dunderheaded argument that the government is simply funding consumers’ access to games and pornography.
• Kudos also to the plan authors for promoting greater transparency and information on the issue of spectrum usage. There have some statements leading up to the release of the plan that we don’t really know how much spectrum is available. The live database the FCC will launch this week should begin to address that critical issue.
• The upgrading and continuation of the E-Rate program, which has been very successful in getting broadband to schools and libraries.
• Setting a universal floor of 4 Mbps downstream and 1 Mbps by 2020 will likely be attacked by many critics, but this is in fact a positive step forward. I’d also suggest those critics get out of the Washington to Boston corridor once in a while.

The negative:
• The plan is just that–a plan with no force whatsoever. That leaves plenty of room for reshaping to the likes of interest groups of all varieties and
• The set-top box recommendations (section 4.2) are great in theory but miss the target. Opening up STBs to competition has long been a goal of many, has been the subject of multiple rulemakings by the FCC and generally has failed. Content owners play a huge role in this world and plan does nothing to address the issue
• The funding mechanism for broadband deployments to areas already deemed uneconomic by existing providers is suspect. Blair Levin, who lead the team creating the plan (which also included a couple of former Yankee Group analysts), claimed that the plan is revenue neutral. That presumption lies on actually getting back a large chunk of spectrum for auction.

The sticking points that will most interesting to watch:
• The plan calls for making 500 MHz of spectrum available for broadband in the next 10 years. Much of this is likely to come from broadcasters, who aren’t likely to give back any spectrum voluntarily and would prefer being allow to sell it in private sales. They’re like to find friends on the left who will be concerned about such impact would have on the public interest.
• Fiber unbundling battles loom. Thought it was all said and done? Among the many recommendation are that the FCC appropriately balance copper retirement policies as part of developing a coherent and effective framework for evaluating wholesale access policies. This is a topic that Yankee Group has explored often. Unfortunately it’s not likely to be solved anywhere but in court, making the plan another Telecom Lawyer Employment Act.

In a scenario that seems destine for a made for TV movie, Motorola reportedly is contemplating a new version of its spin off plan. The Wall Street Journal reported today that instead of spinning off the Home and Networks Mobility division from its handset group, the company is looking at continuing the auction of its wireless networks lines while creating a new publicly traded entity comprised of handsets and set-top boxes.
On the face of it, the combination of set-tops and handsets seems almost nonsensical. The former exists as a cozy effective duopoly with Cisco Systems–at least in the U.S.–is largely proprietary to every cable operator’s specifications, tends to stay in place for years and is as sexy as vanilla ice cream. Handsets are squarely in the consumer electronics camp where design and looks plays major roles.
But putting set-tops and handsets in the same group absolutely makes sense when we look to the future and in particular the future of the set-top. Set-top boxes are under increased pressure to start looking and acting like CE devices. And indeed many have been writing the obituary for the old cable converter for the better part of a decade.
I don’t necessarily believe the set-top is near extinction. However, its greatest threat is in fact coming from the CE community. While one can debate the relevance of stand alone devices such as a Roku or forthcoming Boxee box, increasingly gaming consoles and Blue-Ray players are taking on the same functionality as set-tops. Additionally, connected TVs have the same potential through are not being initially positioned as such. Regardless of the product, the end result is likely to force set-top box vendors to start thinking like CE vendors.

After months of speculation, Comcast and GE finally announced the worst kept secret. Together, the two company have formed a joint venture that combines Comcast’s cable programming networks (E!, Vs., Sprout and Golf Channel among others) with the broadcasting, cable networks, movie studio, theme park, and online content businesses of NBC Universal. Online ticket selling Fandago and portal Daily Candy also were thrown in the mix.

Volumes will be written about this deal over the next 6 to 9 months as it goes through the multiple regulatory approval process. Based on the initial coverage, expect to see plenty of comparisons with AOL Time Warner, often held up as the most destructive merger since the Monetgue-Capulet union led to some untimely deaths. And plenty of arrows will be slung over the incongruity of a corporate entity that owns hybrid fiber/coax networks and The Incredible Hulk rollercoaster.
It’s too early to declare winners and losers in this deal, as Comcast Brian Roberts said this morning–on his newly acquired CNBC. From our perspective, though, there’s one part of this deal that is spot on. Consumers want media on their schedules at the location of their choice and on any device. Comcast already has the home well covered and is working on the location and device part of the equation with its Clearwire venture.
Just as important, this deal comes at a strategically critical time for all cable operators. Comcast is essentially doubling down on content assets during a transitory period when the greatest threat isn’t from traditional competitors like satellite operators but from over the top players like Google, blip.tv and Netflix as well as IPTV operators like AT&T and Verizon.
Comcast’s move to become an even more vertical player in this environment is a clear message to the world: content has been, is now, and will continue to be king for a long time.

IPTV is a perfectly awful, sophomoric joke inspiring moniker and it needs new name. If that wasn’t already clear from the fact that virtually no operator lets the acronym get within the last 100 meters of it marketing–heck you still can find VoIP as the awe inspiring label among some providers–the fact hit home during this week’s Cable-Tec Expo in Denver. Maybe it was the 16 inches or so of snow that was dumped on the area as the event was getting started, but a surprisingly large portion of this very traditional cable show was dedicated to figuring out how cable operators should migrate their video infrastructure to all-IP. This trend will be the focus of a future (shameless plug alert) Yankee Group report in part because it offers significant opportunity and potential for chaos among both operators and vendors.
But what to do about that name? Several vendors I spoke with at the show were hesitant to even verbalize what cable considers a four letter word. One VP of marketing even flat out said “everybody hates IPTV” while the acronym stood in two foot high letters as a prominent part of his booth. A handful of vendors have started pasting IPTV with somewhat chunkier sobriquets such as “broadband video” and “video over IP.”
A few suggested that the real issue is IPTV’s strong brand identified with telcos. Cable operators would prefer giving away free HBO for life to adopting something that came out of the “evil empire” as one operator called all telcos.
The reality however is that as unappetizing as it may be for vendors and operators alike, the name is likely to stick around for some time. Part of the reason is that there isn’t a significant difference between the gear that brings IPTV to cable and telcos. The path to an all-IP network it turns out leads to multiple networks that look eerily similar.

It took slightly longer than two full sessions on femto cells at 4G World, but someone finally asked the all-important question. Paraphrasing here a little but the question went something like, “I’m already paying for 22 Mbps downstream and 5 Mbps upstream. I’ve got WiFi coverage all over my house. Why do I need to buy a femto cell so that you can have better coverage?”
Behind the question lies an even more fundamental issue for any service provider exploring the idea of using femtos to fill in those last few gaps of indoor coverage. Is the femto a consumer device or an extension of the network? As a network product operated and controlled by the service provider, femtos present a challenging business model proposition in that they’re not likely to generate enough usage to justify the current costs. As a consumer product, the challenge is even more daunting given consumers’ reticence to purchase additional boxes that don’t provide a well defined benefit. That’s to say nothing of the control issue as in who controls the femto and who gets the call when there are any issues.
Among the more interesting thoughts thrown out at this week’s show was flip flopping the entire equation by not only offering femtos for free, but providing incentives such as steeply discounted or free service to users willing to install them and open them up for usage by others. In such a scenario, the femto remains a network device controlled by the service provider but gives users the perceive benefit of additional indoor coverage.
Until service providers can resolve some of these basic issues, femtos will remain more fodder for panel discussions and less products deployed in the real world.

In June, former Yankee Group analyst Josh Martin posted a blog about flying cross country to San Francisco while using Virgin America’s in-flight Wi-Fi network. I’m currently having the same experience but on American Airline en route from San Jose to Chicago.
As a general doubter of the ability of wireless technologies to replicate and replace the wireline experience, I approach this expecting significant limitations in speed and application usage. I was wrong.
So what works? Just about everything.
The first speed test somewhere over northern California shows 2.4 Mbps down; 264 kbps up. That’s comparable to a mid-tier DSL connection on the downstream side. The second test somewhere around Salt Lake City when I notice a few more laptops open comes up at 1.46 Mbps down and 286 kbps up. Still not bad.
So let’s run this puppy through its paces, making it progressively more demanding on the connection at each step.
• Launch a VPN session to access corporate e-mail? Check.
• Tweet the fact that I’m 36,000 in the air? Check. Get immediate response? Check
• Launch multiple IM sessions? Check.
• Stream music from Pandora? Check.
• Check out a few random videos on YouTube? Check, sort of. There were a few buffering delays but nothing more than I occasionally get on other Wi-Fi connections
• And finally, a Skype video call to Yankee Group’s Wally Swain in Colombia? Yes, it works save for the bad background noise and the fact that I don’t want to be “that guy making the loud phone call.” Not much I can do about that.

What doesn’t work? From an application perspective, not much. The overall experience is solid but not the most comfortable in a standard coach seat. A few more inches of forward leg room might help but that’s not likely to happen in this millennium.
As Josh Martin noted in his blog, there certainly will be some consumers/road warriors who view see seat 10A as their last refuge from connectivity but progress can’t be stopped. The ability to clear out the in-box, catch up on news and brag to other geeks about your connectedness is well worth $9.95.

The long-awaited rules around the broadband portion of the massive U.S. stimulus bill have finally been released. While a first glance at the Notice of Funds Availability (NOFA) contains no bombshells, several items pop out. Let’s take the important questions first and leave the fine details for later postings.
How much is at stake? While the whole program will dole out more than $7 billion, this current Notice of Funding Availability take into account a mere $1.6 billion of the $4 billion plus allocated to NTIA. Subsequent rounds of funding are may take on revised rules and add some requirements for applicants. The RUS is opening up its entire $2.4 billion with this notice.
Who gets the money? As expected both NTIA and RUS are allowing everyone and their brothers apply for funding. There are plenty of special considerations in both but it would be hard to say any organization including the Boy Scouts being automatically disqualified.
What qualifies as broadband? Probably the most disappointing of the multiple definitions offered up by this NOFA. Broadband under this interpretation is “advertised speeds” of at least 768 kbps down and at least 200 kbps upstream. Both NTIA and RUS missed the opportunity to push the boundaries here.
What is rural? No big surprise here with this NOFA defining rural as any area not located: within a city, town, or incorporated area with more than 20,000 inhabitants; or within an urbanized area contiguous and adjacent to a city or town that has a population of greater than 50,000 inhabitants. Sorry suburbs, you’re out of luck.

What about that “open access” requirement? You mean that big elephant in the center of the room? He’s still there. The U.S. is not moving to an open access requirement but there certain is a desire to get a little taste of it. In the notice’s “Nondiscrimination, interconnection, and choice of provider” provisions, NTIA appears to state that applicants will receive a higher consideration if they provide a plan that “would allow more than one provider to serve end users in the proposed funded service area.” It’s not really open access but it’s a half step in that direction.

Today’s decision by the U.S. Supreme Court not to take up a copyright infringement case will look like a defeat for Hollywood studios, TV networks, Major League Baseball and the National Football League. And on the surface, it is. But today’s move also has more potential impact to reshape the living room of the future than anything cooking up in the labs of every set-top box maker or TV manufacturer.

The decision lets stand two lower court rulings that will allow Cablevision to roll out remote DVR service. At the heart of the case is whether cable companies’ storage of programming on servers that they control or “in the cloud” as some are slightly misinterpreting, constitutes a violation of copyright laws. Having already lost the battle decades again over VCRs, it’s no shock the studios and leagues didn’t prevail here. That’s even without taking into account the fact that both are already doing the same via Hulu, MLB.com, NFL.com, etc. What’s “enabling consumer choice” for content owners is “copyright violation” for the distributors.

Behind the scenes it’s nearly certain that every major cable operator already is planning their own remote DVR rollout. To reiterate a prior blog from the National Cable Show: At a panel of four leading technologists–Cablevision SVP Jim Blackley, Time Warner CTO Mike LaJoie, Rogers CSO Michael Lee and Comcast CTO Tony Werner–moderator Jim Chiddix asked if Cablevision wins its Supreme Court case and is allowed to provide NPVR would other follow suit. The silence was deafening.

Just as important, the non-ruling has the potential to open up the set-top box market like no other event. Without a requirement for hard drives for in-home storage and heavy processing power, cable operators suddenly have a plethora of inexpensive IP-based STBs to choose from. Longer term, the decision by the Supreme Court not to hear the case lends some legal cover for the more aggressive and visionary operators that try to blend the traditional viewing experience with the more on-demand fare that is gaining a greater share of viewers’ time.

As ridiculous as the headline may sound coming from anyone’s mouth, it’s certainly feasible under a bill introduced yesterday by Rep. Eric Massa (D.-NY). Under his proposed Broadband Internet Fair Act, any internet provider with more than 2 million subscribers would be required to submit any usage-based billing plans for approval to the Federal Trade Commission. Apparently not content with owning auto manufacturers, Massa now would like to get the feds into the business planning process for ISPs. Perhaps they can decide what color the raised floor tiles should be in data centers next.
Massa has moved front and center in the “outrage” over plans by Time Warner to test metered bandwidth service in Rochester.
As we’ve said in previous posts and Yankee Group reports, metered bandwidth is not inherently evil and likely inevitable for most service providers. Our argument rests on the idea that operators would set very high caps that truly would only impact those top 2% consuming the most bandwidth.
This bill comes just one day after I had a conversation with John Badal, former president of Qwest New Mexico who’s moved on become CEO of Sacred Wind Communications. Sacred Wind is using WiMax to bring broadband and basic phone to 27,000 square miles of the Navajo Nation. Though just starting to launch, Sacred Wind is starting “broadband” at 128 kbps and isn’t exactly encouraging users to move to multi-Megabit service soon because middle mile costs could cripple the operator. Despite what many in the anti-cap community would like to believe, there is an operational cost to providing high speed service.
Under Massa’s bill, ISPs’ proposed billing change also would require public hearings and impose fines for those that ignore. As expected operators and their associations including the American Cable Association have cried foul, claiming it would deny those who use only a little bit of bandwidth from paying lower rates.
That’s debatable. More concerning should be the idea that any government entity should have say over a process that belongs in the business planning department.

Verizon announced today that it was spinning off more than 3 million access lines in 14 states. Those assets then will be immediately acquired by Frontier Communications. It’s a move that Yankee Group has been advocating for more than a year.

By spinning off the largely rural assets Verizon acquired from GTE nine years ago, the company is able to focus much of its wireline assets on markets where FiOS makes sense. Or at least more sense for a publicly traded company that always has a spotlight on it.

For Frontier the move is fraught with risk (just ask anyone in Maine, New Hampshire and Vermont that has lived through the Fairpoint acquisition). It also represents an extremely bold move by a traditionally conservative company in a segment of the market more buttoned down than Augusta National’s membership committee.

Having watched the slow grind that is rural U.S. telco consolidation play out over the past decade, perhaps this deal may finally be the kick start this long overdue process needs.

I’ve spent many days over the past 20 years talking to and observing executives in the rural telco market. They are virtually all highly likeable, salt-of-the-earth type people who truly care about the communities in which they live. Most serve as one-man Chambers of Commerce–and yes, they’re almost always men and Frontier having a woman CEO is a unique twist.

In segment where scale is increasingly important, vendors often dabble then flee at the thought of serving 900+ clients buying one box at a time and the federal government is about to pour a good chunk of the multi-billion broadband stimulus dollars, having fewer operators makes too much sense to ignore.