Saying Goodbye to Broadbandtrends & on to the New IP

After 10 successful years leading my own research firm, Broadbandtrends, its time to say goodbye as I join Heavy Reading as a Senior Analyst covering the New IP (more about this later).

I’ve been in this industry a long time – 28 years to be exact – starting out as a communications engineer with Appalachian Power (AEP) – laying and splicing fiber optic cable as well as installing microwave sites and one of the earliest x.25 packet networks in the U.S..  So, I can say that I’ve gotten my hands dirty…

And in these last 28 years I’ve seen a lot of change. Change in operators, vendors, services, and technology.  But nothing has been more trans-formative than broadband and mobility.

Most people forget that broadband didn’t really start until after the turn of this century. In fact, in 1999 there were only 3.1 million global fixed broadband subscribers.  At the end of 2014, this had grown to 712 million.

BBGrowth

For me personally, my first “broadband” connection was ISDN (128Kbps) that I got in 1997.  I paid for data by the minute and if I actually used both B channels simultaneously – it cost me twice as much.  A $400 monthly bill was not uncommon – so it’s hard for me to complain about my current $60 per month 25Mbps cable broadband connection (which I have had since 1999 – 5 years before DSL was even available in my area).

During these past 10 years at Broadbandtrends, the pace of mergers and acquisitions has accelerated, Google Fiber put every U.S. broadband operator on notice and triggered a Gigabit Broadband revolution.  Broadband Stimulus programs both in the U.S. and aboard helped to accelerate availability and growth –  while over-the-top (OTT) providers of voice and video helped to increase demand for higher speed/higher quality broadband connectivity.

These are just a few of the mergers and acquisitions that have occurred on the access side – and it is by no means comprehensive:

AccessMergers

New technologies, such as VDSL2 Vectoring and G.fast continue to breathe life into the copper plant, while mobile broadband and broadband enabled devices are forcing operators to change virtually every aspect of how they deliver services.  And this brings me to my new gig.

As the New IP analyst at Heavy Reading, I will be spending a lot of my time looking at how operators are making the transformation from communications service providers to digital service providers.  The core of this transformation is a state-of-the-art, virtualized IP network.  This New IP infrastructure will help service providers to both save money on capex  and opex, and make money by offering new content-driven services.  Here is a snapshot of what differentiates the New IP from the Old IP:

New IP

While the New IP affords some capex savings as operators virtualize portions of their network, the greatest benefits come from the operational side where real-time, end to end capabilities and process automation support reduces operating expenses.  Additionally, these characteristics combined with  Big Data analytics will drive innovation, agility, value creation and on-demand experiences that will enable new business models and drive new revenue streams.

This is an exciting time for telecommunications as we are in the midst of significant change that will change the face of telecom and telecom operators forever.  What does this mean and how does this affect you as a vendor, operator or customer?  I plan to have your answers as I take an in-depth and comprehensive approach to covering this topic.  Come check us out at Heavy Reading and the New IP.

Thank you for 10 spectacular years at Broadbandtrends!

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Ultra Broadband Copper Technologies Breathing New Life into the Copper Plant

Check out our latest post over at ADVA Optical’s Technically Speaking Blog  – we talk about the Ultra-broadband copper technologies are breathing new life into the copper plant,  to enable operators to offer faster speeds  that will support the wide range of high-bandwidth applications on the horizon, while providing operators with a time to market alternative to FTTH – often at a fraction of the cost.

Additionally, we just published the results of our 3rd Annual Global Operators survey on Ultra-Broadband Copper Deployment Strategies.

Here are some highlights:

  • 55 percent of respondents are actively deploying VDSL2 vectoring technology or are in trial and plan to deploy by the end of 2015
  • Cost remains the greatest challenge facing operators as they deploy Ultra-Broadband copper technologies
  • Although a handful of operators are currently in trial with G.fast, the bulk of deployment is expected to begin in 2017
  • The overwhelming driver for deployment of Ultra-Broadband copper technologies is to address the competitive environment.
  • Operators currently deploying VDSL2 Vectoring are highly satisfied with the performance and stability, but less satisfied with cost and ease of deployment
  • Basements and manholes are the preferred location for G.fast DPUs, but significant regional preference prevail
  • Alcatel-Lucent, Huawei, & ADTRAN Top the Ultra-Broadband Copper Vendor rankings

UltraBBCopperDriversFor this survey,  Broadbandtrends interviewed 31 service providers during February and March 2015, regarding their plans for Ultra Broadband Copper deployment.  The respondents, from all major regions, represent 42 percent of all deployed DSL lines at the end of 2014 and were either the primary decision maker or have strong influence in the planning and purchasing of Ultra-Broadband Copper solutions.

Participants provided input on a range of areas for both VDSL2 Vectoring and G.fast including timing of deployments; key drivers for ultra-broadband copper; key challenges of ultra-broadband copper; expected speed offerings; average loop lengths for deployment; average node size; % of network expected to be vector & G. fast capable; reverse powering plans; G.fast distribution point location; and perceived success of VDSL2 vectoring deployments.

For more information, please download the Executive Summary (BBT_SPSurveyUltraBroadbandCopper_151120_TOC)  and check out our handy Infographic:

UltraBBCopper

 

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Latest Global Operator Survey Provides Insight into Ultra-Broadband Copper Deployments

Broadbandtrends recently published excerpts from its 3rd Annual Global Survey of telecom operators regarding their plans for the deployment of ultra-broadband copper technologies (VDSL2 Vectoring & G.fast) – some highlights are shown in the infographic below:

UltraBBCopper

Please see the attached press release for additional information (BBT_PR_SPSurveyUltraBBCopper_APR132015)

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Special Report Discount for #FTTH2015 Attendees: Gigabit Broadband Services Deployment Operator Survey

In honor of the 2015 FTTH Conference and in celebration of Broadbandtrends’ 10th anniversary, we are offering a 25% discount off the list price to all attendees on a Global Operator Survey regarding their plans to offer Gigabit Broadband Services.

The October 2014 survey analyzes results from 88 interviews with ILEC, CLEC, Municipalities, Utilities and Alternative over-builders in all four major regions.

This survey provides insight into timing of deployments; key drivers; key challenges; technology selection; service offerings (current & future); pre-registration requirements; Gigabit Broadband availability (2014-2018); and anticipated Gigabit Broadband take rates (5 year period).  In addition, the survey features operator ratings of key FTTH vendors across multiple criteria.

Key findings of the survey include the following:

  • Technology Leadership Perception was the #1 driver and rated the highest in importance for offering Gigabit Broadband
  • The majority of operators are focusing Gigabit Broadband on Business and Institutional customers first; followed by residential
  • Cloud-based backup and support for Ultra HD (4KTV) showed the most promise for emerging services over Gigabit Broadband
  • GPON is the favored technology for residential Gigabit Broadband Deployments; while P2P Gigabit Ethernet is favored for businesses and Institutions
  • The #1 challenge for offering Gigabit Broadband Services was unclear customer demand
  • A surprising low percentage of operators are using “pre-registration” to determine build priorities
  • Operators expressed a significant amount of uncertainty in anticipated take rates for Gigabit Broadband, particularly ILECs
  • Calix is perceived as the top FTTH Vendor for Gigabit Broadband by respondents, followed by Cisco and ADTRAN

Please download the Executive Summary  & Table of Contents (BBT_SPSurveyGigabitBroadband_141280_TOC)  for more detailed information.

To purchase the report, please contact us at reports@broadbandtrends.com and mention FTTH2015 to receive your 25% discount.  This offer is good through 27 February 2015.

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Netflix’s Plans for Global Domination May Hit a Few Speed Bumps (Updated Jan 22, 2015)

In its 4Q14 Earnings Release, Netflix announced strong growth, with international subscribers growing faster than forecasted, while U.S. subscribers were in line with expectations.

At the end of 2014, Netflix supported 57.4 million streaming subscribers, with another 5.8 million DVD subscribers (U.S. only).

During 2014 (2Q14 to be exact),  Netflix announced its plans for a major European expansion that begun in September 2014 – adding Germany, France, Switzerland, Austria, Belgium and Luxembourg to its list of available countries.  At the end of  2014 – Netflix services were available in 13 Western European countries, representing 75% of total broadband subscribers within this region.  The only notable missing countries are Italy, Spain and Portugal.

In September 2104, Netflix announced plans to launch services in Australia and New Zealand in March 2015.  After this launch, Netflix services will be available to 40% of fixed broadband subscribers.

NetflixAvail2014

Netflix has been steadily increasing its reach for its service since its initial international launch in Canada in November 2010, which coincided with the launch of its stand-alone streaming package.

Netflix

 

Based on the success of the current expansion plans, Netflix now believes it can expand from 50 countries to 200 countries by the end of 2017.  Strong broadband adoption – whether fixed or mobile – combined with rapid growth in the use of smartphones, tablets and Smart TVs – all capable of streaming video – plays a key role in Netflix’s expansion strategy.

Growing the U.S. Even Further

In the U.S. market, Netflix has 39.1 million streaming customers (approximately 39% of fixed broadband subscribers) and has set a long-term goal of reaching 60 million to 90 million U.S. subscribers – giving it a penetration of greater than 80% – a lofty goal indeed.

The question is whether or not that is even possible.  Yes, it has the best brand recognition of any streaming service available, but it definitely faces some strong competition from Amazon Prime as well as services such as Comcast’s Xfinity Streampix – which will be available to a large portion of customers – at little or no charge – if Comcast and Time Warner Cable do merge.  And let us not forget the potential AT&T/DIRECTV merger – which will also likely result in offering a streaming services available to its subscribers.

While original content has definitely boosted subscriber numbers – Netflix is no longer alone in this category  – as Amazon has become very aggressive (and successful) with its own original content (and with deeper pockets than Netflix).

International Markets Have Different Challenges than U.S.

From an international perspective, Netflix supports 18.3 million subscribers and is expecting more than 100 million long term – a fairly challenging goal.  In order to hit this target – it would be essential for Netflix to launch in big markets such as China and Japan.

The biggest advantage Netflix has in the U.S. – is limited competition and strong brand recognition. However, from an international view – the challenges can vary significantly from region to region and even country to country.

Within the European continent – its biggest challenger is Amazon Prime, which is available in multiple countries.

In France – the challenge is not necessarily competition, but content rights.  In fact, Netflix has already sold the rights to its own in-house production – House of Cards – to Canal Plus. Additionally,  French regulation prohibits the online release of films until at least three years after theatrical release and as a distributor they have to help pay for film production in France to comply with national rules.

In Germany,  it faces competition from Sky Deutschland’s Snap service – a recent entry into the streaming content market as well as strong VOD content from T-Online.

In CALA,  Netflix is facing increasing competition – not only from incumbent Pay-TV operators, but also the pending AT&T/DIRECTV merger – who will bundle a broadband service together with its own streaming service to attract subscribers – not to mention offering live sports – such as FIFA World Cup – which are higher in demand than other types of content.

Expanding from 50 to 200 countries will provide its own host of challenges.  Ranging from broadband adoption/availability to whether or not it will be able to secure global content licensing for much of its content.  Additionally, it will be difficult (not to mention expensive) to provide localized content to that many different markets – something that has been key to its current strategy.

So what is Netflix’s strategy?

When I think back about my own Netflix experience – it was all about the movies and being able to see first run as soon as it was released on DVD.  However, when they introduced the streaming service – the content was substantially different.  At that time, only about 10% of my queue was available for streaming.

Today – while 1st run movies are still available (albeit in a much later release window) – much of the streaming content is focused on television series, including an increasing library of originally developed content. This original content development will play a key role in Netflix’s international growth – as they will be able to develop content that has specific appeal within each country.

Additionally, Netflix plans to place more emphasis on exclusive content – with the “intent to expand the content library meaningfully” – investing $3.2 billion globally on content, with the content selections moving toward higher-rated and exclusive titles.  However it is not expected to include any live content or sporting events at this time.

Another path Netflix is exploring is partnering with mobile operators to offer its services – as it it has done with Vodafone UK.  As of July 2014, anyone signing up or upgrading to a Vodafone Red 4G plan can opt for Netflix as their entertainment pack of choice.  The downside is that streaming Netflix will definitely count against the monthly data cap – using up most monthly data limits in record time.  In this scenario – Wi-Fi remains a much better option than most mobile data plans.  

Additionally, Netflix is working with more operators to add its Netflix app their devices. This already includes Virgin Media, BT and TalkTalk in the UK.  Deutsche Telekom in Germany, Bouygues, SFR and Orange in France; Proximus in Belgium and DISH in the U.S.

But the reality is that in order to reach that 100 million subscriber mark outside the U.S. – it will likely have to make a move into the Asia Pacific market – most notably China, Japan (where Hulu is currently available and now owned by Nippon TV) and Korea.  In Japan and Korea,  strong broadband penetration and fast speeds are the norm, and both countries have a proven appetite for streaming content.

For China – clearly the largest global market – Netflix continues to explore its options with hopes of launching a small service centered on original and globally-licensed content.

Will Netflix dominate the Pay-TV landscape?

It certainly has the potential to have the most paying subscribers of any Pay-TV provider and it has most definitely impacted the business models of nearly all of them.   Consumers may no longer want their MTV, but they definitely want their Netflix.

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The State of Gigabit Broadband – Jumping on the Gigabit Bandwagon?

Last week, Broadbandtrends published its 2014 Global Operator survey on Gigabit Broadband Services Strategies (http://www.broadbandtrends.com/2014_reports) .  We had tremendous participation on this survey – over 120 operators – but through a very stringent screening process – which focuses  responses to key decision makers and those operators that are currently offering or plan to offer these services within the next 3 years, we ended us with 88 qualifying operators from all major regions, across all operator types (ILEC, CLEC, Cable MSOs, Wireless, Municipality, Utility, and competitive Overbuilder).

This survey provides valuable information on the state of the Gigabit Broadband Market – why types of customers are being served, what technology is being used for deployment, and what are the current and future services to be offered over this network.  In addition, we asked operators to rank their Top 3 drivers and Top 3 Challenges for offering Gigabit Broadband services, provide anticipated build-out (network coverage) and take rates over a five-year period.  Finally, we asked operators to rank the importance of offering Gigabit Broadband services across six metrics:  Customer Retention, Customer Acquisition, Technology Leadership & Perception, Competitive Environment, OPEX and Revenue Generation.

From a demographic perspective, we did have the strongest participation from the North American market (73%) – where no one can dispute there is more Gigabit Broadband activity in this region than anywhere else in the world.  But there was also strong participation from the EMEA region, followed by CALA and APAC.

But unlike most operator surveys – in which regional differences are apparent – the differences in strategy, drivers and challenges were found among the operator types.

For Telcos, offering Gigabit Broadband services finally provides them with the necessary competitive differentiator that will enable them to effectively compete against cable operators.

For municipalities and communities, Gigabit Broadband becomes the economic engine driving investment and job growth, while drastically improving education, healthcare, and community services, while providing the pathway towards becoming a Smart City.

We did find it interesting that being viewed as a Technology Leader was not only the #1 driver for deployment of Gigabit Broadband, but it also ranked the highest in terms of importance – ahead of customer acquisition, retention and revenue generation.

While being first to enter a market certainly allows an operator to capture a larger share of the market, it will be important for these early pioneers to continue to differentiate from the competition through new services, bundles or packages.  Otherwise, once the market reaches equilibrium (all operators offer Gigabit broadband), they will face the same challenges they do today.

The top challenges to building and offering Gigabit Broadband – cost, customer demand and uncertainty on ROI – are the same that have challenged operators with any major network upgrade, particularly FTTH.  However, the pre-registration process – which is based on a strong business plan that clearly delineates what is needed for success – is not being used by the significant portion of operators entering the Gigabit Broadband market. As such, anticipated take rates are surprising low and more interestingly, uncertain. Perhaps this is a “build it and they will come” scenario.

The results of our survey illustrate some serious disconnects between drivers, challenges and actions.  Being a Technology Leader is certainly important, but long-term success will be measured by how operators leverage this position to increase both subscribers and revenues.

If you are interested in learning more – contact us (http://broadbandtrends.com/about_us/contact_us) – your report purchase comes with some inquiry time – this may be the best deal on consulting you will ever get.

 

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Technology Leadership Perception Drives Gigabit Broadband Deployments

Broadbandtrends recently conducted a global service provider survey of broadband operators regarding their plans to offer Gigabit Broadband Services.  The 2014 survey analyzes results from 88 interviews with ILEC, CLEC, Municipalities, Utilities and Alternative over-builders in all four major regions.

This survey provides insight into timing of deployments; key drivers; key challenges; technology selection; service offerings (current & future); pre-registration requirements; Gigabit Broadband availability (2014-2018); and anticipated Gigabit Broadband take rates (5 year period).  In addition, the survey features operator ratings of key FTTH vendors across multiple criteria.

Importance

 

Key findings of the survey include the following:

  • Technology Leadership Perception was the #1 driver and rated the highest in importance for offering Gigabit Broadband
  • The majority of operators are focusing Gigabit Broadband on Business and Institutional customers first; followed by residential
  • Cloud-based backup and support for Ultra HD (4KTV) showed the most promise for emerging services over Gigabit Broadband
  • GPON is the favored technology for residential Gigabit Broadband Deployments; while P2P Gigabit Ethernet is favored for businesses and Institutions
  • The #1 challenge for offering Gigabit Broadband Services was unclear customer demand
  • A surprising low percentage of operators are using “pre-registration” to determine build priorities
  • Operators expressed a significant amount of uncertainty in anticipated take rates for Gigabit Broadband, particularly ILECs
  • Calix is perceived as the top FTTH Vendor for Gigabit Broadband by respondents, followed by Cisco and ADTRAN.

For additional information, please visit http://www.broadbandtrends.com/2014_reports  to download the report summary or to place an order.

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AT&T Expands Digital Life Capabilities; Going International in 2015

AT&T showcased its Digital Life home (yes, the actual home!) at the 2014 CTIA show in Las Vegas, demonstrating its many capabilities beyond just Home Security and announcing that it would launch Digital Life care – a service focused on the aging population (elder care).  It also announced that Telefonica would be licensing the Digital Life platform to launch services in Europe in 2015.

Its been a little over 2 years since AT&T announced the Digital Life product, which is now available in 82 markets. The Digital Life platform is an all-IP based, 100% wireless solution currently offering home security and home automation services.

The platform has operated as a “wall-garden” with a select group of partners to ensure the highest level of quality of experience for the customer.  However, during 2014, AT&T has developed an API program that will allow for more devices and capabilities.

To do this there will be a separate platform to serve as the service layer for third party integration to interact with Digital Life. This service layer sits between the cloud and AT&T’s ecosystem with foundational modules that include security and customer management.

AT&TOpenAPI

Digital Life Care

AT&T announced its plans to launch a new in-home monitoring service focused on assisted living/elder care – called simply enough – Digital Life Care.  The intention of this type of service is to help those that need extra care to safely and independently remain in their own home and provide peace of mind for their family.

In this type of application, sensors are typically placed throughout the house to monitor a person or persons.  Depending on the application, a family member or caregiver are alerted when anything out of the norm occurs.

According to AT&T,  the platform is a customized solution that adapts to the changing needs of the caregivers by providing real time monitoring and accurate alerts related to their loved one’s eating, personal care, mobility, medication schedule and more.

AT&T expects to trial this service to employees in Atlanta and Dallas this year.

Broadbandtrends conducted a global operator study on Smart Home services at the end of 2013.  We asked operators which services they currently offered and which services they were planning to offer in the future.  As shown, Home Automation and Home Security ranked the highest.  While only a small percentage – 23% planned to offer Elder Care/Assisted Living services.  According to some respondents, there are liability concerns regarding this type of service, so it will be interesting to see exactly what AT&T will support when it launches commercially.

SmartHomeServices

Telefonica – The first of many service provider partners

AT&T also announced that Telefónica will license its Digital Life platform for limited trials in Europe.  According to Telefónica, the first tests are likely to be in Madrid or London, however, the technology is currently being examined by European regulators.  Regulation for security and home monitoring (such as fire/water detection) services varies considerably from country to country – particularly if it is a professional service. 

Per Telefonica, the trials will cover approximately 750 customers.

According to our 2013 survey, the overwhelming driver for deployment/offering of smart home services was new revenue opportunities, followed by customer retention.  The same is true for Telefonica, which is looking for new revenue opportunities as demand for other services slow.

SmartHomeDrivers

 

Smart Home Services offer a potentially lucrative revenue stream for telecom operators. These types of services can not only differentiate the operator from the competition, but they proving to be “quite sticky” with respect to customer retention.

Additionally, Telecom operators are well positioned to offer these services due to their trusted relationship with their customers, a skilled workforce, billing relationship, etc..  As such, we expect to see many more operators look towards AT&T for potential licensing arrangements.  

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The Gigabit Conundrum

Check out our latest post over at ADVA Optical’s Technically Speaking blog.  We take a closer look at the current state of gigabit broadband click here to read

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When Politics and Progress Collide: The Battle for Community Broadband

Maybe “we the people, for the people” should read “I’ll scratch your back, if you scratch mine” – because the influence of politics on the progress of community/municipal broadband has never been more evident then in recent days.

Last week, both the EPB and the City of Wilson petitioned the FCC to preempt state laws which restricts both utilities from providing services adjacent to their service areas.

However, prior to these petitions, Congresswoman Marsha Blackburn (R-TN)  offered an amendment to the Fiscal Year 2015 Financial Services Appropriations Bill that would prohibit taxpayer funds from being used by the FCC to pre-empt state municipal broadband laws – which passed the House with a vote of 223-200.  Chances are slim that it will pass the Senate, but it does signal that changes to the laws of 20 states that currently have restrictions on Telecommunication broadband services are not likely to occur anytime soon.

What is perhaps most disappointing about this action is the fact that those who voted for this amendment clearly do not seem understand the impact that robust broadband infrastructure can have on economic development – let alone improve educational and healthcare resources, job creation and provide more choices for both residential and business customers.

In the case of  Tennessee, many of these communities that have requested service from EPB are not only underserved in broadband, but completely unserved.

EPB

According to Section 706(a) of the Telecommunications Act of 1996, Congress commanded the Commission and the States to encourage the deployment of advanced telecommunications capabilities on a reasonable and timely basis to all Americans, using all regulatory methods at their disposal to remove barriers to broadband investment.

In Section 706(b), Congress also required the Commission to take affirmative action to acquire information about the pace of deployment of advanced telecommunications capabilities, to decide whether such deployment was occurring on a reasonable and timely basis, and, if the Commission ever answered that question in the negative, to act immediately to remove barriers to infrastructure investment and to promote competition.

In the state of Tenessee, broadband of at least 768kbps is available to 96.29% of households, with 93,000 households currently unserved.  If we move up to 3Mbps, the number of unserved/underserved nearly doubles to 174,000.  The question is whether the state has a goal of 100% connectivity or even a “broadband” speed target.  If it does, what is the timeframe for acheiving this?

More importantly, per TA96 – what is considered a “timely basis”?

Under current Tennessee law, EPB is authorized to provide telephone services anywhere in the state.  However, territorial restrictions prohibit EPB from using the same infrastructure (fiber optics) to provide advanced services such as broadband internet and video services outside its electric territory.

According to the petition filed by EPB – the cost of deploying services outside its electric power territory would be covered by service revenue, contributions in aid of construction, or other capital or operating support, including the use of Universal Service Funds.

However, without the ability to provide all communications services, including video programming services, it would not be economically feasible for EPB to expand its broadband network into adjacent areas.  Voice services alone would not justify the investment in new infrastructure.

So now this issue is in the hands of the FCC as they are currently soliciting comments through August 29, with reply comments due September 29.  Although FCC Chairman Wheeler has stated the following – “I believe that it is in the best interests of consumers and competition that the FCC exercises its power to preempt state laws that ban or restrict competition from community broadband. Given the opportunity, we will do so.” – it remains to be seen how quickly they will act given their current slate of high-profile items (mega-mergers, Connect America Fund, spectrum auctions, etc.).

Regardless of the FCC, this may be the call to action necessary for some of these states to revisit their current telecommunications legislation and ask some hard questions about what they want from their states and communities.  It doubtful that any state representative would say ” we don’t want growth or additional tax revenue” – but that may be the very position they find themselves in if they continue to impede progress.

Yes, there are alot of angles here and yes, there have been some poor implementations of municipal broadband in the past.  But there are also more success stories than failures and there are more tools available to help these communities and municipalities make educated decisions and develop realistic business plans.

For over-builders like Google Fiber – the ability to leverage existing infrastructure is a key element of its decision to enter markets – but if state laws prevent entities from investing in this type of infrastructure – everyone loses.

If an incumbent feels threatened by someone like EPB – I would say it would be fair to give them a chance to put up – otherwise it is time to shut up.  They had their chance.  And for those of you in states that continue to have these restrictions – it time to start asking your representatives some very hard questions and if you don’t like the answer – maybe its times for new leadership.

 

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