Internet Access in Rural America Stinks, Report Says

[#1]

Nearly three-quarters of rural Americans receive slower Internet broadband speeds than that recommended by the FCC, and 90 percent can't transmit at the recommended rate either.

This is according to the Calix U.S. Rural Broadband Q1 2012 Report, a quarterly report issued by broadband provider Calix, now in its second release.

"The most common peak downstream broadband rate consumed by endpoints in rural America was between 1.5 Mbps to 3 Mbps in Q1 2012," the report noted. "During the quarter, 60% of rural broadband subscribers received a maximum downstream broadband speed of 3 Mbps or less – approximately one-eighth of the U.S. peak downstream average published by Akamai in its most recent published ”State of the Internet” report. In fact, 71% of rural subscribers received a downstream broadband speed that was slower than the target for the Connect America Fund (CAF) of 4 Mbps, and approximately 90% fell below the CAF upstream target of 1 Mbps. Upstream rates remained slow as well, with 95% receiving 1.5 Mbps or less," the report continued.

This is all happening, of course, while some states and corporations are actually attempting to restrict regions from setting up their own Internet services when they are not available from other providers. 

This not only cuts rural Americans off from economic development opportunities, but as education increasingly is dependent on the Internet, cuts children off from state of the art education as well. In addition, as websites are increasingly growing with images, analytics, ads, and buttons -- with the average size of a single screen being 1 MB -- it becomes harder for rural users even to surf.

Ironically, one of the biggest uses rural Americans have for broadband Internet is video streaming, though this requires a minimum of 1 Mbps and realistically often requires more for satisfactory performance. According to the Calix report, 64% of downstream and 15% of upstream traffic is video streaming. Not surprisingly, this was more common in those rural broadband networks that were composed of fiber rather than copper; in copper networks, nearly 93% of endpoints generated less than 100 GB of downstream traffic a month, the report noted.

[#2]

Unfortunately, this article is based on a single, uncorroborated source: a white paper from a company that sells equipment and services to wireline broadband providers. And the company that wrote the paper obviously has vested interests: it wants to sell more of its products and wants its customers to prosper. So, unsurprisingly, it presents data that supports more government subsidy -- of telephone monopolies -- such as CenturyLink, which has done a very poor job of serving the rural portions of its turf (including rural Idaho). These subsidies would be provided by the 15% USF tax that appears on every telephone bill... from our unwilling pockets straight to the telephone company's corporate coffers. The purpose of the white paper is to lobby for these monopolies to be given more of our dollars in the hope that they will trickle down to Calix, the company that produced the paper. The fact is that WISPs, or terrestrial wireless Internet service providers, do a much better job of serving those areas, while at the same time creating local jobs and keeping money in local economies. But they're not mentioned or accounted for in the report at all. Funny, that.

[#3]

Gee, Johnny who lives 40 miles from nowhere can't download NetFlix in high-definiton and it's the job of the taxpayer to make sure he can.  Glass has it correct, the government steals our money and gives it to CenturyLink, Verizon, and AT&T so that they can expand their company on the taxpayers back.  If there is an area that isn't covered, then notify WISPA and let private industry do what it does best.  If you don't that this is a self-serving White Paper that is probably full of the same skewed facts, lies and distortions that CenturyLink just sumitted to to CAF so they can take out 60 private companies.  CenturLink, CAF, and the USF were so bad that Cox and Commcast wrote a joint letter to these idiot government bureaucrats to stop giving a $40 Billion dollar company money to compete against them or they would stop investing in upgrading their networks.  It's one thing to compete in the private industry, it's another to compete against a crooked and stupid government who just lost $30 Billion dollars of taxpayer money investing in bad business plans.

[#4]

It's not just rural; but the entire country.  We were on the right track to competition and transforming the telecom sector to a horizontal orientation, a la the data processing world.  In the late 1990s/early 2000s we had the lowest cost, highest bandwidth wired and wireless networks.  But the Telecom Act, special access reform and killing of equal access in 2004 have remonopolized the sector.  Policy makers, academics and even the trade need to wake up to the enormous brake this bandwidth bottleneck is having on our entire economy.  VC investment in telecom equipment and services is 70% below the standard level it has been relative to all other VC investment and all other Tech and Media investment; so the outlook is not good and things will get worse.  The theoretical solution lies with understanding Moore's and Metcalfe's laws, marginal cost, and what horizontalization brings in the lower, middle and upper layers in terms of far better, more effective and higher ROI vertically complete solutions.  The practical solution lies with the smartphone.  Perhaps Steve Jobs' biggest legacy will be the resurrection of equal access in 2007 (aka unfettered 802.11 access in the iOS smartphone).

[#5]

This is Michael again.  I am not criticizing Glass and Conoway as much as pointing out that Calix is undergoing the same experience as all vendors.  Really really sh-tty!  I wonder why they are shooting the messenger.

The whole sector (even the monopolists) has to wake up to the flaw in the current paradigm and how bad things are in the US.  I was probably the only analyst on Wall Street that called the Telecom Act a well intentioned farce back in 1996 and predicted that the top 25 companies would consolidate down to 3-5 super networks.  Nobody understood back then how the monopolies would game the process.  But they did and it's only gotten worse, as they point out with so-called USF reform.

We need to use this paper along with one from the CFTC http://www.crtc.gc.ca/eng/publications/reports/rp120406.pdf and a recent one from New America Foundation http://oti.newamerica.net/publications/policy/the_cost_of_connectivity to get a complete picture and counter the negative impact of monopoly on all fronts.

[#6]

Michael, the incumbents are nowhere near a monopoly. There are approximately 4,000 WISPs serving our country, and they're truly competitive. The only thing that would endanger them is policies based on the notion that there IS a monopoly, and that therefore stifling regulation is the answer.