Entries in CenturyLink:CTL (8)


For ILEC with 210k-Mile Network, IPTV Just "Another Application"

It appears CenturyLink didn't want to miss making an announcement at last week's Citi Entertainment and Media Conference, going with a "me too" approach to IPTV services. The "announcement" was modest, as CenturyLink revealed that they would be extending their IPTV services to one or two new markets in the former Qwest territory. Currently CenturyLink's Prism IPTV service passes 1m homes in select markets and, as of 3Q11, had 50k subscribers. For a telecom provider as large as CenturyLink, however, those numbers are relatively small—but what's interesting is how CenturyLink executive vp and cfo Stephen Ewing characterized IPTV: as just “another application.”

Ewing said, “The incremental cost of us rolling out IPTV is not significant. Once you get a 20 Mbps service out there to a customer the incremental cost of layering IPTV on top we view it as another application.” These sentiments, of course, square with what we've been saying for a while—that since so many providers spent so much time and money on network build-outs and improvements, this was the year to capitalize on those networks with new services, content, and applications.

But CenturyLink's "announcement" seems pretty modest, and offering IPTV in only two markets seems like a paltry "expansion," considering that the company has 210k miles of fiber. With its acquisitions and its expansive network, rollouts like IPTV appear to be an obvious next step. For now, Ewing said that, “The (IPTV) customer base is still small, but we did increase the customer base 25% during the third quarter.”

CenturyLink's network design also makes IPTV easier to distribute, as all of its video content is put into a head end in Missouri and, from there, distributed to each of the 8 markets currently served with IPTV. Each market also has its own mini-head end for local content, and all content is delivered over CenturyLink's fiber network.

Last fall, the company denied speculation that it would expand its Prism service to former Qwest markets. CenturyLink had just inherited Qwest's 1m DirecTV subscribers and was committed to satellite TV. But now the Louisiana-based ILEC says it's following a two-pronged approach to video services: satellite and IPTV. It's a strategy that allows CenturyLink to hedge its bets, capitalize on the satellite subs it's already inherited, and continue to anticipate consumer trends, as greater numbers of Americans access over-the-top video services like Netflix. Ewing said, “If over the top eventually takes some of the traditional TV market, we think we'll be well positioned with the bandwidth with have to our customers to participate in that.”

What is surprising, however, is that CenturyLink does not seem to have an overarching strategy to build out broadband to former Qwest markets. So far the company has just said, vaguely, that it plans to "expand its broadband footprint." Broadband has been a key component to the ILEC's business strategy for a while now, and in 3Q11, the service provider added 57k high-speed Internet subscribers, versus only 12k in 2Q11. Part of these gains, however, come from Qwest's FTTN initiative, which CenturyLink has continued after the acquisition. By the end of this year, CenturyLink estimates that it will pass 5.4m homes with FTTN.

In FTTN service areas, 75% of customers enjoy 20 Mbps speeds, while the remainder of subscribers have speeds of 10 Mbps or higher. As for CenturyLink's big picture, about 20% of subscribers can get 20 Mbps, over half can get 6 Mbps, and two-thirds can get 6 Mbps or higher. According to Ewing, “The speeds will continue to improve over 2012 and future years as we continue to build out the IPTV footprint and the Fiber to the Node footprint in the Qwest markets primarily,” he said.

Of course, CenturyLink will find itself increasingly in competition with LTE services (which we will look into more next week), but for now Ewing said CenturyLink seemed to have an edge, due to its increasing bandwidth. Ewing said that average customer usage is continuing to rise to about 18 Mbps, double where it was a year ago.


The FCC’s Egalitarian Cable Broadband Initiative: What does it Mean for RLECs?

The “Biggest Effort Ever” to Address Broadband Adoption

A wave of $9.95 per month broadband plans initiated by the Comcast-NBCU merger and seconded by a new FCC program announced on November 9, 2011 will potentially sweep millions of low-income families online. Comcast’s “Internet Essentials” program and the FCC’s “Connect 2 Compete” initiative are intended to increase broadband adoption through significantly below-market prices coupled with affordable computers and digital literacy training. This is surely a benefit to the millions of families who cannot afford $40-150 per month DSL, FTTH, 4G or high-speed cable, but is it a competitive threat to small companies?

This all started with a little merger earlier this year between cable goliath Comcast and media behemoth NBC Universal. The high-profile and reasonably controversial merger was approved by the FCC with a variety of “conditions and enforceable commitments,” according to a January 18 Wall Street Journal article. One of Comcast’s “voluntary commitments” is to expand broadband to low-income families at reduced rates. The text of the commitment explains: “Comcast will make available to approximately 2.5 million low income households (i) high-speed Internet access for less than $10 per month; (ii) personal computers, netbooks, or other computer equipment at a purchase price below $150; and (iii) an array of digital-literacy education opportunities.”

Enter Internet Essentials. Since it is a voluntary commitment, Comcast isn’t forced to provide $9.95 per month broadband, but one gets the impression that they had better just do it with a smile on their face lest they face scrutiny from the FCC for noncompliance. However, one also has to wonder if Comcast would be implementing such a program if not for merger commitment.

Internet Essentials basically follows the merger commitment language mentioned above to the letter. Eligible participants can purchase broadband for $9.95 per month plus tax, with no price increase, activation fee or equipment rental fee. Second, these families can purchase a computer for $149.99 plus tax at the time of enrollment. Finally, eligible families can receive free Internet training, “available online, in print and in person,” according to the Internet Essentials website.

Households must meet the following criteria to be eligible for the program: live in a Comcast service area, have at least one child enrolled in the National School Lunch Program, have no current Comcast account (or an active account within the last 90 days), and finally “not have an overdue Comcast bill or unreturned equipment,” which will hopefully not disqualify too many people right off the bat. Internet Essentials began at the start of the 2011-12 school year; and enrollment will be open for the next three full school years. Families who enroll can stay at the $9.95 per month rate “as long as at least one child in their household continues to receive free lunches under the National School Lunch Program.”

Internet Essentials was such a groundbreaking idea that the FCC decided to initiate a copycat program (called Connect 2 Compete) on a wider scale, backed by a venerable army of “Who’s Who in Broadband and Tech.” Connect 2 Compete includes the same three principles as Internet Essentials: $9.95 per month broadband, low cost computer and digital literacy training. Just like Internet Essentials, the program is available for households with at least one child receiving free lunches, no broadband service for the last 90 days, and no outstanding bills or equipment rental fees. Connect 2 Compete will start in the spring on a trial basis and then expand nationwide in fall 2012. The companies involved in Connect 2 Compete include the cable industry and NCTA (providing the broadband service), Microsoft and Redemtech (providing refurbished computers with Windows and MS Office), and Best Buy (providing digital literacy training via the Geek Squad). Other participants include Morgan Stanley (microloans), United Way Worldwide, Boys and Girls Club, Goodwill, Connected Nation, NAACP, and several others who together form “an unprecedented coalition of nonprofit and grassroots organization.” According to FCC Chairman Julius Genachowski, “These commitments total up to $4b in value and can benefit millions of Americans.”

Connect 2 Compete has already been met with praise, skepticism and criticism. Both Internet Essentials and Connect 2 Compete are spearheaded by the cable industry and will therefore primarily only impact low-income consumers in urban areas—not that this is bad, since broadband adoption in low-income urban areas a very serious concern. However, what about low-income households that do not include a child on the school lunch program, like elderly, disabled and single-person homes? Perhaps the FCC will tweak the eligibility requirements to include a broader demographic once the program is underway.

When he announced Connect 2 Compete last month, Genachowski cited America’s shameful 68% broadband adoption rate compared to South Korea and Singapore’s 90% adoption rate. Genachowski emphasized that education, jobs and health care are becoming more and more dependent on broadband, and “Broadband is now a basic requirement to participate in the twenty-fist century economy.” It also appears as though the FCC intends for Connect 2 Compete to be an urban counterpart to the high-cost Connect America Fund, even though Connect 2 Compete is focused on adoption while the Connect America Fund is focused on deployment. Deployment isn’t as much of a problem in urban areas; but adoption is certainly an issue in rural areas just as much as in urban areas, so it will be interesting to see if Connect 2 Compete eventually comes to RLEC territory in some form or another.

At least one non-cable, rural-focused broadband provider is apparently jumping on the $9.95 per month broadband bandwagon. CenturyLink recently announced its like-minded program, Internet Basics, which provides 1.5 Mbps (download; same as Comcast) broadband, $150 netbooks and training for more than 100 communities across the country. The key difference with Internet Basics is that households are eligible if they also qualify for the telephone Lifeline program. According to a November 21 blog post by CenturyLink vp of public policy and federal legislative affairs John F. Jones, “The true potential of adoption programs like CenturyLink’s and the ones envisioned by Chairman Genachowski will be realized at the local market level, where communications providers and their employees work hand-in-hand with community leaders and civic groups to properly identify needs, resources, and opportunities to advance not only broadband availability, but also understand and overcome the barriers to adoption and faced by those not online today.”

For RLECs, these low-income broadband adoption programs are definitely something to watch. Connect 2 Compete might actually have a double meaning, where it could boost the competitive position of cablecos that compete with telcos for low-income consumers. But, will small companies see any financial benefit from offering extremely low-cost broadband? They might if they face significant cable competition and serve large populations of potentially eligible households. Another point to consider is that today’s $9.95 customers just might become tomorrow’s $49.95 customers, especially if they utilize the broadband connection to find a new job or improve the family’s financial situation. A November 10 Wall Street Journal article about Sprint’s perspective on the Lifeline program caught my attention, stating that “In any given period, Sprint has said, more than 50% of its net new customers have come to the carrier via the free service,” called Assurance Wireless.

Economic, market and regulatory forces are definitely putting pressure on broadband providers to offer extremely low-rates coupled with cheap hardware and digital training to low-income Americans. Can we expect a large-scale rural initiative similar to Connect 2 Compete? What are RLECs currently doing to help increase broadband adoption and digital literacy for their low-income customers? Does Connect 2 Compete increase the competitive threat posed by cable companies?


The So-Called “Level Playing Field” for Broadband Networks

Community and Municipal Networks Face Tough Opponents

As North Carolina goes, so goes the country? Could be—at least that's the fear of some communities and municipalities who had high hopes for building and operating their own broadband networks. But a recent legislative ruling in North Carolina has dealt a serious blow to such networks, and may force rural customers, schools, libraries, hospitals, and governments to keep existing within the “broadband gap.” The Tar Heel State is just one of many places where battles between public and private broadband networks are heating up. Hanging in the balance are rural areas, where reliable broadband can be scarce.

Still, despite months of public protest and voracious debate, the North Carolina Legislature passed HB129 on May 23. The controversial bill, dubbed the "Level Playing Field/Local Government Competition Bill,” restricts the North Carolina cable broadband market to commercial providers—a move that limits (and may even destroy) municipal broadband networks in the state. The new law effectively prevents local governments from dipping into the consumer broadband provider business. It also places deployment restrictions and imposes tax burdens on cities seeking to create their own high-speed networks.

Additionally the law changed the state's definition of broadband so that the so-called “broadband gap” would be less noticeable. Now broadband service will be declared as “widely available” even if a single resident in a particular census block has access to broadband. Analyst Phillip Dampier noted that such service “could be 768kbps DSL from CenturyLink. If one person has the service, the thinking goes, everyone can get it, even if they can't.” In other words, Dampier says, the North Carolina legislature attempted to cover up North Carolina’s broadband crisis by “changing the definition of the word ‘crisis‘ into ‘accomplishment.’ Instead of allowing communities to provide service in unserved areas, simply declare all areas as being served, thereby negating the need for community broadband.”

A few towns and cities in North Carolina—such as Wilson and Salisbury—have already begun operating their own municipal broadband. As fully-functioning networks, they will be exempted from the new law, but still adamantly oppose what they see as unfair regulation. “Essentially this bill is a cable monopoly protection bill,” said Doug Paris, assistant city manager of Salisbury. “It protects Time Warner Cable and ensures they will continue to do what they’ve been doing for decades, which is serving where they want to serve and not serving where they don’t want to serve.”

Time Warner (NYSE:TWX) and CenturyLink (NYSE:CTL) have tried to pass similar law in North Carolina for four years, hoping to ban municipal broadband networks entirely. But with the passage of HB129, the companies had to settle for a law that instead saddles proposed municipal networks with overwhelming bureaucratic obstacles. The likely outcome is that municipal broadband projects will be stunted if not completely abandoned.

The question remains whether municipal and community-owned networks are sustainable in the first place and whether they pose unfair competition to incumbent providers. Cable companies and others claim that public entities should not compete with private business and that such competition gives an unfair advantage to public owned networks. But proponents of such networks cry foul. Often municipal networks serve a different customer demographic than private communications providers, and some have been financially sustainable. In Salisbury, for example, subscribers have reached 1k even though the network just went online in 2010—a milestone that indicates interest among unserved and underserved customers in the area. The town of Wilson initially had to borrow $28m for its network, but according to the city's Public Affairs Manager Brian Bowman, the city now has enough subscribers to make the network fiscally sustainable for another year.

Other towns and cities in North Carolina won't be so fortunate, though, and some have admitted that their plans for community broadband are on hold, in light of this recent law. John Bjurman, CTO of Chapel Hill, said that the law effectively ends the city's plans for its own network, even while the city has already put fiber in the ground. The law requires that municipalities calculate service costs and taxes as the same level applicable to private companies, which would make planned networks like the one in Chapel Hill financially out of reach.

In the end, North Carolina's battle may be a taste of what's to come across the country. Christopher Mitchell, director of the Telecommunications as Commons Initiative, estimates that at least 54 towns, nationwide, own their own fiber networks, while 18 states have marshaled a fight against such networks. [See “Community Broadband Preemption Map” here]. Mitchell argued that community networks don't compete with incumbent providers and are constructed for a town to remain technologically relevant, attract and retain business, and in some cases stave off job losses. Mitchell writes, “The result is that leaders in a number of communities have said, ‘We really need to build something ourselves, because if we don’t, we’re not going to be competitive, we’re not going to be able to grow small businesses, we’re not going to be able to get existing businesses to relocate here, and people generally aren’t going to want to live here if we don’t have fast, affordable and reliable access to the Internet.’”

It's possible that each state will have to face these battles one-by-one, as federal regulation seems unlikely and the number of community-owned fiber networks is on the increase. But there's also the chance that the energy behind these debates and discussions will spur new solutions: Perhaps, just perhaps, these battles will prove that it's necessary to forge public-private partnerships between traditional providers and the towns and cities still living in the broadband gap. In the meantime, it's clear who won this show-down in North Carolina: large communications providers, with deep pockets and political sway.


Movin' Up to IPv6

World IPv6 Day Highlights Future Transition to New IP Format

Happy World IPv6 Day! Today, Internet giants such as Google, Facebook, and Yahoo! moved their platforms to the new Internet Protocol, to test functionality and prepare for the eventual shift to IPv6 from IPv4. Participants also hope that the much-hyped trial will motivate other organizations across the industry to prepare for IPv6 and ensure a smooth transition before IPv4 address space runs out.

For those not following the IPv4-to-IPv6 transition, the problem is a simple one: IPv4 (Internet Protocol version 4) uses a 32-bit address format, allowing for 4.3b addresses. But with dramatic Internet growth, there simply aren't many addresses left, leading to what experts call “IPv4 address exhaustion.” As we know, Internet Protocol addresses are a prerequisite for all Internet communication—both the sender and the receiver need one. As a result, additional addresses are necessary whenever new users are connected to the Internet. Running out of addresses is simply not a workable option, so enter IPv6.

The new IPv6 is a protocol that uses 128-bit address configuration, opening a nearly unfathomable number of addresses (billions of times more than IPv4) to supply ever-growing demand. Right now, over 95% of the Internet uses IPv4, but for many years service providers, hardware makers, operating systems vendors and web companies have prepared for the eminent transition. Experts say that adopting the IPv6 protocol will also provide a better QoS and more reliable service, especially for mobile devices and PDAs.

All of this may sound like tech-speak or dry details, but the transition to IPv6 may prove an important “stress test” for small ISPs. According to analyst Carol Wilson, approximately 50% of ISPs now are IPv6 enabled, but those tend to be the providers that are “well connected... connected to eight or more other service providers.” Wilson says that networks in less populated areas are less likely to have IPv6 networking available. That could spell connection trouble in the future, as customers could experience service disruptions when the eventual IPv6 shift is completed. Wilson states that while “smaller ISPs are the ones less likely to have IPv6 access available... they may have equipment that can handle the newer Internet addressing scheme.” In other cases, businesses that need IPv6 connections may be required to connect to another network, such as tunneled traffic or networks provided by Hurricane Electric, an IPv6-native Internet backbone and colocation provider.

Most analysts, network providers and industry insiders predict that the transition to IPv6 will happen over a span of time—something that can make it more difficult to motivate companies to make the switch (remember the lead up to Y2K?). Cisco predicts that there will be “several years of coexistence between IPv4 and IPv6 while the array of devices and applications evolves. Therefore management of IPv6 will be offered in phases over time.” But still, everyone agrees the change will come.

For most ISPs, the biggest concern is the cost associated with an upgrade. A recent report by the National Telecommunications and Information Association (NTIA) acknowledges that “the potential costs associated with deploying IPv6 consist of a mixture of hardware, software, labor, and miscellaneous costs. The transition to IPv6 is not analogous to turning on a light switch.” The report goes on to explain that costs will vary for each type of company or service provider, depending on the company's existing infrastructure and IPv6-related needs. Ultimately the NTIA says cost will be relatively low for hardware and software vendors, both of whom are already providing some IPv6 capabilities. But the cost increases for service providers, with very few offering IPv6 service now; additionally, the NTIA says these service providers face “a very high cost currently to upgrade major capabilities.” NTIA's report concludes that, “By and large, ISPs offering service to large groups of customers will likely incur the largest transition costs per organization, while independent users will bear little, if any, costs.”

Participants in today's World Ipv6 Day include the big guys you'd expect, such as AT&T (NYSE:T), Verizon (NYSE:VZ), Comcast (Nasdaq:CMCSA), Time Warner (NYSE:TWC), and Cisco (Nasdaq:CSCO), as well as XO Communications (OTCBB:XOHO.OB), Charter Communications (Nasdaq:CHTR), CenturyLink (NYSE:CTL), and tw telecom (Nasdaq:TWTC). Naturally, each company has issued press releases heralding the coming of IPv6 and expressing the need for other companies to follow suit. But in Colorado, tw telecom has actually taken an extra step forward by providing its customers IPv6 services since 2008, and the CLEC has worked to offer both IPv4 and IPv6 addressing across a single port—a design that mitigates costly infrastructure upgrades and is much easier to manage.

So far, it appears that the World IPv6 Day trial hasn't encountered any problems, and as of noon Eastern Standard Time, all systems were “checking in green.” This means that participating websites are working correctly both for people using the traditional IPv4 Internet and users working with IPv6. For designers and participants, this means that the trial run was a success, and, for us, this means we'll be hearing even more about the necessary and now-proven possible use of IPv6 services.


Education in the Clouds

Finding Opportunity in Supplying Cloud Technology to Colleges

On college campuses, technology often changes as quickly as the season’s fashion: students telecommute to classes via video conference, discuss and submit work in online course shells, prepare presentations while using expensive software programs for “free,” store files on remote servers, and of course send and receive countless email messages.

But while the technology profile of the nation's campuses continues to grow, a recent survey conducted by The Chronicle of Education highlights a troubling reality—that despite student and faculty demands for mobility, accessibility and content availability, technology budgets are shrinking. As a result, colleges and universities have had to get creative with their funding choices. Many have turned to mobile and cloud computing to provide a variety of technology resources at a lower cost. This move to the cloud is not new news, of course, but what is interesting to me (and hopefully to you) is the way that cloud computing has led some institutions to forge strategic partnerships with communications providers and form consortiums to pool resources for expensive upgrades.

These recent developments on college campuses indicate one of the many ways that cloud computing will likely change the communications provider industry and education—a vertical segment of the 2.0 generation that Richelle Elberg discussed in her three-part “Mindshare” series last fall. In Part 3 of her series, she spotlighted several segments such as gaming, small business, government, healthcare, and education, all of which exhibited “growing demand for services network providers may develop.” She noted that while the future opportunity would be enormous, it “won't be straightforward, especially for smaller service providers.”

Beginning today I will follow up with this discussion, looking at real examples of how service providers, big and small, are partnering with colleges and universities to leverage cloud technology. This will be a sustained discussion, as there are many opportunities for partnership in educational technology, and I'll also devote future articles to some of the other vertical segments that have been identified. Above all, I hope to provide real world examples of how cloud computing can help re-invigorate the connection between communications providers and their customers, whether it’s local governments, healthcare providers, gamers, or in this case, students and academic administrators.

In just the past few months, major communications providers like Verizon (NYSE:VZ) and AT&T (NYSE:T) have announced hefty investments in cloud technology; CLECs like California-based TelePacific Communications and Virginia-based XO Communications (OTC.BB:XOHO.OB) have also unveiled cloud-computing strategies. Still other providers like West Corp. and CenturyLink (NYSE:CTL) made headlines when they acquired cloud capabilities. College campuses and even K-12 institutions are certainly part of their customer base, and as academia searches for ways to integrate cloud technologies, these companies will be positioned to provide such services.

The opportunity is substantial. In this year's annual Unified Communications Tracking Poll, conducted by CDW Corporation, only 5% of higher education institutions have fully deployed UC services via a cloud model and 14% are in the process of deploying cloud services. But here’s where it gets interesting for service providers: an astounding 48% are evaluating the benefits of cloud computing on their campuses. CDW's 2011 data predicts that these numbers will be even higher at year-end, indicating that cloud-based education technologies are an open-field of revenue potential.

Real World Examples

Several months ago, a panel from Brookdale Community College in Lincroft, New Jersey, offered a provocative presentation on their campus' move from a siloed IT environment to a cloud-based environment. At the Aligning the Ubiquitous Campus Conference, the Brookdale panel attested to how cloud technology allowed for virtual classrooms, access to resources from remote locations, desktop virtualization, and expanded software and services for students and faculty. The panel was comprised of Greg Liano (Associate Professor of Mathematics, who's been heading-up the cloud-computing initiative among faculty) and Ben Broder (Director of Technical Services).

According to Border, Brookdale's pilot committee took their cues from “public cloud” services such as Google Docs and Microsoft Office Live and “knew the cloud was the way to go, so we decided to build ourselves our own private cloud.” They utilized a Virtual Desktop Infrastructure (VDI) and piloted the desktop virtualization in math and science courses and in library research computers using the Vmware View client. Students no longer had to purchase costly software or use discipline-specific computer labs, but could access software and applications from any computer by using VDI.

The panel also described how cloud computing will radically decrease the cost of technology, as computers are no longer forced to run demanding programs but instead provide just a monitor and keyboard for cloud applications and storage. Their next rollout will include the Health Science Department and Computer Services Department and will continue to utilize the Remote Desktop Protocol (RDP) model.

Brookdale is part of NJEDge, a nonprofit consortium of 45 colleges and universities in New Jersey. The consortium seeks to promote campus collaboration statewide by integrating both existing and emerging technologies for instruction, research, and public service.

Back in 2004 NJEDge signed a three-year, $13m contract with Verizon to design, install, and manage an interactive broadband data and video network for their member institutions—the very network that is now supporting Brookdale's cloud computing initiative. While this group partnered with Verizon and Cisco (NASDAQ:CSCO), I think that smaller ILECs can nevertheless use the partnership as a model for offering campus connectivity.

One of NJEDge's primary, self-described goals is to “move the state of New Jersey to the forefront of technology-mediated educational practices,” which will rely heavily on cloud computing, and this is certainly the trend in other states as well. Brookdale is simply one of many small colleges looking to be as flexible and diverse in their offerings as the bigger (read: richer) schools. All of this innovation requires a stronger, faster, more reliable network, along with hosting capabilities and storage space—capabilities that schools are willing to work into their limited budgets.

Quite simply, cloud computing delivers strong value for the institution’s investment, reaching the entire campus, diversifying course offerings and faculty positions, and even encouraging non-traditional students to enroll. So while many service providers are looking for the next big growth opportunity, colleges and universities are looking for ways to take their classrooms, communications, and connections to the cloud. Sounds like a good match to me!

Next month, I'll look at several more colleges that are leading the way in integrating cloud technologies, and the providers and networks that are allowing them to make these advancements.