At Least Get the Facts Right

A few days ago a report came out from the Internet Innovation Alliance, a broadband advocacy group whose 175 members include AT&T and fiber-maker Corning. The report was written by Dr. Anna-Maria Kovacs, a visiting scholar at Georgetown University.

This report makes conclusions that are based upon the facts used in the report – but those facts are misleading at best and purposefully slanted at worst. This is typical of pieces written and sponsored by these so-called advocacy groups that are sponsored by large corporations. This advocacy group and the many others like it are not a group of scholars writing pieces that they believe will benefit society. Instead they write opinion pieces that are paid for by large corporations who tell them the conclusions they must meet in order to get paid.

As an example, there are several advocacy groups who have been doing horrendous and misleading hatchet jobs for years that attack municipal fiber ventures. My gut tells me that this is sponsored by AT&T who intends to use it as evidence that they should be able to get out of traditional regulation and be allowed to toss people from copper to put them onto wireless. The study says it was paid for by IIA members, but not any of the telcos in particular, which is always how the advocacy groups hide who paid for the report.

This is a blog and I limit myself to about 500 words, so I can’t write a full rebuttal to this 45-page report. So instead I will just hit the highlights of a few things wrong with the report. Mostly, it uses incorrect facts to support its conclusions. And if it was a true scholarly piece it would look at all sides of the issue instead of slanting everything towards only one side of the argument. So here are a few of the things wrong with the report:

• It doesn’t provide evidence or cite sources for any of the statistics used, and those statistics seem to be very different than what I see from numerous other sources.

• It says that less than one-third of the households in the country still use landlines. I follow this closely and I have seen numerous reports in the last year estimating this somewhere around 60%. And the vast majority of businesses still use landlines.

• It says that only “only 5% of households rely exclusively on traditional circuit-switched POTS” as a way to communicate. I think one reason this number is cited is that it assumes that customer served from ‘IP services’ such as Verizon FiOS and AT&T U-verse are all-IP services. But they are not. For the most part, the voice calls on those networks still use the TDM-based traditional voice network once they leave the customer’s premise. The same thing is true with all of the voice coming from cable networks. The only voice traffic that bypasses the traditional voice network are calls originated from places like Skype and Vonage, and those calls still must use the PTSN to terminate. And almost no wireless traffic is purely IP, and all calls between the wireless and landline networks use the PSTN.

• The report also estimates that half of the annual capital spending by telcos is made to support the legacy networks. Interestingly she thinks everything that cable companies spend is IP-based, when in fact the coaxial networks are every bit as much legacy as telco copper networks. But her assumption is wrong in several ways. She is mixing apples and oranges and not looking at the spending on the backbone, which is all-IP and the last mile, which large is legacy. There are several industry sources that she could have used to find the spending on these two parts of the network.

• The paper says that 99% of communications traffic is now IP-based. This is a misleading statistic for various reasons. Obviously there is a lot more bandwidth needed to download a movie compared to making a phone call. But a large part of this IP traffic is delivered to customers using the legacy networks. For example, the AT&T U-verse network uses two twisted copper pairs and DSL and is entirely a legacy network offering. The same can be said for cable modems. So other than customers who are lucky enough to be served by fiber at the premise, the IP-traffic is delivered to customers over copper.

• At the end of the paper she concludes that most customers could be made happy with wireless LTE and/or fixed wired broadband. This is the conclusion I am guessing she was paid to make. It’s funny, but just last week the CEO of Verizon said that it was beyond the law of physics to think that his wireless network could be used as a substitute for landline data. And he is right, and this report is just another paid-for piece that uses misleading data to come to a politically motivated conclusion.

2 thoughts on “At Least Get the Facts Right

  1. Horay! I couldn’t agree more! I read the same slanted report this week and just kept saying at nearly every cited statistic that “this is BS”. AT&T (really PacBell, Southwestern Bell, Bell South, Ameritech, Nevada Bell, and other smaller phone companies) has benefitted for nearly the last 30 years of monopolistic dynasty. If they want to be unemcumbered from the traditional wireline services, then they should allow any provider to use that media to service the customer. This endgame that I layout would look a lot like Electrical Deregulation in my homestate of Texas. AT&T would never go for this, wireline is needed to deliver the high bandwidth requirements of U-verse. Wireline is still AT&T’s bread and butter and the dialtone and circuit switched services is just gravy, those assets that support those services have long been depreciated.

  2. The shame of this report is that some policy maker is going to read this and go, “Oh gee, why should AT&T have to spend half of their capital each year to support only 1% of their traffic?”. Anybody in the industry would read this and just shake their head.

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