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Editor’s note: Richard Bennett is a Senior Fellow with the Information Technology and Innovation Foundation and co-author of ITIF’s 2013 report, “The Whole Picture: Where America’s Broadband Networks Really Stand.” Follow him on Twitter @iPolicy.

We’ve all heard the story: America’s broadband networks are second-rate. We pay exorbitant prices for shoddy service because broadband providers print money and hold innovation in a death grip. While America languishes, our competitors in Europe and Asia are racing ahead to a user-generated content utopia. The only way forward is a government takeover, or, failing that, a massive dose of regulation.

So go a number of recent treatises such as Susan Crawford’s “Captive Audience”; works by like-minded Internet aficionados Tim Wu, Lawrence Lessig, and Yochai Benkler; reports by public interest advocacy groups Free Press, Public Knowledge, and the Open Technology Institute; as well as numerous tech bloggers.

The only problem with this story is that it’s almost completely untrue.

Granted, as recently as the late aughts, the story was plausible: In those dark days, our rankings in terms of both broadband subscription growth and speeds were falling. Increased demand for data capacity and a technology lull combined to push our average Internet connection speed down to 22nd in the world at the end of 2009, according to Akamai’s measurement of “Average Connection Speed.” Since then, the speeds of such shared connections have nearly doubled from 3.9Mbps to 7.2 Mbps, raising the U.S. to eighth place.

Akamai’s Average Connection Speed measures individual TCP streams over IP addresses that are often shared — and doesn’t sum simultaneous streams — so it’s more a measure of usage than of network capacity, however. To see the capacity of the underlying broadband network, it’s best to look at Akamai’s “Average Peak Connection Speed” metric.

The distinction between these two metrics flummoxed Ars Technica’s Cyrus Farivar, who maintains that the shared-connection measurement is the more meaningful indication of “user experience.” Farivar is clearly wrong about that, and Akamai’s “Average Peak Connection Speed” is the better indicator of network improvement.

The Average Peak measurement shows performance in the U.S. tripling over the past five years, up to 31.5Mbps in Q4 2012. We don’t know where the U.S. ranked on this scale before mid-2010, but it’s currently 13th. The tripling of network capacity combined with a doubling of “shared speed” says that networks are getting faster, as the U.S. is simultaneously using them more heavily

America’s broadband speeds are improving for two reasons: first, broadband providers have installed newer technologies, such as Verizon FiOS, DOCSIS 3 cable modems, and AT&T U-verse that are four or more times faster than the technologies they replaced; and second, users have begun to demonstrate a preference for higher-speed broadband by opting into higher-speed upgrades. Some upgrades are costly and others are not; Comcast recently doubled the speeds of most of their Bay Area broadband plans for free.

While our networks are improving, we’re retaining low prices for entry-level broadband plans first noticed by the Berkman Center’s “Next Generation Connectivity” report: the U.S. is currently second in the price of broadband for entry-level users. The nation is also third in network-based competition, second in the fiber-optic installation rate, first in the adoption of next-generation LTE, ahead of Europe in broadband adoption, and doing quite well in Internet-based services.

While U.S. cable TV companies still lead telcos in new broadband subscriptions, fiber-based telco broadband is gaining subscribers at a faster rate than cable. U.S. broadband providers are profitable, but much less so than Europe’s or Korea’s, where applications like YouTube must pay ISPs for access to residential customers. Significantly, we’ve gained ground on competitors despite an enormous disadvantage stemming from America’s very low urban population densities, which make U.S. broadband networks much more expensive to build and maintain than those in most nations.

Amazingly, the European Commission’s top telecom regulator, Vice President Neelie Kroes, tells a story much like the tales of woe we hear from American broadband critics, but with the roles reversed: Kroes laments Europe’s declining standing relative to the U. S., where “high-speed networks now pass more than 80 percent of homes; a figure that quadrupled in three years.” To facilitate private investment in networks, Europe has developed a “Ten Step Plan” for a single, cross-border market for broadband that mimics our interstate, facilities-based broadband market.

But these facts are glossed over by the critics of U.S. broadband policy in large part because they directly contradict their neo-populist narrative of rapacious, profit-hungry broadband monopolists gouging consumers. The long tradition of American populism distrusts private provision of “essential” services and refuses to believe that competition can ever be brought to bear on infrastructure markets. Crawford in particular relies too heavily on a strained analogy with electricity, a genuine natural monopoly that is as different from the competing information networks we have in the broadband space as any network can possibly be: Can you get electric service over the air?

Critics also come up short on research, generally refusing to consult updated primary sources in favor of blog posts and news articles from inside the echo chamber that simply reinforce the traditional narrative. “Confirmation bias” is rampant in broadband criticism.

Broadband advocates would do better to focus their efforts on real problems, such as our dismally low level of interest in the Internet, the primary reason non-subscribers give for refusing to go online. Ideally, these efforts would be combined with initiatives to increase computer ownership among the poor — the second reason so few Americans use the Internet. The world’s high-subscription nations, such as Korea and Singapore, aren’t the price leaders for entry-level Internet services as we are, but they’ve led successful outreach efforts to spread computer ownership, digital literacy, and Internet awareness across their entire populations.

Getting all of America online is a goal that all Americans can support regardless of party creed or ideological doctrine. If we can make as much progress with online participation as we’ve made with speed, Europe will have a second Internet crisis on its hands.

More fiber, more speed, and more communities: Google Fiber is expanding in and around Kansas City to include Grandview, Missouri.

Google Fiber, as you probably know, offers Gigabit internet speeds — up to 100x faster than the average broadband connection. It’s currently available or announced in only a few limited locations, such as Austin, Texas, Provo, Utah, and of course Kansas City itself.

Interestingly, none of the locations are in California, where Google is headquartered, and none except Austin are in locations typically thought of as major digital or technology centers.

Source: Sean Ludwig

Typical Google Fiber speeds

Google Fiber is so fast, with speeds like 923.35 megabytes/second uploads and 841.94 megabytes per second downloads, that businesses want to get in on the party as well. However, since Google Fiber is designated solely for residential, the only way some startups have been able to use Fiber is to set up shop in a home.

If you happen to live in Grandview, Missouri, however, don’t hold your breath.

Previously-announced neighborhoods in the area won’t be fully built out until this fall, and Google’s community manager for Fiber, Rachel Hack, says that “it will still be awhile before we can build Fiber in Grandview.” In fact, the project is still in the planning phases.

If only Fiber could be installed as quickly as it operates!

Image credits: Sean Ludwig/VentureBeat

Filed under: Business, Cloud, Gadgets, Media

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Fastback Networks has raised $15 million to save mobile data networks from total collapse. OK, perhaps that’s an exaggeration, but Fastback has created radio technology to transfer mobile data at fast speeds so that companies can expand and plan mobile networks to handle huge voice and data networking loads in the future. Fastback’s technology could be a key piece in mobile networks that can transfer data as quickly as land-based infrastructure such as cable modems.

Matrix Partners led the round, with participation from existing investors Foundation Capital, Granite Ventures, and Juniper Networks. The latter wasn’t previously disclosed before. These investors believe that the San Jose, Calif.-based Fastback has the capability to deliver on technology that will make “small cells” practical. Right now, the world has more than 5 million macrocells, or fiber-connected cell sites that can handle the world’s voice and data traffic. The small cells are expected to offload a lot of the work the macrocells do into smaller networks, such as Wi-Fi networks, that handle the needs of users in a smaller cell sizes such as the neighborhood cafe.

Fastback provides what it believes is a vital connection between the macrocells and small cells: a wireless radio technology that can glue together the small Wi-Fi networks with the larger cell sites. Fastback chief executive Kevin Duffy said in an interview with VentureBeat that the company will use the money to scale up its operations and expand customer trials with major carriers.

“We founded this company because we saw a few years ago what was happening with the load being carried on the cellular network,” Duffy said. “The demand is overwhelming. But fiber networks won’t be able to reach everywhere. They will need a wireless radio solution. We call this technology that bends around buildings the ‘intelligent “backhaul” radio.’”

Fastback has created small cell “backhaul” data transfer technology — the Fastback Intelligent Wireless Transport solution — to bring together LTE carrier (licensed) networks with unlicensed Wi-Fi computer networks. Backhaul technology is for connecting infrastructure with big data pipes. Fastback’s patented technology can deliver data transfer speeds for small cells that are equivalent to the speeds of fiberoptic networks. The radio networks do not have to be within line of sight in order to transfer data from a small cell (Wi-Fi network) to a macro cell, which is connected to a fiber network. This so-called “any line of sight” technology means that mobile network operators can deploy small cells in any location without line of sight or access to fiber.

It took about 25 years to create the 5 million cell towers that are sprinkled across the globe. In the future, 10 to 20 times more towers may be needed, and the only way to handle that demand is to create small cells or to tap existing networks in the unlicensed spectrum. Fastback’s technology can transfer data at 500 megabits per second over a 10-kilometer radius.

Companies need this technology not only because of the need for mobile data transfer but also because of the increasing transfer of video over data networks and the pending improvements to voice technology that are coming to make cellular reception as good as landlines.

Stan Reiss, a general partner at Matrix Partners, has joined Fastback’s board. In an interview, Reiss said that Fastback has a technology advantage and it can remove barriers to widespread adoption of small cells. Juniper invested via the Junos Innovation Fund.

“I saw the technology required to make small cells possible, and that drove me to these guys, who have the best mousetrap,” Reiss said.

Fastback previously raised $11 million in a first round of funding in 2011, and it came out of stealth in February. Fastback has 35 employees. Duffy, formerly the chief executive of Proxim, cofounded Fastback with Kevin Negus in 2010. Negus, Fastback’s chief technology officer and chairman, was previously the chairman of WiDeFi and chief technology officer of Proxim.

“We should be shipping in 60 days,” Duffy said.

Filed under: Business, Gadgets, Mobile

The Federal Communications Commission announced today it has hired Michael Steffan as the director of digital learning. In his new role, Steffen will lead initiatives to expand access to broadband Internet in schools.

FCC Chairman Julius Genachowski explained, “Broadband and digital tools have game-changing potential for education.” Improving connectivity is a first step toward teachers and students taking advantage of the new education technology.

The appointment is timely given that senators, like John D. Rockefeller IV, are pushing for an extension of the 2010 E-rate program, which subsidizes Internet services for schools and libraries. The FCC believes that these institutions should offer lightning fast connections to the web.

The FCC, which is currently the largest funder of Internet Connectivity in K12 schools across America, has endorsed E-rate reforms. In January, Chairman Genachowski called for the nation’s mayors to bring one-gigabit Internet access to one community in each state by 2015.

Steffen will draw on experience bringing connectivity to America’s most remote school districts. Most recently, he served as the Chairman’s legal advisor on wireline, international, and Internet policy issues. During that time, he oversaw the creation of the Connect America Fund, a broadband infrastructure program for rural America.

The FCC has stepped up its involvement in education, but is also concerned with other sectors, including health care. Last month, the commission appointed Matthew Quinn as Director of Healthcare Initiatives. In this role, Quinn is helping to facilitate the availability of medical devices that require spectrum; and ensuring that rural hospitals and other health care facilities have required connectivity.

Top image via Shutterstock

Filed under: Business

Globally, the speed for broadband connections is steadily on the rise: according to Akamai’s Q1 2012 State of the Internet report, it’s now at 2.6Mbps, compared to 2.3Mbps in the last quarter, and a rise of 25% on a year ago and a reversal of the 14% decline of last quarter. South Korea continues to remain the connection king, with an average connection speed of 15.7Mbps. The U.S., meanwhile, doesn’t make it into the top-10 countries (it’s ranked 12th) but at least it’s speeding up: it is now at 6.7Mbps, up by 29% on last year and 17% from the previous quarter.

But as broadband continues to improve, so do attacks. Akamai notes in its study that attack traffic is on the rise, concentrating in particular regions and ports, with Asia Pacific, led by China, accounting for 42 percent of attack traffic originating from Asia Pacific; and the top 10 ports for attack traffic accounting for 77% of all attacks (up from 62% last quarter).

After Asia Pacific, Europe accounted for 35% of all attack traffic originations, while North and South America accounted for 21%. Africa represented less than 1.5% of attacks. However, although the Americas appear to account for less attack traffic, in fact the U.S. ranked second to China on an individual country basis, with 11% of all attacks; China accounted for 16%.

Other notable figures:

The Internet continues to grow: Akamai notes that it registered 666 million unique IP addresses from 238 countries and regions connecting to the Akamai Intelligent Platform in Q1 2012, a six percent increase over Q4 2011 and 14 percent increase compared to Q1 last year. More growth is happening in smaller countries than in larger ones. In the wake of the global launch of IPv6, Akamai says that the number of unique IP addresses from the top 10 connecting countries was at 66%, but that this is down by about one percent on the quarter before. China, Brazil, Italy and Russia are all growing at rates of 20%.

Broadband high and low: Akamai’s seeing enough growth at higher broadband speeds that it’s now breaking out progress in this area. It notes the number of countries where people are using broadband at speeds of 10Mbps or higher is now at 10%, a rise of 19% on last quarter. South Korea, being the world’s broadband leader, has high-speed broadband penetration of 53%. Japan is at 37%, Hong Kong is at 28%, Latvia is at 26% and the Netherlands is at 24% penetration for high-speed broadband.  Overall, 125 countries are seeing increases in speed over last year, Akamai notes, with only 10 countries seeing declines. Given the speeds below, you can see why Google’s fiber project is so compelling and has so many people excited at what it might bring next.

Mobile broadband: Germany takes the crown for fastest mobile broadband at 6Mbps. Worldwide some 65 carriers had speeds greater than 1Mbps. Interestingly, only three carriers analysed had connection speeds below 500kbps, meaning those carriers that are upgrading to mobile broadband seem to be doing it in a largely unified mass, with less speed fragmentation than we’re seeing in the area of fixed broadband. Akamai doesn’t name and shame the slowest providers — or say who the best ones are.

As for how we are using mobile broadband, this graphic that Akamai presents of the last five years shows just how much data is growing with respect to voice usage:

Attack traffic by ports points to Conficker Worm rising again: Akamai notes that Port 445, used for Microsoft-DS, accounted for a disproportionate 42% of all attack traffic, up from 25% in the previous quarter. It notes that Port 445 is associated with the Conficker worm.

It appears that this increase was largely attributable to significant growth in the percentage of attacks targeting Port 445 (42 percent of observed attack traffic), after seeing declines over the prior several quarters. As has been noted in past reports, Port 445 is associated with the Conficker worm. It was the most attacked port in seven of the top 10 countries generating attack traffic, Akamai notes. Attacks on web-based applications, represented by Port 80, actually decreased by three percentage points globally, but that was the second-most targeted port in the U.S., Germany and Brazil, Akamai notes.

Ever wonder what those mysterious government service fees on your cell phone bill go to fund? Part of it goes toward a newly launched $415 million plan to provide 400,000 rural netizens with some broadband goodness. The Connect America Fund, a Obama administration-supported plan for universal broadband, is part of a larger $4.5 billion mission to connect 19 million homes to bit-torrent streaming speeds by 2020. As with any major government rollout, the project is dogged by bureaucracy and industry backlash, but is nonetheless moving forward.

Broadband has gone from being a luxury to a necessity for full participation in our economy and society,” writes the FCC, arguing that public money will go toward expanding an essential part of the economy, ultimately resulting in more revenue for the federal government.

Not everyone is thrilled with the plan: South Dakota Public Utilities Commission Chairman Chris Nelson says the government’s project has halted private sector plans for his state, “Rural phone companies are completing their broadband infrastructure expenditures this year but are making very, very few plans for next year and literally nothing the year beyond that because of the uncertainty the order has caused,” Nelson said to Businessweek.

FCC Chairman Julius Genachowski argues that Connect America will make expansion more evenly distribute. “What our programs do is level the playing field so that an investor can look at a rural landscape and say, ‘OK with a lower population density and this investment from the federal government, now I can make a business work in rural South Dakota,’” Genachowski said.

The FCC had planned on augmenting the fund with some private-sector cash from the big telco players, but Verizon and AT&T have politely declined part of the $300 million pot. Verizon spokesman Ed McFadden said the decision was made “in order to focus resources and capital on our own wireline and wireless broadband deployment plans.”

Regardless, the plan is still moving forward. Readers can play with an interactive map from the FCC below:

[Photo Credit: Telegraph]

Internet Providers Testing Metered Plans for Broadband – NYTimes.com:

Cable providers starting to act like cell phone networks: metering bandwidth and usage. What will the Justice department do?

Editor’s Note: This guest post is written by Doug Pepper, who is a General Partner at InterWest Partners where he invests in SaaS, mobile, consumer internet and digital media companies. He blogs at dougpepper.blogspot.com.

Everyone expects startups, even successful ones, to undergo a cycle of hype, disappointment and ultimately growth on the way to a sustainable business. But what about new technology markets themselves? Does the growth of a new market follow a similar pattern?

Fred Wilson recently wrote about the twists and turns that startups face (expanding on Paul Graham’s astute “Startup Curve”). I’d like to take those ideas further and describe the “Market Curve” — a similar path that new markets take on the path to sustainability.

The chart below shows the basic pattern. Markets often experience a “Hype Cycle” of overheated expectations followed by a trough — call it “Facing Reality.” If the market ultimately succeeds, the next phase is “Liftoff.” But troughs don’t end until several ingredients are present. First, there must be broad adoption of core underlying technologies that support the market. Second, there needs to be compelling reference applications to drive mainstream adoption. Finally, there must be a pioneering company, typically with a charismatic leader, that leads the market out of the trough. Obviously not all markets are destined to make it out of their trough.

For entrepreneurs and investors the most exciting element of the Market Curve is that, once the trough ends, strong technology markets ultimately prove more valuable than anyone imagined even during the Hype Cycle. Here are a few examples of how different technology markets fit into this curve.

Internet: Broadband Penetration and YouTube

The late ‘90s saw extreme hype surrounding the Internet but the market was simply not yet ready to deliver. With only five million fixed broadband connections in 2000 the underlying technology wasn’t there. Plus there were very few truly compelling applications. The Internet entered its “Facing Reality” trough in the early 2000’s and failed to live up to initial expectations.

But, by 2005, there were 43 million US broadband connections and addictive applications like YouTube and eventually Facebook. That year Jeff Bezos launched Amazon Prime and convinced mainstream consumers that they could conveniently and safely shop for anything online. Since then, the Internet has proven to be more transformative to our civilization and more ingrained into mainstream culture than ever imagined.

Amazon has surfed the wave of the Internet’s Market Curve almost from the very beginning. Their stock price clearly follows this pattern.

Mobile: The iPhone and App Store

Between 2000 and 2005, nearly every VC firm had Mobile as a core investment sector. And, with few exceptions, those investments were unsuccessful. During that time, mobile networks were slow and unreliable (remember the CDPD network?), devices were clunky and carriers thwarted innovation. Clearly, that all changed when Steve Jobs launched the iPhone in 2007 and replaced the carrier decks with the App Store. And, with more than one billion mobile broadband subscribers globally, the post-PC mobile computing industry is in a “Liftoff” phase that is accelerating beyond wildest expectations.

SaaS: Salesforce.com and Successfactors

When I first joined my VC firm, InterWest Partners, in September 2000, the Application Service Provider (ASP) concept was all the rage. These ASPs offered off-the-shelf software to enterprises delivered over the Internet. However, between 2001 and 2007, adoption was slow because enterprises were more concerned with security risks than the benefits of hosted software.

Over time, Internet security and reliability improved and several pioneering companies, including Marc Benioff’s Salesforce.com and Lars Daalgard’s Successfactors, emerged with proprietary software applications that proved the benefits of SaaS delivery. Today, this market has broadened into a larger paradigm called Cloud Computing with corporations shifting nearly every aspect of their IT infrastructure into the Cloud. This could not have been imagined during the Hype Cycle of this market.

Market Failures: Troughs That Never End

Of course, not every market recovers from its trough. For example, while there are certainly specific nano technologies that are fundamental to many products, a broader nanotechnology market hasn’t emerged. It’s not clear that it ever will. And, in my opinion, Cleantech currently sits at the bottom of the trough. Because of extreme capital intensity, long sales cycles and wavering enterprise and consumer interest in “Green,” this market has become challenged. The question is whether Cleantech will ever emerge from the depths of the trough where it sits today and become the powerful market that John Doerr, Vinod Khosla and many others had hoped.

In the chart below, I show where a number of current technology Markets sit along the Market Curve.

Takeway: Have Conviction During the Trough

The best investors recognize and take advantage of these troughs and the best entrepreneurs lead Markets out of the trough. When SaaS was in the trough, Marc Benioff built Salesforce.com and Dave Strohm invested in Lars Daalgard at Successfactors. When the Internet was in the trough, Jeff Bezos built Amazon.com and Roelof Botha invested in YouTube. In the case of Steve Jobs, he invented a product and pioneered a business model that altered the Mobile market and led it out of the trough. The key is to have conviction about a Market and, as an investor, look for the technologies, products and leaders that will end the trough. Or, as an entrepreneur, launch market leading products and business models to end it yourself.

Marketo is an example of an investment my firm, InterWest, made during a trough. During the late 1990′s, there was a peak of excitement around Marketing Automation with companies like Annuncio, Rubric, Marketfirst and ePiphany. But, the market was not ready. Marketers were not adopting Internet techniques for acquiring customers and they didn’t have sufficient budgets to adopt and implement enterprise software.

By 2006 when InterWest invested in Marketo, the company’s founders believed, and my colleague Bruce Cleveland and I agreed, that the market had progressed along the Market Curve. Marketers had begun consistently utilizing search engine marketing, landing pages, email marketing, and online content marketing … all the activities that are harnessed and optimized by Marketing Automation and Lead Nurturing products. And, the SaaS delivery and business model meant that marketers could quickly see ROI without big budgets or IT resources.

We had conviction that that the Marketo team would create the compelling products needed to lead the Marketing Automation market out of the trough. Today it seems clear that this market will be larger than expected even during the initial Hype Cycle.

While Apple’s new LTE-equipped iPads are designed to offer customers the same experience regardless of which U.S. mobile carrier they base their purchase on, the Verizon model currently boasts the exclusive capability of sharing its high-speed mobile broadband connection with other devices for upwards of five times longer than most standalone LTE mobile hotspots.

There are few more articulate supporters of high speed broadband access than Sonic.net CEO Dane Jasper. Not only does he think Americans should have the right to high quality broadband, but he also thinks that it is the key to innovation in the broader economy. Home video is, of course, increasingly dependent on broadband and so, Japser told me when he came into our San Francisco studio earlier this week, is innovation in our  healthcare and education sectors.

Jasper doesn’t see the actual cost of broadband as the problem. Internet access isn’t finite, like coal or water, he insists – and the cost of bandwidth is actually plummeting to zero. Indeed, a stunning 98% of his costs, he confessed to me, go on things outside the product. It’s staffing, he acknowledged, which suck up most of his costs – with investment in customer service being 20 times higher than his investment in product.

For Jasper, innovation can solve all our problems. Even the seemingly endless issue of piracy, he told me, can be solved by rights-holders becoming more innovative in making their product readily available on the Internet. It’s that kind of innovation, Jaspers insists, rather than legislation such as SOPA, that will save the entertainment industry.

This is the second of two interviews with the straight-talking Jasper. Yesterday, he told me why fiber is the future of wired connectivity.