Telecommunications in Alaska.

Most of us think of telecommunications in terms of the end product and the most common product we think of is the telephone. Normally we don't even consider television or the Internet in the same sentence. Even so, telecommunications is not just about telephones, television or the Internet. It's about bandwidth (bits of data) and how to get more of it. Whether you log onto your computer or watch TV, the core business of telecommunications is delivering bandwidth to consumers.

In Alaska, any discussion of telecommunications must look at urban and rural parts of the state as being distinctly separate markets and technological areas. More importantly, when you get to rural Alaska you encounter a regulatory structure for distribution and sale of telecommunications services.

Types of Bandwidth

Broadcast Bandwidth: Most people associate this with television but as television has moved into the digital world, lead by satellite television providers, this also has come to mean broadcast data. This type of bandwidth provides one-way service only, so it is not suitable for telephone. Coaxial cable or some type of wireless system is normally the source of broadcast bandwidth.

Two-way symmetrical: The best example of this is the plain old telephone. Most telecommunications are developed in the two-way symmetrical model, that is the bandwidth in both directions is equal.

Two-way asymmetrical: The Internet is driving this form of bandwidth because at the consumer end a 10-kilobit request for a Web page can result in a megabit of multimedia content. It's called asymmetrical because the bandwidth from the consumer to the network (Internet) is typically much less than the bandwidth from the network to the consumer. For example, some forms of digital subscriber line services offer 768 kilobits-per-second to the network (upstream) and up to 6 megabits from the network (downstream). Cable modem service is asymmetrical also.

Providing Bandwidth to the Consumer

Telephone Cable: This is where it all started and it hasn't fundamentally changed since Alexander Graham Bell. Most consumers are getting their two-way bandwidth this way. In capacity terms, the telephone line in your home today can download at 56 kilobits per second. Digital Subscriber Line service is the newest technology using copper telephone cable. A DSL line can download up to 6 megabits per second-or in other words, can pack a little over 100 pounds of sugar in today's one pound bag.

Coaxial Cable: This is how cable television is typically delivered to the home. Normally associated with broadcast bandwidth, cable systems can be upgraded to support two-way bandwidth. Today's cable modem service is the most common example of two-way bandwidth over cable.

Fiber Optic: Fiber is the workhorse of wide-band telecommunications. It is fiber that normally feeds the telephone cable, coaxial cable and wireless networks. Many large business consumers have direct access to fiber, but even then the final delivery to the individual is normally over a telephone-type or coaxial cable.

Wireless: Most people think of this as cell phones but it is really a lot more. There are two distinct forms of wireless bandwidth. The first is terrestrial radio systems that provide telephone, Internet and television services from transmitters in the local area. The second is satellite systems that cover large areas. Satellite systems are the workhorses of the television industry and have a special niche in providing communication networks for large national retailers such as Wal-Mart, Chevron and Safeway.

Urban Bandwidth 2000 and Beyond

Broadcast Bandwidth: Look for a significant increase in broadcast bandwidth and more programming or channels as companies become more efficient in using the bandwidth. Today most broadcast bandwidth is used to bring analog television signals to the home.

As GCI Cable and Alaska Choice Television convert from analog to digital service, there will be a several-fold increase in the number of available channels, and the introduction of television enhanced by broadcast Internet content. With two-way Internet services available over these same networks, entertainment should be a rapidly evolving experience.

With local broadcasters putting in digital television transmitters, plan on an increase in the number of off-the-air channels (channels you can pick up free with cable or rabbit ears), but also plan on some type of pay broadcast television service to offer more than the basic fare. The largest increase in raw bandwidth and content will probably come from satellite providers.

Direct Broadcast Satellite Services have always been digital, and as newer generation satellites come into service allowing smaller receive antennas, even urban users will have an expanded choice of television providers. As more providers are capable of serving the market the price will probably not decline, but future price increases by cable operators will be held in check by competition from other providers.

Two-Way Bandwidth: Most consumers don't really care whether they get service over asymmetrical or symmetrical bandwidth. The main issue is price. Consequently, most of the new bandwidth coming into service over the next five years is likely to be asymmetrical.

The prime driver in this is the basic asymmetry of the Internet from the user's perspective. Unless you are hosting a large Web site and have a large telecommuting work force, the economy of digital subscriber line services and possibly cable modems in providing both voice and Internet service will drive both business and residential sectors to look at a DSL or cable modem alternatives.

Since DSL can use the same wire for both telephone and Internet service, a logical price point for entry-level DSL service would be two home telephone lines plus Internet service (about $49 per month). GCI's first DSL-like offering is considerably more than that, but when ATU (ACS) enters the DSL market, this price should change substantially.

DSL does have a significant limitation. If your home or business is located more than 18,000 cable feet (not as the crow flies) from a telephone central office, then DSL may not be an option. Technology may push this limit outward, but not in the near future.

Terrestrial wireless services operating in frequencies ranging from 2 to 32 gigahertz frequency bands could also have a significant effect on the prices for bandwidth. Currently the only publicly available wireless Internet service is provided by Spectrum Wireless in the unlicensed ISM (Industrial, Scientific and Medical) frequency band. This is not likely to be the only wireless, high-speed data alternative over the next five years.

We should anticipate the frequencies employed by Choice Television and WantTV will eventually be used for services other than television. In addition, there are other licensed wireless services just now emerging. These wireless services will be especially valuable for consumers too far away from telephone central offices to use DSL, and those not on an existing cable system. Traditional cellular services will roll out new data services to complement their existing voice offerings, but the speed will be limited compared to other services. Maybe we will even get integrated messaging where e-mail and voice mail go to the same point (hopefully with better junk mail filters).

Intrastate and interstate two-way bandwidth for private networks should see a significant price decline over the next five years as competition between Alaska FiberStar, KANAS and GCI heats up. However, this bandwidth will still cost between three to four times as much as its Lower 48 counterpart for interstate service. While intrastate bandwidth will on the surface be less expensive due to competition, the price of a telephone call in state may not decline much due mainly to the regulatory structure.

While I can call Queen of England for 10 cents a minute, it still costs me at least 14 cents a minute to call the governor. Until the regulatory structure changes its ways, this disparity will remain. The major future issue is the pricing model for bandwidth. Today, the regulatory structure not withstanding, the cost of telecommunications is distance sensitive. Generally speaking, the further the distance the higher the price. The Internet is chipping away at this model and replacing it with another. The new model is speed of access and quality of service.

Rural Bandwidth 2000 and Beyond

While fiber optic bandwidth is the main source for two-way bandwidth distributed in urban areas, most of rural Alaska has only one source and that is satellite. Unfortunately, satellite bandwidth is the most expensive two-way bandwidth you can buy and good satellite bandwidth in rural Alaska is hard to find.

Cable systems will probably be the first to distribute high bandwidth two-way services since they are the most capable systems in place. After that, DSL and wireless alternatives will probably be the next to develop.

None of these can progress unless there is a source of broadband services to feed the local distribution system. At today's prices of $1,500 for 64 kilobits provided to schools and libraries, broadband service may mean 128 kilobits for many smaller villages. The $1,500 price is extremely low given the price structure of the satellite industry in general and the probability of this price changing significantly is not very great.

The most likely development in rural bandwidth is augmenting the basic 64-kilobit service with some form of asymmetrical Internet service. This could substantially improve the quality of rural Internet service while keeping it affordable.

All is not bleak or expensive in rural Alaska. Broadcast bandwidth from multiple satellites has dramatically changed the world of television in rural homes. While initial adopters spent $1,000 or more for their systems, the next generation of Direct Broadcast Satellites, coupled with the satellite providers' incentive programs, should bring the initial investment price to under $500 for 200 or more channels of video. The downside of this DBS product is the pressure it will place on rural cable systems to add channels or lose subscribers and it doesn't have Alaska content. However, rural cable systems have the opportunity for new revenue from Internet services.

The final unknown in rural Alaska is the regulatory structure at both the state and federal level. In the near-term, this structure will probably limit the entry of new players trying to provide conventional voice services through new technology such as the Internet because it is geared to subsidize switched telephone networks. In the largely unregulated world, this type of switched network design is being replaced by packet-based (Internet type) networks. In addition, the same regulatory structure will limit Internet deployment in the small villages to schools because service to schools is subsidized and service to the village is not.

Unless the regulatory structure and the businesses it supports evolve, in five to seven years they could be rendered largely obsolete by deployment of Ka band satellite systems such as Teledesic and Spaceway. This will give individual users a competitive alternative the regulators are unable to control. In addition, these systems offer the greatest promise of putting urban and rural Alaska on somewhat equal footing for access to bandwidth.

Conclusion

Bandwidth in Alaska for the next five years is going to be a function of where you live. In Anchorage I can listen to Internet radio stations from around the world but I can't tune in Ketchikan because the speed and quality of their connection to the Internet isn't good enough. Providing affordable, high-speed access to the Internet in rural Alaska will be one of the dominant issues in Alaska telecommunications over the next few years and will become a major topic in the rural versus urban debate. The impact on the state can be substantial both in terms of the cost of providing state services in rural Alaska and in developing rural economies in an age where what you have access to is more important than where you live.

For the last six years, Tom Brady has worked in small business as general manager of AmRussCom and manager of Data Services for Microcom. Brady has assisted in developing a successful telecommunications business in Russia and in developing new satellite television and data alternatives for rural Alaska. In addition, he is the project manager for Microcom's technical support contract with the State of Alaska for the Satellite Interconnection Project. Having been an Alaska resident since 1975, Brady has seen the development of technology over time throughout Alaska and was a pioneer for cable television in state when he laid the groundwork for the first cable system at Eielson Air Force Base in 1976.