[151455] in North American Network Operators' Group
last mile, regulatory incentives, etc (was: att fiber, et al)
daemon@ATHENA.MIT.EDU (Jared Mauch)
Thu Mar 22 12:28:34 2012
From: Jared Mauch <jared@puck.nether.net>
In-Reply-To: <CAKnNFz-bge=7DZBmeHBpXt-auOXGjtsJh2Ru=1KeugKdE6AP-A@mail.gmail.com>
Date: Thu, 22 Mar 2012 12:26:50 -0400
To: chris <tknchris@gmail.com>
Cc: nanog@nanog.org
Errors-To: nanog-bounces+nanog.discuss=bloom-picayune.mit.edu@nanog.org
On Mar 22, 2012, at 11:05 AM, chris wrote:
> I'm all for VZ being able to reclaim it as long as they open their =
fiber
> which I don't see happening unless its by force via government. At the =
end
> of the day there needs to be the ability to allow competitors in so of
> course they shouldnt be allowed to rip out the regulated part and =
replace
> it with a unregulated one.
I think this partly captures the incentive case here, but there is also =
a larger one at play. Over the years the copper infrastructure was =
installed and extended through various incentive programs. You can see =
the modern-day reflection of that in the RUS (used to manage rural =
electrification act, part of USDA) and NTIA (Department of Commerce).
The barriers to entry are significant for a new player in the =
marketplace. The cost is putting the cabling in the ground vs the cost =
of the cable itself. One can easily pick up hardware for $250 to light =
a single strand of 9/125 SM fiber @ 10km for a 1Gb/s ethernet link. =
That's low enough you could likely get a consumer to buy the hardware. =
The real cost is the installation per strand foot/mile.
In the past this has been subsidized for copper plant. There is no =
reason in my mind that the fiber plant should be treated differently =
from this standpoint. I can find fiber optic cabling for $0.25/ft. The =
problem here is a multi-dimensional one that I've seen play out in a few =
markets:
Verizon selling assets to Fairpoint (NH, ME, VT). These are high cost =
areas due to low-density population. For the sale to go through, =
Fairpoint had to agree to build into these higher cost areas. The =
result was bankruptcy for Fairpoint.
Verizon sold assets in Michigan (and other states) to Frontier. I've =
not tracked this one as closely, but I suspect the economics of this are =
fairly complex.
I've also spoken to some small ISPs and their general cost of building =
fiber to the home tends to be $2500/subscriber in upfront capital. This =
covers just the installation cost. Due to years of subsidy and =
regulation, people are unwilling to pay this amount to install a =
telecommunications service whereas a new home requiring a connection to =
the water, sewers, natural gas or electric grid may pay $10k or more to =
connect. Many people wouldn't think of buying a home without electric =
service, but without modern telecommunication service? I've seen this =
play out after the fact with friends asking how to get service. =
Satellite, Fixed wireless or just cellular data quickly become their =
fallbacks. The demand is there, the challenge becomes recovering the =
build cost.
It is my firm belief that without a regulatory regime it will not be =
feasible to connect many communities robustly to modern communications =
infrastructure. This could clearly change if the carriers involved see =
fit to replace this infrastructure, but with their current debt loads, I =
think it will be challenging to say the least.
Taking a look at Verizon - Their most recent quarterly balance sheet =
shows:
http://finance.yahoo.com/q/bs?s=3DVZ
Assets: 230.461 Billion USD
Liabilities: 194.491 Billion USD.=20
This is not a lot of money, considering they have growing liabilities on =
a quarterly basis as part of their debt load (Long-term debt of $50 =
Billion).
A large fiber build would easily cost a few billion dollars and have =
lots of regulatory barriers. In my county it costs $200 to go over or =
under any public road (just for the permit). This starts to add up =
quickly.
I do think we need a new last-mile regime in many areas, be it more =
"fair" access similar to pole attach fees or the removal of local =
barriers to build this infrastructure.
Some school and other governments here in Michigan would love to =
sell/lease their excess fiber capacity to the private sector, but are =
worried about turning a profit when it was built with taxpayer funds and =
problems associated with that. I'd like to see these barriers removed. =
If it's there, lets make it of value. If the school system turns a =
profit on their enterprise, that's fine, it can lower the tax burden =
elsewhere.
Me? I'd be willing to pay $2500 to have Fiber built to my home. I =
might even pay more. At this point, my research continues on building =
the fiber and arranging my own easements for where to place it. I =
suspect you just need a few geeks that are willing to part with some =
extra $ for fiber bragging rights and one can build it.
- Jared=
