Universal Broadband's Potential Winners (CMCSA)

[David Farber <dave () farber net>]

Begin forwarded message:

From: Brett Glass <brett () lariat net>
Date: January 5, 2009 8:10:01 PM EST
To: dave () farber net, "ip" <ip () v2 listbox com>
Subject: Re: [IP] Universal Broadband's Potential Winners (CMCSA)

Nicholas Carlson wrote:

> Lots of companies stand to benefit from President-elect Barack Obama's
> plan to create universal access to a broadband Internet. We've
> mentioned Kleiner Perkins-backed startup M2Z Networks, which wants the
> FCC to auction off spectrum for a free over-the-airwaves-Internet.

The M2Z plan is, hopefully, dead under the new administration. Its
business plan simply doesn't work arithmetically; it's not possible to
offer 768 Kbps to all comers, in 95% of the country, using the profits
that can be made on the sliver of spectrum that would be up from  
auction.
Backbone bandwidth and infrastructure are many times too expensive.

> How much these companies will benefit depends on how Obama's
> administration and the FCC ends up defining broadband. If the FCC
> decides broadband means download speeds of around 5 megabits per
> second, then cable operators like Comcast (CMCSA) and Time Warner
> Cable (TWX) win. Their cable modems are capable of reaching those
> speeds, while phone-based modems from the telephone companies are not.

The devil is in the details here. Does this mean that the raw speed of
the connection is 5 megabits per second, or that each user actually
can GET 5 megabits per second 24x7? The latter is, again, simply
financially impossible.

> So the phone companies will want broadband defined as anything above
> 1.5 megabits per second.

Even this is too high to make universal deployment feasible if a high
duty cycle is expected. With wholesale bandwidth costs at or above $100
per Mbps in many parts of the country, no provider could afford to meet
such a standard.

> The Telecommunications Industry Association
> is also lobbying for a $25 billion grant. Sprint (S) subsidy Clearwire
> would also benefit from a slower broadband benchmark. Its WiMax
> download speeds range between 2 megabits and 4 megabits per second.

Clearwire would have a different problem. While WiMax typically has
a maximum speed of 6 Mbps, that's the capacity of the entire access
point. If one user gets that much throughput, the rest of the users
get zero... zilch... nothing unless the provider spends $2,000 on
a second access point. And then, a second customer could saturate THAT
one if allowed a 100% duty cycle. In short, without throttling  
throughput
to an amount substantially lower than the maximum raw speed, no one  
could
provide such coverage.

Alas, most of the people who are attempting to set policy don't seem to
recognize these limitations, because they're not familiar with the
technology... and believe providers' "maximum speed" claims without
understanding what they mean.

--Brett Glass





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