RE: Internet access in Japan (was Re: BitTorrent swarms have a deadly bite on broadband nets)

[Steve Gibbard <scg () gibbard org>]

On Wed, 24 Oct 2007, Rod Beck wrote:

> On Wednesday 24 October 2007 05:36, Henry Yen wrote:
> > On Tue, Oct 23, 2007 at 09:20:49AM -0400, Leo Bicknell wrote:
> > > Why are no major us builders installing FTTH today?  Greenfield should
> > > be the easiest, and major builders like Pulte, Centex and the like
> > > should be eager to offer it; but don't.
> >
> > Well, Verizon seems to be making heavy bets on replacing significant
> > chunks of old copper plant with FTTH.  Here's a recent FiOS announcement:
> >
> >   Linkname: Verizon discovers symmetry, offers 20/20 symmetrical FiOS
> > service URL:
> > http://arstechnica.com/news.ars/post/20071023-verizon-discovers-symmetry-of
> > fers-2020-symmetrical-fios-service.html
>
> While probably more "good" than "bad", it is my understanding that when
> Verizon (and others) provide FTTH (fiber to the home) they "cut" or
> physically disconnect all other connections to that residence.....  so much
> for any "choice"...
>
> Exactly. And because they installed fiber, the FCC has ruled that they 
> do not have to provide unbundled network elements to competitors.

It's this last bit that seems to be leading to lots of complaints, and 
it's the earlier pricing of "unbundled network elements" at or above the 
cost of complete service packages that many CLECs and competitive ISPs 
blamed for their demise.  Some like to see big conspiracies here, but I'm 
not convinced that it wasn't just a matter of bad planning on the parts of 
the ISPs and CLECs, perhaps brought on by bad incentives in the law.

The US government decided there should be a competitive market for phone 
services.  They were concerned about the big advantage in already built 
out infrastructure the incumbent phone companies had -- infrastructure 
that had been built with money from their monopolies -- so they required 
them to "share."  This meant it was pretty easy to start a DSL company 
that used the ILEC's copper, but seemed to provide little incentive for 
new telecom companies to build their own last mile infrastructure.  Once 
the ILECs caught on to the importance of this new Internet thing, that 
meant the ISPs and the new phone companies were entirely dependent on 
their biggest competitor for services they needed to keep functioning. 
The new providers were vulnerable on all sorts of fronts controlled by 
their established competitors -- pricing, installation procedures, service 
quality, repair times, service availability, etc.  The failure of the new 
entrants seems almost inevitable, and given that they hadn't actually 
built any infrastructure, they didn't leave behind much of anything for 
those with better plans to buy out of bankruptcy.

I don't think this was what was intended.  My impression is that the 
wholesale copper was supposed to be a temporary bridge to allow the new 
entrants time to build infrastructure of their own.  That's why the rules 
about sharing didn't apply to infrastructure built by the ILECs later. 
But new entrants building their own infrastructure generally didn't 
happen.  Instead, the end-user ISP operators I was dealing with at the 
time generally seemed outraged that the evil phone companies, which should 
have been there to sell wholesale services to them, were instead competing 
in their markets.  Unfortunately for them, the phone companies not only 
undercut them on cost, but generally built better networks.  Given the 
impending obsolescence of the phone companies' traditional businesses, what 
else would the phone companies have been expected to do?

The exception to this was the cable companies.  They already had some 
physical plant of their own, but they invested a lot of money in a lot of 
new construction.  Many of them didn't do financially well on the deals, 
but even those who ran out of money left behind infrastructure that is now 
effectively competing.

This isn't to say the original encouragement of CLECs using ILEC copper in 
the 1996 telecommunications act wasn't without benefits.  I rather doubt 
the ILECs would have gotten as interested in DSL as they did, if there 
hadn't been the threat of losing the business to competition.  But given 
that improvements in speed since the initial crushing of the upstarts have 
been mostly limited to trying to match the capabilities of the cable 
companies, perhaps it wasn't the best strategy for the long term.  If 
those who want to compete need to build some infrastructure of their own, 
and if anybody is successful in doing so, that should have a much bigger 
impact in terms of putting long term pressure on the ILECs to provide 
better service.

-Steve