Re: last mile, regulatory incentives, etc (was: att fiber, et al)

[david peahi <davidpeahi () gmail com>]

I have discovered that the Federal School Lunch E-Rate program has built
out an entirely parallel fiber optic infrastructure in the USA, bypassing
telco fiber in many urban areas such as Los Angeles/Southern California.
There are now companies that exist solely to construct E-Rate fiber.
Sunesys is one such company.
E-Rate builds out fiber to schools and libraries, and the telcos apparently
have lobbied to ensure that a lateral to a library, for example, does not
become a local fiber hub, but the backbone fiber can be used by anyone,
with laterals built to order.
I do not work for any of these E-Rate companies, but have discovered their
potential use for connecting my network locations together.

On Thu, Mar 22, 2012 at 9:26 AM, Jared Mauch <jared () puck nether net> wrote:

> 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=VZ
>
> Assets: 230.461 Billion USD
> Liabilities: 194.491 Billion USD.
>
> 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