more on more on RBOC vs. RBOC

[Dave Farber <dave () farber net>]

Delivered-To: dfarber+ () ux13 sp cs cmu edu
Date: Tue, 20 Apr 2004 14:53:01 -0700
From: brent.hunsaker () ngc com
Subject: RE: more on more on RBOC vs. RBOC
To: dave () farber net

Dave,

The fixed 30-year depreciation is a misnomer. The copper wire was 
depreciated at 30 to 40 years, passive fiber at 30 years, electronics is 
much less than that and is based on services provided. Your added features 
to the basic phone services is due to new digital equipment. Change to 
equipment in the CO is also due to capacity, physical and functional. The 
electronic portion of the CO upgrades continue to increase traffic in the 
same physical space. One example is the movement of one D0 on one card to 
24 D0s one one card and more. DSL services has come slow due to intial 
inertia but once they get moving they keep moving.

The ILECs are also willing to use politics and legal action to delay 
compitition. This is part of the reason that local fiber service companies 
are having a hard time starting up.

Deployment practices also contribute. With ILECs the process of deployment 
of new types of equipment takes years just because of the process. If they 
choose to overcome that process of lab demo (1-2yrs) to field demo (1-2yrs) 
to field trial (1-3yrs) to greenfield deployment to referbishment of 
existing areas, then you would see a more competitive ILEC. This process 
allows the ringing out of all problems in electronics, deployment, field 
service, support and maintainance.

With WDM and DWDM implementation on fiber the electronic upgrades would 
move more quickly. The limit with fiber is the optical plexers. Right now 
diplexers and triplexers is expensive. Half of the CPE electronics costs 
are these plexers. As the costs of those go down the CPE costs go down.

As the ILECs choose to change their processes and these costs go down the 
depreciation periods for fiber vs. wireless start to converge. So, this is 
just a bit more complex that what is being discussed here.

Thanks,
Brent

-----Original Message-----
From: Dave Farber [mailto:dave () farber net]
Sent: Monday, April 19, 2004 6:11 AM
To: ip () v2 listbox com
Subject: more on more on RBOC vs. RBOC



Delivered-To: dfarber+ () ux13 sp cs cmu edu
Date: Mon, 19 Apr 2004 09:05:50 -0400
From: Dana Blankenhorn <danablankenhorn () mindspring com>
Subject: Re: [IP] more on RBOC vs. RBOC
To: dave () farber net
Reply-to: Dana Blankenhorn <dana () a-clue com>
X-Mailer: Microsoft Outlook Express 4.72.3110.1
X-Spam-Status: No,
  hits=4.5 required=7.5
tests=DOUBLE_CAPSWORD,NO_MX_FOR_FROM,MSG_ID_ADDED_BY_MTA_2 version=2.31
X-Spam-Level: ****
X-Spam-Filtered-At: eList eXpress <http://www.elistx.com/>

Joel has a good point. But there's more basic economics at work here.

Bell infrastructure is based on 30-year depreciation schedules. So are all
the CLECs he mentions.

The way to compete against the Bells is going to be based on Moore's Law. A
network that combines Wi-Max and Wi-Fi to reach competitive fiber is using
Moore's Law. They're using equipment they can pay for, and replace, after
three years. Those CLECs Joel mentions were not. Their facilities, even if
fully utilized, would not be paid-off and replaceable after 3 years.

No matter what the Bells do they can't get away from depreciation. They have
those incumbent networks to support. All their fiber-to-the-home talk is
also based on 30-year depreciation.

I personally think 30-year depreciation is a sucker's game. And I'm
wondering when some people with capital will put their money where my mouth
is. I suspect it's already happening, quietly, under the surface. (If you
publish this note, Dave, some of that investment may well come to light,
courtesy our multi-thousand member staff of crack reporters.) And the next
few years will be very interesting as a result.

Dana Blankenhorn   danablankenhorn () mindspring com
Progressive Strategies   Business Strategy analyst
http://www.progstrat.com http://www.corante.com/mooreslore
Get A-Clue.Com Free   http://www.a-clue.com

-------------------------------------
You are subscribed as interesting-people () lists elistx com
To manage your subscription, go to
 http://v2.listbox.com/member/?listname=ip

Archives at: http://www.interesting-people.org/archives/interesting-people/