Re: Broadband Economics 101 - Focus on the economics, not the technology

[David Farber <dave () farber net>]

Begin forwarded message:

From: "David P. Reed" <dpreed () reed com>
Date: December 16, 2008 9:40:19 PM EST
To: dave () farber net
Cc: ip <ip () v2 listbox com>
Subject: Re: [IP] Broadband Economics 101 - Focus on the economics,  
not the technology

It is distressing to me to read this article, because it *alludes* to  
an economic argument, but does not make a single economic argument.

The one half-hearted argument it makes is that the combination of  
users paying more than $500/year each and web sites paying far more  
each cannot support the buildout and maintenance of a modern fiber  
plant or wireless plant.

That argument is so clearly off the mark that it is a joke.  There  
have been any number of profitable companies who make money by  
operating some damn good networks at those prices.   No one is selling  
Comcast or RCN or Verizon short.

More importantly, people have calculated that a full deployment of  
home-run fiber to every home in the US will cost no more than $3000/ 
home *all in* if we do the whole thing.  Depreciated over 30 years,  
that means the fiber will cost $100/year.  I think you can make pretty  
good profits if you charge $500/year for a system that costs $100/ 
year, and where the terminal equipment costs and end user support  
costs are borne by the servers and by the users.

Especially if you factor in "Moore's Law" and roll the system out over  
the next 5 years.

Seybold is many things, but not an economic thinker, I'm afraid.

David Farber wrote:
> Begin forwarded message:
>
> From: dewayne () warpspeed com (Dewayne Hendricks)
> Date: December 16, 2008 4:50:58 PM EST
> To: Dewayne-Net Technology List <xyzzy () warpspeed com>
> Subject: [Dewayne-Net] Broadband Economics 101 - Focus on the  
> economics, not the technology
>
> Broadband Economics 101 - Focus on the economics, not the technology
> By Andy Seybold
> Created Dec 16 2008 - 8:53am
> <http://www.fiercewireless.com/story/broadband-economics-101-focus-economics-not-technology/2008-12-16 
> >
>
> The press is full of stories about the AWS-3 spectrum in the 2.5-GHz  
> range that M2Z has been trying to convince the FCC to release so it  
> can build a nationwide broadband network. The vote on the auctioning  
> of this spectrum, with some conditions, was supposed to take place  
> at the Dec. 18 FCC meeting. The meeting has been cancelled, although  
> it is not clear whether the FCC commissioners might still vote on  
> this item by circulation, which means without a meeting. Each  
> commissioner would still vote and include his or her comments.
>
> The U.S. Congress, the National Telecommunications and Information  
> Administration, and the Commerce Department have all weighed in  
> against the FCC voting on this spectrum with its special  
> requirements (25 percent of the service is to be free, no adult  
> content permitted, and the network must cover 95 percent of the U.S.  
> population). Further, T-Mobile USA and others are concerned about  
> interference to their own networks if this project moves ahead. Over  
> the past few days, there has been a flurry of articles and letters  
> pushing the FCC to abandon this auction as the rules now stand.  
> Perhaps it has gotten the message, or perhaps it simply wants to  
> push this agenda item through behind closed doors. In any event, I  
> believe the new administration and the new FCC will want to take a  
> look at this spectrum to determine how it can best be used to serve  
> the public.
>
> The FCC, Congress and the executive branch of the federal government  
> have been saying for years that we need to provide broadband  
> services to those in the inner city who cannot afford it as well as  
> to rural America where it is simply not available. There have been a  
> number of recent attempts to increase broadband services including  
> muni-WiFi, which has failed almost everywhere it has been tried, and  
> Broadband over Power Lines (another FCC favorite), which could have  
> provided services to rural America had it worked and not caused  
> interference to so many other services and had it not cost too much  
> to deploy.
>
> [snip]
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