Cook’s Collaborative Edge

A Conversation With Sara Wedeman About the  Route from ‘Here’ to ‘There’

This interview was inspired by April’s discussions relating to the efforts of Connected Communities, Inc., Broadbandcensus.com and Rachelle Chong. Having submitted a series of analyses to NTIA during the “public comments” phase of the development process, Sara has a lot to say about how mapping should be done, and why it is so important to do it well.

The interview (available here) focuses on three essential themes:

How to, and how not to do broadband mapping;

Methods for making the mapping process a substantive and meaningful part of the NTIA-BTOP program; and

The connection between connectivity, civil liberties, and prosperity.

We begin by discussing research and mapping. These are astoundingly complex exercises, that should not be undertaken without the development of a sound methodology. Using population density as a case in point, Sara focuses on two examples.

In the first we examine an urban zip code, Philadelphia’s 19104. In this case, using the wrong unit of geographic measurement (the zip code), distorts our understanding of just about everything. Zip codes were designed to facilitate mail delivery, not the measurement of complex, technical issues like ‘lumpy’ adoption and exclusivity of access. If we fail to consider population density (which we will do if we assess urban broadband access at the zip code level), we risk making sweeping and just plain wrong assumptions about who has access to broadband and who does not.

Next and by way of contrast, we cover a rural example, deconstructing West Virginia’s first congressional district. This district includes 20 counties spanning the northern part of the state and abutting Ohio, Pennsylvania, and Maryland. Starting at the state level, the first district appears to be the most densely populated of the state’s three congressional districts. However, ‘smoothing’ the data at this level obscures the fact that most of the district’s seemingly denser population is located in just two census tracts in the city of Wheeling. Wheeling is located at the confluence of the Ohio River and several tributaries, which raised some interesting observations about the interconnected nature of topography, communication pathways, and trade routes.

The important point is that unless one knows how to do this type of research, there is a large danger that the above-referenced issues will be overlooked, resulting in a misleading portrayal of the true state of connectivity in areas both urban and rural.

But broadband mapping is not just about geography. More importantly, it is about people living in geographic space. We cannot conduct a credible mapping exercise without talking to people; asking them about their perceptions and experiences of high speed Internet access. This methodological requirement demonstrates why a few short questions on these topics should be included in the upcoming Decennial Census.

If done well, broadband mapping will be a tremendously sound investment. Its contributions will not stop with locating unserved and under-served communities and creating a national map. It will also help in diagnosing, and presumably redressing, the many causes of service blockage — which are likely to vary based on both social and geographic factors. Moreover, mapping has the potential to help infrastructure providers develop build-out strategies that literally reflect the ‘lay of the land.’

The next thread of the conversation focuses on the relationship between connectivity, the Five Freedoms, and prosperity. The impetus behind our mapping exercise resonates strongly with the work of Amartya Sen, 1998 Nobel Laureate in Economics. Sen won the Nobel for exposing the explicit connection between the availability of accurate, timely information and the availability of food (or lack thereof) by analyzing conditions surrounding a series of famines in Bangladesh. His later work showed that the protection of civil liberties, the ability to participate in the timely, unfettered, exchange of information and opinion, as well as transparency on the part of society’s institutions (along with two other freedoms) were critical to the health and wealth of nations. These, he called the “Five Freedoms.”

On a macro scale, connectivity, trade, and prosperity are deeply and closely related to one another. Although Sen did not refer specifically to the Internet, it seems clear that the Internet offers an unprecedentedly speedy, open vehicle for exchange of the type that Sen describes – that is, as long as it is ubiquitously accessible and free from the control of society’s most powerful institutions. Consider his words: “it lies in the obligation of States to guarantee or promote a climate of open and plural public debate, and to correct a situation in which these characteristics are absent or distorted.”

This, of course, brings us back to broadband mapping, connectivity, and trade. Waterways - particularly points of confluence between several waterways - were the original highways, communication pathways, and nodes on networks of trade routes. River valleys, protected by topography and vegetation, were and are naturally-occurring shipping channels, outstanding conduits for the free and unfettered flow of information, and homes to markets where one could buy and sell goods and services. That is why so many major cities were formed on their banks.

To the extent that the nation chooses a high quality, granular, multi-modal approach to broadband mapping, this exercise will provide us with value that far exceeds its original cost. When combined and properly analyzed, data collected during the mapping process will help us identify patterns and points of leverage, both geographic and social. This knowledge will, in turn, be vital to crafting effective strategies for infrastructure installation and technology adoption — goals that embody very spirit and intent of the Obama Administration’s Stimulus Package.

Update for clarity: the text that follows, except for the last line, is not mine but a direct quote from a Verizon customer who does not wish to be identified. A better story for Kafka was the way he put it.

“If you wondered; like Jobs at Apple, Ernestine *is* back from retirement…..and has taken over. The difference is: Her customers can’t welcome her return as his did.

On the DSL order from Hell; She’s shown that “We don’t have to care; we’re The Telephone Company” is again the order of the day.

The DSL order that She would not take because there was existing COVAD service? Even AFTER that was terminated, She delayed accepting the installation order for another 5 days. (Not delivering the service, just accepting the order.) The excuse? The loop didn’t qualify… yes the loop that had been in service for many years just days before. [And only ~8Kft
long, I might add..]

Add in Her Executive Appeals folks who don’t answer their phone; and have full VM boxes, for days….

Comcast and company look all the more attractive as phone providers.
(Who would have ever believed in 1996 that a *cable company* would
look attractive from a customer service perspective?)

Besides the FCC complaint already filed over this; I wonder if I can get Charles Schumer interested in the issue?”

Meanwhile in St Petersburg, Russia I visited these guys today. This is pretty cool.

David Lesher writes on Cybertelecom

Ge this one, folks. I have been told by Verizonal that they will NOT
provide DSL on a DSL-qualified assignment.

Why? Because I could instead get FIOS at twice the cost.

Fred Goldstein replies:

Alas, that is entirely legal nowadays. DSL is unregulated, not common carriage, so taking orders is strictly voluntary.

Of course when the FCC cravenly adopted those rules in 2005, they explained that the ILECs would never turn away business, wholesale or retail, so there was no need to require anything of them.

I suggest that you write this up to the FCC, both as an Ex Parte comment in docket (WC) 02-33, and as a Comment in the open National Broadband Plan docket (GN) 09-51. This is further proof that their deregulation is not working.

And you can still, I think, file a complaint for violating a non-rule. If the FCC could come down on Comcast for doing nothing wrong and violating no rule while selling an unregulated product, they certainly could come down on Verizon for not violating a rule while doing something they suggested in the past that they wouldn’t do when getting a service deregulated. Until the rule of law is firmly re-established in this country, such non-rule proceedings may be more practical anyway.

Separately Bruce Kushnick in his 25th Anniversary of Dereg Report adds:

• Tax Payments in 2008 — Verizon only paid 3% of the total revenue on
income taxes, while AT&T only 5%.

Sara Wedeman writes after reading about Rachel’s Antics

I have many thoughts about this. I’ve been doing a bit of poking around, looking at the US Census and other sources Anyone who questions whether counting, recording, and mapping create jobs need look no farther than Claritas or ancestry.com. I’m sure there are lots of other examples–these are simply two that spring to mind.

Note: mapping/GIS and the research that goes into maps are not the same thing. They both have to be done right. I’m not worried about the quality of the GIS programs used by “broadband mappers” to date, but I am worried about the quality of the data inputs. This is because social/demographic research is by nature intellectually and technically complex, and one needs a lot of training and experience to do it properly. Among the mapping initiatives I have seen, all suffer from horrible missing data problems, and most suffer from the principal investigators’ lack of research expertise–expertise that is necessary to provide an accurate picture of broadband penetration in the US.

For instance, an understanding of the role of population density is critical. In a rural area, one community may span multiple zip codes. In an urban area, one zip code typically contains multiple communities–some rich, some poor, and some in between. Urban zip codes are also inhabited by a lot more people. A case in point: zip code 19104, a part of West Philadelphia, has a population greater than that of 25 of Pennsylvania’s 67 counties.

Since access to broadband is positively correlated with wealth, the presence of broadband in an urban zip code that houses multiple communities and economic levels matters little. The fact that those working in an office building have broadband access does not by any means imply that it is available to the people walking on the street below. Unfortunately, the role of population density is rarely taken into account. Talk about ignoring the elephant in the room!

Done for its own sake, broadband mapping may produce a short-tern jolt. Done right, it has the capacity to produce powerful, positive change of the kind so many of us hope for. It can create jobs now, guide strategies for adoption and installation, and stimulate the growth of future industries.*

The main point is that the above benefits will accrue to the nation only if the process is designed and executed properly, by people who have the requisite independence and expertise. I’m not pointing any fingers: I’m very glad that BB mapping has become a topic of interest, deemed worthy of investment. I just want to see it done right, so we can have confidence in the ultimate product. As my father says, “A thing worth doing is a thing done well.” I concur.

COOK’s Edge:Sara’s comments on mapping filed with NTIA are here and here and here and MANDATORY reading. See also.

The gaming of the broadband stimulus is going on in full force.

Consider Rachelle Chong’s testimony from last Thursday’s hearing on the ARRA deployment.

Chong: In 2006, Governor Arnold Schwarzenegger had the foresight to form a blue
ribbon Broadband Task Force, on which I served. The Task Force performed a
broadband mapping exercise and brought recommendations to the Governor for state
action. Out of these efforts came the CPUC’s California Advanced Services Fund
(CASF). The CASF program is one of the few broadband infrastructure grant programs
in the nation.

Cook’s Edge: God preserve from one like this. Follow the logic.

Chong: The CPUC established a “current generation” speed benchmark of 3 Mbps
download and 1 Mbps upload to CASF subscribers. This speed was not a minimum,
however, as the CPUC believed that any broadband speed is better than no service at all; thus applications with any speed were accepted.

Cook’s Edge: so you can apply for CASF subsidy money for current generation speed of 3 down and 1 up, but applications at ANY SPEED are welcome. Gee what do they really want? Better than mediocre DSL? NO.

Chong: Our formula awarded more points for faster service at a diminishing level in order
to favor applications that would provide “current generation” speeds over those
applications that sought “next generation” speeds.

Cook’s Edge: Wow. Copper based obsolete speeds are to be preferred over faster technologies.

Wonder Why?

Maybe it was because Chong’s biased so called ‘testimony” is underwritten by $60,000.000 from ATT and Verizon?

Chong: The CPUC also set up the California Emerging Technology Fund (CETF), a non
profit organization intended to bridge the Digital Divide with $60 million in seed capital
donated by AT&T and Verizon during merger activities in 2005.

Cook’s Edge: And dear me - Rachelle is popular; She warns avid readers of her blog:
A small warning: I do feel I should warn the many professionals who earn their living by lobbying me to please refrain from ex parte contacts on Twitter and on my blog (via email contacts). I thank you kindly for this!

Here is the Executive Summary of my just published June interview.

Our feature interview describes a multi year long streak of questionable practices by Verizon in New Jersey. We see the situation as a symbiotic relationship between politicians in state government who are happy to let Verizon continue to act as an unregulated free market engine that works to benefit its executives and the expense of its customers in a way reminiscent of pre meltdown Wall Street.

The predatory enablement of the telco incumbent in New Jersey began 20 years ago with the successful effort of the Deloitte Touché - NJ Board of Public Utilities funded study on New Jersey’s telecommunications future. This study was used by the BPU and NJ Bell, later Bell Atlantic, and finally Verizon to, in the aftermath of the 1984 break up and the rise of free market funamentalism, change the regulatory environment for the state’s local phone company. The change was from the staid rate of return utility model that had made ATT a blue chip for people to count on for retirement since 1934 to a darling of Wall Street model that would take whatever risks necessary to participate in the beginning of the great bull market that ended last year. It opened the way for the NJ incumbent to earn vast new sums of money. In return for the change, NJ Bell and Bell Atlantic agreed to a course of action that they asserted would increase NJ tax revenues and employment. Most important of all they promised to reinvest their increased revenue by building a fully symmetric 45 megabit per-second fiber optic infrastructure to all customers in the state.

The Consequences of Deregulation Run Amuck

As is by now well known, this did not happen. Verizon got a huge windfall. New Jersey lost jobs, and lost tax revenue. Our discussion with Tom Allibone recounts these events in detail. We outline the ways in which Verizon, by getting itself effectively deregulated on the federal and state level, has been able to enforce practices on its customers that leave them with little choice but to accept. Customers, without the protection of tariffs, are forced into contracts of adhesion where Verizon billing systems send incorrect bills and the customer has no choice but to pay or loose service.

We trace in great detail an as yet little recognized struggle on Verizon’s part to quit paying the state’s Business Personal Property Tax. Verizon has been paying NJ municipalities about $100 million dollars a year as recently as 2000. It is down to 43 million a year now and Verizon’s lobbyists are informing municipal governments that payments will soon cease because they claim to be under fierce competition and point to a clause that says the tax is applicable only to companies that have 51% or more of the local phone lines in a political jurisdiction.

The only problem is that as Verizon makes these assertions there is no means of independent audit and ample reason to believe that the company is not telling the truth. We present evidence that, to support this assertion, Verizon has tried to spin off its FiOS arm as an independent unregulated information service and claim therefore that lines lost to its FiOS customers are lines lost to competition – all of which brings Verizon closer to its “trust us” 51%-of-the- phone-service belongs to competitors so we do not pay BPPT to your township any more.

But this line of revenue enhancement on Verizon’s part seems to involve some other issues. Verizon’s FiOS marketing has involved deceptive practices that have become so blatant that the NJ State Attorney General actually launched a class action lawsuit against Verizon on March 19th. sadly the State AG Office is the only part of state government to lift a finger on behalf of its citizens. In looking for a down loadable pdf of the complaint I just found that the NJ Divsion of Consumer Affairs is soliciting input from residents who bought FiOS in the past 24 months.

Our discussion with Tom shows that verifiable inventories of Verizon property in the state have never been taken since divestiture. Some local audits now are uncovering poles that are, in effect, off the tax records. A Verizon VP of Taxes sent written assurance to Tom’s mayor that Verizon in payment of local taxes did not depreciate more than 80% yet a councilman in Summitt New Jersey claims to have records that show 90% depreciation. Verizon is legally required to remove broken poles but there is no enforcement of penalties for non removal.

The BPPT situation is set up in such a way that the ability to enforce the state law governing the tax is removed from the hands of municipal authorities. Verizon has constructed an arrangement with the State Division of Taxation where records of the value of Verizon’s inventory and the nature of the inventory itself are sent every year to Trenton. There, with no public transparency or oversight, each township is told every year the dollar amount of Verizon property on which it can level its local tax rate.

Yet when Verizon decides it wants more revenue, it goes to NJ politicians be they the Seantor Doria’s of the legislature or Governor Corzine. the politicians always come through. When it threatens to close its Newark offices, it winds up being relieved of its legal responsibility to pay 1.9 million in taxes every year to Newark. There is no one following the big picture – no one speaking on behalf of the public just the Verizon friendly former investment bank billionaire who is now Governor of NJ and free to help a business friend out. It is a sordid picture full of interrelated complexities of Verizon is using its cozy relationship with NJ politicians to maintain a one-sided predatory relationship with the state of New Jersey. One may only wonder if we will every see the day when, as a part of the pendulum swing, the people of NJ and other states will be able to demand redress from the abuses of the currently all powerful incumbent.

Verizon gave its lead attorney a ten million dollar plus retirement bonus last year – one that was written up in the New York Times. One that caused another well known telecom attorney to write on our list that this was to be expected. Under the mantra of market fundamentalism “the best investment a regulated company can make is in regulation and litigation, not infrastructure or new products.” I would only add that this avarice need not be not a sine-qua-non of regulation if we can only do a fundamental reset of the expectations for our political system and economy.

I am happy to report that even after loosing Martin Geddes - one of its founders - to JP Rangaswami at BT Design, the folks at Telco 2.0 are still putting out the best analysis of the need to change the global infrastructure and operating models of the global phone companies.

Here are some highlights from their most recent report

Fibre Down Under: It’s All Part of the Master Plan…

Australia, New Zealand, and Singapore’s ambitious plans for publicly owned FTTH show that if you want Real Broadband (speeds heading for at least 100Mbit/s, a high degree of symmetry, and OPEX low enough to support a healthy ISP market), only Pakistan-style anarchy or state-run technocracy will cut it. That’s also the conclusion we reached in our Online Video market study; and data from Akamai bears it out.

snip

So, this is very interesting news.

[Cook’s Edge: serious readers should click on the above link and go straight to teleco’s blog to get the advantage of their links charts illustrations etc. Meanwhile a few more snips follow.]

Australia’s central government has decided that none of the tenders for its planned National Broadband Network are any good, after Telstra effectively refused to take part, and that instead the government will build a publicly-owned fibre-to-the-home network, providing dark fibre to anyone who wants it. Five years after deployment, the company will be reviewed with an eye to deciding whether it should be privatised, part-privatised, or left in peace.

New Zealand, meanwhile, is putting NZ$1.5bn of government funds into a national dark fibre build that will be owned by “local fibre companies”, dark-fibre deployers owned jointly by local government, commercial partners, and perhaps by telcos, but with the restriction that no operator using the network can own a majority of any LFC.

In Singapore, meanwhile. where the government wants to build 1Gbit/s service to every address, contracts have been issued for both the “NetCo” (which will actually lay the dark fibre and also provide regulated wholesale access to the duct network) and the “OpCo”, a telcolike entity that will provide wholesale service over it to competing telcos and ISPs.

It’s hard to avoid the conclusion that what works, in this case, is actually a big technocratic plan. You might think that Australia will always be a special case - only five per cent of Telstra local exchanges were unbundled, after all, so for most of them the only option is either Telstra or the state - but in fact it’s not so.

snip

Further, realising the positive externalities of fibre to their fullest extent involves many other actors; the Australian NBN plan provides that the network company will provide service to the health and education sectors, and perhaps they may be asked to chip in. The trans-sector concept is crucial - for example, the energy sector has both needs for connectivity for things like demand response, and also extensive duct, pole, and right-of-way networks. The question may be whether this degree of coordination is achievable without some layer of government being involved.

snip

It is almost painfully evident that the only model that has yet to deliver much fibre is the one with a regulated private incumbent and competing DSL operators; anarchy and technocracy both deliver, market-led regulationism doesn’t. And it is a real issue whether the many fancy options that have been discussed are anything more than outbursts of frustration at this fact.

snip

So the report that the FCC may demand that telcos share any fibre built with government money should fill us with inspiration, not fear.

From Hendrik Rood in The Netherlands

This brief explanation in a comment to an article by the Economist on economic populism, takes a priceless summary of the workings of recent private equity take-overs in terms of Adam Smith’s well known example of a manufacturer of widgets …

Typical scenario for the last 18 years:

January -
Private Equity Investor (PEI) has 20 million. He uses it as a security to borrow 200 million from Bank 1 to buy a company Widgets. Widgets is a solid manufacturing business with assets of land, factories, patents, a brand, good will and no debts.

March -
Widgets borrows 300 million from Bank 2 – no problems, it’s a solid business – but here comes the bit where it all goes criminal, but not illegal…

Widgets pays out 300 million to PEI its owner as a dividend, who repays 200 to Bank1. PEI now has 100 million cash, and has done nothing for it. Widgets however has to pay 20 million in interest per year. PEI now has 100 million.

July -
Widgets also sells its assets: land, patents and so on and leases them back for 30 million a year.
The sales bring 200 million which Widgets also pays out to PEI its owner. PEI now has 300 million.

August -
Widgets Pension Fund is ‘restructured’ bringing a liquid 150 million onto the balance sheet. Widgets has liabilities to its pensioners with little to back them. 150 million is paid out to PEI as a special dividend., PEI now has 450 million.

December -
PEI sells the business to a pension fund, for 100 million, less than he paid as it has a lot of debt, but it is a good business. PEI now has 550

Recap:
Widgets now has 300 million debt causing 20 million a year in interest, plus 30 million in leasing payments. It has pension liabilities and the pension fund is almost worthless. PEI had 20 million at the start of the year and now has 550 million. But the business is still viable, as Widgets can meet its payments.

5 years later -
Sadly hard times come. Turnover drops, prices drop, costs are cut, people lose their jobs, including engineers, managers, the shop floor and the sales team who did real work for years, created real value, invented the patents, built the brand. It doesn’t help. The company has no stores of fat - it goes bust. The banks loans are sour. People lose their jobs, the pensioners cannot be paid.

This happens 100 times so the banks are bust too, but get bailed out by the taxpayer (that’s those guys who lost their jobs and pensions at Widgets)

PEI lives happily in The Bahamas with the 550 million which he ‘earned’ in a fabulous year of ‘value creation’ made possible by the power of free and light touch regulated markets.

Sadly, due to the complexity of all this the bright chaps at The Economist can not quite see why this is a slightly problematic way to run an economy… Honi suit qui mal y pense.

————-

Just recall that the key events that allowed this type of acquisitions due was too low real interest rates (which makes borrowing to execute these schemes extremely cheap) and willingness of many in the banks to earn on the transaction for additional finance and disregard long run risk when interest rates rises.

Any resemblance to the operation of Carlyle, Apax, TPF, Blackstone, Babcock and Browne etc. with regard to telecom operators like Hawaii Telecom, TDC, Eircomm or say cable operators like Ziggo is purely co-incidental, off course.

Free, the broadband arm of Groupe Iliad is an increasingly important French national broadband player. Free’s management is extremely innovative.

Among other things on March 19 it announced that it is building an all IP mobile network so that it will no longer have to pay Orange for the circuits it resells. A very interesting point made by Free to the press “There is really something you don’t seem to be grasping: investing in optic fiber will make our margins explode. Today an unbunbled customer is 50% margin or thereabouts. When we migrate the customer to optic fiber, we move to 85 or 90% margin.” See Benoît Felten’s translation in the video below. These remarks are in the last of the three links below.

Free has disrupted the French market. Starting from humble beginnings in the late 90s, it is now the second largest broadband provider in the French market. It has defined the reference model broadband triple-play offer in France and is now applying its successful strategy to two new markets: fiber to the home and mobile.

On March 19th, Free announced its 2008 results – down because of its purchase of ISP Alice. (If not for the Alice acquisition it would have had a 44% increase in profit. It got a lot of people talking with blunt and well deserved attacks of French incumbent Orange.

Free customer portal www.universfreebox.com filmed the whole annual results Q&A and Yankee Group analyst and www.fiberevolution.com editor Benoît Felten subtitled them in English. The video is in several sections due to Youtube limitations. Here are the first three:

Part one Do click on part one for even better background!
Part two
Part three

Benoît adds: Check the first of the above links, I explain how you get subtitles on Youtube. Essentially, click on the box in the lower right hand corner of the youtube screen.

COOK”s Edge: The candor of Free’s management in its discussion the French market is extremely refreshing. It wants structural separation and minces no words in explaining why. If only we had ISPs with the gumption to talk to the incumbents like these Frenchmen! Opps - our incumbents are out only ISPs. So much for free markets!

UP DATE Benoît points out that in your “first paragraph you mention the all IP mobile network, but the margin mechanisms you describe apply to wireline fiber not mobile. Currently Free does not have a mobile network, they’re just seen as the most likely candidate for the new licence coming up.”

At the end of April I intend to publish the June 2009 Issue of the Cook Report that will include an interview I’m now in the process of completing with Frank Coluccio – principal consultant, Cirrant Partners Inc. Frank lays out a comprehensive assessment while making copious recommendations in an area that is extremely important to all industry and national-interest stakeholders, alike, but one that remains nascent and only recently has begun to gain mainstream recognition. As readers of our next report will see evidence of this can best be seen at this time in the Data Center where Frank likens the unification of computing services through fiber optic networking fabrics to what is possible in all other networking venues as well.

The new “applications” of fiber that he is now suggesting be unleashed, however, are indeed new, stemming from the economic and ecological exigencies of the era that comprise a whole new list of incentives that are only now coming to bear in the latter part of this first decade of the 21st Century. Until now, Frank says, the industry has been quite content with following the Taoist principle of wu wei — as in, by doing nothing apparent, all will take care of itself.

In almost every instance, fiber has not only unlimited capacity but is now becoming cheaper to install than copper. Recently on my Economics of IP Networks list Hendrik Rood wrote a powerful summary in which he states: “It is not the unlimited bandwidth, but the near unlimited reach due to very low attenuation, in particular at low bit rates, that have provided the main gains for deploying fiber.”

Hendrik states: Fiber has been deployed first in the long distance, removing many repeaters per link compared to coaxial systems. Fiber also less expensive than radio relay links, except for rough terrains, and beats twisted pair transmission carrier systems hands down. The benefit of fiber is that it supports high-bandwidth with far less equipment and thus improved reliability, lower maintenance, and, when leased out, fiber enables a far more competitive market place as well.

I think that the singular notion that fiber supports high-speed “broadband” is misguided. A more important attribute of fiber becomes evident in its ability to support a very different market structure that raises competitive levels by allowing open access in exciting new ways, thereby bringing about equal if not more important benefits.

For the matter of a transmission systems performance (e.g. a submarine cable, or a radio or satellite link), it is not bandwidth alone, but the bandwidth-distance product that matters.

I think, if you want to promote FTTH, as the FTTH-council does, one should come up with new metrics: e.g.
- calculate the electric power consumption of an entire DOCSIS 3.0 based
broadband USA or one that is based on Fiber-to-the-Node, such as AT&T’s U-Verse vs an all-VDSL based broadband USA vs a FTTH based USA.
- calculate the required maintenance cost for the equipment mountains in
the outside plant
- calculate the expected MTTF / repair cost for the cable plant of
DOCSIS, VDSL and FTTH
- calculate for various fiber plants the OPEX and additional OPEX cost
to change to a pro-competitive design

For an introduction to what such a calculation on OPEX looks like see:
the presentation of John Brouse, the Network Operations director of Charter Communications, where in such data is presented. [Editor’s note – it is 2004 data and the cost figures have gotten much better since then.]

The blunt point is this: A nation, or any sovereign entity, should do an OPEX calculation comparable to the one discussed in the study above at least once, and then ask themselves the simple question: are they trading off the CAPEX required for rewiring against higher OPEX with DOCSIS / DSL technology path, and is it this trade off that brings higher societal costs when compared to their capital outlay? It is not that difficult to demonstrate that FTTH is a superior technology from an OPEX point of view, while bringing far more bandwidth. The issue was and is the CAPEX upfront, not the CAPEX deployed in several tech cycles over a typical 25-30 year outside plant economic life cycle.

Somehow I have the strong impression that all kind of advocates have been fooled by, again and again, discussing the benefits of FTTH in terms of bandwidth and new applications. I have always shied away from that “wonderful apps, wonderful services” approach and think that many other, unspoken benefits reside elsewhere.
The more hard-nosed argument seems to be:
1. A far cheaper fixed network in OPEX and annualised CAPEX depreciation
2. The opportunity to re-architect in a pro-competitive design
3. Lower energy consumption footprint
4. Higher reliability due to less active components (a dumber network) per communications link.

And the dynamic enabling benefit is the opportunity to change gears from the electronics growth curve on a far steeper growth curve for optical technology.

It is this type of “making the economic case” that sometimes seems to have been forbidden in the policy fashion of the last few decades. I have the impression that this will soon change, when policy makers facing a severe economic downturn start to grasp that maintaining technological indifference is a very expensive policy during an economic depression, in particular when you observe that other countries do make a switch and consolidate on a far more efficient new technological system.

So yes, while you might get all of that high speed broadband benefits by DOCSIS 3.0 you can imagine yourself, you cannot at the same time get the operating cost advantages and dynamic benefits of FTTH.

Note: I have never been asked by the FTTH Council to write a report for them. This view might not be fashionable and deployable for a lobbyist group. Touting new broadband applications and services is fashionable. Large opex cost reduction and improved competition as economic advantages tends to fly in the face of some

COOK’s Edge: Another recent white paper by list member Herman Wagter on fiber to the desk is found here.