Muni Fiber (was: Re: last mile, regulatory incentives, etc)

JC Dill jcdill.lists at gmail.com
Sun Mar 25 14:37:24 CDT 2012


On 25/03/12 8:56 AM, Leo Bicknell wrote:
> In a message written on Sun, Mar 25, 2012 at 11:47:58AM -0400, Jay Ashworth wrote:
>> Well, for my part, /most of the poiny/ of muni is The Public Good; if /actual/ bond financed muni fiber is skipping the Hard Parts, it deserves to lose.


It doesn't matter if it's a bond-financed project or a privately funded 
(privately owned) project - they are using a public resource (the 
street/poles) to lay their lines, and usually also using the power of 
the municipality's right to eminent domain to put in or use poles (or 
underground conduits) to run lines across private properties.  As part 
of the Public Good contract to use these public resources, they should 
be required to service both the the easy parts and the hard parts, no 
matter the source of the financing or the ownership of the lines.

> If a commercial company goes in to serve folks with fiber they
> expect a relatively short ROI, 3-5 years typically.  This is why
> rural customers aren't "profitable"; they can't get money from a
> bank or wall-street for a longer time so they are trying to spread
> out the build costs over too short of a recoupment period.
>
> Fiber has a 20-50 year life.

The biggest problem is determining how certain that lifespan is.  
Remember how Netflix looked like an awesome business to deliver DVDs by 
mail in 2002, and had one of the most successful IPOs of the era?  Less 
than 10 years later we have widespread broadband and companies can 
deliver that same content by copper/fiber/802.11.  Now Netflix is in the 
position of being in direct business conflict with the companies they 
rely on to carry their product to their customers (e.g. Comcast) and 
their future is very uncertain.  Can you promise that fiber has a 
*feasible* lifetime of 20-50 years?  Maybe in 5-10 years all consumer 
data will be transferred via wireless, and investment in municipal wired 
data systems (fiber and copper) becomes worthless.

This is why most modern build-outs have to show a ROI of under 5 years.  
We just don't know what new technology breakthroughs might happen, which 
could make a project that requires a 10-30 year payback schedule go 
bankrupt when a new technology makes the prior one obsolete.

jc




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