Muni Fiber

Sun Mar 25 18:34:05 UTC 2012

In a message written on Sun, Mar 25, 2012 at 07:15:47PM +0100, Nick Hilliard wrote:
> It'll never be done though.  Too much to lose by creating a topology which
> allows you to unbundle the tail.

Only if it is your capital building the tail.

Today's Internet companies are still trying to achive penetration
to the 30-40% of households that are cheap to reach, and profitable
as customers in commercial timescales (3-5 years).  As we reach
saturation in that market (less than 10 years from now, I think)
they will have to look to the "unprofitable" customers as the only
real source of new business.

The economics then change.  While it's better to have it be your
asset and create a customer lock-in, when the risk is high enough
it will be seen as better to have a municipality or other take on
the risk even if it means unbundled competition.

Phone provides the history here; telephone companies started out
with only the most profitable companies.  To reach the commercially
unprofitable ones they turned to government, in the form of things
like the Rural Electrification Act (governemnt backed loans to rural
providers) and the Universal Service Fund.  These government subsidies
were also a _major_ driver in the argument that copper local loops
should be unbundled since in a lot of cases government had paid for
them, not private companies.

Politically the makings of a similar situation already exist.
Goverment has swung the USF funds to fuel rual broadband, strongly
favoring FTTx where it makes sense.  While companies like Verizon
enjoy not having to share their fiber lines now, these same forces
will conspire to drive unbundling in fiber, just as it did in copper.
What they are getting now is simply a first mover advantage.

Government at the end of the day will fund the 20-40% of America
which is profitable in the long run, but not in commercial time
scales.  They will also fund the 10% of America which will never
be profitable, no mater what.  It happened with Electricity and
Telephone, and I suspect the societal drivers to do the same with
the Internet will be even stronger.  Companies will have to accept an
unbundled tail to get access to this 30-50% of the market; and while
they aren't interested now, they will be very soon.

-- 
       Leo Bicknell - bicknell at ufp.org - CCIE 3440
        PGP keys at http://www.ufp.org/~bicknell/
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