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Crawford Likes Aussie Utility Network

David Isenberg

Susan Crawford, special assistant to the president for science, technology and innovation policy and a member of the National Economic Council, is reported to be favorably inclined towards a U.S. network much like Australia's recently announced $33B broadband plan.

Of course, the U.S. is some 15 times bigger than Australia, and that'd make the price tag closer to $500B by straight multiplication. But the U.S. would get a fiber network done right. It'd be as fast as technology would allow; note that affordable symmetrical residential Gbit service is already available in Sweden and Japan. It'd be upgradable approximately forever. It'd be un-bundlable, so anybody could offer services on it and no entity would need to maintain a monopoly. And, says Crawford, "… [such] a wholesale network can deliver massive social and economic benefits."

What's not to like? Incumbent mouthpiece Scott Cleland says that it'd unfair if the government competes against his clients. Former FCC Chair Reed Hundt doesn't think it's a "practical solution."

I think Susan Crawford has the right idea. Technology exists now to deliver hundreds of times more than we're getting. The only thing the U.S. lacks is the will to do it. The U.S. used to think big. That's what made it a great country. It could do it again. The only losers would be the very same companies that are keeping us in the past in the name of the late, great free market.

By David Isenberg, Principal Prosultant(sm), isen.com, LLC
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Relative sizes: US and Australia Leo Vegoda  –  May 27, 2009 1:27 PM PDT

Of course, the U.S. is some 15 times bigger than Australia

Are you sure? Australia is 7,686,850 sq km while the USA is 9,826,630 sq km (source: CIA World Fact Book). The USA is a bit bigger than Australia but not 15 times its size.

Stop passing bogus estimates Dennis Fazio  –  May 28, 2009 9:23 PM PDT

Sometimes media people get on a kick and start quoting each other without checking. Too many are taking Susan Crawford's piece and extrapolating the Australian vs US cost with the made up number of 15 times the Aussie $33 billion. This calculation has no grounding in reality. It's pulled out of thin air with no justification.

I figure that number a little differently.  Verizon says it costs $796 (let's say $800) to pass a house with fiber, and that was two years ago — read that estimate here:  http://telephonyonline.com/mag/telecom_riding_fttp_cost/.  And WikiAnswers.com says (based on the US Census Bureau estimates) there are 111,000,000 households in America (see:  http://wiki.answers.com/Q/How_many_households_are_in_the_US).  So here comes my powerful analysis…

$800 (cost to pass a house) times 111,000,000 households = $88,800,000,000 ($88.8 billion)

So this is my attempt to stop this $500 billion meme before it gets too far.  I'm not necessarily saying that $88 billion is fully accurate, though it's based on more reality than 15*$33B. But I am saying that $500 billion is wrong, wrong, wrong. So please stop using it.

These estimates are always difficult Dan Campbell  –  May 29, 2009 1:50 PM PDT

I think the "15x" number was simply an estimate based on a population ratio of 300M Americans / 20M Aussies, and even both of those numbers are estimates to start with (but pretty close).  And yes you are right, that doesn't much to do with how many households there are, nor the effort and cost to pull fiber, which has many other considerations including geography and density of the population in areas.  Even that Verizon number from Telephony Online - who knows if that $796/home estimate was just for the areas that Verizon had already targeted in their business plan which excludes other areas (probably, and this would be closer to the more real cost they are seeing) or if it was an estimate/average across the board to include rural and very hard to reach areas (highly doubtful).  It is cheaper per home to drop fiber in a densely populated area that hits many homes than to trench or string it for miles into the country to a smaller number of homes.

But ultimately this and other articles are not really trying (yet) to get to that cost but really just making the point that a US Gov't subsidized fiber network may be beneficial in many ways and that it should be considered.

Plan is ill advised Brett Glass  –  May 30, 2009 8:53 PM PDT

There's no need for a network like Australia's here in America, because the fiber is already in the ground. The problem is gaining access to it.

I am a wireless ISP. I live in a small city which has 5 — count them — backbones running through or near town, two of them a block from my building. But the owners of these networks won't provide service to us at any reasonable price. Nor will the local cable and telephone companies, which quote us wholesale prices greater than the retail prices they offer to customers (a classic anticompetitive tactic).

And there's unacceptable market concentration occurring in the Internet backbone market. All of the fiber networks which pass in or near our city used to be owned by different companies, but now three of them are owned by Level3. And while Level3 has a building at the north end of town that was actually engineered to provide space for co-location of equipment (I've been inside it, and it has more than a dozen empty equipment cages which were intended to be rented by tenants), it refuses to open a point of presence that would allow our community to avoid being gouged for Internet bandwidth by the cable and telephone monopolies.

Qwest is likewise rumored to be about to sell its backbone, possibly creating still more market concentration.

Crawford's radical notion that ISPs should be saddled with such heavy regulation that they cannot innovate — or even be nationalized — is simply off base. All that is necessary is to ban anticompetitive practices and incent or require the existing fiber owners to open their networks to the areas through which their fiber passes. (This should have been a condition of granting them use of the public right of way, but at the time no one imagined that they wouldn't do the obvious thing and seize the opportunity to serve those areas.)

David I. comments on his blog, at Brett Glass  –  May 31, 2009 9:26 AM PDT

David I. comments on his blog, at http://isen.com/blog/2009/05/quote-of-note-brett-glass.html, that he doesn't believe that solving the middle mile problem is quite all that necessary. Maybe not, but it's certainly close. There is in fact so much fiber already in the ground that it would be easy to fill the remaining gaps using technologies such as wireless.

Let's consider, for example, another city in my area: Medicine Bow, Wyoming. It has a population of under 100 people, and no terrestrial high speed Internet. Setting up a wireless system to serve the community would be easy; an ISP like myself could do
it in a day. But there's no high speed backbone connectivity available.

Ironically, three fiber backbones — two owned by Level3 and one by Sprint — pass right through town, running right along US Highway 287 and the railroad tracks. For a capital investment of about $100,000 — less than it costs to build a house nowadays — Level3 could provide bandwidth to the city from its existing regeneration station along the tracks. Even if it grossed only $2,000 per month for the bandwidth it sold at that location, this would be a 24% per year return on its capital in
vestment — not too shabby. But even though this is a great return, the company would not do it. It is insisting upon a 100% or greater return per annum on any capital investment — a rate of return that even loan sharks likely do not achieve (after all, they have to pay their thugs).

The story is similar in other cities where either the incumbent telephone company has a monopoly on the fiber or the long haul fiber goes by but does not stop. Yes, there are a few remote spots where the backbones are more distant, but again this can be solved with wireless or other similar solutions. (Heavily treed, hilly areas might be best handled by BPL, for example.)

As I said in my comments to the NTIA and RUS, solve the middle mile problem and last mile service will become feasible without subsidy of any kind. On the other hand, over-regulate last mile providers — as Crawford advocates — and you will not only fail to deal with the middle mile problem but also create additional hurdles in the last mile.

Correction Brett Glass  –  May 31, 2009 9:30 AM PDT

The first sentence above should read, "...doesn't believe that solving the middle mile problem is quite all that is necessary."

I guess this shows how important the meaning of "is" is. ;-)

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