Guess Who’s Coming to the xchange magazine Blog?
November 14, 2008
You guessed it. This month I started a guest blog feature for xchange magazine on xchangemag.com. I posted my second xchange blog entry today entitled “Two Topics, One Conclusion” in which I wrote about how forbearance can help solve the fiber glut myth that exists. It also continues my commentary on the case for forbearance and answers a recent question I got:
“If all such forbearances were granted and the government stops watching, what will stop the ILECs from doubling prices where there isn’t competition and cutting prices in half where there is - thus ending the business case for anyone else to hook up more buildings with fiber? In other words, does granting forbearance necessarily lead to more choice?”
Here’s an excerpt from my post on the xchange blog:
Forbearance is the right tool to increase investment into local fiber optic infrastructure. This local fiber infrastructure is much needed to surpass today’s basic copper broadband to make the U.S. globally competitive in an array of industries.
As a result of being granted forbearance, ILECs will likely raise wholesale prices, as they should. This will generate profits for some, and for others, grant a timely death or consolidation. But as profits rise and regulatory certainty of forbearance manifests itself, then and only then will investment groups have an interest in entering the highly fixed cost business of local market competition on a fiber access platform. The worry that the ILECs will price everyone out of business is just a worry. Even the craziest of ILECs will recognize that if they get out of line, soon they would face regulatory scrutiny again. If anyone knows the touch point for monopolistic behavior, it is the ILEC. The last thing they want is more regulation when they have the control to avoid it. Control – understand that is what the ILEC is all about – from there, design your execution strategy.
Forbearance can also be a managed process. It does not necessarily represent a light switch. There can be safeguards and indices built into the process. But clearly, we need a sunset provision whereby all gloves are off the ILEC within five years. A five year sunset provision would mean that CLECs will have been given 17 years since CA 1996 to figure things out for themselves. Having such a sunset provision would clearly signal to investors that making high-cost investments in local fiber optic infrastructure is a value proposition and a long term advantage. Imagine if we had an eight-year sunset provision at the outset in 1996 – we would not be in the current mess. However, no one back then asked the non-celebrity types about regulatory policy – what could they possibly know? After all, they are from outside the beltway.
Is Dave right on or way off? Shoot Dave an email or post a comment below. You can also follow Dave’s xchange blog.
Just for Grins
October 23, 2008
Just for grins, when I originally sought funding for American Fiber Systems in 1999, I had a business model that was purely demand driven. The model was based on a fundamental premise that in the long run, if you do not own and operate your own local fiber optic infrastructure but rather rely upon your largest competitor to stay in business, well, it is simply not a smart idea.
Once again, it’s 1999 – my view based on experience, you cannot rent or lease your way to sustainable economic success through the ILEC. The more you depended upon the ILEC pieces and parts, your ability to innovate, time-to-market, provision and compete is limited. When your largest competitor, the ILEC, basically controls your costs and has expertise in regulatory and judicial matters, I don’t see this as a win-win formula … but I could be wrong.
Anyhow, the reason I bring this up is purely for grins. In 1999 I pitched many investment banks, a/k/a “experts,” for funding, Lehman Brothers and Bear Stearns amongst them. Across the board, I was told by the Wall Street experts that my demand-driven, slow role, metropolitan fiber based business model was not attractive and not fast enough. They were critical because I had an incremental, success-based funding model. I was told that unless I was raising $500 million equity and $300mm in high yield debt (heroin), I had no idea what I was doing.
Thank god I had experience, common sense and thick skin. I ignored them and eventually went the venture capital route. So as I watch Lehman Brothers and Bear Stearns fade from our memories … with more to follow … I guess I will let the record speak for itself alongside the business moral values of some CEO from upstate New York who had no idea in 1999 how to build a business according to the big Wall Street firms.
Shoot Dave an email or include your insights and questions below.
You Want the Truth?
October 22, 2008
This post is part II in a series on telecommunications forbearance and getting on the bandwagon.
If you want the truth, here it is: Most asset-light competitive CLECs started out all having the same business plan — targeting a 12% market share in each market by colocating, renting, #5ESS switching, UNE-P, UNE-L, etc. If you have 30 competitors in the same market, all with the same business model, the odds of capturing a 360% market share is illogical. In addition, few will admit it, but back in the 1990s, the CLEC fantasy was to build out with a #5ESS and rent — look like an ILEC and be acquired by a long distance carrier for doing so. Well, who would have predicted the collapse of all the major long haul carriers that were consolidated by the ILECs and blessed by the United States government? Perhaps, just perhaps, if a few Wall Street experts thought a little longer term, that maybe recommending company stocks that actually owned local fiber optic infrastructure, that built it out slowly and selectively, were a better bet than 30 look-alikes vying for 12% market share. I must be nuts; Wall Street can’t get past a 90-day horizon, so my conjecture is a pure indication I am off my meds today. In assuming any type of long term fiduciary duty on the part of Wall Street — is insane.
What some more truth? Investor experts of the 1990s flocked to celebrity-like CEOs and CFOs that showed up with a CLEC plan. The majority of these CEOs and CFOs came from the long haul or old CAP business with great claims to fame. The truth is, running a local metropolitan network, in any form, is 10 times more costly and complex than any form of long haul or CAP networks. Many of these CEOs and CFOs gorged themselves on investors’ cash while they were in reality getting on the job training at shareowners expense. Pick any CEO that went bankrupt… you will see what I mean. Check out any of their current resumes – they won’t say they went bankrupt, they will use the word “acquired.” Though having your assets or business “acquired” in bankruptcy is a small detail they leave out. Yet, the insanity continues. Why the hell would anyone hire a CEO or CFO that destroyed a company and lost everything while doing the lemming waltz with Wall Street? Strangely enough, it happens. I guess if you didn’t destroy shareholder value, you are not “experienced” enough for Wall Street.
Still more to come on this topic. I’m pacing myself…
Is Dave right on or do you think he’s missed the mark? Tell him so. Shoot him an email or give him a piece of your mind below in the comments section.
Part I: The Forbearance Bandwagon
October 20, 2008
We took a break from forbearance for a bit – but I was asked by Rob Powell over at TelecomRamblings.com a while ago to make a case for forbearance, and I didn’t want to leave that question unanswered. Here’s what he said:
So Dave, to get me to jump off the fence and onto your bandwagon, can you answer this question? If all such forbearances were granted and the government stops watching, what will stop the ILECs from doubling prices where there isn’t competition and cutting prices in half where there is - thus ending the business case for anyone else to hook up more buildings with fiber? In other words, does granting forbearance necessarily lead to more choice?
Let’s have a reality check. Telecom is a high fixed cost, fixed asset business. For the life of me, I can’t figure out how the self-proclaimed “National CLECs” think for a billion dollars in debt/equity that they can compete on a national basis with an ILEC that spent tens of billions of dollars over 100 years just to get where we are today. Please no whining about guaranteed rates of return – it bolsters my argument as to why there should have been zero incentive for any “rational CEO” CLEC to have bought/rented anything from an ILEC.
Before we are ever going to see this alleged plethora of highly rich, user defined applications, there is an inherent need for bandwidth. And I am not talking about “basic” broadband that is dominant today. I am talking about 50 megabits ubiquitously within three years and 1 gigabit ubiquitously within ten years. Sorry to say, but this requires fiber, not rented copper. Inside baseball – don’t tell anyone – the ILECs know the need for fiber. That’s why they are spending over $30 billion annually on new builds though, according to Wall Street experts not so long ago, we had this HUGE fiber glut. As of today, does Wall Street have any credibility with anyone besides themselves?
Like Lehman Brothers, Bear Sterns and more to follow, let telecom wholesale prices rise by way of forbearance to weed out the weak balance sheets. Those running a telecom business on paper (like Wall Street has) by colocations and renting – let this brilliant management group demonstrate their abilities to compete without any more government supports. The CA 1996 is 12 years old; do the asset-light CLECs deserve another 12 years to figure things out? I can’t help it that they took their investors money and went 100 miles wide but an inch deep. Perhaps, like a few of us have done, if they decided to go 20 miles wide but 10 feet deep, I would not have to point this out. However, these CEOs had choices to make over the past 12 years; they had a business plan that gave investors a choice to invest or pass. It is time to lift wholesale rates vis-à-vis forbearance.
Stay with me. Much more to come in this dialogue.
Do you want Dave to shoot straight on another telecom topic of interest to you? Shoot him an email or post your comment/question below.
What America Needs is Choice (and I’m not talking about the election)
September 18, 2008
We have not experienced in 12-years a migration from ILEC dependency by CLECs. The CA 96 was designed to create competition – it has failed. So, do we need other 12-years of status quo? Absolutely not!
What America needs is choice. Choice in true facilities based competition and not the holographic companies that claim they “own” a network.
How will you get true choice? Real competition? You don’t do it by continuing regulations that have not worked. You do not do it by relying on Governments that are only interested in sapping fees from users of any operator’s customers plus the operator. It is time to wake up – you need to do what you need to do and stop relying on the Beltway Broadband Bandits. You do this by leadership and not whining how unfair it is if I don’t get 12 more years of renting. You realize the government is NOT on your side and you figure out your destiny. Prolonging the inevitable only provides the ILECs and cable Companies more opportunity to penetrate with facilities which lock you out of competition.
The Global bandwidth driven economy is passing America up and bandwidth is fast becoming the oil of the 21st century. So let’s keep arguing for the status quo so we can fall behind further.
Yes, the ILECs do not have to share fiber, it’s the law. So why do we sit around and whine about it? A lot of CLECs do whine which is a waste of time and lawyer/lobbyist money. Get over the anger and denial and stop counting on the government. Also, by law, cable companies do not share networks or even rent out pieces like the ILEC is required. I don’t hear too much pissing in the wind about this fact!
Yes, granting forbearance will drive prices up in the short term, as it should. This is called an open market finding competitive equilibrium. The reason we hear; “Oh my costs will go up and my prices will go up” is because the weak CLECs that only compete on price have no value add to offer customers. They don’t have sales people whom are sophisticated enough to sell up the value chain on value and a profitable return. They believe telecom is homogenous and it is all about low price elasticity. Bottom line: being on the ILEC dole so long, some CLECs have become plain lazy. Exactly what the ILEC wants.
As competitive equilibrium is reached in a post-forbearance market and profits realized, then and only then will private investment occur into more local fiber optic infrastructure and access. When investors clearly realize that they can get a return on the capital deployed in this high fixed cost business under a forbearance-granted market, the investment flows. Profits create competition, not the continuance of the telecom welfare state as we know it.
Over 90% of business buildings in this country still do not have cable #2 into their building from a true facilities competitor. It is estimated it would take $125 billion in investment to bring needed fiber to every home and business as entry stakes for Global broadband access. We will not attract new infrastructure investment as long as government regulations make earning a profit a risky undertaking in what is and always has been and will always be, a high fixed cost business for participants of stamina.
Weren’t those 12-years enough time to figure things out?
Shoot me an email or add a comment below.
What Will the Future Hold for Fiber, FiOS?
September 2, 2008
I disagree with the premise there isn’t fiber network investment interest. There is investment interest, but the problem is not the debt markets, it is regulatory. Until the investment community can see some level of certainty of profits, we won’t see large investment flows into local fiber infrastructure which is badly needed in America. Why? Denying forbearance keeps the status quo of a regulated wholesale industry which is not reflective of market-driven profits whereby an intelligent investment decision and rationale can be made.
The good news about the telecom collapse is that when sustainable profit growth is demonstrated, we won’t have the irrational exuberance and land grabbing at any cost mentality. We may actually get route partnering where route installation is optimized amongst parties as investors have learned having 10 carriers joint build on the same route - well, it just might be a bad business model.
Getting forbearance granted is not a matter of if, just when. And as it happens, it is a friendly reminder I make, it takes 18 months to two years to build out a metropolitan footprint. So fighting forbearance without any forward planning is, in my opinion, a fool’s bet. I often say never rely on anyone inside the beltway for your business viability … never. We need forbearance granted sooner rather than later, to reignite our industry infrastructure investment and cure our global bandwidth disadvantage. A sunset provision for piece-part renting should have been in CA96 if someone would have asked a reasonable, rational, non-ILEC business person for an opinion.
I also disagree that FiOS will not have “real ROI”. Yes, I am a fiber bigot. Growing bandwidth needs in a very short period of time are going to bury copper access by pure physics requiring optical capacity. Not if, just when. What is driving this is a chasm today - rich, interactive content is being developed requiring a rich customer experience, and the physics of this experience requires gobs of bandwidth. Within three years we are talking about 500+ hi-def, uncompressed interactive video programming channels into homes, virtual real-time network based DVRs, GPS enabled content applications … this alone puts the cable companies on the DOA path. Reliability and customer richness of experience is what sells.
Disclosure: I own Verizon stock, and I am long.
Shoot me an email or leave a comment below.
Profitability vs. Manifest Destiny
August 29, 2008
Consider this post an epilogue to the series on forbearance. AFS is a privately held company, and someone coming up with “AFS only hits about 1% of businesses in any market” reflects a limitation in research, not fiber service. It is an incorrect statement in and of itself. Here are some facts…
We did not get trapped in the Wall Street measure of national manifest destiny that so many did, and we did not perish in bankruptcy. CA96 promoted a pro-competition framework … no we don’t look like others and our market segments are different from most others. Actually, only a handful of us as a percentage of all competitors chose to build and own fiber infrastructure methodically and rationally as a sustainable strategic advantage. I believe the count today is less than 30 metro network fiber providers remain; of the 30, only a handful are financially healthy.
Our fiber placement is unique in our markets with primarily one competitor to route compete against with, Ma Bell. We only address the business segment; consumer residential is a two wire game between the cable company and the ILEC. We only connect bandwidth into buildings where the lead-in customer requires a minimum of 50 megabits. We purposely don’t want to be in the low end, copper retail, high churn, no loyalty, thin margin, low price-only, usage sensitive T1, IAD, DSL retail segment. However, we do backhaul for these folks in this segment over our unique network footprint as a viable, diverse, reliable alternative to Ma Bell. And, by the way, once we drop fiber into a building, it does not take long for us to garner 100% building share.
We place our fiber in our markets to address 95% teledensity of high bandwidth, high margin buildings. We maintain a database of physical audits of these buildings inclusive of prospects, digital photos of the telco closet, racks, terminations, GPS coordinates and building entry points for the fiber. We pretty much know what’s going on when our sales person shows up and more importantly, how to price based on the route and competition. 50 megabits, by the way, blows out most copper clad CLECs in a building.
We have been taking one building at a time since inception in 2000 and have a CAGR of 40% for revenue…our margins are to die for. We are not a big top-line revenue testosterone driven company; we only want to address the 20% of the high margin, high bandwidth segments in our markets where we do have a greater market share than 1%. We are a different cat, and given the fiber shortage, we can keep doing what we are doing because like the GAO, lots of buildings still lack another real competitor, let alone fiber access. We prefer profitability to manifest destiny. After all, our customers actually like us, and they recognize we need to stay in business to provide the service they have come to appreciate and trust.
Lack of Competition & Illogical Conclusions
August 28, 2008
We’ve been talking about what is in place relative to the “pro-competitive deregulatory framework” Congress authorized under CA96, including the historical context on forbearance. Here, again, are the four answers I proposed in the last post:
- A near zero cost of entry for competition.
- Complete fall off of innovation.
- Severe lack of true, real broadband facilities competition.
- Illogical conclusions where forbearance on wholesale pricing has been granted and, temporarily, where it has been denied.
I explained the first two points in the last post, “What has CA96 given us?” Now let’s explore the next two answers.
Lack of Facilities Competition. If you want a 90-day business that Wall Street analysts will eventually run from, don’t own fiber. Our present reality is that CA96 did little to promote and rationalize fiber deployment. Yes, we had crazies that built on top of each other or joint built in the largest of cities only to find a route based fiber glut where service prices decline 30% to 50% annually.
What people have difficulty understanding is that revenue growth and margins are route specific, not market specific. However, lazy marketers often price their services not by a network/route advantage but by those prices the renters charge market wide because they work out of Ma Bells copper central offices.
Let me share a story. A few years back, we had a prospective 100-megabit customer pushed to me by sales for assistance. What this prospective customer wanted was the same price for a circuit in Kansas City as they were getting in Columbus Ohio. The prospective customer could not understand why our price was higher. Now, it’s a fact that Columbus has a twenty plus duct system running around it in which everyone and his brother placed fiber. Thus, the route was saturated. If our company sold totally on price and not on the value of the unique routes we provide as a network owner , we would have dropped our drawers like most do to get the sale! Instead, I politely told the prospect if they want that Columbus price, they need to go to Columbus, dig up the fiber and install it in Kansas City. The prospective customer went away for a while in search of options but eventually ordered from us as our fiber route was unique.
Where I believe Congress screwed up was not applying sunset provisions for Ma Bell pieces & parts in CA96 whereby new market, light-asset competitors would realize and rationalize their plans and capital expense. I believe such a sunset provision would also have had a rationalizing effect on local fiber deployment as well which would have incented “gas pipeline” like partnerships and contiguous metro fiber builds. It’s still not too late to sunset pieces & parts renting; such clarity may actually attract new capital for infrastructure investment. Capital investors want clarity.
Illogical Conclusions. Once again, my opinion, but market share measures have little to do with actual competition. The FCC relies on market share data instead of actual competition which is misleading in applying forbearance. I live outside the beltway, so here is a simple question/observation: How do the sparse markets of Omaha, Neb., and Anchorage, Alaska, qualify for wholesale forbearance with literally a handful of competitors, while cities like New York, Boston, Philadelphia, Los Angeles, San Francisco, Dallas, etc., have gobs of competitors of all ilks, and forbearance in these highly competitive cities gets denied/delayed? It is illogical.
Another documented logical conclusion which supports my position on forbearance comes from a November 2006 Federal Government GAO report. The Federal Government Accountability Office (GAO) collected data highly critical of the FCC for a report on competition by actually pulling circuit type data from 16 markets through a proprietary, highly confidential database that Telecordia keeps. This database identifies who has what circuits and where. The GAO report was highly critical of how the FCC measures competition as the GAO released their findings on true, real, physical facility based competition. This November 2006 report stated that 94% of business buildings in the United States have only one true, real, physical facility based provider … Ma Bell. The FCC would identify 5-7 competitors in a building, however, all riding over the same Ma Bell infrastructure including Ma Bell. The report may be found at www.gao.gov/cgi-bin/getrpt?GAO-07-80 . The data supports a need for wholesale forbearance to attract new infrastructure investment. It’s been 12 years since CA96. Should asset-light competitors get another 12-year term to figure out that they should stop relying on Ma Bell? I think not.
What has CA96 given us?
August 25, 2008
We’re continuing the series on forbearance. Last time we reviewed the historical context of forbearance.
So the question to be asked, given where we are with forbearance, ingrained telecom company habits, and governmental intervention (or non-intervention depending on your point of view) is “what do we really have in place relative to the ‘pro-competitive deregulatory framework‘ Congress authorized under CA96?” We have four answers.
- A near zero cost of entry for competition.
- Complete fall off of innovation.
- Severe lack of true, real broadband facilities competition.
- Illogical conclusions where forbearance on wholesale pricing has been granted and, temporarily, where it has been denied.
Let’s tackle the first two points:
Zero Cost of Entry. Though reshaped by the courts since CA96, at one time the availability of renting pieces & parts from Ma Bell ranging from UNE-P to copper loops to resale enabled low cost market entry or asset-light entry for thousands of competitors. These competitors, for the most part, went wide rather than deep with their business models — cream skimming. Once it was realized that these asset-light companies each required the same 12 % market share in each city to breakeven, and you had 50 or so asset-light competitors competing … the bankruptcies soon followed. This is not to say that asset-light models didn’t work, there were a few exceptions the most notable up until now has been Paetec Communications and CBeyond Communications.
Innovation. I believe our industry is entering a high growth bandwidth inflection point. We are hearing reports of slowing bandwidth growth and assume that it is due to lack of demand or economic softness. My belief is the 75% of broadband penetration we have reached in the United States is slowing not due to demand but the carrying capacity of legacy copper solutions and lack of real facility competition …we have a fiber shortage my friends.
Since CA96, great lobbying efforts have been made to create a level playing field amongst telecom industry participants, in doing so has totally missed the pro-competitive, de-regulatory framework Congress authorized. If all parties are equal, there is minimal incentive for innovation. I place this akin to a socialist government, where everyone in gray looks good. I can’t find innovation at work over the past 12 years. VPN’s have been around since 1983, IP packets go all the way back to the 1960’s with IBM’s TCP/IP the precursor to the Internet Protocol stack. Voice services have been mass produced since the early 1900’s.
I believe by not having a level playing field, comrades, that innovation will occur much to the disadvantage of Ma Bell. But when everyone shows up looking like, packaging like, offering like and performing like Ma Bell, all we have is a lot of gray.
More to come on the next two points, lack of competition and illogical conclusions.
Pole Attachments
June 11, 2008
I spent a bit of time during my inaugural blog giving an overview and opinion on the Beltway, Congress, FCC and lawyers. I will not let that pass. Let me share with you how nuts things are on the topic of pole attachments to prove my point that logic and common sense do not exist inside the Beltway.
The FCC is taking “position papers” at this time on the competitive and cost aspects of hanging a cable on wood or metal poles. But before I go down a path, I need to make sure that you have your mind right. Think about this: If you download a video on to your laptop, does the laptop get heavier? If you upload a document from a laptop, does the laptop get lighter? Do you pay special charges to Dell or HP for a laptop depending upon how or what you are going with the laptop?
So much for the warm-up.
Poles are those tall structures that carry the cables for copper facilities, fiber facilities and power distribution. They are regulated by our government, as they should be. No one wants six poles installed within a four-foot circle to carry six different carriers or utilities facilities. Now, from this point on I suspend any form of common sense until my proposed solution, as I describe in layman’s terms the genius of the Beltway and some carriers…
I don’t want to impress you with my brilliance. I have an MBA, but perhaps more importantly, I have read all sorts of legal filings and industry related articles on pole attachments. (I will spare you the detailed insanity.) At the center of the pole attachment debate in DC is who pays what to place a cable on a pole. Isn’t it funny? It’s always about money.
Anyhow, the genius of the debate is that an entity offering voice services should pay a different rate to attach to a pole than an entity providing cable services to attach and a different rate yet for an entity providing IP services over a cable to attach.
How nuts is that?
The last time I checked, a pole has no idea what is traveling over a cable. What the pole cares about is safety and a solid physical attachment. Better yet, if you are running an OC-12 over a cable across a string of poles and decide to upgrade to an OC-192, in fact, the cable does not get any heavier.
Every time I discuss this topic with a man or woman not familiar with telecom, they rightly so and quickly determine that charging by “what” runs over a cable is asinine as the pole is indifferent. Now, mind you, these are just normal, every day citizens not nearly as smart as the Beltway buddies.
There is also hypocrisy to the situation. Let me share an observation - I will change the names in the story to protect the guilty.
Carrier Vextron delivering voice and data for years never participated in the pole attachment debate. Vextron pretty much left the debate and cost arguments be handled by the “little people” carriers, if you will. The reason for this is that Vextron for years cut some sweet deals with a few cable companies which allowed them to lease fiber from a cable company within a cable companies closed fiber sheath on pole routes. Cable company rates to attach a cable are the lowest of attachment rates on a given pole. With Vextron inside the cable sheath, delivering non-cable services, they were clearly cheating the regulators. Also, Vextron was not competing at the same costs to be on a pole as its competitors — probably an oversight.
Low and behold, our industry changes. Cable companies are now becoming phone companies, and phone companies are becoming cable companies. Cable companies are now chasing business as well as consumers for telecom services. As such, the cable companies turned on Vextron, reporting them to the FCC, and no longer allows the free loader any fiber as they are now direct competitors.
Where is the hypocrisy?
Upon this industry change adversely affecting Vextron, Vextron immediately put on a red superman cape and entered the circle of competitive providers vis-a-vis the Comptel organization. Comptel is the last standing organization inside the Beltway that allegedly acts on behalf of all members interests in regulatory and competitive matters before Congress and the FCC. It’s sort of an anti-Ma Bell group.
Anyhow, Vextron swoops in and tells all the “little people” at Comptel now is the time for us to unite and petition the FCC for lower cost pole attachment fees. What did the “little people” do? They signed on with this group that never gave a rat’s ass about them until their sugar deals with the cable companies went bad. Did anyone at Comptel call them on the table? … Did anyone ask: where have you been for the last 12 years on this issue? No. Why? Because it’s always about money.
Don’t ever let it be said that I don’t offer up solutions to problems. My solution to the pole attachment issue is so simple, it won’t get implemented!
My solution starts out with the idea that no one should care about what content or transport a cable is carrying. What we should care about is that we don’t end up having 15 cables hanging on one pole. And here is where my fairness and equality of access comes in to play.
If a company, say Vextron, has a cable on a pole, and it is a closed cable that only Vextron has access to the copper, fiber/coax or fiber strands, it is my belief for such privilege that Vextron et al should be paying 80% of pole attachment fees for the pole. Any closed cable should pay much higher fees relative to open cables. I would even consider a federal or state fee per mile for a closed cable. I would even consider federal and state fees for copper cables which are much heavier than fiber optic cable … a great incentive to deploy open access fiber cables! More fees … sounds like I am running for President.
Open cable providers, those carriers that lease fiber to others so that we don’t have overbuilding or 15 cables on one pole, should pay a minimal amount to pole attach as an incentive to share copper, fiber/coax or fiber facilities. In my open cable solution, for example, a fiber cable must at a minimum contain 96 strands of fiber, and 50% of those strands readily available to lease to others on equal terms. No single other carrier can buy all the inventory.
This solution solves a lot of problems. The first problem solved is larger carriers like Vextron or Ma Bell monopolizing a pole and thwarting competition get competition and subsidize competitors for the privilege of having a closed cable. By driving an open access component (a business choice driven by economic costs) to the actual physical cable it provides proper incentive for competition in all forms and the idea of “what” a cable carries is no longer important. The idea of overbuilding a pole line (and fighting Ma Bell or the utility to do so) because of closed cable systems, is that rational new fiber deployments can occur. Lastly, and logically, fiber will get deployed more efficiently as open cable competitors will efficiently deploy more cable where by other competitors will already know they have an open access option once it is built. Last I checked, America is in need of deeper fiber penetration and fast.
Too simple to get implemented; my solution is good for competition, good for consumers, good for business and good for America.
Remember: the softest pillow is a clear conscience.
Dave Rusin
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