Churning…Churning…Churning Inside the Beltway…
October 8, 2009
Today it is short and sweet.
As much as I dislike going political, let’s use industry terms…
We need to “churn” out our elected officials inside the Beltway – all of them. Forget tenure and your self-serving interests because your representative has been there for years.
Korea is going 1 gigabyte by 2012 … I have written about this before. What is in the water inside that Beltway?
Wake-up America!
http://joongangdaily.joins.com/article/view.asp?aid=2900490
A Week of Responses
April 21, 2009
I’d like to take this week to respond to some of my loyal readers’ recent comments.
In response to “Charts is Charts”:
Dave,
Where’d you get these charts? Startling. Why isn’t One Comm ($850Mn) on them, I wonder?
Where can I found how ‘rural’ is defined?
Thank you
–Bryan
Bryan,
On the charts — OneComm is not listed as it is not a public company.
I would like to see the same charts based upon quality of revenue and profitable growth… Everybody is in love with the top line, a.k.a. too big to fail.
On rural, my definition means nothing. Lobbyists inside the beltway play the definition game. In my world, rural is like northern Maine–that’s rural. Rural to me is some day living on a mountain range with my closest neighbor 10 miles away. I have solar cells to be off the grid and a satellite dish on the roof as a link to what’s going on. (Note: my wife and daughter won’t go for this thus it is a fantasy.)
–Dave
Rusin’s Lobotomy, Part 4
March 27, 2009
Just a few facts to support my logic:
- Fujitsu just announced an LTE wireless platform capable of delivering 120 megabits per second. It can go as high as 300 megabits at 20Mhz.
- Ericsson just announced a VDSL2 platform that boasts 500 megabits over twisted copper pairs using a vectorized noise cancelling technology.
- Charter Communications is delivering 60 megabits per second over DOCSIS 3.0 technology.
- Ethernet-over-copper a favorite of XO Communications delivering between 5 megabits up to 88 megabits per second.
- WiMax platforms delivering 180 megabits today, with greater expansion as the 700MHz licenses come on board for deployment
- An interesting satellite, WiMax and wi-fi model from CTC (St. Louis) and AlphaStar International to deliver 4G bandwidth speeds by low cost radios to anywhere in rural America. The satellites are a holdover from the Reagan Star Wars initiatives which are in place for back haul today.
Based upon the definitions above–and the hard facts–over 90% of America is under-served unless you have FIOS, DOCSIS 3.0 or an independent carrier fiber pipe serving a location. Once again, we are not under-served if we feel good about measuring bandwidth at 200 kilobits, dial-up, T1 speeds or slightly higher. Throwing money at anything less than 50 megabits (I prefer 100 megabits) is a waste of tax payer capital and not good for America, in my humble opinion.
Where do you stand? What do you believe when it comes to Broadband and bandwidth?
What’s good for America?
Rusin’s Lobotomy, Part 3
March 25, 2009
Here Is Why…
Here is why, in my opinion, the minimum definition for Broadband in America should be at least 50 megabits– if not 100 megabits:
We have the technology available today to deliver it…it’s a matter of prioritizing what is good for America.
I am not advocating only fiber optics, though it is bandwidth future proof (and makes the most sense for populated areas greater than 1.5 million in an MSA), and existing technology is readily available and should based upon the standards we set to become the focal point of deployment and fund allocation. Let me apologize now if “What’s good for America” gets in the way of legacy dial-up, special access, UNE-L, TDM, Rural Telecom and DSL interests (limitations).
I am not advocating any one technology – no one in the government should be picking winners and losers based upon technology or modal competition (been there, done that). We need to set a high bandwidth standard and let the free market choose the winners and losers. We need investment in geographic areas that make us globally competitive whether rural, suburban or urban.
Rusin’s Lobotomy, Part 2
March 23, 2009
Here I go applying common sense again…yet another step closer to the lobotomy I talked about last week.
My brain tells me we can not give definition to the terms “un-served” or “under-served” until there is a definition of Broadband. Turn up the electricity–but isn’t it logical that you can’t define un-served and under-served until there is a quantifiable definition or goal of Broadband in my crazy way of thinking? Shouldn’t that definition come from: “What’s good for America?” first?
If you agree with me, I’d like to know, as it might cause me to cancel the lobotomy.
Presently, our feel-good definition of Broadband, as established under the great Chairman Martin’s FCC regime, is any connection with a speed greater than 200 kilobits per second. This definition gave Congress and the FCC feel-good statistics of those being served by Broadband penetration across the United States in excess of 80%. If this is the case, why the debate? Why the funding? Why have the Bell companies been pouring tens of billions of dollars into “closed network” local fiber optic deployments?
Now, let me really cloud things up by getting back to “What’s good for America?”…
Depending upon whose numbers you look at, in the global reality of broadband, deployment, and penetration rate – America is, like, 17th on the list. #1 and #2 world ranking Japan and South Korea average about 100 megabits to consumers and businesses. South Korea recently announced an initiative of having a
minimum standard of 1 gigabit in 5 years! Just south of one of the few remaining Communist bastions–North Korea is heading in with a goal to have 1 gigabit of bandwidth service.
So, what’s good for America? 2.5 megabits? 1.5 megabits? How low do we want our standards?
In my opinion, the minimum definition for Broadband should be at least 50 megabits– if not 100 megabits.
On Wednesday, I will explain why…
It’s All About the Love
March 5, 2009
I am a friend of the industry. If you regularly read this blog you know that I have no shame in admitting I am a bigot…a metropolitan fiber optic bigot.
You will find below a link to a FREE Seminar being offered by Ciena Corporation on March 24th – it’s all about the basics of lighting optical fiber, a.k.a. Optical Networking 101*.
So–to all my “asset-light” CLEC friends and purveyors of copper loop services–this is an opportunity for you!
For our Enterprise friends that worry about their carrier going bankrupt, or if you are someone who does not understand Telecom lingo–this is also for you.
During this seminar, you will discover how to:
• Make optical networking work for you
• Choose optical networking technologies
• Light up “dark fiber”
• Reduce recurring costs
• Prepare for future network technologies
• Get independent from Ma Bell
• Be in awe of Dave Rusin and his blog
• Become a part of, and join, the Fiber Bigot Club
Why do I share this? Because at AFS; it’s always about the love …
Register Here.
* All participants will receive a link to download “Optical Networking for Dummies.”
Before We Piss Away Money–An Explanation of Networks
February 2, 2009
Did you know there is a factor of 10x more non-fiber sheath owners–non-owners of “infrastructure”–than there are of actual fiber sheath owners?
Did you know that the key to fiber route value is placement–unique routes, versus over-built, redundant, joint-built fiber routes?
Let me explain. If you have 5 carriers on the same fiber route, each with their own fiber sheath, what you have is a 40-year supply and demand imbalance and an inability to make a profit. Often this imbalance creates “distressed assets.” If you are from the beltway, and thinking about handing out our cash, read this paragraph a few times until you understand it. History has a way of repeating itself.
Just like UNE-Loops of copper, an IRU is not network ownership, it is a rented privilege. If your carrier has an IRU-based business model of a few fiber strands, you may need to ask some questions about future supply availability and/or overall capacity. Those who own the cable sheath control the supply and have unlimited capacity ability.
The costs to deploy fiber optic networks increase every year as labor is 60% of the cost!
What cost a $1 to build in 2000, now costs $2.00. Yes, distressed assets–they are distressed for a reason. The route…redundant cables…joint-built routes…fire-sold IRU’s to competitors, etc. These reasons gave credence to a massive fiber glut (circa 2001 to 2006), according to the real smart guys on Wall Street.
Since 2001, the Ma Bells of America have collectively spent over $25 billion on the deployment of new fiber optic networks. With such a supply glut as recent as 2001-2006, one would think there would be no need.
What is going on?
Owners of fiber optic cable infrastructure that allow IRU’s to be sold are actually providing open networks, which promotes real facility or network-based competition. However, our regulators don’t discriminate as they should between open and closed networks. The government should be bending over backwards for open-access network providers to promote substantive competition. More on this subject in a future blog.
Anyhow, there are different types of networks: oceanic, long haul, metropolitan and access. Let me describe each one in simple terms because I want to make sure we don’t piss away money needlessly:
Oceanic: Dropped from a barge to the ocean floor, this is a cable sheath wrapped inside of a steal sheath that connects continents or countries. Its capabilities are strictly transit and aggregation of point-to-point traffic. As many bits you can aggregate is what gets shoved down this pipe.
Long Haul or Regional Long Haul: This is the terrestrial version of Oceanic, but without the need for a barge or steal sheathing around the fiber cable. Long haul networks can be buried underground or strung from poles. This type of network terminates in what is called a carrier hotel in a given city or metropolitan statistical area (MSA). Long Haul capabilities are strictly transit and aggregation of point-to point traffic. As many bits you can aggregate is what gets shoved down this pipe. A national long haul network can run coast-to-coast, while a regional long haul network can cover a state or a region, such as the Northeast.
Metropolitan Network: This is the backbone network inside a city, suburb, town or village that enables connectivity between the access network (last-mile) and the long haul networks. These networks are not just bit stuffing aggregation networks.
Access Network: This is the last-mile or first-mile network that connects into the “edge” or metropolitan network backbone, which in turn connects to local data centers or the carrier hotel. Wireless last-mile broadband fantasies aside, the typical flavors of the access networks are copper, or–in less than 10% of situations–fiber optics. Copper has physical limits for moving bandwidth just like wireless silicon where fiber optics does not.
So what is my point?
Just follow the demand…do not build supply-side infrastructure with government tax dollars without the demand.
Next lesson…Traffic Engineering.
Drinking Your Own Kool-Aid Can Be Dangerous
October 27, 2008
Got another email the other day that I wanted to share. Keep ‘em coming.
I’m an investor in telco, all “next gen” type providers, and I wanted to see if you would comment on the differences between running a wholesale business vs. an enterprise business. It has been my recent experience that the next gen companies that have tried to combine the two models have had only marginal success. An analogy that told to me is that it’s like running a corporate bank versus a retail bank. The skills of the executive team has to be different with different philosophies on how to build market share taking into account off-net strategies, empowering local sales managers to expect lower margin or longer payback on companies with great long term potential, and how much to invest in SG&A etc. Perhaps if you feel so inclined you could post a few of your thoughts in this area? Regardless, thanks for your comments I enjoy them very much (although I don’t agree with all of them!)
Fair enough. I don’t expect everyone to agree with my comments that’s what America is all about – freedom of expression. However, when I do post my opinions, they are informed opinions and typically based upon experience and results. I don’t spend time wishing the way things should be, but rather I deal with the reality of each situation that presents itself to me.
The greatest poison competitive carriers face is trying to be all things to all prospective customers. So far, after 100+ years of regulation, only the ILECs have demonstrated that this can be done. For the life of me, prior to the telecom crash, the thought that a company capitalized at a billion dollars of equity and debt is somehow going to be a national threat to the ILECs was ill conceived to me – but not the “real smart guys” on Wall Street. The real smart guys poured billions of dollars into hundreds of CLECs after drinking their own Kool-Aid. (My apologies to Kraft Foods, the makers of Kool-Aid.)
Here at AFS we have management very familiar with retail telecommunications. So much so that we purposely have avoided the retail side of the business and have focused on our business – underserved second tier markets, data, IP access, on-net buildings, 10 meg + demand and owning the local fiber optic infrastructure. (Note: given the current economic uncertainty, our model has us positioned quite well in a McKinsey nine-box matrix against most other competitors.) This has been our choice since day 1 and given that we are facing yet another downturn, our position is capable of weathering the worst of storms.
More to come soon on my response to our friend…
Have a question, comment, complaint or otherwise for Dave? Shoot him an email or post a comment below.
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.
Network Reliability:You Get What You Pay For
October 17, 2008
I mentioned in an earlier post that I would throw in my two cents on this question we received:
Question about 100% on-net network uptime for all optical customers. Does AFS have any on-net bldgs that are stubbed (no dual entrance)? AFS has never had a fiber cut to a stubbed bldg? AFS has never had ANY outage for an on-net all optical customer?
First, to have an all-optical customer, you must own a metropolitan fiber backbone that is configured redundantly. Renters have a difficult time doing this. An all-optical customer chooses to be an all-optical customer – it is the highest form of redundancy offered. We offer all sorts of scalable options. The customer chooses this path as they recognize any SLA payment is not worth the cost of late delivery, service affecting outages, budget over runs and excuse spinning customer service. An all-optical AFS customer enjoys access redundancy, network redundancy, circuit redundancy and card level redundancy. And it is not cheap, but depending on the enterprise — i.e. hospitals, government, financial, casinos — that require 100% uptime, it becomes more of a corporate risk management issue than a low price issue from purchasing.
Yes, AFS has had outages, but given the redundancy we offer, this customer set has never been affected. They usually don’t know there is a problem. For example, if we have a fiber cut, we call the customer to let them know, though the ring configuration they are on maintains traffic load integrity. They are grateful we called. As I have said over the years, connectivity is perceived as a price-driven commodity until it does not work. Reliability — you get what you pay for — today, tomorrow and 20 years from now. The key is customers needing to know what to ask in separating the lying rats from the straight shooters. If you would like, I wrote a white paper on network clouds that gives you the ammunition and questions to ask a prospective carrier pitching you their solution. The paper assists in smoking out the lying rats. It can be downloaded here and feel free to send it to all your friends.
On stubs, I cover this in the aforementioned white paper. You are describing a collapsed lateral, whereby the provider dedicates four fibers on the same lateral into a building dedicating one pair to a port and another pair to a port on the same box or redundant boxes. The box running the ports has no idea the fiber pairs are on the same lateral and the customer believes they have redundancy until such a time that lateral is cut. At AFS, we don’t sell collapsed laterals as a redundancy feature, some lying rats do, and some don’t disclose the risk. We explain to customers that choose to be all-optical the requirement and cost to have dual fiber entry into their building. Once again, those in corporate risk management recognize the value over low price.
Shoot Dave an email with any questions or comments on this post or fill out the comment form below.
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