5 ms·

The really maddening part is that if a city or town decides to do their own network because the private companies has left them out they get sued or new laws ar

by baldfat 10y ago

The really maddening part is that if a city or town decides to do their own network because the private companies has left them out they get sued or new laws are passed to kill the project. A) They get money from the government B) They sue local governments that try to do their own networks C) Then FCC gives more money and profits with less competition and less free markets

rayiner 10y ago
I think the lawsuits attempting to shut down those networks are stupid. At the same time, municipalities are the worst possible level at which to build those sorts of networks. Here in D.C., the Metro tracks are in such dire shape that trips scheduled for 25 minutes take 40+ due to train slowdowns. Last summer, tracks were literally catching on fire. In any case, the vast majority of people live in states where municipalities are not banned from building broadband networks. Munipalities don't do it because they have no money. Is Baltimore going to spend a billion dollars building fiber to every household when it's got a billion-dollar pension fund shortfall? Verizon spent over $3 billion to wire up half of NYC. Was New York in a position to do that itself, when it's got a $46 billion pension liability, and a $14 billion liability in the MTA?
- AnthonyMouse 10y ago
  > Munipalities don't do it because they have no money. Why isn't it self-funding? Issue a bond, pay for the network, lease it wholesale to competing ISPs, use the lease money to pay back the bond over time. Zero tax dollars.
  - rayiner 10y ago
    The economics, politics, and logistics are brutal. Say you build out to the whole city of Baltimore, and get 40% to subscribe at a cost of $5,0000 per subscriber.[1] You issue a bond at 4% interest. So you gotta cover $200 in interest per year per subscriber. Say you charge $70 for service, and 60% of your revenue goes out the door in maintenance and customer service.[2] After paying debt service, you have $135 per year to pay down principal. So it takes you 37 years to pay down your principal. 30-year bonds may be practical for a school building, but not so much for a telecom network where you'll need to make ongoing capital expenditures to upgrade the network.[3] Then there is the politics. It's a political non-starter to issue city bonds to build a network you lease out to private ISPs to sell $70/month internet service that poor people and the elderly can't afford. So some sort of cross-subsidy has to be baked into the deal, and that involves charging higher-income customers more than $70/month. But that makes it harder to hit the 40% uptake rate. And if you can't hit that, you're really screwed because the uptake rate drives your per-household cost. And then there is logistics. Who do you pay to maintain said fiber network? Cities have no experience or staff capable of doing it. So you have to create a new department, and staff it (at least in Baltimore) a relatively expensive unionized workforce (which makes it harder to hit your 40% operating margin above). [1], [2] Roughly cribbed from the financials of EBP's network in Chattanooga. [3] The FiOS network is only 10 years old, and Verizon is about to spend a bunch of money to upgrade from GPON to NGPON-2.
    - AnthonyMouse 10y ago
      It seems like the solution there is to buy out the incumbent. Then you get ~100% uptake instead of 40%, which better than doubles your total revenue and lets you start with the existing network rather than from scratch. You could even bring on some of their technical staff.
      - amazon_not 10y ago
        Australia tried that. Total disaster.
        AnthonyMouse 10y ago
        Australia was about to try that but then a different government came in that intentionally sabotaged it to prevent their opponents from getting credit for it succeeding.
        mkj 10y ago
        Well it's still in progress, a bit hard to declare it a disaster yet.
    - amazon_not 10y ago
      > The economics, politics, and logistics are brutal. No on the economics, yes on the politics and again no on the logistics. > Say you build out to the whole city of Baltimore, and get 40% to subscribe at a cost of $5,0000 per subscriber.[1] How did you get that $5,000 number? It's far more than Verizon paid for FiOS and I can't get it to line up with EPB's numbers either. > Say you charge $70 for service, and 60% of your revenue goes out the door in maintenance and customer service. 60% is far in excess of what maintenance and customer service costs. A brand new fiber network does not require significant maintenance and customer service is a small fraction of the monthly cost. > 30-year bonds may be practical for a school building, but not so much for a telecom network where you'll need to make ongoing capital expenditures to upgrade the network. 30 year bonds work just fine for fiber networks. Upgrading active equipment is a minor effort, covered by your operating budget, unlike building the network which is CAPEX heavy. > It's a political non-starter to issue city bonds to build a network you lease out to private ISPs to sell $70/month internet service that poor people and the elderly can't afford. Yes, politics is a problem, but the above isn't what's stopping builds. > And then there is logistics. Who do you pay to maintain said fiber network? You outsource it like everybody else, unless it becomes cheaper to do it in-house. This is a solved problem.

by baldfat 10y ago

rayiner 10y ago

I think the lawsuits attempting to shut down those networks are stupid. At the same time, municipalities are the worst possible level at which to build those sorts of networks. Here in D.C., the Metro tracks are in such dire shape that trips scheduled for 25 minutes take 40+ due to train slowdowns. Last summer, tracks were literally catching on fire. In any case, the vast majority of people live in states where municipalities are not banned from building broadband networks. Munipalities don't do it because they have no money. Is Baltimore going to spend a billion dollars building fiber to every household when it's got a billion-dollar pension fund shortfall? Verizon spent over $3 billion to wire up half of NYC. Was New York in a position to do that itself, when it's got a $46 billion pension liability, and a $14 billion liability in the MTA?

AnthonyMouse 10y ago
> Munipalities don't do it because they have no money. Why isn't it self-funding? Issue a bond, pay for the network, lease it wholesale to competing ISPs, use the lease money to pay back the bond over time. Zero tax dollars.
- rayiner 10y ago
  The economics, politics, and logistics are brutal. Say you build out to the whole city of Baltimore, and get 40% to subscribe at a cost of $5,0000 per subscriber.[1] You issue a bond at 4% interest. So you gotta cover $200 in interest per year per subscriber. Say you charge $70 for service, and 60% of your revenue goes out the door in maintenance and customer service.[2] After paying debt service, you have $135 per year to pay down principal. So it takes you 37 years to pay down your principal. 30-year bonds may be practical for a school building, but not so much for a telecom network where you'll need to make ongoing capital expenditures to upgrade the network.[3] Then there is the politics. It's a political non-starter to issue city bonds to build a network you lease out to private ISPs to sell $70/month internet service that poor people and the elderly can't afford. So some sort of cross-subsidy has to be baked into the deal, and that involves charging higher-income customers more than $70/month. But that makes it harder to hit the 40% uptake rate. And if you can't hit that, you're really screwed because the uptake rate drives your per-household cost. And then there is logistics. Who do you pay to maintain said fiber network? Cities have no experience or staff capable of doing it. So you have to create a new department, and staff it (at least in Baltimore) a relatively expensive unionized workforce (which makes it harder to hit your 40% operating margin above). [1], [2] Roughly cribbed from the financials of EBP's network in Chattanooga. [3] The FiOS network is only 10 years old, and Verizon is about to spend a bunch of money to upgrade from GPON to NGPON-2.
  - AnthonyMouse 10y ago
    It seems like the solution there is to buy out the incumbent. Then you get ~100% uptake instead of 40%, which better than doubles your total revenue and lets you start with the existing network rather than from scratch. You could even bring on some of their technical staff.
    - amazon_not 10y ago
      Australia tried that. Total disaster.
      - AnthonyMouse 10y ago
        Australia was about to try that but then a different government came in that intentionally sabotaged it to prevent their opponents from getting credit for it succeeding.
      - mkj 10y ago
        Well it's still in progress, a bit hard to declare it a disaster yet.
  - amazon_not 10y ago
    > The economics, politics, and logistics are brutal. No on the economics, yes on the politics and again no on the logistics. > Say you build out to the whole city of Baltimore, and get 40% to subscribe at a cost of $5,0000 per subscriber.[1] How did you get that $5,000 number? It's far more than Verizon paid for FiOS and I can't get it to line up with EPB's numbers either. > Say you charge $70 for service, and 60% of your revenue goes out the door in maintenance and customer service. 60% is far in excess of what maintenance and customer service costs. A brand new fiber network does not require significant maintenance and customer service is a small fraction of the monthly cost. > 30-year bonds may be practical for a school building, but not so much for a telecom network where you'll need to make ongoing capital expenditures to upgrade the network. 30 year bonds work just fine for fiber networks. Upgrading active equipment is a minor effort, covered by your operating budget, unlike building the network which is CAPEX heavy. > It's a political non-starter to issue city bonds to build a network you lease out to private ISPs to sell $70/month internet service that poor people and the elderly can't afford. Yes, politics is a problem, but the above isn't what's stopping builds. > And then there is logistics. Who do you pay to maintain said fiber network? You outsource it like everybody else, unless it becomes cheaper to do it in-house. This is a solved problem.