How do you get around the problem of natural monopolies, then? Or should we be moving to a world where, say, a dozen or more separate companies are all running fiber or coax on the poles on my street in an effort to get to my house?

IMHO, the only way to get real competition on the last mile is to have the actual fiber/wire infrastructure being owned by a neutral party that's required to pass anyone's traffic.

Which closely resembles what the original goal of "the National Infrastructure Initiative" was, back in the early 1990's. Fiber to the homes. 86 million of them by 2006. The Bells volunteered to do it in exchange for incentives, which they got, and kept, and then never delivered what was promised. The best short summary of what happened is probably here: http://www.newnetworks.com/ShortSCANDALSummary.htm This boooklet is now maybe ~5-10 years old so it doesn't reflect more recent developments. We *let* the monopolies (er, duopolies in some cases) get away with the regulatory and legislative manipulation that led to the current outcome, and the irony that the message I'm responding to was authored by someone who appears to work for one of those companies would write such a message is not lost upon me. ... JG -- Joe Greco - sol.net Network Services - Milwaukee, WI - http://www.sol.net "We call it the 'one bite at the apple' rule. Give me one chance [and] then I won't contact you again." - Direct Marketing Ass'n position on e-mail spam(CNN) With 24 million small businesses in the US alone, that's way too many apples.

On Fri, Mar 21, 2014 at 02:30:45PM +0000, Sholes, Joshua wrote:

...

http://www.newnetworks.com/ShortSCANDALSummary.htm

This boooklet is now maybe ~5-10 years old so it doesn't reflect more recent developments.

We *let* the monopolies (er, duopolies in some cases) get away with the regulatory and legislative manipulation that led to the current outcome,

That's definitely its own set of problems completely outside of where one stands on any idea in the space or on the regulation vs. competition debate in general. Regulation does no good unless it's enforced, and competition can't exist meaningfully in an environment where unfair business practices are allowed to exist.

Which are both permitted and perpetuated in large part by the regulatory environment we are made to operate under. Monopolies usually require some sort of government support in order to survive. Don't forget that it is the old companies (regardless of their current name) making life difficult for the content carriers. They don't want to adapt so they are lobbying to enact policies which make it easier for them to sit there and be stagnant dinosaurs while the rest of the world moves on. It's the same thing the record companies are doing on with a different flavor. -Wayne --- Wayne Bouchard web@typo.org Network Dude http://www.typo.org/~web/

On Friday, March 21, 2014 04:25:09 PM Naslund, Steve wrote:

Nice idea, too bad no one can make any money on building infrastructure but not selling the services on top of it. Remember Global Crossing? You are asking one company to put up all the capital expense and then try to recover it by allowing access to their infrastructure to anyone at low rates. Not gonna work. Just on a piece of paper, figure out what it costs to get fiber to your neighborhood from the nearest central office and then how much you have to charge to pay for that. If you can get a reasonable price that returns your investment within 20 years, I will be impressed.

Like I mentioned, some countries Asia-Pac and Africa have seen some of their governments deploying this infrastructure for the citizens. Things go belly-up when the governments sub-contract the actual operations of the network. Either they use the same old incumbents to run it, or they employ private contractors (who are, sometimes, equipment vendors that build the network - which means even more sub-contracting). I've seen such builds focusing on access to the homes, as well as core national backbones. I haven't yet seen both initiatives at the same time in one country. Mark.

Well, don't forget the labor, taxes, business licenses fees, county taxes on chairs, Obama care, accountants and time required. Bob Evans CTO Bob Evans CTO Do you need IPv4 space to lease, space you can use until IPv6 is the standard?

On Fri, Mar 21, 2014 at 10:25 AM, Naslund, Steve <SNaslund@medline.com> wrote:

...

Nice idea, too bad no one can make any money on building infrastructure but not selling the services on top of it. Remember Global Crossing? You are asking one company to put up all the capital expense and then try to recover it by allowing access to their infrastructure to anyone at low rates. Not gonna work. Just on a piece of paper, figure out what it costs to get fiber to your neighborhood from the nearest central office and then how much you have to charge to pay for that. If you can get a reasonable price that returns your investment within 20 years, I will be impressed.

IIRC, GLBX didn't receive taxpayer funded subsidies, nor municipal bonds, in order to roll out their infrastructure.

I would gather that a fiber plant, on whole, costs less than the number of subscribers, multiplied by average monthly bill, and again by average length of service.... not to mention 20 years.

-Jim P.

What do you mean by average monthly bill? That is the issue here. The average monthly bill includes the services you are getting. In the Chicago area a fiber optic access circuit unbundled from the imcumbent carrier to a competitive carrier is something like $10 a month or so. How could you possibly think you can fund a build out in a new area for that price? It may be possible to pay for that over 20 years. The problem is that no one goes into business to break even over 20 years. Would you fund my business model if I told you I needed hundreds of millions of dollars in capital expense and I might show you a profit in 20 years? How much are you willing to have added to your cable and Internet service bills for the access component of the service? Now think of this. I am the guy who owns all of the layer 1 in your area. What if I go out of business? What if I overcharge you? What if I charge $100 a month to access the infrastructure? Who fixes that. The government regulations. I think this business model existed before. It was called the Bell System and the only way they could pay for it was to charge you high rates for services. Steven Naslund -----Original Message----- From: Jim Popovitch [mailto:jimpop@gmail.com] Sent: Friday, March 21, 2014 10:15 AM To: Naslund, Steve Cc: Sholes, Joshua; Larry Sheldon; nanog@nanog.org Subject: Re: Level 3 blames Internet slowdowns on Technica On Fri, Mar 21, 2014 at 10:25 AM, Naslund, Steve <SNaslund@medline.com> wrote:

Nice idea, too bad no one can make any money on building infrastructure but not selling the services on top of it. Remember Global Crossing? You are asking one company to put up all the capital expense and then try to recover it by allowing access to their infrastructure to anyone at low rates. Not gonna work. Just on a piece of paper, figure out what it costs to get fiber to your neighborhood from the nearest central office and then how much you have to charge to pay for that. If you can get a reasonable price that returns your investment within 20 years, I will be impressed.

IIRC, GLBX didn't receive taxpayer funded subsidies, nor municipal bonds, in order to roll out their infrastructure. I would gather that a fiber plant, on whole, costs less than the number of subscribers, multiplied by average monthly bill, and again by average length of service.... not to mention 20 years. -Jim P.

We don't know because the service provider rolls that cost up along with the services they sell. That is my point. They are able to spread the costs out based on the profitable services they sell. If they were not able to sell us services I am not sure they could afford to provide that infrastructure. In fact, having been a service provider I can tell you that I paid the LEC about $4 a month for a copper pair to your house to sell DSL service at around ten times that cost. I am sure the LEC was not making money at the $4 a month and I know I could not fund a build out for that price. Steven Naslund -----Original Message----- From: Jim Popovitch [mailto:jimpop@gmail.com] Sent: Friday, March 21, 2014 11:07 AM To: Naslund, Steve Cc: Sholes, Joshua; Larry Sheldon; nanog@nanog.org Subject: Re: Level 3 blames Internet slowdowns on Technica On Fri, Mar 21, 2014 at 11:48 AM, Naslund, Steve <SNaslund@medline.com> wrote:

What do you mean by average monthly bill?

What is the average monthly (non-subsidized) access cost that your friends and family pay each month? -Jim P.

On Mar 21, 2014, at 11:01 AM, Joe Greco <jgreco@ns.sol.net> wrote:

Why wouldn't you instead charge for the build out as a NRC and then charge for maintenance as a MRC?

I for one would be willing to bear a high NRC start-up cost for someone building fiber to my home. Not everyone would make that tradeoff. I know people who trade between the two local DSL/DOCSIS incumbents every year because it's $5 cheaper/mo to get the next 12-month deal as a switcher. While their time may not be worth ($5*12)/hour to account for this minimal switching cost, it's certainly a real economic cost if you're waiting for a 4 hour window for a tech to show-up and do an install. aside: I recently got natural gas at my home, the install cost was something like $2k, the utility had an option, pay an extra $27/mo for however many months, or pay the $2k up-front. Some folks can't absorb a cost like that, others can. I've heard from FTTH providers their install cost is in that same ballpark. Really wish they would have been able to pull fiber at the same time as the HDPE. The fact that it was a contractor as well certainly means they could run a side-business building their own fiber using the other utility as the main seed-money and have a wholesale fiber network for "cheap". - Jared

On Mar 21, 2014, at 12:22 PM, Joe Greco <jgreco@ns.sol.net> wrote:

...

On Mar 21, 2014, at 11:01 AM, Joe Greco <jgreco@ns.sol.net> wrote:

...

Why wouldn't you instead charge for the build out as a NRC and then = charge=20 for maintenance as a MRC?

I for one would be willing to bear a high NRC start-up cost for someone = building fiber to my home. Not everyone would make that tradeoff.

I was discussing the cost that the service provider had to pay in the context of a "$4/mo copper pair" for rental of a copper pair that the ILEC almost certainly did not need to install. I do not see why the cost for build out needs to be included in the actual monthly cost an ILEC needs to charge.

I think that utilities have a long history of proving that the cost for build out can be successfully charged to the property owner in several ways as you note. I don't see it as being an insurmountable problem to find some way for an intermediate service provider to deal with this if needed.

Sure, but for POTS this installation NRC was regulated for residential (at least last time I ordered a POTS line for a home, which was ....) The cost of the O&M on the switch and OSP is likely less than what I pay them. The history was they were allowed to show costs and add on a margin and rate increases would be approved. I don't want to know what their costs are after ice storms... Here in Michigan there was a recent law passed to allow ending of service in areas starting January 2017. http://www.legislature.mi.gov/%28S%28la3cxz45kfy2bs55wvsiqy55%29%29/mileg.aspx?page=GetObject&objectname=2013-SB-0636 - Jared

...

We don't know because the service provider rolls that cost up along with th= e services they sell. That is my point. They are able to spread the costs= out based on the profitable services they sell.

Okay.

...

If they were not able to = sell us services I am not sure they could afford to provide that infrastruc= ture.

That's a crock. You can always provide infrastructure without selling services on top of it. It's wire. Or fiber. Or whatever. If you're not able to subsidize the >infrastructure with services, then what you actually get is a less distorted reality where you can actually identify the component costs (circuit, services, etc).

Sure you could do that. I'm not denying that you could. I am saying good luck making money on that or getting that business model funded.

...

In fact, having been a service provider I can tell you that I paid t= he LEC about $4 a month for a copper pair to your house to sell DSL service= at around ten times that cost. I am sure the LEC was not making money at = the $4 a month and I know I could not fund a build out for that price.

Why would you try to fund a build out on that?

How are you going to get more than that? I am saying you CAN'T fund a build out that way. That's why a pure infrastructure model is not economically viable unless you have exclusivity that forces people to use it.

Why wouldn't you instead charge for the build out as a NRC and then charge for maintenance as a MRC?

Because your customer will not pay a NRC for a residential build-out. I know from experience that it is hard to get even business customers to eat a reasonable construction cost of a couple thousand dollars. Try that model against an incumbent cable company and see how that works. Will they be willing to pay thousands to be on your fiber network not knowing what the service is like until they commit or will they be more likely to go with the incumbent cable company with a simple monthly charge. In a low density area you can never fund a build out which is where universal access charges came from and the reason that rural LECs are exempt from competition. In return for building a network that is not profitable easily they get exclusive access to sell services on it to give them a chance. Will your NRC be reasonable anywhere outside a major metro area?

What you're suggesting reeks of the deliberate cost distortion games that go on so often. My personal favorite is cell phone contracts where the cost of the >phone is *cough* "subsidized" by the carrier. But what's really happening is that the customer is paying for the phone over the term of the contract, and if >the customer doesn't get a different phone at the end of the contract, then the carrier ... lowers their monthly rate accordingly? No, of course not... they > keep it as profit.

The carriers do subsidize the cost of phones and often they are free. You can also get your phone upgraded on a schedule that is usually a couple years at most, you just have to ask. This is a legacy model to get customers past the entry point of phones that might have cost up to $1,000. Just look at the cost of a cell phone without any service attached to it. It is much greater than what you pay when you buy a phone with service. It is the customer spreading the costs out over the life of a contract because more people care more about monthly costs than overall cost. Do you think people want to fund communications infrastructure to a home they might move out of in a year or two? By the way, how do you continue to collect the NRC if I do move? I can sell my home tomorrow, Do I still have to pay for your fiber build? Can you mandate that the grandma that moves in has to pay for it now even if she does need high speed services? It's not a cost distortion game. What is going on is that the LECs originally built their network out with the model of a captive customer that they could recover costs from for the life of the infrastructure so a 20 - 30 year payout was reasonable. Unfortunately for the competitive communications provider, the capital markets will not fund a model like that and the customer is not captive anymore. Would you bet that any of your customers will be with you 20 -30 years from now? Just about every transport level provider of fiber networks got in serious financial trouble. Look at MFS, Global Crossing, Williams, etc. The more successful model is like Level 3 who sold service on top of an infrastructure (much of which was bought out from under failed transport only providers). It was hard to make money on the city to city and country to country fiber network. The fiber to the home will be completely unprofitable without exclusive access or the ability to sell multiple services on it. The economic reality is that if I build out an expensive infrastructure I have to pile on as many high priced services as possible to order to maximize the revenue from it. A customer who does not balk at a $200 a month TV/voice/Internet service is not going to be happy getting a bill of $50 a month for a fiber loop. The services are what the customer really wants and where you can add bells and whistle with little added expense. The infrastructure is the expensive part. BTW, if you think that NRC infrastructure charge would ever go away, you are kidding yourself. Here in Illinois, we have been paying for the construction of our tollway in perpetuity. When it was originally built the state promised to remove the tolls as soon as construction costs were recovered. We are still waiting and will be forever. If you want, you can criticize the model of the free economic that use profit to determine viability but unfortunately someone pays the bill in the end. Whether it is government funded, a grant, or a commercial enterprise, expenses get recovered. The only difference is that in a free market the customer gets to choose what they pay for. In any other model, everyone pays whether they like it or not. I think our communications model had to develop as a managed monopoly otherwise it would not have been the universal solution that it is today. Now we have to deal with the downside of the monopoly as well. Steven Naslund Chicago IL

Many rural LECs are not required to provide unbundled network elements. As a network provider you can resell their service but they are not required to provide unbundled elements necessary to compete against them as a facilities based provider. So, for example, in Alamo Tennessee or Northern Wisconsin you can get a T-1 from a competitive carrier that resells their services but you cannot get competitive POTS service. You can buy DSL service from anyone but they are reselling the RLECs DSL access services not just running on their cable pairs. One of the biggest players that specializes in being a rural LEC is Frontier Communications. Yes, there are wireless carriers and satellite providers but especially in rural areas they are not a real viable alternative for high speed data since we know the characteristic of satellite service and WISPs have the same density problem in providing service in rural areas. It is hard for a WISP to be profitable when you only have a handful of customers per mile. Same formula, low density, long distances, high infrastructure per customer cost for the WISP. Steven Naslund Chicago IL -----Original Message----- From: Frank Bulk [mailto:frnkblk@iname.com] Sent: Sunday, March 23, 2014 10:08 PM To: Naslund, Steve Cc: nanog@nanog.org Subject: RE: Level 3 blames Internet slowdowns on Technica Not sure which rural LECs are exempt from competition. Some areas are effectively exempt from facilities-based (i.e. wireline) competition because it's unaffordable, without subsidy, to build a duplicate wireline infrastructure. There are also wireless carriers and WISPs the compete against RLECs, as well as satellite providers. I'm not aware of any exclusivity. Frank -----Original Message----- From: Naslund, Steve [mailto:SNaslund@medline.com] Sent: Sunday, March 23, 2014 9:00 PM To: Joe Greco Cc: nanog@nanog.org Subject: RE: Level 3 blames Internet slowdowns on Technica <snip> In a low density area you can never fund a build out which is where universal access charges came from and the reason that rural LECs are exempt from competition. In return for building a network that is not profitable easily they get exclusive access to sell services on it to give them a chance. Will your NRC be reasonable anywhere outside a major metro area? <snip> Steven Naslund Chicago IL

Correct, there is competition to them including the local cable company (if there is one). You just cannot get competitive access to their infrastructure. You have to pay at least the full wholesale rate. That tends to make them the most cost effective choice for wireline services like DSL and local T-1s and makes it impossible to sell facilities based POTS service in their area. The idea was that they are at a competitive disadvantage because the cost of their infrastructure to serve these areas so they deserved some special consideration. If these guys were put in a fully competitive situation that made them insolvent, who would step up to provide POTS service to grandma on the end of that five mile cable run out to the farm. That was the thinking when the Telecom Act passed. The RLEC are where a lot of your "universal access charges" go to help subsidize their buildouts. My point was that there is some regulation in place that recognizes that in some areas (actually a lot of the US in terms of square miles) it is just not cost effective to provide infrastructure in a fully competitive environment. If you think you can make money just selling infrastructure without services, it might work in a major metro area but not in these areas. Steven Naslund -----Original Message----- From: Frank Bulk [mailto:frnkblk@iname.com] Sent: Sunday, March 23, 2014 10:21 PM To: Naslund, Steve Cc: nanog@nanog.org Subject: RE: Level 3 blames Internet slowdowns on Technica I think I understand what you're saying -- you believe that RLECs that don't have to provide UNE's are exempt from competition. I guess I don't see the lack of that requirement meaning that there's no competition -- it just means that the kind of competition is different. Frank -----Original Message----- From: Naslund, Steve [mailto:SNaslund@medline.com] Sent: Sunday, March 23, 2014 10:16 PM To: Frank Bulk Cc: nanog@nanog.org Subject: RE: Level 3 blames Internet slowdowns on Technica Many rural LECs are not required to provide unbundled network elements. As a network provider you can resell their service but they are not required to provide unbundled elements necessary to compete against them as a facilities based provider. So, for example, in Alamo Tennessee or Northern Wisconsin you can get a T-1 from a competitive carrier that resells their services but you cannot get competitive POTS service. You can buy DSL service from anyone but they are reselling the RLECs DSL access services not just running on their cable pairs. One of the biggest players that specializes in being a rural LEC is Frontier Communications. Yes, there are wireless carriers and satellite providers but especially in rural areas they are not a real viable alternative for high speed data since we know the characteristic of satellite service and WISPs have the same density problem in providing service in rural areas. It is hard for a WISP to be profitable when you only have a handful of customers per mile. Same formula, low density, long distances, high infrastructure per customer cost for the WISP. Steven Naslund Chicago IL -----Original Message----- From: Frank Bulk [mailto:frnkblk@iname.com] Sent: Sunday, March 23, 2014 10:08 PM To: Naslund, Steve Cc: nanog@nanog.org Subject: RE: Level 3 blames Internet slowdowns on Technica Not sure which rural LECs are exempt from competition. Some areas are effectively exempt from facilities-based (i.e. wireline) competition because it's unaffordable, without subsidy, to build a duplicate wireline infrastructure. There are also wireless carriers and WISPs the compete against RLECs, as well as satellite providers. I'm not aware of any exclusivity. Frank -----Original Message----- From: Naslund, Steve [mailto:SNaslund@medline.com] Sent: Sunday, March 23, 2014 9:00 PM To: Joe Greco Cc: nanog@nanog.org Subject: RE: Level 3 blames Internet slowdowns on Technica <snip> In a low density area you can never fund a build out which is where universal access charges came from and the reason that rural LECs are exempt from competition. In return for building a network that is not profitable easily they get exclusive access to sell services on it to give them a chance. Will your NRC be reasonable anywhere outside a major metro area? <snip> Steven Naslund Chicago IL

I think I understand what you're saying -- you believe that RLECs that don't have to provide UNE's are exempt from competition. I guess I don't see

And MSOs, wireless carriers, and satellite providers aren't competitors to RLECs? Frank -----Original Message----- From: Owen DeLong [mailto:owen@delong.com] Sent: Monday, March 24, 2014 9:05 PM To: Frank Bulk Cc: Naslund, Steve; nanog@nanog.org Subject: Re: Level 3 blames Internet slowdowns on Technica Since a second build-out is impractical (if not actually impossible) and they don't sell UNEs, they are, in fact, pretty much exempt from direct competition for the same services. Owen On Mar 23, 2014, at 8:20 PM, Frank Bulk <frnkblk@iname.com> wrote: the

lack of that requirement meaning that there's no competition -- it just means that the kind of competition is different.

Frank

-----Original Message----- From: Naslund, Steve [mailto:SNaslund@medline.com] Sent: Sunday, March 23, 2014 10:16 PM To: Frank Bulk Cc: nanog@nanog.org Subject: RE: Level 3 blames Internet slowdowns on Technica

Many rural LECs are not required to provide unbundled network elements. As a network provider you can resell their service but they are not required to provide unbundled elements necessary to compete against them as a facilities based provider. So, for example, in Alamo Tennessee or Northern Wisconsin you can get a T-1 from a competitive carrier that resells their services but you cannot get competitive POTS service. You can buy DSL service from anyone but they are reselling the RLECs DSL access services not just running on their cable pairs. One of the biggest players that specializes in being a rural LEC is Frontier Communications.

Yes, there are wireless carriers and satellite providers but especially in rural areas they are not a real viable alternative for high speed data since we know the characteristic of satellite service and WISPs have the same density problem in providing service in rural areas. It is hard for a WISP to be profitable when you only have a handful of customers per mile. Same formula, low density, long distances, high infrastructure per customer cost for the WISP.

Steven Naslund Chicago IL

-----Original Message----- From: Frank Bulk [mailto:frnkblk@iname.com] Sent: Sunday, March 23, 2014 10:08 PM To: Naslund, Steve Cc: nanog@nanog.org Subject: RE: Level 3 blames Internet slowdowns on Technica

Not sure which rural LECs are exempt from competition. Some areas are effectively exempt from facilities-based (i.e. wireline) competition because it's unaffordable, without subsidy, to build a duplicate wireline infrastructure. There are also wireless carriers and WISPs the compete against RLECs, as well as satellite providers. I'm not aware of any exclusivity.

Frank

-----Original Message----- From: Naslund, Steve [mailto:SNaslund@medline.com] Sent: Sunday, March 23, 2014 9:00 PM To: Joe Greco Cc: nanog@nanog.org Subject: RE: Level 3 blames Internet slowdowns on Technica

<snip>

In a low density area you can never fund a build out which is where universal access charges came from and the reason that rural LECs are exempt from competition. In return for building a network that is not profitable easily they get exclusive access to sell services on it to give them a chance. Will your NRC be reasonable anywhere outside a major metro area?

<snip>

Steven Naslund Chicago IL

Here is the legal definition of an RLEC. http://definitions.uslegal.com/r/rural-telephone-company/ Steven Naslund Chicago IL -----Original Message----- From: Naslund, Steve [mailto:SNaslund@medline.com] Sent: Sunday, March 23, 2014 10:16 PM To: Frank Bulk Cc: nanog@nanog.org Subject: RE: Level 3 blames Internet slowdowns on Technica Many rural LECs are not required to provide unbundled network elements. As a network provider you can resell their service but they are not required to provide unbundled elements necessary to compete against them as a facilities based provider. So, for example, in Alamo Tennessee or Northern Wisconsin you can get a T-1 from a competitive carrier that resells their services but you cannot get competitive POTS service. You can buy DSL service from anyone but they are reselling the RLECs DSL access services not just running on their cable pairs. One of the biggest players that specializes in being a rural LEC is Frontier Communications. Yes, there are wireless carriers and satellite providers but especially in rural areas they are not a real viable alternative for high speed data since we know the characteristic of satellite service and WISPs have the same density problem in providing service in rural areas. It is hard for a WISP to be profitable when you only have a handful of customers per mile. Same formula, low density, long distances, high infrastructure per customer cost for the WISP. Steven Naslund Chicago IL -----Original Message----- From: Frank Bulk [mailto:frnkblk@iname.com] Sent: Sunday, March 23, 2014 10:08 PM To: Naslund, Steve Cc: nanog@nanog.org Subject: RE: Level 3 blames Internet slowdowns on Technica Not sure which rural LECs are exempt from competition. Some areas are effectively exempt from facilities-based (i.e. wireline) competition because it's unaffordable, without subsidy, to build a duplicate wireline infrastructure. There are also wireless carriers and WISPs the compete against RLECs, as well as satellite providers. I'm not aware of any exclusivity. Frank -----Original Message----- From: Naslund, Steve [mailto:SNaslund@medline.com] Sent: Sunday, March 23, 2014 9:00 PM To: Joe Greco Cc: nanog@nanog.org Subject: RE: Level 3 blames Internet slowdowns on Technica <snip> In a low density area you can never fund a build out which is where universal access charges came from and the reason that rural LECs are exempt from competition. In return for building a network that is not profitable easily they get exclusive access to sell services on it to give them a chance. Will your NRC be reasonable anywhere outside a major metro area? <snip> Steven Naslund Chicago IL

The economic reality is that if I build out an expensive infrastructure I have to pile on as many high priced services as possible to order to maximize the revenue from it. A customer who does not balk at a $200 a month TV/voice/Internet service is not going to be happy getting a bill of $50 a month for a fiber loop. The services are what the customer really wants and where you can add bells and whistle with little added expense. The infrastructure is the expensive part.

That's correct, but it is still the wrong way to try to approach the problem. It is simply not practical for N different companies to all try to build out their own networks; we already had the cable and telco monopolies each building out communications infrastructure, which in hindsight seems a little foolish, though it was largely due to the available technologies at the time.

BTW, if you think that NRC infrastructure charge would ever go away, you are kidding yourself.

The "N" in NRC means non-recurring.

Here in Illinois, we have been paying for the construction of our tollway in perpetuity. When it was originally built the state promised to remove the tolls as soon as construction costs were recovered. We are still waiting and will be forever.

As someone who has worked in the Loop on and off for twenty years, I am fully aware of the history and folly of the Illinois trollway. As an out-of-stater, I've watched the way that the tollways have been modified over the years to more heavily impact those of us coming from the north (Deerfield/Waukegan restructuring), to more heavily impact those paying cash, etc. I note that it wasn't all that many years ago that I was paying 40c cash at the Waukegan toll; today that same toll is $2.80.

If you want, you can criticize the model of the free economic that use profit to determine viability but unfortunately someone pays the bill in the end. Whether it is government funded, a grant, or a commercial enterprise, expenses get recovered. The only difference is that in a free market the customer gets to choose what they pay for. In any other model, everyone pays whether they like it or not. I think our communications model had to develop as a managed monopoly otherwise it would not have been the universal solution that it is today. Now we have to deal with the downside of the monopoly as well.

The problem is that if you accept such a fatalistic position as the only possible way, you end up with Comcast and U-Verse. Unfortunately it is a fallacy to imagine that this is the only way it can be. We've seen last mile infrastructure built by municipalities, for example. We know from the historical examples of gas, water, sewer, power, oh and also telephone and cable that it is perfectly possible to create a monopoly to deliver basic services. The entire point, in fact, of my first post in this thread was to point out that this is in fact what Ma Bell had promised to deliver as part of the NII, to provide the last mile fiber to the house, and then to allow competitive access to that network. They did want - and in fact got - concessions and other inducements to actually deliver such a network, by some accounts as much as $200 billion in incentives, which they promptly kept, but then slowly chipped away at what they were expected to deliver in return, until they were finally allowed to just deliver their own services on the infrastructure. So guess what. In this case, we actually spent the money to do it already and in return we got shafted with U-Verse. ... JG -- Joe Greco - sol.net Network Services - Milwaukee, WI - http://www.sol.net "We call it the 'one bite at the apple' rule. Give me one chance [and] then I won't contact you again." - Direct Marketing Ass'n position on e-mail spam(CNN) With 24 million small businesses in the US alone, that's way too many apples.

On Sun, Mar 23, 2014 at 6:59 PM, Naslund, Steve <SNaslund@medline.com>wrote:

[...] The economic reality is that if I build out an expensive infrastructure I have to pile on as many high priced services as possible to order to maximize the revenue from it. A customer who does not balk at a $200 a month TV/voice/Internet service is not going to be happy getting a bill of $50 a month for a fiber loop. The services are what the customer really wants and where you can add bells and whistle with little added expense. The infrastructure is the expensive part.

Oh good lord, if anyone could deliver a fiber loop to my property for $50/month, I would prepay the next 20 years right now to make it happen. Heck, I'd pay 10x that for a fiber loop to the property, if I could have it cross connected to the ISP of my choice at the far end. I think you might underestimate what people would be willing to pay for competitive infrastructure access to their property. Conversely, I'd be happy to pay $5,000 in NRC installation charges to get a fiber run to the property, with a correspondingly lower MRC. Matt

... In fact, having been a service provider I can tell you that I paid the LEC about $4 a month for a copper pair to your house to sell DSL service at around ten times that cost. I am sure the LEC was not making money at the $4 a month and I know I could not fund a build out for

On Friday 21 March 2014 09:13:28 Naslund, Steve wrote: that price. I take it you have not been a service provider for a while? Thanks to its removal from the tariff list, that $4 DSL pair from the ILEC for a third party ISP now costs $34... That doesn't include ISP cost. Adrian

On Monday, March 24, 2014 04:26:11 AM Naslund, Steve wrote:

If you are going to try to do a fiber build out to the home, what would be the monthly cost of just the cable if I cannot sell services on it and is anyone will the pay the much. If I have to pay something like say $40 a month for a fiber connection, how much is service and equipment going to cost on top of that? If you have the choice of being a service provider or an infrastructure provider, why would anyone in their right mind want to be the infrastructure provider. The infrastructure guy eats the lion share of the capital expense and takes all of the risk that someone at the home will continue to want the service. That separated model just does not work except in the case of the ILEC which has capitalized that network over the last 50 years.

All dark fibre providers I know of, that eventually start off as pure dark fibre players, will eventually enter into the services game. Even those that do so cautiously, but only deploying DWDM spectrum before to maintain the "darkness" of the fibre, will eventually add yet more serices on top of that. It's just like how wholesale providers have to, at some point, look into enterprise business. You can't just survive being an infrastructure-only provider, in the long run. Mark.

That number will change depending on distance, terrain, and a lot of other factors. I have personally installed a lot of outside plant fiber and $700 can turn into $2400 the first time you find a rock or need to add a manhole somewhere. It also depends on distance between customers and their distance from a right of way. Are we talking New York labor or Atlanta labor charges? Big difference there. Did the municipality require conduit? Some do and it becomes much more expensive. Are you digging up any pavement or direct boring it all? It does not matter much though. Bottom line is that if you can get a residential customer to pay even $700 construction charge very often, I will be impressed. Steve -----Original Message----- From: Jay Ashworth [mailto:jra@baylink.com] Sent: Monday, March 24, 2014 12:25 PM To: NANOG Subject: Re: Level 3 blames Internet slowdowns on Technica ----- Original Message -----

...

From: "Steve Naslund" <SNaslund@medline.com>

...

What do you mean by average monthly bill? That is the issue here. The average monthly bill includes the services you are getting. In the Chicago area a fiber optic access circuit unbundled from the imcumbent carrier to a competitive carrier is something like $10 a month or so. How could you possibly think you can fund a build out in a new area for that price? It may be possible to pay for that over 20 years. The problem is that no one goes into business to break even over 20 years.

Well, Steve, happens we had this conversation in some detail last year when I was up for a City IT director position, and contemplating fibering 12,000 passings.

The magic number is apparently $700-800 per passing, not the $2400 you seem to suggest...

----- Original Message -----

From: "Steve Naslund" <SNaslund@medline.com>

Thinking about this again, let's take Jay at his word that he can make a "passing" for $700-800.

Let's not. I was quoting vendors who had themselves been quoted by other NANOGers. Whether those other NANOGers had *paid* that price is unclear, but the price was assuming a bulk greenfield install. Whether it included TAs I don't remember, and would have to look at the archives.

Unfortunately, the ISP or service provider does not pay for a passing, they pay for an entry. After all we can't let them make their own entry or we will have everyone and their brother in our splice case.

They will terminate their equipment in my building, and I will feed them cross-connects.

We will also have third world aerial spaghetti as they all run their own drop cables using God knows who as "skilled labor".

No, cause the fiber that's in the ground is all that's ever going there, since it was installed by the city. You're running with my number, you need to run with *all* the context which accompanied it, none of which you inquired about.

1. You need to decide how many strands you are going to drop to my home. You could drop a single fiber or pair but then you have to put mux equipment on the end of it. After all I want choice and that might include TV from provider X, phone from provider Y, and high speed data from provider Z.

I was going to install 3-pair per passing, except in multi-unit res and business, where the ratio would drop off to about 1.2 or so at 500 units.

2. Since you are the sole provider of the physical layer, you now have to roll a two man crew with a bucket truck and an experienced splicer.

I do like hell; I have Mongo walk over into the wire room and feed a patch cord. Everything is already wired.

By the way, this is Chicago so we have to have a two man crew at a minimum and they are both IBEW union contractors since this city will NEVER hire non-union labor. Figure they might have a 20-30 minute drive here is traffic cooperates. They get paid hourly so they don't much care how long it takes but let's say they are feeling frisky today and only take about two hours on the job itself plus the hour of travel.

It's clear that you're making the assumptions for *your* environment, so I won't leave any more of these in now that I've made my point.

Are we getting closer to that $2,400 per home yet? What if this is the suburbs and you have to direct bury enough cable to reach the pedestal on the corner and cross my one acre lot with it?

Probably, but $2400 got nothing to do with *my* environment. 100% passings, 100% MPOE, on a pedestal for empty lots, of which there aren't many. Helps to be aiming at the target before you pull the trigger, Steve. Cheers, -- jra -- Jay R. Ashworth Baylink jra@baylink.com Designer The Things I Think RFC 2100 Ashworth & Associates http://www.bcp38.info 2000 Land Rover DII St Petersburg FL USA BCP38: Ask For It By Name! +1 727 647 1274

You are right but that is usually how it works with fiber because that last drop to the home is a pretty expensive piece that you don't usually want installed until it is needed. The LECS usually don't even light a building unless there is a service that requires it. I was trying to make the point that $700 - 800 per premise as quoted seems extremely low to me. The cost of the cable, splices, cases, MPOEs, and especially labor make that number unbelievable to me. I am coming at this as someone who was in charge of a similar project that connected every building on US Air Force bases to a fiber backbone. An Air Force base is very similar to a suburb in a lot of respects in terms of density and utilities structure. I was responsible for the design, pricing, procurement, and contractor management on that project. We had 3,000 buildings in approximately a eight square mile area and the total project cost was in excess of $12 million dollars which equates to something like $4000 per building. Granted we were doing 12 strands per building but cable costs have fallen since this project so they should be pretty close. That project included the backbone and the drops into each building. Between those two, the drops into each building was the biggest challenge for underground deployments since no underground conduits were usually available and there was a lot of existing infrastructure to be avoided. I would imagine that if it was a new subdivision it would be much easier but in a 50 plus year old neighborhood there are tons of unknown obstacles and challenges. The labor for splicing and cable pulling itself was provided by Air Force cable technicians so did not factor into the costs. The costs were mostly civil construction under streets where duct were full and the addition of many manholes and handholes because original manholes were not in the right positions to support the infrastructure or were decayed from being in ground for 50 plus years. I would say that about half of the money went for civil construction of duct infrastructure and the remainder went to cable and various hardware items. Yes, you could go all direct burial but under streets, that is a maintenance nightmare that you are going to pay for someday. The Air Force required manholes and conduit under streets to allow for future serviceability and it was probably a good move since we did use a lot of pre-existing conduit going from copper to fiber. Steven Naslund

...

This assumes installing a single home on demand.

...

In reality, if you're going to implement what Jay and I are suggesting, then you dig up a neighborhood at a time and drop a bunch of strands of fiber (I'd guess 8 or 16 as likely numbers) per >>household.

...

Owen

----- Original Message -----

From: "Steve Naslund" <SNaslund@medline.com>

You are right but that is usually how it works with fiber because that last drop to the home is a pretty expensive piece that you don't usually want installed until it is needed. The LECS usually don't even light a building unless there is a service that requires it. I was trying to make the point that $700 - 800 per premise as quoted seems extremely low to me. The cost of the cable, splices, cases, MPOEs, and especially labor make that number unbelievable to me. I am coming at this as someone who was in charge of a similar project that connected every building on US Air Force bases to a fiber backbone. An Air Force base is very similar to a suburb in a lot of respects in terms of density and utilities structure. I was responsible for the design, pricing, procurement, and contractor management on that project. We had 3,000 buildings in approximately a eight square mile area and the total project cost was in excess of $12 million dollars which equates to something like $4000 per building. Granted we were doing 12 strands per building but cable costs have fallen since this project so they should be pretty close.

"Marine, Aviation, Mil-Spec, Aerospace, Man-Rated": The five most expensive adjectives in the English language, in ascending order. (When I need rule-of-thumb multipliers, I use 5, 10, 20, 400, and 5000, resp.) For the record, I don't recall whether $800 was all-in -- inclusive of all the central building equipment and labor -- or not. Time to exhume the thread from the archives. It was quite informative. Cheers, -- jra -- Jay R. Ashworth Baylink jra@baylink.com Designer The Things I Think RFC 2100 Ashworth & Associates http://www.bcp38.info 2000 Land Rover DII St Petersburg FL USA BCP38: Ask For It By Name! +1 727 647 1274