Moody's: U.S. Telecoms are underinvesting in broadband
fiercetelecom.com
fiercetelecom.com
1. Fiber optics - this is growing, and companies which have a lot of it are continuing to lay it out (albeit slowly). Also see, Altice's recent announcement. My hope is that post-election Google Fiber will ramp back up, simply for the legal defense of saying that they too are a cable company and the same laws should apply. In any case, consumers want it. High-end consumers will pay a premium, and the cost for urban footprint fill-out is not exorbitant.
2. Cable coaxial wire - this is a big thick wire that continues to upgrade nicely. DOCSIS 3.0 is basically the same old 1980s/1990s cable with better comms protocols. It's getting to the point to where they can compete on a reasonable basis with single strand fiber, at a lower speed and price point. So cable companies build out the back-end with fiber, but don't have to replant single homes.
3. Crappy copper telephone wire - this stuff is thin, it's painful to maintain and upgrade and always lags copper. Companies with a lot of this (Windstream, Verizon, AT&T, Frontier) are trying to run it for cash flow rather than spend a lot on upgrades. The telcos push fiber to the node, but it's a slow grind and involves very careful cost benefit analysis.
3 different technologies. 3 very different strategies. The election has further complicated things. Should VZ save up it's ammo and make a play for Sprint, Charter, Dish, or T-Mobile or invest in more broadband plants? I'd save the ammo given that Tom Wheeler is out on January 20th..
They got about 10% of the way in, then a new conservative government got in power and stomped on the plan. Instead they're doing fibre to the node for everyone.
Why have gigabit fibre when you can have slower, less reliable, more expensive copper connections that go a whopping 12Mbit!? Faster even, if the node happens to be sitting in your front lawn.
Whats the point of nation wide fiber network when you force data caps on it like it was some kind of undersea cable to mars?
The CVC prices are unreasonable but they can and will come down. Once the fibre is in place you can argue about the business details later. You can't, however, lay fibre overnight. That takes years of planning.
The POI decision was dumb too but it can be worked around.
As for the data caps, you can already buy an unlimited 100Mbps service right now. So it's just a matter of cost.
And no, they cannot upgrade FttN to G.fast, no matter what they tell you. That requires shorter copper lengths than all but the closest handful of houses to the node have. Plus you need everyone on the same technology so that the vectoring (like active noise cancellation) can work.
Gfast drops off a cliff after a few hundred metres, and they have houses connected to nodes a kilometre away. Gfast and Xgfast are only appropriate for Fibre-to-the-curb.
FttN can never be meaningfully upgraded.
G.fast extends the fibre closer to the house but I suspect it's not very cost-effective unless the take-up is high, so perhaps it will mainly cater to rich people in suburbia.
We've know that fibre (FTTH) was the answer since the 1980s but all British governments have been too short-sighted and stupid to finance it.
Of course, they dug up the streets to install new pipes for the short-term benefits of North Sea gas, and they can find £50 billion for HS2, when they could have FTTH for less.
Yet.
640K ought to be enough for anybody.
What reasonable use has a consumer sub for more than 10-20 Mbs? if your running a business from home get a business line and stop expecting Pensioners to subsidize your business
2 different people watching high definition video at a high bit rate.
Going from dial-up to 2Mbps ADSL was a huge jump, and ADSL2 also made a big difference. However, for a single user, there's not really that much difference between 20Mbps, 40Mpbs and 80Mbps. You have a faster connection to the exchange, but you're still limited by the speed of the net and the speed of the servers you connect to.
And believe it or not a lot of people don't care about having fiber internet available.
> with fibre available to 1,006,741 users, of which 240,525 have signed up
And the goal is to cover 75% of the population (1,340,000 households).
So it's around $1000/household. And of those households the majority will not be using the service but they'll be paying for it assuming the household pays taxes.
This is why, for example, last month people who qualified for 200MB can now get gigabit plans.
It's not just that the communications protocols got better. I think that kind of implies that the medium is at it's end, and that the difference between DOCSIS 2 @ 38Mb/27Mb and DOCSIS 3.1 @ 10Gb/1Gb is some engineers squeezing more out of copper through ingenious protocol-level optimizations. And that's mostly not the case. The big difference is that 3.1 came out a decade later and can take advantage of amazing progress made with ADCs/DACs.
I think it's reasonable to claim that the driving force in internet bandwidth gains have not been because of better mediums, like fiber instead of co-ax. The easiest place to look is wireless, where the medium hasn't changed and won't change, but the speeds have exploded. 802.11ax might push 10Gbit. LTE is an order of magnitude faster than EDGE.
It's easier to push more data when there's less noise on the line. But if we can work around the noise instead, it makes little sense to spend millions laying new cables.
I'm not sure I see why the election will make things more favorable for Google Fiber. Nor do I necessarily agree with the statement that "consumers want it." FiOS is awesome in the D.C. metro area. I get 150 mbps symmetric all times of day with 8 ms pings to my hosted server. In rural Maryland. Yet, Verizon has struggled to hit even 33% market penetration. It's incomprehensible to me, but most people seem to care more about television viewing options than broadband. My parents wanted to ditch FiOS because of all the Indian channels Cox Cable had!!
> 2. Cable coaxial wire - this is a big thick wire that continues to upgrade nicely. DOCSIS 3.0 is basically the same old 1980s/1990s cable with better comms protocols. It's getting to the point to where they can compete on a reasonable basis with single strand fiber, at a lower speed and price point. So cable companies build out the back-end with fiber, but don't have to replant single homes.
Modern HFC networks are nothing like the 1980s/1990s networks even when you're talking about the wires in the ground. The only thing that hasn't been upgraded is the coaxial cable into the house.
I'm also in DC area and live in a house where the previous owners had Fios. We have Comcast and we are happy with it. I get over 200 megabits down, only about 12 megabits up. I know Fios can get us faster uplink speed. But I don't care. This uplink is fast enough. I seldom upload much of anything. I remember when my uplink was 1.5 megabits years ago, and I was happy with that, so I'm not going to get Fios just to get more speed I don't need.
The Comcast X1 box is excellent and it's the first time I've had a cable box that is even decent. The voice command is great. One night I hit the mic button and said "Saturday Night Fever" and seconds later we were watching the movie. Maybe Fios has a box that is as good. I have no idea. But their marketing gives me no reason to believe they have a box that is as good, so I have no reason to switch. When both have Internet that is more than good enough for me, things like a box are going to make all the difference.
The simple fact is that cable Internet is more than good enough for most people, so they are not going to switch to get some uplink speed or some faster ping.
My neighbor has Fios and asked me about how happy I am with Comcast and said he is considering getting Comcast. Clearly Fios is not offering something so amazing that people would not consider leaving.
I would guess that Google Fiber would give Alphabet wiggle room when it comes to net neutrality etc. They will have to buy content from Comcast and AT&T. They could end up competing on search and advertising against Verizon. I could see advantages to being able to argue legally that they also are an ISP as well as a media company and search provider. Just my opinion/hope though.
I'd be interested to know why we aren't talking about four different technologies, with the fourth one being wireless.
You can roll out fast broadband to large areas just by building a few towers to broadcast WiMAX. There's no "backhoe time" and you avoid the cost of digging up the streets.
IEEE 802.16m will now give you a gigabit to a fixed point
You could do the same with LTE but you need a lot more towers and I don't know about spectrum availability.
However, WiMAX seems to have failed in the US, with Clearwire shutting down in March...
Easier said than done. It might be workable in dense urban areas where there are already lots of tall buildings, but getting approval to build towers in many residential areas is like pulling teeth. To support peak usage hours when everyone is at home HD streaming hulu and netflix, even with WiMax, you will need way more (i.e. smaller) cells than wireless carriers have today, which means lots more towers. Plus you'll need fiber going to all of these small cell towers, which means you're half way to FTTN anyway.
I think wireless internet might fit some niche situations well, but I'm skeptical there is significant capital or long terms savings in the general case. Not to mention that it will never be able to compete with fiber on latency or bandwidth.
I played the WiMAX game in the US as a consumer. If you didn't have clear line of site with the tower, you got terrible speeds if you still had a connection.
Driving + WiMAX was a no go unless it was through an empty field (never got to try this one). Using WiMAX near a window and getting up for some coffee was a no go. Hell, being outside that pane of glass made a huge difference.
It was really bad for mobile.
> You can roll out fast broadband to large areas just by building a few towers to broadcast WiMAX.
I can see this working if customers had outdoor antennas installed.
Maybe I'm wrong though?
The US tried that and it didn't work. Specifically, The US Justice Dept broke up AT&T into a bunch of "Baby Bells", which spent hundreds of billions of dollars on takeovers to reassemble themselves into AT&T.
In brief: Southwestern Bell Corp (SBC) merged with Pacific Telesis, then SBC bought Ameritech, then it bought AT&T and renamed itself... AT&T. Then the new AT&T bought Cingular. Consumers paid heavily for this, and got no real benefits.
The obvious answer is to make broadband a "social good" like highways, schools, the judicial system and (in rational countries) healthcare, and build it out in the same way as Al Gore's dad built the US interstate highway system after WW2.
Unfortunately, that can't happen in the US, because politics.
Under the US healthcare system, Americans pay 2x to 3x more than the OECD average, suffer much higher rates of infant mortality, have far more sickness in the over 65s, and die younger.
Without the concept of a "social good", you'd expect the US telecoms/broadband industry to produce similar results.
Crappy broadband causes a massive loss in productivity and makes the US less competitive with many small countries, but I don't expect those costs are factored into anybody's calculations.
In some European countries, when the former telco monopolies were split, they were split vertically - so there was one "copper company", then the phone service company, etc. The copper company would generally be heavily regulation with local loop unbundling, requirements to be fair to anyone who wants to sell service over the network, etc.
So 1/3 less, for twice as fast internet, or ~5x faster internet for the same price.
So, I don't really see why anyone with a choice would choose AT&T in my neighborhood.
I live in Kansas City. I pay $70/mo for google fiber. 1Gbit down, 1Gbit up.
So for twice what TWC is charging you I get 10x more bandwidth down, and 100 times more bandwidth up.
So can we agree transit in the US is completely and arbitrarily priced? There is no basis for their fees.
It costs no more for transit wherever you are in the US vs me. In fact I would argue wherever you are it's probably cheaper because KC is probably smaller than your market. And you have more physical infrastructure and capacity.
Understanding the various factors involved in building infrastructure, and how they differ from jurisdiction to jurisdiction, is huge because it plays a huge role in how companies invest, build out, and price. Comparing two different cities' prices, without any more information, is completely useless.
When I cancelled and returned my modem, the customer service department was behind bulletproof glass.
I don't have much to contribute to the price discussion- just can't pass up the chance to tell a KC TWC story.
AT&T: 768kbps - $40
Comcast: i hate myself no matter the price
no other options
My parents have heard horror stories from TWC customers who have been overcharged, service that has been poor, and squabbles with home internet data caps (of which ATT has none- at least as shown on our bill). We could go with something like a DSLExtreme or Sonic.net, but then our TV bill would go up. I definitely wish for any bit more competition in our area, but it's doubtful to happen anytime soon.
Verizon Fios is a good example, they built it to compete with cable, but they still can't get more marketshare (in overlapping markets). It's barely profitable.
Telecoms don't think it's worth investing to challenge the cable monopoly.
Competition would still be possible on top of this network, just like you can have different delivery companies.
They were successful in lobbying state utility commissions to push out maintenance on the wired network and provide more cash flow to buy spectrum.
None of this stuff was an accident. The only way fiver will expand is if the government pays for it.
Bandwidth is a scarce resource, and they're often the only seller for a given market. The more demand, the more the market will bear for that resource. The more contentious and oversubscribed their infrastructure, the more likely they are to make seemingly-convincing arguments for rent-seeking (Internet "fast-lanes"), deregulation (because competition lowers prices), and consolidation (more efficiency drives down prices), all of which they can leverage to increase profit while holding prices steady -- or raising them -- due to further-increasing demand.
Building and maintaining increased capacity increases their expenses and lowers the value of their product.
Why in the world would they invest? It would be the stupidest possible thing for a telco to do.
edit: it's worth my noting that my basis for asserting ever-increasing demand is that of induced demand for network services
They have some very good analysts, not usually given to making policy type statements like this except where it impacts the issuer's revenue and capital structure that determines how well they're able to pay P&I on bonds. So without reading the note I would say it's pretty significant
A good question to ask here is to what extent institutional debt buyers continue to rely on these ratings.
More background: https://corpgov.law.harvard.edu/2014/10/09/impact-of-the-dod...
I really like the approach that places like Longmont, CO are taking [http://www.longmontcolorado.gov/departments/departments-e-m/...] or Greenlight in Rochester, NY. Love their pricing page:https://greenlightnetworks.com/pricing
I'm in Pittsburgh and have FIOS and that's set the price-performance bar at which I am not willing to drop below.
Meanwhile I have a 100/7 connection via HFC from the CableCo.
Mind you, they send me a mailer every week too, asking me to subscribe to TV and Phone services...
Time passes and few months ago there was a spin-off using that infrastructure for telecom (Copel Telecom [2]).
[1] http://www.copel.com/hpcopel/root/index.jsp
[2] http://www.copeltelecom.com/site/
Great speed and reliability with a average price.
Also, consider that AT&T started rolling out their fiber to the home not too long after Google announced cities in the bay area, and AT&T is actually servicing homes, but Google isn't. I don't know what uptake Google was expecting to get in San Jose, but they're probably not going to get it if customers are already passed by AT&T Fiber and may already be serviced by AT&T. (Incidentally, inducing the market to offer 1G probably fulfills Google's goals for deploying fiber anyway)