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Why ADCo? 112

Ian Peon writes: "Phoenix center recently released a study (pdf or doc) addressing the 'Last Mile problem.' The paper explains why no one has yet been able to crack the cable and phone providers' local monopolies -- and offers a solution: An ADCo (Alternative Distribution Companies) business model. SF Gate has a good article on this."
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Why ADCo?

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  • Interesting... (Score:3, Interesting)

    by powerlinekid ( 442532 ) on Thursday December 06, 2001 @08:29PM (#2668603)
    Interesting idea but not really feasible I feer. I'd love it if time-warner had a better competitor than Verizon but the govt really fucked us when they allowed the local monopolys (phone companies, power companies, etc). Now I think the thing I'd be really trying to figure out is how do we convince people that they need broadband. As with ISPs back in the day, you had to convince people that they needed, not just wanted to be on the internet. Now they need to be convinced that they need to pay $40 a month as opposed to the $17 so that AOL goes faster. I have a suspicion that this might become a losing battle, which is a shame for the technology in the long run.
    • Re:Interesting... (Score:2, Insightful)

      by mancxvi ( 319922 )
      how do we convince people that they need broadband

      The following argument works every so often.

      You are in a store. You can either buy one bottle of water for three dollars, or fifty bottles of water for six. Which do you choose?

      Then again, some people using AOL won't quite get it. Oh, well...
      • Re:Interesting... (Score:2, Interesting)

        The problem is that the apps that people use that need broadband are being killed, such as napster and other file sharing. Streaming video still works on a modem because noone has done the streaming movie (as in video rental store) idea yet which would certainly require broadband even with better technology. I'd say that 75% at least of people using the internet are perfectly happy with their 5k per second max bandwidth which is more than enough for email, web browsing and chat. Again, this just hurts the rest of us who would like to be able to go faster because we understand (and would actually utilize) the potential.
        • It's just unfortunate that the main thing advertised in the Road Runner commercials is the fact that you don't have to use your phone lines, because that's hardly the number one benefit.
          • i know... *sigh*... but i don't know if I can 100% believe that broadband is worth it on a mass scale (meaning that it should be as wide spread as normal ISPs). Seems to be a losing venture to me. Someday hopefully technology will dictate politics... until then we'll be using "Big Name Cable OR Phone Company" for our internet needs and considering how far cable and television has come in 50 years, I'm not holding my breath.
        • Streaming video still works on a modem because noone has done the streaming movie (as in video rental store) idea yet which would certainly require broadband even with better technology.

          Sputnik7 [sputnik7.com]

          Of course, it's free, so it's not exactly like the video rental store, but it is streaming on demand. I'm sure they aren't the only ones.

      • I'd try that argument with something that isn't as cumbersome as water bottles. My first reaction was, "Where the hell am I going to keep 50 bottles of water." Unless you are talking about those small bottles. But, in that case, wouldn't it be cheaper to buy in bulk?
        • wouldn't it be cheaper to buy in bulk?

          That's the spirit! Paying twice the price for broadband is like buying "the internet" in bulk! Fun!
          • Paying twice the price for broadband is like buying "the internet" in bulk!

            Except that you can't store the surplus and over time.
            • Yeah you can. Just add a couple o' 120TB drive arrays to your system and start caching everything on the internet...

              Simple.

              That should be more than enough p0rn to keep you busy for a while. ;)
      • "You are in a store. You can either buy one bottle of water for three dollars, or fifty bottles of water for six. Which do you choose?"

        You forgot to mention that at the end of the day, all the water you don't drink is thrown away.
        • The analogy that most americans will probably get (and by the way love) is either you can have a single plate of spaghetti or you can have the all you can salad and food bar.
        • You forgot to mention that at the end of the day, all the water you don't drink is thrown away.

          Wow, that makes sense in terms of broadband. The end of the day is where you get the most water, and the water never stops coming.
      • You are in a store. You can either buy one bottle of water for three dollars, or fifty bottles of water for six. Which do you choose?

        plugh!

        Sorry, but this reminds me sooo much of the old Adventure game(s).
    • by darkPHi3er ( 215047 ) on Thursday December 06, 2001 @08:56PM (#2668692) Homepage
      BUT, even the SFGate article says"

      "The reasons for that, boiled down, revolve around the costs involved in small telecom companies trying to do too many things all at once."

      i haven't read the study in depth yet, but looking at the TOC and skimming the section heads, they seem to ignore a POLITICAL reality....

      The Telcos ***DON'T WANT*** to solve the LastMileProblem.

      The Telcos had, up until the construction of the fiber backbone, ARPANET and courts' decision that made telcos open the backbone up to competitors, a REALLY SWEET business model

      strictly "Cost Plus, Plus" and very cozy relationships with their Fed/State regulators, many of whom were telco execs doing the "Public Service" tour of duty...which made the telco business a "name your own rates" kinda business

      the more broadband deployed, the less value switched circuits have, and the more value packets acquire

      the Telcos would much rather sell analog switched, retail priced voice services (where they created the business model and still control it), than...

      ...packet based, circuit-less (or virtual circuits, if you prefer) communications, where they cannot charge per packet and have to share their packet revenues with broadband providers...

      i'm routing, uh, rooting, for the ADCOs, but, if you will recall, CLEC's were also supposed to solve at least part of the problem, and before them the RBOC's (soon to be "The RBOC or So")were going to wire the "bridge to the future"...

      as a engineer geek, it sounds to me like the ADCOs can solve acutally solve the deployment of high speed fiber to the businesses and homes in the local loop (though you'll probably end up with a very limited number of very big ADCOs, economies of scale being very real)....

      but, what about a business model that will allow broadband providers to survive w/o the consumer being charged "per packet" (like Docomo) or "per bandwidth" like fractional T?

      Switched circuits are wasting assets, telcos and analog voice are doomed businesses,BUT...

      ..so far, no successful new business model has emerged to replace them

      ...
      • You can use the Cisco net phone for starts. As soon as you take the clients off of the circuit and on to the net, the telcos have to play ball.

        That said, you are right, and it will be a long long time before packet switched networks carry a majority of voice traffic.

        Unfortunately, as Business Week pointed out a few months ago, the telco/government apparatus simply doesn't favro change or progress and likely it will take substantial public sector wrangling to open up this market again.

      • I just get depressed when I read stuff like this.

        Seriously now, is there any country in Europe that's different than the U.S. in regards to telcos, power, etc? I've thought about moving to Germany, Britain, or the Netherlands. Hell, even France, since I speak some French.

        I don't want to end up in a technologically backwards country like Afghanistan, though...

        Just call me a wannabe ex-patriot.
    • $40?
      try $55 a month.

      Roadrunner is raising their prices in my area next month so all the clueless bandwidth hogging aol-ians can pay double for their retarded interface at the expense of MY bandwidth.
    • the govt really fucked us when they allowed the local monopolys (phone companies, power companies, etc).

      It wasn't a matter of "allowing" local monopolies, there isn't any other way to do it. Someone has to maintain the physical connections, and that costs money. Local Telco and Power monopolies are required to allow other companies to provide access, but no matter who you go to as your providor, you still have to pay for the maintenance of the lines. Whoever owns the lines (and thus maintains them) can charge less for access as they have less overhead to cover, thus the "monopoly" which you percieve. The "best" you could hope to achieve in further breaking up these "monopolies" is a finer granularity of monopoly, which would degrade service with no cost benefit to the consumer.

      Most of the lines in my area are owned by Pacific Bell, and the service is fine. Even in the heaviest storms service is rarely out for even a day, even though it's a rural, mountainous region with a fairly spread-out population. (Yes, there are parts of California that get real weather. I know it's hard to believe.) In one of the small outlying communities, however, the lines are owned by GTE, and the service is horrible. The office isn't big enough to support a real crew, so outages sometimes last for days, and since the profit margins are so thin the CO equipment is rarely upgraded. Modem connections top out at 19k within spitting distance of the CO.

      I know you think that further breaking up the local "monopolies" will benefit you, but believe me, it won't. All you'll get is what I've described above, spread out over the whole country.

      Of course, you could always have the government buy up all the lines, we all know how fast and efficient the government is with infrastructure maintenance! But hey, at least you'd only have to pay once a year instead of once a month...

  • How limited is Cable Internet?
    I have RoadRunner, and get 500k a sec from Redhat mirrors.
    But, What happens if everyone had it?
    Would alot of new cable have to be ran, or is there a way to use different wavelengths on the wires or something.
  • Just imagine. If ADCOs get enough support to give the local monopolies a real fight, we might actually see the long-promised broadband revolution.
    • Let's be realistic now. This venture will no doubt fail, like many before it. Concentration of market power will ensure these little upstarts will be driven out of business. Each new merger and takeover means less choice to the consumer and more power to the oligopolists. The likes of AOL/Time Warner will only get stronger and will progressively censor information they don't approve of.
  • by PoiBoy ( 525770 ) <brianNO@SPAMpoiholdings.com> on Thursday December 06, 2001 @08:42PM (#2668639) Homepage
    The article stated that the costs are such that a 33 percent market share would have to be obtained to make this financially attractive...

    Being able to garner a 33 percent market share sounds nearly impossible, especially if it must be done within a reasonably short period of time to satisfy financial constraints. Although /. users and other technology-minded people may be interested in switching utility providers, I don't think the average household is sufficiently frustrated with the local ILEC to bother with having a fiber optic line installed. Moreover, although fiber optic lines have been discussed as being necessary for video-on-demand and other expensive cable services, the cable companies are likely to provide the necessary lines. In short, I don't think enough people really care about their phone providers to demand such a service.

    A much less costly alternative would be to install some type of wireless communications network. The company would only need to install one or two of these per square mile, and with a small receiver located in households' basements, they could get phone service, cable, and internet service. Providing phone service would in fact be easier than current cellular technology, since the houses and receivers are obviously not going to move; encription could be used on the internet links, and I don't really see any reason why providing 100 channels of cable would be all that difficult. All of this from small transmitters located atop telephone polls every thousand yards or so.

  • The last mile (Score:2, Insightful)

    by imrdkl ( 302224 )
    Includes the last 75 feet. The robot in the sewer makes it sound good, but I dont believe they can make this work without trenching and traffic.

    Instead, I think they mean to run optical cable through a neighborhood, but not actually to the neighborhood. That's where the money will be, getting cable from one industrial/commercial zone to another without having to go out to the mains every time.

    • In most homes the line should be embedded in an accessible location, often easy to snag from under the concrete or just under the top soil itself.

      Or, they could simply lay a new cable and leave the old one buried.

    • Does the US have hydro wires? Last time I checked there we plenty. No one seems to have heard of aerial fiber. Works great looks exactly like televison cable wire. Works great in all climates. Wroks great, Works great....Etc, etc. The US seems to not install it. Most other countries do though.
      Oh well.
    • So you're saying you don't have a toilet in your house?

      They can run the cable right *into* your house. Drill a small hole in the outflow pipe, pull out the end of the fiber, and putty-seal it. From there, the fiber can be run through the walls. Under carpet and behind baseboards, if necessary.

      The real challenge is two-fold: they can't run a dedicated fiber to every home without clogging the sewer line (a bundle for a neighbourhood would be too big); and it's a harsh environment for any would-be fiber splitters, which would obviate the bundle problem.

      (Just struck me that you may have been thinking "storm sewers." If they are using storm sewers, then they are substantially hosed.
      • Even the typical cleanout is still a good distance from the house. How many payments of 40/mo will it take to cover the cost of a single installation? Not to mention the implicit cost of a J-box, either in the sewer main (as you mention), or in series at the panel, in which case two leads have to be pulled in.

        I still think it's a ploy to get access through residential zones.

  • Obviously, the existence of ADCos would be dependent on government regulation-- that's no surprise, without regulation we'd all still be paying AT&T two bucks a month to lease our phones.

    So, given regulations designed to allow ADCos to exist, how would the Baby Bells pervert such regulations to maintain their stranglehold on the phone lines in their areas? No, I don't have an answer to this question; I just know that the Bells' executives would spend plenty-o-time trying to think of ways to do it.
    • without regulation we'd all still be paying AT&T two bucks a month to lease our phones.

      I don't agree; without regulation, AT&T wouldn't have been a monopoly in the first place, and if they weren't a monopoly, we wouldn't have had to pay two bucks a month for phones.

      Everyone thought phones needed to become a monopoly, but I'm not so sure. The successful phone companies would be the ones that had good connections to other phone companies. Without a monopoly guaranteed by law, the phone companies would have no way to lock in customers.

      given regulations designed to allow ADCos to exist, how would the Baby Bells pervert such regulations to maintain their stranglehold on the phone lines in their areas?

      You are right, they would try to do that. I don't have an answer either, other than "deregulate everything and let the market sort it all out."

      steveha
      • The old AT&T monopoly wasn't proclaimed by the government as you assume. It came in stages.

        Stage 1: In 1876, Al Bell patented the telphone. He didn't actually have the working design (Elisha Gray did), but he got his patent application in earlier and had the better patent attorney. That gave him and his backers 17 years of monopoly, as with any patent. They didn't choose to license it.

        Stage 2: In 1893, competition began. Al Strowger invented the dial. Bell Telephone bought the loading coil patent from Putin, increasing the range of the phone from a few miles to a few dozen. (No amplifiers yet.) So Bell had, by dint of a non-licensed patent, had another monopoly, on long distance. Independent telcos sprang up like weeds delivering local service, many with dial (which Bell didn't have until the 1920s, when Strowger's patents had run out).

        In 1912, Bell, already dominant, entered into an agreement with the feds. They stopped buying up independent telephone companies, and agreed to interconnect the networks for toll calls. So the industry was formed. Bell had almost all the LD and most of the local business, but small local telcos continued to operate. Later, state regulators enshrined the monopolies into rules.

        Patents gave Bell a head start. So they were able to become dominant, in a business where economy of scale matters. That's what makes it so hard to compete with them for wire: It costs money to pass houses, and if you have an 80%/20% market split, the 20% player's cost per home will be, oh, roughly four times the 80% player's, and they'll lose money.
  • Hardly a panacea (Score:3, Interesting)

    by dfeldman ( 541102 ) on Thursday December 06, 2001 @08:50PM (#2668672) Homepage
    My community has at least three ADCOs that I know of; they are all local companies who want to offer broadband. Two are running copper lines and one is running fiber. (For the record, I'm not quite willing to give up my DSL line until these guys start turning a profit.)

    One of the major problems with ADCOs is, predictably enough, running the cables. Overhead and buried cables are usually prohibitively expensive, which is why the only way the telecom/cable companies were able to afford them was with subsidies and legislated monopoly status. Therefore the companies are forced to use sewers and other undesirable underground networks to run cable. And this is where the problems begin.

    The sewers in my town are extremely old and small. There are frequently "conflicts" among the carriers when installing and maintaining these cables. Rain has proven to be an issue, as have insects and other much larger creatures. Running these cables in sewers is decidedly jury-rigged and isn't going to work out as a long-term solution.

    One of the ADCO companies was considering transmitting signals through water supply lines (!). They claimed that there was a significant amount of potential bandwidth in the water supply network. I am not sure if that ever came to pass.

    But one thing is sure: whether it be 802.11b wireless or something else, some other technology is going to be needed to replace the sewer-and-heating-duct kind of cabling that ADCOs rely on.

    df

  • I don't care if its stationary wireless, dedicated fiber digging, or sewer cable, just someone get the lead out and solve this problem.

    Simply put, a huge amount of talent, infrastructure, and capacity on the backbone is just waiting for someone to open up the pipes and start getting massive quantities of data to consumers. Interactive TV, P2P that actually works, telepresences, etc etc, none of it can bring us out of the 1996 web until bandwidth to each dwelling increases vastly.

    • The next problem is that in any given city block, there is NO ONE who will pay what it will cost to deliver it. Depending on the density of people who will pay for the service and the number of clues they have, you might be able to swing service for between $50 and $200 a month. If it's just one person paying, it could go as high as $1000 to $1600 a month. Solving the last mile problem is easy. Solving it affordably is what's such a pain in the ass.
  • Why .DOC? (Score:3, Funny)

    by scorcherer ( 325559 ) on Thursday December 06, 2001 @09:00PM (#2668701) Homepage
    Posting a link to an EVIL M$ .DOCument on the Slashdot branch of the Holy Church of the Penguin? WHat is this world coming to?
  • Public Utility? (Score:3, Insightful)

    by thunk1 ( 520412 ) on Thursday December 06, 2001 @09:03PM (#2668713)

    Does anyone besides me think that making all data lines a public utility would be such a bad idea? Our roads are a public utility. Why not make our data the same?

    I'm not advocating that the government-run everything. I think we all know that would be a nightmare for more reasons than one. If the government owns the cable, then there's nothing keeping different data service companies from using portions of it. This could work from the big pipes, all the way down to the last mile. On the backbones, companies would rent out X number of fibers, and Y amount of floor space wherever said fibres meet. The last mile would probably take a while longer to get set, but the same principle would suffice. Each local unit (neighborhood, apt building, etc) gets one of those metal boxes you see sitting around. The data companies just get to rent out space inside of those, to switch from the fiber to the copper that runs to your home/apartment.

    No monopolies. Fair competition. And by leaving the operation to the data corps, the existing players still get to stay in the game. I'm sure someone here can come up with something, but I can find no reason why having the government own the physical layer only would be a bad thing. I realize that there is little chance that the telco lobbyists would let an Idea like this fly, but hey... I guy can dream of the perfect net access can't he?

    • Our local ADCo [transact.com.au] is partially owned by the utility company which is, in turn, partially owned by the territory government.

      This is a good model for a network, with fibre to the curb and VDSL to the residence. Technology and some degree of public ownership does not seem to be enough to succeed though. The main shareholders were recently asked to kick in further capital to keep the firm afloat.

      The main problem appears to be content. Being an "open" network, where all providers are welcome, as opposed to the competitors HFC "closed" networks, providers (other than the BBC) appear to be reluctant to put their IP on the line.

      It seems that content providers are afraid of having to compete against each other. They much prefer the tried-and-true closed model with their captive audiences. If you buy the Telstra/Optus cable you must watch their cable allies.....

    • The gov't shouldn't own the physical layer because gov'ts aren't into profit making, and therefore do not perform R&D or innovate. It's the incentive of profit that justifies R&D, and tax payers wouldn't (and shouldn't) stand for such behavior by the gov't when private corps. can do so (and be liable). This is what venture capitalists are for, not taxpayers' dollars

      Why did the U.S. Postal Service lose over $1B last year? Because the private sector innovated and kicked its ass. Monopolies are monopolies, public or private. There's nothing special about a gov't run monopoly accept for that it sucks up even more money for bureaucratic expenses.

      • The gov't shouldn't own the physical layer because gov'ts aren't into profit making, and therefore do not perform R&D or innovate. It's the incentive of profit that justifies R&D, and tax payers wouldn't (and shouldn't) stand for such behavior by the gov't when private corps. can do so (and be liable). This is what venture capitalists are for, not taxpayers' dollars


        Really this depends heavily on whether you think that the service/infrastructure in question is important enough to the national welfare that it is in the nation's best interest to ensure that there is universal coverage. Companies are driven by the profit motive and as such are not likely to ensure service in less attractive areas. A government can ensure that even less lucrative customers can access the essential service. Now, there are certainly several ways to go about doing this, but government ownership is not the evil you make it out to be. In the US, the public roads are a case example. They are generally government owned (though not always operated) and they are some of the best road systems on which I have ever driven. A contrasting example is the stimulus of universal telephony coverage as mandated in '34. There the US government basically regulated the rural telephone system into existence. (I would also suggest the school system as an example of a government owned facility - there are several places in the world where the national school system works quite well.)

        Back to the issue of broadband. What you find is that of the countries that lead in broadband penetration (South Korea, Singapore, Canada) the top two have had significant involvement by the government in driving the buildout. In Singapore the government actually did the backbone buildout and later privatized it. In Europe, Sweden is a broadband leader, and the government, both national and local, has taken an extremely active roll in ensuring broadband growth. There are subsidies to the infrastructure players and municipally owned networks. (Though they should have given Telia a firm kick in the ass a little earlier, IMHO)

        For a good read on this topic, try the new OECD broadband report [oecd.org]
    • No need to do this with the long haul lines, only with the "last mile". If you want a long haul line (e.g. T-1 circuit from NYC to Chicago) You have many player that will be happy to sell (lease really) you the circuit, e.g. AT&T, Sprint, Qwest, etc... But to use any of them you need to get a local loop (circuit between you and the CO) and a back haul circuit (circuit between CO and IXC) to the IXC's closest POP.

      What really needs to be done is that we need break the ILEC's apart. One company owns local loop physical plant. They do not own any switch and are legally barred from doing anything except leasing physical point to point circuits. e.g. They can lease you a copper pair from your house to the CO. They can also lease space in the CO. They cannot offer any other services. We'll call this company the LineCo. The LineCo is a classically regulated monopoly, their profits are limited to a fixed percentage of investment. (i.e. they install $100 of new cable, they can only make a profit of $15 on this cable.) This gives LineCo a reason to constantly upgrade and expand their physical plant (out of room at the CO is no longer a problem since , if they build a new addition to the CO they can make more money)

      The rest of the telco becomes a private company which leases space in the CO from the first company. The relationship between the two companies is regulated like the relationship was regulated between AT&T and the RBOCs. (We will refer to this company at the ILEC)

      Other providers (CLECs, IXCs, Cable companies) can lease space from LineCo just like the ILEC. LineCo has no benefit from making facilities availble to the ILEC and not the CLEC, LineCo profit is the same. In fact LineCo should try and get as many different providers into each CO since this will cause the CO to need expansion and allow LineCo to make more money.

      ILEC will lose their special status which allows them to have a limited monopoly since that would be transfered to LineCo.

      This will give true competition in the local circuit market.

  • WideOpenWest [wideopenwest.com] is already laying wire here in Colorado and they claim on their site that some portions of Denver are ready for service...
  • It is expensive and legally problematic to put cables anywhere over public property.

    Perhaps another approach is to look at large building projects (i.e., multiple buildings such as major office complexes and housing developments) and ensuring that they have dark fibre already installed. Once the last few hundred yards are covered to a suitable trunk then the attachment cost is minimised.

    Existing buildings are another issue, but just think if at least newer projects were 'prewired'. Note that this isn't much different to the current organisation of utilities, we just say that combined cable/phone/high-speed data is just another bit of plumbing.

    This is where we should be starting, if the new building projects are prewired then that reduces the problem size.

    With existing buildings, there are problems that depend upon the population density and thus the number of possible subscribers. Having robots crawl around sewers or air-blowing fibre down pipes isn't a major issue. Getting the connection to the buildings is.

    There are a lot of benefits to having to deal with a single company for access, but I'm still not clear how the costs can be bundled or competition effectively managed. Would the access companied share infrastructure, for example?

    • Power distribution utilities already have the access they need to get *any* cable into your home.

      What you will get from your local power utility is 'blown' fiber into your meter box. From there you need a bridge... run wireless or cat5 or even power line.

      Problem solved ! There are trials working in Australia already !
  • I'm not sure if they're all doing it, but in the article they mention using fiber optic cables, which would be an obvious advantage over copper. Aside from the competition aspect, I wonder if this will allow faster advancement in other areas, such as the speeds of home connections? These ADCos could allow cheaper upgrades (then again, upgrading any significant length of fiber must cost a lot in consumer terms, just for the price of the cabling).
  • I thought it was almost funny how the writer decided to slam a completely unreleated tax-cut in a story about telecom. SFGate.. no wonder. In fact, ADCOs would provide a much more effective economic stimulus, particularly in Silicon Valley, than anything else now being considered, including the incredibly misguided huge corporate tax rebates recently approved by the GOP-controlled House of Representatives. Unlike corporate tax rebates, which merely reward companies for being big, fixing the last-mile glitch would actually do something real to restore economic growth in the tech sector, especially at firms working to develop new broadband-related products, which include hardware, software and services.
    • Yeah, I saw that paragraph and had to reread it to see if I could figure out what tax cuts have to do with ADCo's. I couldn't. It's a rather glaring example of a liberal journalist imposing his views on an otherwise informative article.
    • ...nor strictly irrelevant. In fact, it think it was quite apropos -- the author was pointing out that, if stupid and expensive laws that benefit a few rich people can get passed in the name of "economic stimulus", a less-expensive and more egalitarian and more effective law should be able to be passed for the same reason.

      Nothing wrong with that.
      • As everyone knows, the people who sign your paycheck are the rich you hate so much. If the rich get to keep more of *their* money (which us poor seem more than happy to steal!), maybe they will give you a raise.

        Maybe one of them will decide that it's time to start investing money in *you* and the other nerds in this world, and perhaps a bright one will think that this is a good idea and put his money behind it.

        Think about that for a moment. Maybe you'll look at the rich in a different light, and realize that without them and their *evil* wealth, we would be digging potatoes out of the frozen ground, or worse yet, starving.
        • The rich don't sign my paycheck -- I actually charge them for services. As for your other comments, I'm a doctor (almost), so I'm hardly a "nerd" who's interested in "investment" from the feudal-lord-gazillionaries that the USian government seems hell-bent on creating and supporting. And, personally, I don't see how your stawman about me "hating the rich" is accurate or relevant, since I'd gladly be rich myself.

          Wealth isn't evil, but it doesn't take a genius to know that to help the greatest number of people you shouldn't be giving huge sums to a very small number of people who don't need it, don't deserve it, and certainly won't be pumping it back into the economy -- "trickle-down" bullshit be damned.
  • I don't think the problem is only "trying to do too much at once"; it's also "building a huge network costs a ton of money". And while there is the example of the robots stringing fiber in pre-dug tunnels, that's a VERY unique case that isn't possible elsewhere. Under normal circumstances, I'd guess that the cost of building one's own network is so high that you HAVE to provide a wide range of services because you can't build enough revenue off a single product.

    I agree that doing it all on one's own is the best way to go -- MCI (and later, Sprint) are doing ok because they have their own networks and don't just sell time from AT& to their long-distance customers -- but the costs are still probably way too high to justify it anytime soon. You'd need a much higher demand for service to make it feasible.
  • You will worry about the last mile while the other 5,000 go bankrupt and dark.
  • opinion.. (Score:3, Insightful)

    by Xzzy ( 111297 ) <sether@tru7[ ]rg ['h.o' in gap]> on Thursday December 06, 2001 @09:22PM (#2668765) Homepage
    It's pretty obvious that the main stumbling block is getting new connections into houses. Houses are traditionally built with two wire based connections; power and phone. In the past couple decades it's included cable, which is another market that's developing (developed?) a strong monopoly over their local domains.

    Remember when cable started coming in back in the 80's? They had to send trucks down every road in every neighborhood burying a cable to get into your building.

    That's obviously what these guys are doing, but doing it by loopholing themselves around regulations to cut some of the costs.

    I see these "ADCo's" going through a struggling uphill climb, again, a lot like cable companies did twenty years ago. Robots and sewer lines are nice, but I think they'd be much better served to just duplicate the cable company business model instead of looking for instant gratification type solutions, because it's proven to work.

    IMO, when construction companies start realizing that people need more than three wires into a house, they'll start laying fiber under neighborhoods and selling it to local companies. Now *that* would be a moneymaker; laying extra lines would be dirt cheap if you already have the ground torn up.
  • Well, at least someone is trying to solve the problem, but this isn't the way. Why? Because, as everyone here has pointed out, running cable is so expensive that it has to be subsidized. That's not the sort of environment where competition thrives.

    The correct fix is to have a monopoly on cable distribution. One that isn't tied hip and hoof with voice/data/anything carriers. One that runs cables and manages access to the CO for all the carriers, be they ILEC or CLEC. No more games, no more favoritism.

    The groundwork is there. The cable-laying portion of the ILECs has always subsidized with Universal Service Fees. We the people own a good portion of that copper and fiber! By now, anybody who hasn't figured out that the Telecommunications Act of 1996 was a failure is dead or heavily subsidized by the ILECs, so let'd go back, do it right, and rip the physical infrastructure out of the hands of the ILECs.

  • The problem is that the apps that people use that need broadband are being killed, such as napster and other file sharing. Streaming video still works on a modem because noone has done the streaming movie (as in video rental store) idea yet which would certainly require broadband even with better technology. I'd say that 75% at least of people using the internet are perfectly happy with their 5k per second max bandwidth which is more than enough for email, web browsing and chat. Again, this just hurts the rest of us who would like to be able to go faster because we understand (and would actually utilize) the potential.
  • by LinuxParanoid ( 64467 ) on Thursday December 06, 2001 @09:54PM (#2668897) Homepage Journal
    MS and Intel gave us enormous improvements in their products over time in order to sell us upgrades. Telcos and Cable companies, who sell you a subscription service, have substantially less incentive to improve their product. Better to charge you the same for the same old service, and keep what profits they can from the underlying semiconductor/optic cost drops.

    I fear that both these players are going to stick with 1 Megabitish services for a long long time. Video that fills my screen still seems a decade away.

    If telcos gave you sufficient bandwidth to the last mile, they'd lose their existing revenue model to VoIP/Microsoft.

    If cable companies gave you sufficient bandwidth to the last mile, they'd lose their control over video distribution channels to the surf-anywhere web.

    I think broadband will be accessible for nearly anyone who wants it, and at cheaper prices than today (i.e. $20/mo, not $50). But I'm not convinced the bandwidth is going to start going up at Moore's law rates of the underlying semiconductor/optic technology improvements. Not even close. The geographic monopolies are too strong, and the benefits of cable/telco collusion are too profitable for them to not keep us on the leash of slow improvements.

    --LP
  • by janolder ( 536297 ) on Thursday December 06, 2001 @10:03PM (#2668934) Homepage
    In good ol' Germany, the last mile is open to competitors - in theory. In practice, the government sanctioned ex-monopolist (German Telecom) is able to prevent any intrusion into its highly profitable nickle and dime business. They make switching difficult, they play for time, they make impossible offers to share their network, etc. It speaks volumes that GT would not be profitable without the local call charges they amass every year - about 5 billion USD, if memory serves.

    According to a heise article [heise.de], 60% of German customers have access to alternative local loop providers. However, 98% are still served by GT.

    Sadly, nothing much will change anytime soon. The government still holds a huge percentage of GT's stock. If their monopoly were broken, the stock would deflate like Enron's and that windfall of cash could not be spent on securing the next election by way of pork.

  • Here's a solution for you: do that last mile over a highspeed wireless link. Then, the CLEC's can circumvent the ILEC's for the last mile. Of course, they still need to interface into the existing PSTN to carry local calls. For a big enough CLEC, you can even be your own IXC in a multi-city deployment.

    Sounds unrealistic, or likely to be limited to low bandwidth, low coverage, and low density? They claim to doing it over at SOMA [somanetworks.com]. Take a peek.
  • Getting a last mile connection laid is only part of the problem. In theory, it would be a one time issue and be finished with. The larger issue is the maintenance and operational costs that have to be paid on an ongoing basis to keep the system working.

    Working out how to get the connection to the house is a technology problem, keeping the connection working is a service problem. Most people are going to be interested in buying services, not (just) technology.
  • 802.11b (or it's descendants)
  • when I saw this:
    which uses state-of-the-art robots to crawl through sewers to lay fiber-optic lines.

    All I could think was:
    'I need that kind of "crappy" connection'
    'robots on a high fiber diet'
    'gives a new meaning to "laying cable"'
    I'm warped because I picture a robot in the sewers playing "this little light of mine.mp3" over an internal speaker down in the sewer.

    Seriously, who do I have to ki^H^H help to get these damn cable idiots some competition?

    Can you tell? think about 1M/s up and down for 20 bucks a month... MMMmmmm.

    Moose

    .
  • Local telco's and cables are, almost everywhere, mandated (and regulated) as local monopoly providers. No one is allowed to compete.

    Those few places I've heard of with no cable monopoly have lower cable access prices, and better service. Funny thing, that.

    Where, if anywhere, is the local telephone service unregulated?

    I'm serious. Please post any examples.

    Bob-

  • The research appears to have missed one "last-mile" company: Soma Networks [somanetworks.com].
  • After reading through some comments here and battling my own bias, a desire for a better telecom infrastructure, I'm reluctantly compelled to resort to boring realism.

    As much as I'd like to believe that there IS a solution right now to the telecoms' monopolistic business model, I remain unconvinced that new networks in even the majority of urban areas are financially viable. Why?
    1. The only problem associated with the "Last Mile Problem" would be created in trying to solve it too quickly.
      • We, especially those of us who are Americans, believe that we're entitled to a choice every time we spend money. We are, however the choice may not be between a variety of suppliers, it may be a choice between yes and no. A few examples... Cable TV is finally available to most of us from two different carriers (Echostar/DirecTV and the local fiber/cable company). When cable was first introduced, however, you could either buy cable or not buy cable. You may have been consistently pissed off at your cable company, but you either dealt with it or went back to your antenna. The first settlers in any rural area in America probably only had one store in which to buy their household goods (I'll cite Little House on the Prairie as evidence). Now they have two choices, Walmart and KMart (a little joke). The point is, the heart of capitalism is based on YES or NO, not WHERE, although when markets reach a point of saturation, that's a nice side effect. With most new goods or services, the first decision customers make is either YES or NO. When the demand is great enough to motivate another supplier to snatch a piece of the profits in a given market, the effect is usually a subtle, yet beneficial drop in price and elevation in service to the consumer. Right now, broadband internet and other relatively new telecom-based services are still in the YES or NO phase, and may be for some time. Individuals and businesses won't switch other telecommunications services (like telephone and FAX) to a startup for a few dollars savings.
      • Having said that, Cable internet is expanding, is affordable, is not run by the local telco in most cases, and is a suitable introductory broadband product for the average home customer. It can also be argued that in most places cable is not available, either demand is not substantial, or the cost to run the line is too high. Believe me, the timing of the release of this report also has a lot to do with the chaos surrounding Excite@Home, which, I might add, is only temporary (cable offerings will shift management, not disappear). See #3, below.
      In other words, I don't view the "Last Mile Problem" as one that can be solved any time soon, and we can't blame the problem on the telcos, even if they have made DSL installation less than ideal.
    2. The climate for alternative networks hasn't gotten any better since 1996.
      • Hal Plotkin, author of the SF Gate story, does a fine job of summarizing the report's economic determination of why deregulation in 1996 hasn't worked in creating competition. The reasons, he summarizes are that 1) inital costs are so high that large market shares in a given area must be achieved, and 2) the variety of services, and the burden of marketing and providing all of them, place an unsurpassable strain on any competitor. The Phoenix Center is essentially arguing that by skipping #2 as a wholesaler, they can achieve #1. The problem is that *someone* has to market the various services in order to sell enough bandwidth, perhaps the so-called CLECs. Obviously the wholesaler relies on the success of its customers to succeed, and I'm not sure any CLECs will succeed in carrying out #2 now or soon, even without worrying about laying down the cable. The incumbent LECs have been around forever, and it won't be easy to encourage the majority of people to switch (we all need to remember that when it comes to this topic, we're definitely not part of the majority).
      • We've seen a lot of good ideas fail in the past five years. In fact, a lot of them have been based on broadband bandwidth. A lot of these ideas could work, but were attempted ahead of their time. It's normal for us (especially those of us interested in technology) to be anxious and impatient when it comes to growth. There were a lot of people who had to wait a decade for cable TV, and another decade for a competitor. The problem is that our economy is complex, labor is expensive, and as long as the availability of capital is finite, growth in high tech areas will have to be deliberate and slow.
    3. The Phoenix Center, no doubt, endeavored to find "the best way to compete" with telcos, not to find out "whether to compete" with telcos. I'm sure a lot of time, effort, and mathematics went into this report. The problem is that, as Mr. Plotkin notes, the CEO of the most notable potential ADCO is on the board at the Phoenix Center. We're obviously reading a key piece of research that was spawned to help companies like CityNet find the substantial financing required to start grabbing small pieces of the telecommunications market. Perhaps they were also hoping the high profile collapse of Excite@Home would help corroborate the myth that there are easily serviceable groups of people out there who are ready to pay for broadband, but can't get it. Unfortunately, I doubt any VC firm will be writing a check after reading this report, unless of course the year is 2011 instead of 2001. On that note, however, this report is probably an accurate prediction of a more distant future
    I actually think the report will turn out to be accurate in how the telecommunications market is gradually opened. Perhaps in the near future we'll see some alternative sources of bandwidth in highly concentrated regions, but I think it will be a very long time until most of us will be able to choose where we buy our bandwidth. One of the side effects of the telecommunications monopoly is that because we've never seen any real competition, we don't know what advantages (or lack thereof) a competitor might offer. I think we might find any premature offerings to be either disappointing or doomed for failure.
  • Many people have realized that there is an excess in the supply of broadband, and lowered demand for high-speed Internet. Nobody wants a faster Internet. Nobody wants a faster CPU. Well, Nobody, that doesn't care much about the technical superiority of, for example, the AMD Athlon architecture. From the DC economists, to the NYC fiancers, and from the Silicon Valley vulture capitalists to the top executives of the largest tech-sector firms in North America, NO ONE wants to face the truth - the creation of Internet was a massive fuck-up. It's more than obvious that the infrastructure of the Internet was so rapidly built, that its applications could not possibly utilize it. Essentially, between 1996 and 1998, there was a gold rush in America. People were spending billions of dollars on Internet infrastructure. Anyone who had the kind of cash it takes to raise multi-million dollar corporations was betting his money on the chance that our entire economy will fully depend on the Internet for its function. The dream that high-speed Internet would be available in every mini-mart and taxi cab in America has yet to come true. So much capital was invested in this idea that if it was not implimented in the nick of time, the entire economy would go into a recession. And here we are, in a recession. Strangly enough, most people are still betting their money on broadband. The only way that the "Internet Economy" can be saved is by rapidly developing applications for high-speed networks. Unfortunatly the software market is in a miserable condition. Things like mp3s and Napster really only gave a temporary need to expand the Internet's intrastructure, in order to provide high-speed access. It turns out that if you send something over the net, you can be sure it's possible to copy it, crack it, and restribute it. Subsequently large portions of the Internet are deemed criminal and shut down. So there's a huge problem here. There's almost too much bandwidth, and people don't really want any more. In fact, a lot of them probably don't even want faster computers anymore. Many Americans are discovering that they don't really need tetter technology, in terms of the computers in their homes. So the last-mile problem isn't really a problem. Few people REALLY REALLY NEED anything faster than an old fashion dial-up modem. So DSL and Cable are much nicer, and a lot of people enjoy that little luxury of having websites show up quickly. And it's good for the kids' edubication too. The people who wrote this research paper insist that everyone needs high-speed Internet in their homes, just like they need a microwave. It also goes on to assume that the corporate world needs FAR more bandwidth. It's like building highways in the middle of nowhere, in the hopes that people will buy more cars. What it all comes down to is people trying to get the government to dump piles of cash into ISP industry. This is a dead end. The money should be going into software development and research into networking applications. The Internet needs a massive over-haul.
  • Speaking as someone who was once a licensed plumber, running lines in the sewers poses a couple problems I can think of.
    • One, sewers back up and need to be snaked with steel blades. I'm trying to picture how they would avoid slicing the cables...
    • Two, I know you can get a lot of bandwidth from fibre, but still, if they keep putting more and more fibre in the sewer, it will mean more problems with backups. Eww.
  • There is a couple of companies doing it in the UK now. They are not using 802.11b though. Not sure what they are using.
  • I wonder how much this company's stock would jump if everything the claim turns out true and they kick ass on the last mile!!! Could be a Microsoft sized jump?
  • "But I'm not dead yet."

    "You'll soon be stone dead."

    "I'm getting better."


    One thing we can say for sure, 2001 has proven that a lot of technologies we all believed were slam dunks only a year ago are looking less and less like sure things.

    ABC's Monday Night Football suspended HDTV broadcasts indefinitely. DSL companies are dropping like flies. And now cable broadband is starting to waver.

    Perhaps my belief in technological manifest destiny was unwarranted. Anybody want an HD monitor cheap?


    Fake News Story: Welcome Back To 56k [ridiculopathy.com]

  • The biggest single problem in the last mile is cost of driving a cable of any sort to your house. You have to have right of way access to the property, you have to dig a trench, you have to have junction points. The cost of the cable itself it trivial.

    Right now, we have the cable companies and the telcos driving cables to your house, since they are already going that way. But there is a third possible player that hasn't yet entered the fray.

    I used to live in the city, and had my electric bill on direct debit. I now live in the country, and belong to an electrical co-op. To keep the price down, they don't have routine meter readers - I have to read my own meter and report usage (and the occasionally spot-check me). As a result, direct debit is out - I cut them a check ever month.

    Last month, as I was hiking out to the meter, I thought, "The electric company already has a right of way to the meter, why don't they drop a cable alongside the power line and set up a smart meter. Then, they could also offer data services, as well as variable rate metering (different costs per KWH based on time of day)".

    Think about it.

    1) Look at Qwest - they used to be a GAS PIPELINE company. They needed data on the pumping stations, so they ran fiber. Their CEO had vision - he made them run a lot of extra fiber.
    2) Like a telco (and quite UNLIKE a cable company) the electric company understands uptime. If your cable goes down, "we'll fix it in a few days" is considered acceptable. If your phone or power goes down, a truck is rolling in minutes after the report, rain, shine, or hurricane.
    3) The power companies would LOVE to be able to encourage people to spread the load to off-peak times, but they have no good way of offering the average consumer a reward for doing so. Variable rate billing would solve that problem.
    4) If they had a network to read the meters, they could save money on meter readers.

    I think the only reason this has not happened yet is that power company CEOs don't have the vision Qwest had.
  • The company I work for (This is not a plug so I won't mention who) has leveraged itself in a position to replace the TelCo's here. We are using broadband wireless technology and we have done significant enough damage to the phone company here that they have started to market specifically against us. We are not using 802.11b (I know I'm going to get flamed for that) or any other non-propietary protocol. Our equipment is built for what we are using it for. We don't make the subscribers buy any equipment, we keep ownership so that if you leave our network, you are not stuck with a useless piece of equipment.

    We use the 5.8 Ghz frequecy for the SU's so that there is no worry about wash from too many devices in the band and our equipment is directional so there is little chance of stray signals messing up the equipment. On our backbone we use 18, 27 and 38 Ghz to go between our access points. We won't have any issues with over subscription because for $2500 we caqn slap up a new access panel for a 60 degree arc to service more people.

    Our customer service record is second to none. The company has been around for two years and we have 0 customer churn. Not one customer has left our company for any reason.

    Devon
  • Here is what I am thinking:

    The problem of last mile is two-fold: a) The monopoly held by power/telco/cable (and possibly water co) to get wires to your house, and b) The hassles involved for a "startup", or anybody else, to get rights to bury a new cable or conduit.

    I wonder if there is a way around this - it would be ugly (very, VERY ugly), but could anyone prevent it?

    Imagine stringing up a neighborhood, running the wire (most likely, fiber) between buildings, but not burying it, but by running it along the fence lines, and in some cases, hanging it free from the rooftops. Maybe in some cheap PVC painted to match the neighborhood, and to protect the cable. Each house would get a cheap interface, consisting of the fiber input and output, and a 10BaseT or 100BaseT connector (to go to the rest of the house) - kinda like a switch or hub of sorts.

    For most neighborhoods (especially the ones with evil HAs), this could be done and would be hidden, and thus wouldn't bring on anyone's wrath. It would be crossing property lines, but hopefully the neighbors would get along well enough to be amiable about this. Some runs would have to go under the dirt (such as where gates are), but only in a small 3 inch depth PVC run, for about 3 feet. All the connections would have to terminate somewhere - ideally, all the residents would get together and buy one house to serve as the "terminus", and for that house get a T1 dropped and set up.

    Older neighborhoods would be easier, because of lack of an HA.

    One could say "do it with 802.11" - but this has the main problem of major up front cost (for each house) and interference (for a variety of reasons). The solution I propose could be done cheapest if you don't go with fiber, but instead use Cat5e and 100BaseT four port switches at each house. If you didn't want to go to the expense of getting a T1, if each (or most) houses have cable or DSL, then all houses could share the bandwidth in some manner, given the proper gateway/router/firewall system with proper load sharing software.

    How would I go about setting this up?

    First, I would go house to house, and ask each resident if the own a computer, and whether they would enjoy broadband. Ask them if the currently have DSL or cable, or if they use dialup. Ask each of them what the maximum they would be willing to pay for broadband, if they wanted it. Ask them if they would be willing to be part of a co-op for getting broadband. If they seem willing, share the idea with them.

    Once you have asked enough people, calculate amounts - and if you are given a low enough amount from the calculations, go around and distribute flyers to each house. Make it a cooperative venture, where each resident is responsible for the wire from each side of his property line to his house, the switch, and the firewall/router (cost wise). Find out which residents are capable of set up and wiring (running conduit, etc), to help those who aren't. Offer a simple single disk install of linux for the router/firewall - and point out (or offer to build) these cheap boxes (think "yellow box linux" here). Or, depending on the setup, allow your standard el-cheapon linksys router/firewalls, etc.

    I am certain this can be done - as long as all the neighbors cooperate. Can anyone point out issues in my reasoning? Are there laws or regulations preventing people from getting together to do such a thing (and if so - do these laws violate any rights)? What is stopping people from doing this?
  • The simplest way to convince the masses it to lower the price. That's the only thing keeping people away from broadband, and the situation would change overnight. My biggest fear (and I'm not alone) is that I'll take the $40 plunge only to have the rate go up to $50 in six months. I love broadband - I have it at work and it's crippling to have to go home to the 56k at home. But the simple fact is, I just can't make that little extra a month (and the U.S. economy ain't helpin' either.)

What is now proved was once only imagin'd. -- William Blake

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