[1st-mile-nm] FTTH: Coming From a Government Near You

[Richard Lowenberg]

We are seeing more and more articles about fiber to the home/premises.   Here's
one of the most recent, advocating one financing strategy.
rl
--------

www.internetevolution.com/author.asp?section_id=561&doc_id=148317

FTTH: Coming From a Government Near You
Written by Tom Nolle
3/14/2008

The future of the Internet depends on its ability to deliver experiences. Things
like ?stamping out traffic management? or ?promoting Net neutrality? are
abstract issues that just poke at symptoms of the real problem, which is a lack
of access bandwidth and quality of service (QOS). The only solution to that
real problem is to get fiber to the home (FTTH) in every industrial nation on
the planet. And the best way for that to happen is to get the governments
involved.

Japan and Korea have far better Internet service than the U.S. The reason is
because a mile of fiber passes a lot more demand dollars there. Korea and Japan
have nine and twelve times the U.S. average of ?demand density.? Some parts
of the U.S. are nine to twelve times as dense as other parts. (Verizon has the
best demand density, so it?s no surprise that it?s the only Regional Bell
operating company [RBOC] committing to FTTH.) You can?t change demand
density; no corporation with a profit motive (that?s every public company by
definition) will deploy FTTH at a loss; and no abstract Net neutrality
legislation is going to fix the problem.

What will fix it? Make the telcos into public utilities again? Aside from the
fact that deregulation has never been successfully rolled back anywhere,
there?s no assurance the ?utility? will even deploy fiber, or that it
will be affordable. Use the Universal Service Fund (USF) or its equivalent in
other countries to subsidize FTTH? A USF subsidy hurts the middle class and
poor because everyone pays USF charges. So, what?s left?

The only way to get universal FTTH is to make the bold decision to offer a 100
percent investment tax credit to all those who are willing to deploy FTTH. A
tax credit of 100 percent means that any FTTH deployment cost could be simply
written off against federal tax, dollar-for-dollar.

In effect, the government would be paying for the deployment of FTTH out of tax
revenues, which means we?re paying for it out of our income taxes. Income tax
is a progressive tax where the burden falls most on the wealthier taxpayers. And
that?s where you?ll find high-tech employment -- the group that?s
benefiting most from the boom the Internet has already created.

State and local governments can also get into the action by permitting FTTH
infrastructure to be financed with tax-free bonds. All of this would turn FTTH
from a huge cost to a huge benefit to businesses that deployed it, and FTTH
would expand radically.

In fact, the issue might be keeping FTTH deployment from becoming too good a
business. Therefore, we would need fast and objective standards to be set for
minimum deployment features. That should be done through an independent
industry group with representatives from the Internet community and the access
providers, charged with quickly setting the standards for the FTTH
infrastructure to be deployed. The second step is to require that all FTTH
deployed under the tax credits be perpetually open to competitive access under
technically viable requirements, and at a fair and present rate.

Access providers already deploying fiber benefit by having their costs reduced.
For providers such as Comcast Corp. (Nasdaq: CMCSA, CMCSK) that say they must
manage traffic to ensure the user experience, this offers a way of expanding
the user experience instead. Public utilities that have been looking at
low-capacity broadband over power lines could exploit their poles and rights of
way with fiber to the home.

Any of these choices will expand the capacity and power of the Internet, all
without destroying the business models of public companies like the RBOCs that
have already invested in infrastructure. It would also help the economy by
restoring the innovative drive that became a casualty of the tech bubble, but
also gave us the best decade in modern history.

There is no question that the Internet is already a powerful public service, and
one we can?t assume will be optimized if the disjointed forces of the free
market have to somehow carve out profitable niches for all of the players
involved. Access is the key to everything, but it?s hard to make it truly
flexible and expandable enough to meet present and future needs. A tax-credit
subsidy has worked for R&D in general, so let?s expand it to create the
Internet of the future.

? Tom Nolle, software engineer and founder of CIMI Corp.


-- 
Richard Lowenberg
1st-Mile Institute
P.O. Box 8001, Santa Fe, NM 87504
505-989-9110;   505-603-5200 cell
rl at 1st-mile.com  www.1st-mile.com

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