[1st-mile-nm] Insanely ill-informed NYT broadband article

[Steve Ross]

The front page of the NYT today leads with a story on 
broadband in the stimulus bill so utterly, insanely stupid 
that it could only have been stimulated by spokesmen for 
incumbent providers -- the big cable and telco interests. In 
fact, I KNOW it was, because I rejected the same bullshit 
when these guys and gals started calling almost two weeks 
ago. Broadband to nowhere? Give me a break. The incumbents' 
PR teams worked overtime for THAT one.

But it seems the bullshit has found a home after all. And 
the NYT carelessness will now set the tone for all the 
clueless parrots and stenographers who call themselves 
reporters out there.

Aside from the usual unnamed "sources say," there are 
several quotes from people whose names simply never come up 
in the debate on ultrabroadband issues.

There are several active public policy listservs on this 
topic, going full-tilt right now. Craig Settles, who has 
played a useful role in the debate on municipal wifi (NOT 
rural broadband -- and the issues are not even close to 
being the same) and who is the lead quote in the article, is 
not contributing to either of them.

Our magazine follows broadband policy better, I think, than 
anyone else, and called for $30 billion for ultra-broadband 
in the stimulus package.

The best wowsers in the NYT involve the idea that it would 
take 15 years to do the rural buildout, and that nothing is 
ready to go in the next 18 months. The implication is also 
that rural broadband is very expensive.

Reality check:

1. Except for a bit of point-to-point wireless, rural areas 
do not do wifi. It doesn't scale to the bandwidths and 
reliability needed for economic development, telemedicine, 
distance learning, and so forth.

2. Rural broadband can make money, and we track (as a small 
part of our mission) 400 "tier 3 incumbent local exchange 
carriers" -- mainly small rural telcos -- that make money at 
it and have installed fiber-optic networks -- often with 
better technology than Verizon is using in its FiOS build. 
The trick is not to look at population density, but at homes 
passed per mile on the roads.

A year ago, you needed 8-12 homes passed per mile to make it 
pay. You now need 6 or 8 thanks to some clever technology 
improvements announced in early October (our November issue, 
at www.bbpmag.com details it in plain English). That's 
because the "take rate" and average revenue per customer is 
so much higher in rural areas. This may exclude some rural 
areas in the flatlands, but they add up to 1-2% of US homes.

3. How fast can these things be built? The NYT article says 
15 years. We know of dozens of good business plans (and, 
yes, a half-dozen not-good) that could start construction 
TOMORROW if they could raise the money.

We're talking about credit markets so frozen that, for 
example, a $93 million 22-town build in Vermont, presold to 
nearly half the residents and with experienced management, 
can't sell muni lease paper with a coupon rate around 8 
percent and an after-tax return of 11 percent. We see $1-2 
billion of the $9 billion in the federal bill that could be 
spent TOMORROW.

4. Can the industry scale to absorb the $9 billion? Easily. 
US spending on telecom infrastructure was over $60 billion 
in 2007 -- some 50% greater than spending on roads!!! And 
the equipment/skillset required for deploying the best 
technology, fiber-optic cable, is sitting idle now because 
of the housing construction collapse. Basically, you lash 
the new broadband cable to existing telephone wires on poles.

My magazine (which is more about policy than nitty-gritty 
technical details, but covers a lot of technology as well) 
estimated that we could provide the underserved 80 percent 
of the ENTIRE COUNTRY in five years for $150 billion. Geez, 
we gave AIG almost that much!

Talk about "banker money to nowhere." And THINK ABOUT THE 
PRODUCTS AND SERVICES PEOPLE ON THIS LIST COULD OFFER if we 
had the same broadband infrastructure as, say, Japan, Hong 
Kong, Korea, Sweden....

-- 
Steven S. Ross
Editor-in-Chief
Broadband Properties
steve at broadbandproperties.com
www.bbpmag.com
SKYPE: editorsteve
+1 781-284-8810
+1 646-216-8030 fax
+1 201-456-5933 mobile