Next was Terrence McGarty, very suave and impressive. Has a company deploying municipal fiber in New England. His topic: "Where The Last Mile Is." Type his name into Google and you get a week's worth of interesting reading right away.
Ex Warner president. Builds networks. Someone came to him [at Warner cable] saying we hate our cableco and we want to build fiber. You’re crazy. Said would think about it, and found maybe she wasn’t crazy.
Looked at New England. Unique because there are towns and localism is a factor. Went to over 150 town meetings.
Three categoties. Ones where fiber to home economically viable. Towns where not viable. Amhert NH was prototypical one of these. Large houses in large plots of land set half mile back. Excludes upper 2% of income bracket.
Third category is politically unacceptable muni financed. They remember fiasco of 1903 where they build trolley line. Comcast threatened to sue. Won’t build in Comcast towns.
Muni bond financing is hard, so looked at USDA rural bond financing. Desperate to distribute money. Started in town near Dartmouth, NH.
How to make this work? Need to build public/private partnership. Gave each of the towns a shareholder interest in the venture. Equity participants, have a seat at the board. Integrated with public safety etc.
What are we really selling? Are we selling video bb internet and telephony, better faster cheaper? No, it was more. A virtual LAN, interconnecting towns and cities. A portal to a wide area network. Got an open video franchise. Terrifies cable folks.
Local people as sales and marketing. About 250 munis. Supreme court rules towns are not “entities” under 1996 act, and act says any entity can become carrier. Afraid it would open pandora’s box and anyone could become entity. Duh! Says it is a states right ruling. Says states have right to control any entities in their states and declare them non-entities.
Local power companies, about 120 building fiber to the user. New housing development with FTTH [Fiber to the home]. In excess of 750,000 households, 700+ suppliers. About 80% of households economically viable for fiber only. Rest wireless. 98% coverage. Use EPON (Ethernet on passive optical network). 80% of people live on 20% of roads. Find this out by … driving all the roads. With 70 miles of roads in a town, 80% live on 14 of those miles.
$25k/mile to deploy fiber. Electronics $200-500 NID [Box on wall of house]. $200 for drop from street. $150-250 shared network. OAM 4-5% a year of CAPEX.
Killer is pole attachments, more poles than in Warsaw. 95%+ of fiber on poles.
Verizon etc have 6 month cycle. Will wait until last minute, and then delay. Won’t deny access explicitly.
Sample costs curves. Always have significant positive cash flow.
Need local ISPs. Localism. AOL deal didn’t work.
Will ILECs do it? No money, not in their interest, can’t maintain monopoly rents.
Verizon will try to pre-announce fiber to chill competition. FTTH is inherently open, cornerstone. New applications and innovation and economic development created by openness.
Question is what happens if you suddenly deploy open BB network. A new distribution channel. Distorts market relationships.
Q: Cablecos are incumbents too. Cablecos dropped price in fiber zones to keep customers. Who is the real incumbent?
Most towns Adelphia, dead corpse trying to rejuvenate itself. Localism hits cable guys, re-franchising. LEC has more power than cablecos, state-wide franchise. Once they put in video they are prohibited by law from constructing until they have a franchise. $25/month outside of region for DSL, $5 in fiber zones. Need to invoke anti-trust.
Very dependent on USDA RUS pool. Doesn’t work without loans. Can’t do 100% equity funding. $1.8bn pool, 210 million allocated. Created a constituency, affected the politico thinking.
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