The $14 Billion Dollar Announcement

Peter : On Rad's Radar?
Peter
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

The $14 Billion Dollar Announcement

While I don't agree with everything that Bruce writes here about AT&T's $14 Billion network spend in the next 3 years, there were a few take aways.

The big one is that the ILEC's have been getting rate hikes for years to pay for fiber that most customers are not receiving. FiOS is where it is - and that's the end of that project. U-Verse is fiber to the node and that isn't deployed everywhere either.

Mike Powell, former FCC Chair and now CEO of NCTA, has often gotten in woefully wrong in presenting the state of telecom. You can talk about top speeds all day long, but that isn't what the Majority of US addresses have access to nor is it the top speed broadband even remotely affordable for consumers - and even some small businesses (at $300 per month). The average US broadband speed is 6.6 Mbps. And if you don't bundle that broadband, it costs a lot.

Despite the promises and the rate hikes, telcos have invested $249 per person on average for broadband per year. Consumers spend on average $529 on broadband annually. At a retail job at $10 per hour that is one week's pay. Unsustainable!

62% of Americans buy broadband. That is all. Period. The market is flat.

Verizon and AT&T have a plan to disconnect the copper plant. VZ has already done so in the shade of Storm Sandy at the battery Park CO. All the CLEC customers out of the CO are out of luck, time and competition.

Telcos are basically unregulated at the state level - and the FCC is useless when it comes to enforcement and competition.

The point that everyone misses is this: our economy in America is service based. It is broadband fueled too - ask Apple or Amazon or Google.

Without cheap, fast Internet everywhere, what happens to that economy?

Clipping copper is detrimental to not only the CLEC's but to the majority of small businesses in the US. Ethernet-over-copper is quick to deploy and gives a great MB for the buck. EoC is the last stand against the cableco becoming the ILEC and the ILEC becoming irrelevant. (I laugh when the stock pickers only point to the dividend as if that was somehow any indication if a telco will tank or not.)

Promises from the RBOCs - Verizon and AT&T - for rate hikes or mergers have largely gone unenforced. The $14B announcement was just PR - spin. Nothing either company does is good for the economy, it is just good for them - for now.

How will Cloud services take off if the broadband is too expensive, unreliable or unavailable?

How will the Internet-centric economy stay competitive in that same environment? How does any of that withstand broadband caps and metering? How do corporations have more tele-workers in that same scenario?



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