Big discussion over at AVC on Fred Wilson's blog post about the lack of broadband competition. After the broadband report came out, this apparently was a shock to some:
"Today, nearly 40 percent of American households either do not have the option of purchasing a wired 10 Mbps connection or they must buy it from a single provider. Three out of four Americans do not have a choice of providers for broadband at 25 Mbps, the speed increasingly recognized as a baseline for broadband access."
The discussion revolves around - surprise - arbitrage! There would be investment IF there was enough money in last mile residential; if regulation was lighter; if, if, if.
Quite a few feel that the answer will be wireless. I don't think there is enough spectrum for that, but I could be wrong. And even if there is enough spectrum, metered pricing will crush every wallet.
That said, I think many people don't have a real good ground view of telecom. In many parts of America, there are a number of independent players (non-Duopoly) that are rolling out fiber to the home or fiber to the MDU (condo/apartment building/etc). Stealth in NYC; Socket in Missouri; Sonic in Cali; and Hunt Telecom in much of Louisiana where they are laying fiber to businesses and schools.
WISPs (wireless ISPs) who typically use fixed wireless gear to offer broadband have been transitioning to fiber in a number of rural communities, like Shelby Broadband is doing in KY. And they are doing that without government funds - all bootstrapped.
Another theme is that investment is down in broadband due to the Net Neutrality rules that are being argued in SCOTUS. *cough*cough*bullsh!t* Investment appears down for a number of reasons.
One reason is that the investment dollars of the ILEC/RLEC group are government funds from USF, CAF, RUS, NTIA right now.
Number 2: The cost to pass a home with fiber when FiOS started in 2004 was about $2700; now it can be as low as $700 depending on density, geography, topography. Also, the biggest spender in FTTH was VZ with FiOS, so investment has declined since they stopped spending the $24B. C Spire and Google aren't going to replace that kind of spending. However, CenturyLink's Giga announcement and Windstream's 100Mbps PR are shining some light.
Number 3: I have been in the room when execs at AT&T have said they have no answer for DOCSIS 3.0. Verizon did a co-marketing deal with the cablecos (as part of the SpectrumCo deal). That isn't competing!
How deflating do you think it was for ILECs when Comcast said it was doing 2Gbps?! That isn't about regulation. That is like being in a high school boys locker room and realizing that you have puny equipment muscles.
ILECs don't cross LATAs any more than cablecos do. Only WOW! and RCN overbuild. Wholesale agreements to get FiOS and U-Verse access have been ridiculously hard to acquire until just these past few months. APEX by AT&T opened up U-Verse infrastructure to wholesale partners. Verizon is a little stingier with FiOS probably due to their outsourcing wholesale to one person in a nursing home in Phoenix who only has phone access an hour a day. True story. Ask any VZ wholesale customer.
Until a vendor comes along like Hatteras did with G.SHDSL making it easy to deliver g.Fast to premises end to end, DOCSIS 3.0 will win. VDSL2 is just now becoming economical and stable. And the deployment costs for VDSL2 with fiber-to-the-node is less than FTTH. I think if you didn't see the industry from the ground level, you can make pronouncements all day long that are misleading or skewed.
We need the best broadband network in the world if we are going to compete globally. If not, no one will be able to pay their cell phone bill.
