Why ADCo?

Ian Peon writes: "Phoenix center recently released a study (pdf or doc) addressing the 'Last Mile problem.' The paper explains why no one has yet been able to crack the cable and phone providers' local monopolies -- and offers a solution: An ADCo (Alternative Distribution Companies) business model. SF Gate has a good article on this."

Comments

Interesting...

[powerlinekid]

Interesting idea but not really feasible I feer. I'd love it if time-warner had a better competitor than Verizon but the govt really fucked us when they allowed the local monopolys (phone companies, power companies, etc). Now I think the thing I'd be really trying to figure out is how do we convince people that they need broadband. As with ISPs back in the day, you had to convince people that they needed, not just wanted to be on the internet. Now they need to be convinced that they need to pay $40 a month as opposed to the $17 so that AOL goes faster. I have a suspicion that this might become a losing battle, which is a shame for the technology in the long run.

Re:Interesting...

[powerlinekid]

The problem is that the apps that people use that need broadband are being killed, such as napster and other file sharing. Streaming video still works on a modem because noone has done the streaming movie (as in video rental store) idea yet which would certainly require broadband even with better technology. I'd say that 75% at least of people using the internet are perfectly happy with their 5k per second max bandwidth which is more than enough for email, web browsing and chat. Again, this just hurts the rest of us who would like to be able to go faster because we understand (and would actually utilize) the potential.

Less expensive alternatives?

[PoiBoy]

The article stated that the costs are such that a 33 percent market share would have to be obtained to make this financially attractive...

Being able to garner a 33 percent market share sounds nearly impossible, especially if it must be done within a reasonably short period of time to satisfy financial constraints. Although /. users and other technology-minded people may be interested in switching utility providers, I don't think the average household is sufficiently frustrated with the local ILEC to bother with having a fiber optic line installed. Moreover, although fiber optic lines have been discussed as being necessary for video-on-demand and other expensive cable services, the cable companies are likely to provide the necessary lines. In short, I don't think enough people really care about their phone providers to demand such a service.

A much less costly alternative would be to install some type of wireless communications network. The company would only need to install one or two of these per square mile, and with a small receiver located in households' basements, they could get phone service, cable, and internet service. Providing phone service would in fact be easier than current cellular technology, since the houses and receivers are obviously not going to move; encription could be used on the internet links, and I don't really see any reason why providing 100 channels of cable would be all that difficult. All of this from small transmitters located atop telephone polls every thousand yards or so.

Wireless ADCo?

[bstadil]

Why wouldn't it be possible to do a lot of the last mile plumbing using wireless? If the ADCo could get access to a suitable band (G3?) at least initially they could save a lot of the physical wireing cost and they could get to a relativbely high market saturation quickly. The basestations used could be used for mobile phones etc later.

Hardly a panacea

[dfeldman]

My community has at least three ADCOs that I know of; they are all local companies who want to offer broadband. Two are running copper lines and one is running fiber. (For the record, I'm not quite willing to give up my DSL line until these guys start turning a profit.)

One of the major problems with ADCOs is, predictably enough, running the cables. Overhead and buried cables are usually prohibitively expensive, which is why the only way the telecom/cable companies were able to afford them was with subsidies and legislated monopoly status. Therefore the companies are forced to use sewers and other undesirable underground networks to run cable. And this is where the problems begin.

The sewers in my town are extremely old and small. There are frequently "conflicts" among the carriers when installing and maintaining these cables. Rain has proven to be an issue, as have insects and other much larger creatures. Running these cables in sewers is decidedly jury-rigged and isn't going to work out as a long-term solution.

One of the ADCO companies was considering transmitting signals through water supply lines (!). They claimed that there was a significant amount of potential bandwidth in the water supply network. I am not sure if that ever came to pass.

But one thing is sure: whether it be 802.11b wireless or something else, some other technology is going to be needed to replace the sewer-and-heating-duct kind of cabling that ADCOs rely on.

df

Re:Interesting...Liked the engineering economics

[darkPHi3er]

BUT, even the SFGate article says"

"The reasons for that, boiled down, revolve around the costs involved in small telecom companies trying to do too many things all at once."

i haven't read the study in depth yet, but looking at the TOC and skimming the section heads, they seem to ignore a POLITICAL reality....

The Telcos ***DON'T WANT*** to solve the LastMileProblem.

The Telcos had, up until the construction of the fiber backbone, ARPANET and courts' decision that made telcos open the backbone up to competitors, a REALLY SWEET business model

strictly "Cost Plus, Plus" and very cozy relationships with their Fed/State regulators, many of whom were telco execs doing the "Public Service" tour of duty...which made the telco business a "name your own rates" kinda business

the more broadband deployed, the less value switched circuits have, and the more value packets acquire

the Telcos would much rather sell analog switched, retail priced voice services (where they created the business model and still control it), than...

...packet based, circuit-less (or virtual circuits, if you prefer) communications, where they cannot charge per packet and have to share their packet revenues with broadband providers...

i'm routing, uh, rooting, for the ADCOs, but, if you will recall, CLEC's were also supposed to solve at least part of the problem, and before them the RBOC's (soon to be "The RBOC or So")were going to wire the "bridge to the future"...

as a engineer geek, it sounds to me like the ADCOs can solve acutally solve the deployment of high speed fiber to the businesses and homes in the local loop (though you'll probably end up with a very limited number of very big ADCOs, economies of scale being very real)....

but, what about a business model that will allow broadband providers to survive w/o the consumer being charged "per packet" (like Docomo) or "per bandwidth" like fractional T?

Switched circuits are wasting assets, telcos and analog voice are doomed businesses,BUT...

..so far, no successful new business model has emerged to replace them

...

The fix is less competition, not more!

[bourne]

Well, at least someone is trying to solve the problem, but this isn't the way. Why? Because, as everyone here has pointed out, running cable is so expensive that it has to be subsidized. That's not the sort of environment where competition thrives.

The correct fix is to have a monopoly on cable distribution. One that isn't tied hip and hoof with voice/data/anything carriers. One that runs cables and manages access to the CO for all the carriers, be they ILEC or CLEC. No more games, no more favoritism.

The groundwork is there. The cable-laying portion of the ILECs has always subsidized with Universal Service Fees. We the people own a good portion of that copper and fiber! By now, anybody who hasn't figured out that the Telecommunications Act of 1996 was a failure is dead or heavily subsidized by the ILECs, so let'd go back, do it right, and rip the physical infrastructure out of the hands of the ILECs.

Why broadband will be a long time coming

[LinuxParanoid]

MS and Intel gave us enormous improvements in their products over time in order to sell us upgrades. Telcos and Cable companies, who sell you a subscription service, have substantially less incentive to improve their product. Better to charge you the same for the same old service, and keep what profits they can from the underlying semiconductor/optic cost drops.

I fear that both these players are going to stick with 1 Megabitish services for a long long time. Video that fills my screen still seems a decade away.

If telcos gave you sufficient bandwidth to the last mile, they'd lose their existing revenue model to VoIP/Microsoft.

If cable companies gave you sufficient bandwidth to the last mile, they'd lose their control over video distribution channels to the surf-anywhere web.

I think broadband will be accessible for nearly anyone who wants it, and at cheaper prices than today (i.e. $20/mo, not $50). But I'm not convinced the bandwidth is going to start going up at Moore's law rates of the underlying semiconductor/optic technology improvements. Not even close. The geographic monopolies are too strong, and the benefits of cable/telco collusion are too profitable for them to not keep us on the leash of slow improvements.

--LP