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Dark Fiber: A Case In Point
Anonymous Coward writes "CNN has posted a story regarding the overabundance of fiber lines that were laid during the 90s gold rush along Oregons Interstate 5 corridor. While over 140,000 miles of fiber has been laid 95 percent of the fiber goes unused and roughly half of the companies who laid the fiber are now gone. The article goes on to further say that even with all that fiber, there is little availability to the consumer because either the local connections aren't there or, because of monopolization by phone companies, too expensive. Even for businesses."
Actually, the local paper ran a detailed article about this (I live in Portland). This is not a phenomenon that is repeated in other cities; rather, due to Oregon's I-5 corridor being the conduit between San Francisco and Seattle (Redmond) it was assumed by dot-coms that there would be tons of traffic to handle and profit from. Obviously it didn't pan out. And since those companies didn't provide the amps to light the cable, it will cost billions to fire it all up - and that ain't happening any time soon. But it does explain in part why OR/WA have been hit harder by the recession, with plain old unrealistic optimism.
Well you can buy all the fiber you want. The ITC I work for made a LAN extension that went 7 miles. The dark fiber cost about $8,000 to dig. Then we had to buy $10,000 modules to go into our switches. This is for a LAN extension. If you want to be a DSL provider you better be able to shell out a hell of a lot more (we have paid over a million). That is why it costs so much for broadband, if we got all of our stuff for free we could lower the prices, but we don't so we can't.
..."Fiber-Optic Overdose Racks Up Casualties" back in May of this year. One quote:
Telecom wouldn't be the first to go through such a boom-and-bust cycle. During the railroad boom of the late 1880s, so much money was invested building so many parallel tracks -- or tracks to places that would never support profitable service -- that the entire industry went bankrupt. Much the same story is told of the airline industry, which because of so many losing years has yet to turn a net profit.
Interesting stuff--go read!
Laying far too much fiber is a pretty sound financial move. Laying fiber is expensive. The fiber itself is cheap compared to the cost of gaining the rights to bury cable along a continuous stretch of land, and then actually digging the trenches, laying the cable, filling the hole back up and fixing whatever is at ground level. The theory goes that, as long as they're in there, they should lay insane amounts of cable. Whether or not they're laying the cable from the right points A to the right points B I can't say, but the fact that it's dark or insufficiently used doesn't necessarily indicate that anybody screwed up.
-Waldo Jaquith
I grew up in Oregon and only moved just recently to the East coast for work. I can tell you, just because fiber runs down the Interstate, it's no wonder it's still hard/rare to get broadband in most of Oregon.
Phone company conspiracy theories aside, Oregon is anything but flat. Houses are not close together (generally). One of the things that makes Oregon nice is the country side, open space (I know, hard to imagine sometimes if you haven't seen it), and the ability to live more than 5 feet from your neighbor. Other than the larger cities like Portland, there's really no housing developments or sub-divisions to run fiber to or at least not enough to entice phone companies to bother with running the lines over/under whatever terrain.
I think that's one of the main reasons the Personal Telco Project in Portland is really taking off and will continue to do well. Cheap or free blanketted wireless (able to cover several miles, not just a few hundred feet like current 802.11) is the only way I see a lot of homes in Oregon ever getting anymore than a dialup connection. It's just not practical to lay fiber down one person's mile long driveway. We didn't even have local dial up internet access where I used to live (45 minutes west of Portland) until '97 and even then it was 14.4!
I worked at Bell Labs for a few years. After that experience, it doesn't puzzle me how telcos can have a monopoly, more
captive customers than they can handle, and still "loose money". It's not lost, it's looted. In front of the building (in Holmdel NJ),
a limo would sit for a half hour or more waiting for the Pres. of the Labs to arrive by helicopter. The copter would land, the limo
would drive him 3000 feet to the door, then take off. Amazing.
The primary concern for management was getting the latest org chart to see their progress up the pyramid. I was a bottom feeder/
consultant and I think there was at least 25 levels of management between me and limo boy. No wonder Lucent is in the shape it's
in. An army of talent, led by a crush of PHB's all trying to move up the food chain.
It was a constant cycle of projects started, brought almost to the point of completion and then boom. A new manager, a departmental
re-org, and all of the work tossed in the dumpster, deleted of of the machines because they were allocated to another department, or
just left to rot. Everyone had stories about how cool this or that project was and then got cancelled. Very few stories of successful,
shipping products. Look at what happened to Unix! They couldn't even figure out what to do with it. Tossed around until it was finally
sold off so they could make the numbers for the quarter.
One bright spot, they did have pretty good coffee.
When I moved into the SF Bay Area 7 years ago the only "broadband" available was ISDN. It wasn't an option since it might have cost almost as much as my rent due to the per second (yes, you read that right) charges on top of the monthly flat fee. Then @home started making lots of noise and wasn't available to most people. They priced themselves fairly low and still never became available to me or most of the people I know. Then came DSL. No, it wasn't available to me either because I live so far from the CO. Eventually IDSL showed up and was only expensive, but I could actually get it. So, my first broadband connection was costing me around $150 per month and by comparison to ISDN it was cheap! Then Northpoint went out of business and I got screwed by AT&T when they decided to not continue service to Northpoint customers after buying their assets. (but I'm not bitter - no really) So much for IDSL since nobody offered it anymore.
But now there appeared a new wireless service that said 256k symmetrical and it's available to me. Sure thing! Now my broadband was down to $99 per month. Cool! And they even gave me static IPs. Life goes on nicely for some time.
Just because I'm curious (and was told by Pac Bell each time I called about it previously that they were going to upgrade the CO near my house to make DSL available "next year") I call Pacific Bell to ask my yearly question about when I can get DSL. A mere 4 years after I started asking I suddenly get "it's available to you now". Not just the lower end of the spectrum, either. It seems that Pac Bell really HAS been upgrading their COs and now I can get any speed connection I want. Oh, and 5 static IPs. For $79.95 a month. My broadband gets even less expensive.
So what's the point of all this? It's that (at least for me) broadband connections are becoming more available, higher speed and less expensive.
"Suppose you were an idiot..... And suppose you were a member of Congress... But I repeate myself."
Having 95% of the fibre dark is NOT wasteful --- it's smart investing. Let me explain.
What is the single biggest expense in laying fiber? Digging trench.All those rights of way are expensive, and those guys in hardhats with the cool digging toys won't work for stock options.
What is the second biggest expense? lighting the fiber. All that hardware at both end is expensive, and it's support staff expects to get paid every month.
Once you are laying the first cable of fibre, what is the additional cost of laying an additional fibre? not much.
Once you've decided to lay fiber, the economically rational move is to lay as much fibre as you think you might ever might ever need, becuase laying more fibre later will require you to dig everything up and do it all over again. Don't light any particular strand until you've actually got paying customer -- the cost of the boxes drops with Moore's law.
The problem is not the too much fibre was laid, it's that too many different companies invested in fibre creating a buyers market for the customers. Given the current demand, even if each company had laid only a tenth of much fibre, we'd be in the identical place: same costs, same prices, same bankrupticies. However, when bandwidth demand catches up (and it will someday, I assure you), you'll be really glad all that "wasted fibre" is there.
Put another way, if you lay a small amount of fibre, you are doomed to lose - by design, you've only got a small amount to sell. If you lay a lot of fibre, you might make a lot of money because you've haven't spent much more,and you'll be able to sell a lot more if/when the demand does turn up.
"one treats others with courtesy not because they are gentlemen or gentlewomen, but because you are" --G. Henrichs
Unrestricted bandwidth exists, it just costs more. Nobody's willing to pay that price, so they offer cut-rate bandwidth with restrictions to lower its value.
Operating fiber lines is not cheap. The energy it takes to power the light beams has a noticible cost. The mistake that a lot of the boom-era telecom companies made was laying down more fiber lines than they'd ever need, and then running out of cash before they could afford the equipment to light them up.
The major telcos didn't go around buying up the unused fiber to let it sit dormant. It's sitting dormant because nobody wanted to buy the fiber assets of the bankrupt boom-era companies.
If you want to supply the rest of the equipment to light up the lines, I'm sure the bankruptcy courts and/or creditors of the defunct companies would be glad to hear your proposal to buy assets which right now are valued at near-zero because nobody's willing to take them. The problem is, the telecom market is so bad off there's no takers.