The point is that Fiber OSP builders being treated like PV Solar businesses would likely be  a good thing.  In the CA PV model the incumbent and regulated monopoly (PG&E) is forced to effectively subsidize *new* entrants.  State legislation requires PG&E to implement net metering (reimbursing at retail price sto PV system owners.)  On top of that both the Federal and State governments provide direct economic subsidies via rebates and tax writeoffs.  This is all done to stimulate PV investment.

rj,

Nobody is subsidizing Verizon or AT&T.  About the only relief they get is the fact they will not have to unbundle their fiber plant, but they receive no funds from the government to roll out FiOS or U-verse.  By the way, the rollout of U-verse should require unbundling in most cases because it does not meet the FTTC limits so they don't even qualify for that.

seven

Seven,

Most people of the 6.6B on the planet don't own a computer today in 2009.

Another example:  Look at PV Solar panels in CA.  If these could be justified by only simple ROI economics they would be installed on everyone's homes and paid for by PG&E.  Now the market is in its nascent phase so both the CA and Federal government have stepped up with both regulatory support as well direct economic subsidies.  In my opinion, fiber OSPs deserve the same considerations and arguably have a better overall net value to society.  Sadly, subsidizing FiOS and VZ is like pouring more money into GM.  We need to raise the bar a bit.

rj,

Actually most people did not even OWN a computer in 1986.  So, again you need to rethink that bit of it.  Where you get these whacky notions is beyond me.

Businesses do ROI analysis of their networks - especially large operations that run extensive enterprise networks.  Also, back in the days many enterprises DID do leasing models of equipment to manage their network costs and convert large upgrade cost cycles to payment over time. 

So, what your saying - as I think I read it correctly is that the only way that anything ever works is an open and free market.  Government intervention is a really bad idea.  I agree with that wholeheartedly, surprised you have come around to that view.

And the innovations on the business side came from cost reductions and operational simplfication of modems.  Most business modems were equalized leased line modems plugged into IBM mainframes.  In the old days (late 60s) these modems were hand equalized.  Later (70s) they became auto-equalized from hardware strapping.  In the 80s, they became processor based.  So, yes in the 1960s you could buy a 9600 bps leased line modem that did the same job as the 9600 bps modem that you bough in the 1980s.  The prices had declined and the capability had increased through vendor competition.

seven

Seven,

I was buying MODEMs for my friends and family when setting up PCs from about 1986 or so.  Most people were playing around with bulletin boards, prodigy and compuserve.  Also, businesses buying the MODEM fits into the churn model, ie. customer owned equipment where the rationalization for purchase isn't really an ROI from leasing the equipment.  That, in my opinion, is the big lesson for technology policy - bulid a market system where the technology either is consumer purchzsed or rationalized by "productivity" (a la the PC.)  If the network providers own the equipment (like is done for set top boxes) there really is a big drag prohibiting upgrades and innovations.  Think of it kinda like the ownership sociecty (cars, houses) applied to communications infrastructure.  With that ownership comes a lot of potential.  Without it were doomed to the least common denominator with things like FiOS - a repackaged video network where none is needed pushed by the  FCC, unneeded because these broadcast networks are already built and work fine.  Talk about a waste of money.

rj,

Sir, you have your history wrong on this.  Prior to 1994 (WWW introduction), the vast bulk of all modems both dial and leased were bought by businesses.  The bulk of dial modem "innovation" and churn occurred before this date - with only the introduction of 56K modems (both X2/K.56 followed by V.90/V.92) occurring later.  But the progression of dial modems from 300 bps - 33.4 kpbs proceeded any significant consumer market.  There was a significant Enterprise market with customers like Visa and Mastercard dominating the space.

seven

Another thing that seems relevant in this discussion is that consumer markets played a significant role in enabling MODEM churn.  These pieces of equipment were an end user purchase.  Also, MODEM banks were purchased by "startup" ISPs (that could only exist due to common carriage regulation.)  When all this equipment is owned by the "network provider" the business will have to justify the purchases based on a ROI analysis (or maybe some hopes for Wall St. hype).  Consumers and early ISPs really never did this analysis and hence these markets were conducive to technology churn which enabled these technologies to evolve.  PC technology had a similar boot strap.

Note:  I did buy my cable MODEM but I think that's rare.  It wasn't something the cable co advertised and supported well (nor was my user purchased TIVO and cable card.)

Stevery,

You and I probably have a different view of DSP cost reductions over time.  As I said, I came originally out of the leased line and dial modem business - I worked for Racal-Milgo back in the day.  We used to be able to charge (and the margins were very good) $1 per bit per second for Leased Line modems (lets say this is the early 80s).  This is pretty much before off the shelf DSPs were available (TI 320 series being first iirc).  These 2400 baud, 9600, 14400 or 19200 bps modems were QAM and DPQSK based (they contained a very slow side channel FSK modem as well for management).  So, I see DPQSK and QAM as having been implemented in DSPs for a LONG time.  Telebit (iirc) built the Trailblazer 19.2 Kbps dial modem based on DMT in the mid-80s (maybe late 80s).  The advent of Fax machines created a broad based modem market to get commericial silicon makers (back in the day Rockwell) to build devices.  Derivatives of these eventually got built into dial modems with the advent of the web

The consumer devices (Dial Modems, Cable Modems, DSL Modems, ONTs) all have to trend to $100 per home or so - and they all have or become much cheaper (even indoor ONTs can be built for well under $100 for diplexer built system).

So, the ongoing drop in DSP prices has created the ability to run higher rates with more complicated DSP algorithms for about the same price.  At the price of 40G fiber transport, the DSP costs are not the issue as you have pointed out.  So, from my simple Access mentality I see that there is a progression based around the ability to build devices that sell for $100 (or thereabouts).

seven

I should note that I don't totally buy into Frankston's rhetoric here but I do think that the technology case for a better cable MODEM may not align with a cable cos revenue incentives.  VZ "copying" HFC with FiOS is a sign that the revenue and regulatory models are the challenge more than the technology.

Stevery:

My interpretation of the analysis is that the cable MODEM is not the barrier to residential broadband from the cable companies.  There would need to be more fiber for uplinks and CMTSs installed in the field.  (Similar to what happened with remote DSLAMs and the PSTN)  This is cost prohibitive on the operational side.   And regardless, the primary revenue would get canabalized by 100Mbs+ links (video would go the route of mp3s.)

It kinda reminds me of Bob Frankston's one percent article written a few years back.  An excerpt:

"They [VZ] haven't given up on ITV [interactive TV] – this time they are using fiber as the transport and calling it IPTV. The fiber they are installing for FIOS is really a cable TV plant disguised as a network. It is a Passive Optical Network (PON) designed as a distribution system from a head end to the terminals at each home though it does have capacity to send data back. A single fiber has the capacity for gigabits of traffic. There's so much capacity that they can simply allocate a portion of the capacity to emulating traditional Cable TV. The 15mbps they reserve for their Internet service is less than 1% of that capacity!

The big lesson of the Internet and personal computer is that it makes more sense to just deploy simple IP connectivity and then use standard digital technology to convert the IP video streams to analog video when necessary. While I might forgive the Telcos for neglecting the old-line telephony business, it's harder to understand why they are deploying technologies that are obsolete before they are deployed.

One reason may be that the tradition of “CO (Central Office) Grade” makes them very conservative and it seems a very safe choice when it is really a brittle choice. Even better for the carriers is that it maintains a distinction between video bits and Internet bits. The effect is to take the 99% of the bits “off the table” so they don't have to compete nor worry about efficiency.

The distinction between video bits and Internet bits maps nicely into the myths that define the FCC. The FCC treats the Internet as an information service rather than a fundamental technology.

This flies in the face of what we've learned since the regulations were put in place. The regulations date back to a time when the technology barely worked and every element of the system had to be precisely specified. It was very expensive and each signal had its own special characteristics – bandwidth, frequency, noise etc. IP technology is fundamentally different and allows us to have a single packet medium. All the packets are the same – video, audio, images, text – it doesn't matter!"