Optical/IP Networks

Venezuela Plans New Fiber Rollout

Here's a tale that bucks the trend in telecom competition. Venezuela plans to launch a state-owned service provider to challenge the incumbent private carriers, with the country's president, Hugo Chavez, pledging hundreds of miles of new fiber construction.

The companies hoping Chavez isn't a man of his word are Compania Anonima Nacional Telefonos de Venezuela (CANTV), the dominant fixed line provider that's 28 percent owned by affilates of Verizon Communications Inc. (NYSE: VZ), and Telcel, which is now part of the global Telefònica Mòviles SA empire (see Telefónica Buys BellSouth Ops).

The Venezuelan government owns 6.6 percent of CANTV's outstanding stock.

Having created a new state-owned telecom firm last year called Covetel (Corporacion Venezolana de Telecomunicaciones), Chavez, who runs a country about twice the size of California with a population of 25 million, announced his intention to take on the incumbents on Sunday during his weekly TV and radio show, "Hello President," according to Reuters.

Chavez said the operator would use the existing 762 miles (1,228 km) of fiber already dug along the national electricity grid, but would build an additional 837 miles to reach all the major parts of the country, though the President didn't reveal how much would be invested in the new infrastructure.

The new carrier might provide television as well as traditional telecom services. Chavez's government has in the past accused private TV companies of unfairly attacking his government. — Ray Le Maistre, International Editor, Boardwatch

rtfm 12/5/2012 | 1:28:37 AM
re: Venezuela Plans New Fiber Rollout That was the title of an article in Foreign Policy, which made the interesting point that if developing countries want meaningful widespread broadband, they would have to rethink the push towards privatization.

IF, and I am happy to debate this, a nationalized company wanted to build out a telecom infrastructure for near ubiquitous connectivity (but leave retailing to competitors - ?ala Utopia), they could probably do this surprisingly cheaply and efficiently. Very high take rates, free rights of way/spectrum, etc. With a benign dictator, lots of cheap broadband.

Nick (forget his last name) from ATT Research presented a view of FTTH at OFC that implied that given competition (=low take rates), lack of a killer app driving demand to the 10s or 100 mbps, 30 year fiber lifespans versus 5 years or so amortization for electronics, FTTH wouldn't be widespread in the US for many years (until natural upgrades take hold, or with greenfield developments). Think of UK, where telecom companies paid tens of B$ for 3G licenses. That same money in UK could pay for FTTH or WiFi/WiMax/etc everywhere.

What is the catch? Issues of efficiency, corruption, and innovation. I'm still looking for the ideal (rather, a good) public-private partnership model. In Chavez's case, the author implied his aim to promote "friendly" content as the rationale for the parallel overbuild.

I've spent some time in rural America (and developing countries) looking at telecom, where a T1 can set you back $2K/month (if you have an unfortunate lock-in to a contract made over a year ago), and find the strange mix of "competition" and "regulation" to be a bottleneck. On a similar vein, can anyone enlighten me as to whether microspectrum allocations are possible/feasible/in use (by geography)? By that, I mean where a rural community (e.g., US county) can state that they are going to use, say, 2.5 GHz spectrum (or UHF, or whatever licensed band) for rural broadband as that spectrum is not being used at all in their region. Sure, someone may "own" that spectrum at a regional?/state?/national level, but they sure as heck aren't putting up towers for rural XYZ.

whyiswhy 12/5/2012 | 1:28:36 AM
re: Venezuela Plans New Fiber Rollout Use the 802.11x spectrum for free. You will be limited to fixed point to point solutions, but you can literally buy the required elements (mostly high gain antennas and repeaters) and use them right out of the box. SMC makes a lot of very useful hardware and software. No, I do not work fo them or get any compensation for mentioning them. A quick Google is turning up so-called "9 mile" antennas. I have seen artciles on how to turn old used DirecTV dishes into even higher gain (longer distance) antennas.

If you wait for government, government will always be late, and you will not like what it brings to the table in terms of control.

jepovic 12/5/2012 | 1:28:35 AM
re: Venezuela Plans New Fiber Rollout In Sweden, there are examples of municipalities rolling out infrastructure (typically metro networks), with at best mixed results. The municipalities usually have very poor knowledge of delivering efficient services.

But there is also a more interesting model of municipalities and/or the government sponsoring fiber and DSL investments in what operators consider non-profitable areas. They have what could be described as reverse bidding - for how little subsidies will you invest? The operator requiring the least wins. This has worked well for the vast rural parts of the country.

Usually, there are requirements on the investing operator to provide basic wholesale services, to ensure some competition on the service provider layer. There may also be pricing limitiations.

The model seems to be successful. It allows for subsidies of less attractive areas, without making the government into an operator. There is still the same incentives for the operator for cost efficiency, as any reduced cost translates directly into better profits.

I don't know if it would work in the US, as the legal situation is quite different. The telecom market is an interesting case for discussing the pros and cons of free markets. In some areas, the US model of little interference has worked really well (backbones, long-distance phone calls). In some areas, it has clearly failed (wireless, now DSL?).

The next big thing, the coming 5-10 years, is of course FTTH. Most governments will probably subsidize, in some way, but how will the US governement do?
Y2KickIT 12/5/2012 | 1:28:35 AM
re: Venezuela Plans New Fiber Rollout Public investment in infrastructure "Marxist?" A poor read of history and economics. There is no government takeover of industry or infrastructure.

Governments frequently invests, incents, or directly build common infrastructure. It is one of the functions of government. What we can not achieve separately, we achieve as larger political units, cities, counties, states, and nations.

The U.S. has played that role in energy, transportation, and communications before. The defense highway bill gave us the interstates. While defense was the rationale, the result was a new economic growth engine and transformation.

It is time we find the rationale for broadband, it is for our own economic survival that we develop ubiquitous, low cost (high take rate), true broadband (10's to 100's of Mbps).

We rank 11th and falling, but that doesn't tell the true story, we are getting beat on average bandwidth and cost of bandwidth, even as a percentage of income.

In addition U.S. broadband numbers are often inflated, example is considering broadband available to a Zip code if COs in that zip code serve broadband.

Perhaps the myth that broadband is offered but not demanded in the U.S. is explained by such poor accounting for the true availability of broadband, as well as its poor price/performance compared to markets where broadband has been adopted by the majority.

Public/Private solution: Structural Seperation of access networks from service providers. Government funds construction of FTTP access networks and COs as a new national infrastructure initiative.

The new access networks are jointly run and managed by service providers(every player is now a service provider) with government mediation. Service providers can provide any and all services. No more LECs, no more Cable companies.
2nd.Harmonic 12/5/2012 | 1:28:27 AM
re: Venezuela Plans New Fiber Rollout I recall being at OFC plenary session many years ago when Bob Lucky (then at Bell Labs) was the featured speaker. He talked about extending bandwidth to the entire world and the exciting benefits that this would have.
I found myself jotting notes in the margin of the program about this, and my rebuttal that MOST of the world *Doesn't Want Bandwidth* [I expect to hear chorusses of 'heresy, heresy']. Most of the people in the world want
- safe, reliable drinking water
- electricity that is always there when they turn on the switch
- enough food to feed their children
- freedom from fear of violence at the hands of the police, government and shadowy quasi-government militants
- basic health care.

Hugo Chavez is making the same error that Bob Lucky made, but he is in a position to do damage to millions of people, while Bob Lucky was merely preaching to the choir. (btw, I do have a high regard for Lucky's technical abilities and his ability as a speaker.)

- 2H
brahmos 12/5/2012 | 1:28:26 AM
re: Venezuela Plans New Fiber Rollout you are thinking about it the wrong way. all the
nice things you mention cannot be perpetually doled
out by Govt funds as it is done in most developing countries. the quality of all those are poor simply because Govt is a bad agent to deliver services and lacks in funds. People must come up and be able to pay a reasonable price whether it be to Govt or private parties in order for the providers to improve on quality.

==> anything that stimulates business and economic growth must be encouraged. telecom, roads, waterways, reforms in taxation and labour laws, reduction of subsidies and diverting of these to infrastructure like schools & hospitals.

he is only talking of laying a few fibers, not
providing bband to every home for free.

many years ago in 1984 I was sitting in on a school debate about "whether india should invest in satellites?" (we had just launched a 100kg sat) . today the revolution brought about in telecom and information via TV that satellites have brought makes that debate redundant. nobody is debating such issues now.
rtfm 12/5/2012 | 1:27:53 AM
re: Venezuela Plans New Fiber Rollout I have spent a lot of time (professionally) examining bandwidth, ICT (Info. and Comm. Tech. - more non-American parlance), and development issues.

I fully agree people want food, water, electricity, security over connectivity. BUT,

1) ICT can be an enabler to help the other things. Most problems relate to efficiency, corruption, and (lack of) innovation and feedback. ICT can help these issues.

2) ICT is already being developed, like it or not (rather, with or without underlying fundamentals). The catch is can we do it much better/cheaper? Today, Africa has twice as many mobile phones as landlines, and there are providers bringing in 2.5 and 3G systems. BUT, these systems are not cheap, costing almost an average African wage (just for today's voice). Clearly, this is catering only to the elite/niche/urban. My point is that some amount of fiber, as an infrastructure with, perhaps, open access (or competitive access) would be a good thing.

3) The real challenge for ICT is to move beyond "digital divide" and WSIS sorts of issues but look at how technology can really help the world meet development goals.

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