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WiMax: Town & Country

The latest report from Light Reading's research division, Heavy Reading, shows that wired operators are very interested in using WiMax to deliver fixed and mobile broadband services but finds that the nascent wireless technology is liable to be a country mouse rather than a city kitty.

WiMax boosters like to talk up the myriad fixed and mobile wireless applications that the technology will be used for -- when officially certified products start to hit the market -- probably in the second half of 2005.

But Heavy Reading's "WiMax Reality Check" finds that larger operators hoping to use technology to extend the coverage of cable and DSL services in urban areas may find it easier to stick with the devil they know rather than leap into the wireless unknown.

In the city, DSL and cable will prove to be extremely competitive on performance and price.

"DSL is continually improving in terms of both bandwidth and in coverage distance from the central office," the report states. "That raises the question: Assuming that commercial WiMax gear debuts in the second half of 2005, will DSL technology have improved to the point that many of the shortcomings WiMax is supposed to address no longer exist?"

And beyond DSL, a huge expansion in fiber connectivity is looming. "There's going to be an increasing number of subscribers who have access to fiber to the home," opines Shaun McFall, VP of field marketing at Stratex Networks, in the report. "When that's done, the game is over for WiMax."

And even on price it is hard to see how WiMax operators will compete with established wired networks. Estimates for the initial cost of WiMax basestations range between $10,000 and $20,000. Meanwhile, CPE boxes could cost anything between $750 to $250, according to vendors quoted in the report.

"Growth in WiMax equipment volumes will drive down the cost of network infrastructure and CPE, and the speed at which it can reach levels that are competitive with DSL and cable will determine how quickly and widely it's adopted," the report notes. "Price competition in the broadband arena is already fierce, so it's rather difficult to see how one could swoop in with an offer that would convince a broadband provider to adopt WiMax rather than upgrading its cable or DSL infrastructure."

And wired broadband operators are already offering services priced around $30 a month -- or under.

"We don't foresee in the near term offering service for $30 a month," says Philip Urso, founder and CEO of TowerStream Corp. in the report. "It's not profitable for us or for anyone."

But in rural areas the story is reversed: Broadband infrastructure is nowhere near as established, and WiMax starts to look like a much more attractive proposition.

"This market condition provides the most fertile ground for WiMax," writes Tim Kridel, the report's author. "In the rural area of a developed country, for example, the only option for Internet access might be dial-up – possibly via a long-distance call... We believe that this strategy is sound."

— Dan Jones, Site Editor, Unstrung

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paolo.franzoi 12/5/2012 | 1:07:41 AM
re: WiMax: Town & Country
So, you agree that the unbundling law is the same around the world! See here is the thing. There are 2 places where buildouts are going on: US and Japan. Local loop unbundling need not apply in either. Now for older lines (which includes the not upgrading all of western europe) the equivalent of UNE-L exists in all cases.

Telric is a joke because it does not provide a profit.

Qwest (an IXC and a bubble company) has raped and continues to rape US West. Another bubble company with folks going to jail.

There have always been alternate providers that provide specific services. We will have a duopoly shortly to virtually all the country for voice data and video to residences. Business have not changed at all.

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fgoldstein 12/5/2012 | 1:07:41 AM
re: WiMax: Town & Country So, you agree that the unbundling law is the same around the world!

I agree that local loop unbundling is a worldwide phenomenon, and your railing against it goes against the consensus.

See here is the thing. There are 2 places where buildouts are going on: US and Japan. Local loop unbundling need not apply in either.

Huh? I presume you're referring to "new fiber". Of course Japan's geography makes for a very, very different OSP situation. The US ILECs are not acutally doing significant buildouts. They're doing token buildouts. They promised major buildouts in 1993-1994, in exchange for price caps. They didn't deliver. Now they're promising the same thing again, in exchange for removal of UNEs. What makes you think they'll deliver this time? The bottom line for overbuilding, even by the ILEC of its own plant, is usually pretty bad.

Now for older lines (which includes the not upgrading all of western europe) the equivalent of UNE-L exists in all cases.

Yes, though the US ILECs are still fighting it.

Telric is a joke because it does not provide a profit.

Almost every CLEC I know would kill for 12% return on equity. If that's not profit, then what is? Okay, I know; the RBOCs want collective ownership of the Federal Reserve. (Then they could monetize their debt.) Nothing short of that would make them happy.
fgoldstein 12/5/2012 | 1:07:42 AM
re: WiMax: Town & Country Nope, UNE-P and UNE-L are different. UNE-L has gone nowhere except where people are plowing billions of dollars into new networks. The arguement for UNE is that people are reaping the benefit of this old network. Well, what about new network. Thats why unbundling is not required. If you want access, pay for construction people do overbuild.

That's just plain silly again, Bellheaded ranting for that proverbial pony. There's a natural monopoly on local and short-haul interoffice outside plant, but not on most other aspects of telecom. No natural monopoly on running an ISP, running a mail server, or running a voice switch. Yet your model makes them all monopolies, by enabling the owner of the natural monopoly outside plant to leverage that essential facility against its competitors in non-monopoly areas. Not only does that run afoul of the principles of antitrust, but it's 180 degrees against the direction of the industry worldwide. Local loop unbundling is the law of the land in the EU, and in most of the developed world. Multiple carriers on ever-taller phone poles went out of style by 1910.

BTW, have you ever tried to overbuild? I work with overbuilders. Poles are already quite crowded. The ILECs got on their much cheaper.

Ob. the subject at hand: Given Gingrichite regulators who think that way, WiMax is sometimes more practical than stringing parallel wire on a pole. So some ISPs and CLECs will turn to it for lack of an alternative.

Telric is a joke. Forget about rate of return carriers it only applies to small IOCs. The point is if you drive all the profit away from the business nobody can afford to be in it.

Why is TELRIC a joke? It applies to all ILECs, save rural-exempt ones who don't have to provide UNEs. TELRIC does provide profit. If you don't like the way it's administered, then contest the details. These rate cases are certainly not quickie proceedings -- a lot of variables are carefully considered.

How many RBOCs defrauded their investors?

All of them. I'm sure you concede that Qwest was guilty of creative accounting; they fit in the rogues' gallery in my new book, albeit for their LD shenanigans. But without spilling too many beans, I am aware of serious fraud allegations (SEC-level) being prepared against at least one other RBOC. It seems that they have been billing CLECs erroneously for both UNEs and local interconnection services. And those "unintentional" "system" errors always go in one direction. And the CLECs have been protesting, but not getting fast results -- the false charges remain on the bills for years, even after low-level droids admit the error. Yet it's likely that their SEC "revenue" numbers reflect the false overbillings, not the corrected billings. This is not a small dollar item; it's rampant.

Now lets talk about CLECs? Hmmmm.....see the point?

Yep, most CLECs are privately owned. A handful of boom-era companies took some stupid investors to the cleaners, but CLECs were as a group no worse than most other IT-related sectors. And since most CLECs are small family businesses, they had nobody outside to defraud. 100% of RBOCs are public. I don't think any of my pure CLEC or ISP/CLEC clients trade publicly. They watch their dollars like their own, because they are.
paolo.franzoi 12/5/2012 | 1:07:43 AM
re: WiMax: Town & Country
My point on the SLC 96 is that the 1/3 of lines behind the DLC are in a small minority behind a SLC 96. Sorry that you can't accept that, thus your 2/3s numbers are BS.

Nope, UNE-P and UNE-L are different. UNE-L has gone nowhere except where people are plowing billions of dollars into new networks. The arguement for UNE is that people are reaping the benefit of this old network. Well, what about new network. Thats why unbundling is not required. If you want access, pay for construction people do overbuild.

Telric is a joke. Forget about rate of return carriers it only applies to small IOCs. The point is if you drive all the profit away from the business nobody can afford to be in it.

How many RBOCs defrauded their investors? Now lets talk about CLECs? Hmmmm.....see the point? If you can invent a company to pay regulatory arbitrage (which is what the CLEC bubble was about), you don't have to do anything but scam money. There have always been small competitive niche carriers who have carved out markets. They did so before UNE-P and will afterwards.

After your last message, I assume you acknowledge that UNE-P was a useless proposition.

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fgoldstein 12/5/2012 | 1:07:50 AM
re: WiMax: Town & Country So you admit you are upset about SLC 96 but your numbers are bogus as SLC 96 was obsoleted in the 1980s.

Huh? I'm not "upset" about SLC-96; I'm reporting on its existence, and why your argument about NGDLC is irrelevant where SLC-96 is still in service. It may have been obsoleted from new manufacture in the 1980s, but ILECs leave old stuff in service approximately Forever, unless they have a good reason to remove it. I think VZ (Original Bell Atlantic) still has some analog COs in service, for instance.

So, you are wrong about DSL and competition...now for UNE-P.

You sound like Shrub blasting Kerry for "supporting" the invasion of Iraq, when Kerry preceded his vote with a lengthy (he's like that) and detailed explanation of why he didn't favor invasion in the near term, but favored pressuring Iraq while giving inspectors plenty of time, etc. Shrub turns that into "he voted for it and now he's ag'in it." Remove context and true statements are effectively lies.

Okay, so here is the point. First off you described UNE-L not UNE-P. So, please learn before you speak.

I'm talking about both. I rarely bring up UNE-P, since I'm basically a UNE-L advocate, but you like to blast all CLECs equally, so what's your point? I brought up UNE-P here because it was relevant.

Second off, remove the profit remove the investment. Now look what happens when you allow the investment to occur. You get FTTP and IPTV.

Huh? As I noted several times, TELRIC pricing for UNEs includes profit. Hell, last night I was listening to The Motley Fool Radio Program and they were telling a caller about what a good deal "balanced" funds were, mixing low-risk low-yield bonds with riskier stocks, to provide a typical 7% return. They were oh so impressed! Yet TELRIC nowadays is designed to give the ILECs a return on equity in the 10-13% range. (Each state picks a sensible number. FCC rules state that competitive risk for a given product may be taken into account, so riskier UNEs can have a higher return.) Back in the 1970s, monopoly LECs were typically given returns in the 8-10% range, and capital was a LOT costlier then (remember inflation?). Yet the world didn't come to an end. Ma Bell kept investing and paying dividends.

What you want is investment in the network. Let the companies that actually matter do that. CLECs are dead, have no money and no longer matter. Let them die, all they did is lie to the investment community.

That's your ridiculous prejudice. Sure there wre crooks who put on CLEC hats, just as there wre crooks who put on banker hats, broker hats and merchant hats. But that doesn't make all bankers, brokers or merchants crooks. Lots of hard-working honest CLECs do plenty of good things today. I am proud to have a number of them as clients. Monopolies provide bad service at bad prices, and slow down technological progress.
paolo.franzoi 12/5/2012 | 1:07:53 AM
re: WiMax: Town & Country
So you admit you are upset about SLC 96 but your numbers are bogus as SLC 96 was obsoleted in the 1980s.

So, you are wrong about DSL and competition...now for UNE-P.

Okay, so here is the point. First off you described UNE-L not UNE-P. So, please learn before you speak. Second off, remove the profit remove the investment. Now look what happens when you allow the investment to occur. You get FTTP and IPTV.

What you want is investment in the network. Let the companies that actually matter do that. CLECs are dead, have no money and no longer matter. Let them die, all they did is lie to the investment community.

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fgoldstein 12/5/2012 | 1:07:54 AM
re: WiMax: Town & Country UNE-P means that SBC has to rent its lines and its equipment to other companies to resell.

True. More importantly, though, and the point I was making, is that it set a wholesale price based on cost, with a fair profit. That's the traditional pricing formula for monopolies. UNE-P is a cost-based price, tempered by the need for a reseller to do some of the work. It only works as a business because the ILEC's prices are not cost based, but involve significant extraction of monopoly rents.

It means they add no equipment and therefore no value. People that think this is a good idea want the network to collapse.

Oh, that's just silly. They add value by providing an avenue to cost-based (vs. monopoly-gouge) pricing. Some UNE-P CLECs also provide significant added value in credit-risk management (selling to ILEC-rejected subs). Others add value to the bundle elsewhere. Some use it as a way to provide DSL, absent line sharing (which your buddies removed). Under TRO rules, the DSL-CLEC can no longer ask for line share, but can ask for the line to become UNE-P, and *then* share it with its own data service.

So, suppose the RBOCs decide to invest $0 in the network and go into the donut business with their money. They could lay off their entire staff and pay the fines. They could let the network rot. Then where is your UNE-P?

Sounds that way for any business. RBOCs make a fair profit on UNE-P. If they don't want it, then they should indeed get out of the business and sell it to somebody who does. Regulated-rate LECs did fine for years. Today's ILECs are just greedy.
fgoldstein 12/5/2012 | 1:07:55 AM
re: WiMax: Town & Country DLCs with Integrated DSL blades started shipping in March of 1999.

So the hell what? The SLC-96 that VeriZontal uses in my neighborhood (your basic CEV equipped with fourteen of the suckers, vintage 1986 or so) doesn't have a DSL blade. I did once manage to get them to put ISDN in it though. (I don't count IDSL as meaningful.)

Independent rural telcos have been doing remote DSLAMs for years, but then they usually think rural. And get subsidies... SBC talked a big game with Pronto, but when Shrub and the princeling Powell came along, they suspended it, hoping to hold upgrades hostage to their anticompetitive agenda. So not a lot went in. Ditto VeriZontal, which has only recently begun to put in more than token remote DSLAMs. Not really a regulatory issue -- they cost more per line than CO-based ones, so they spent the money first where the margins were highest.

But if a subscriber *is* in a remote DSLAM, there is usually no CLEC-DSL alternative (e.g., Covad), although I know a few hardy CLECs who do in fact put in remote-terminal DSLAMs themselves, leasing the distribution subloop. Common carriage is still in effect, so such subscribers still can choose an ISP, but the Bells are working hard to kill that option.
fgoldstein 12/5/2012 | 1:07:55 AM
re: WiMax: Town & Country From a purely economic-efficiency viewpoint, WiMax doesn't make a lot of sense in urban areas. It's great for rural coverage though. In urban areas, spectrum is a bit costly, and so are radios (and their supporting infrastructures), so DSL and cable can both be cheaper. There's an old saying among my cohorts -- nobody ever makes money doing wireless data. Will WiMax change that? Not certain.

But there are other factors in play. The current FCC (this hinges dramatically on the election) does not believe in wireline competition or common carriage. They believe that the wire owner should control everthing on it. So there will be one LEC/ISP, and one cable/ISP. Business in non-cable areas (cable plant is mostly in residential areas) who don't want to subject themselves to the ILEC will thus depend upon wireless access, unless they're in the <1% of buildings with competitive fiber access.

WiMax thus becomes an important survival tool for non-ILEC service providers. Whether wholesale (licensed radio provider selling its services to ISPs and CLECs) or retail (WISP/WCLEC), the non-ILEC service providers may be forced to use radio in order to stay in business. WiMax is the commodity technology that will dominate the volume end of that market, even in cities.

On the other hand, if common carriage survives, then urban ISPs will be able to use wireline networks, limiting the appeal of WiMax. Some providers may still make a go of it, but there won't be the same pressure.

Licensed spectrum for WiMax is not common carriage, unless someone chooses to offer it that way, so that's another variable to contend with...
paolo.franzoi 12/5/2012 | 1:07:57 AM
re: WiMax: Town & Country
The $48 phone service (which I noted was part of a bundle) includes Long Distance service with 200 minutes of calling.

UNE-P means that SBC has to rent its lines and its equipment to other companies to resell. It means they add no equipment and therefore no value. People that think this is a good idea want the network to collapse. So, suppose the RBOCs decide to invest $0 in the network and go into the donut business with their money. They could lay off their entire staff and pay the fines. They could let the network rot. Then where is your UNE-P?

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