[IP] more on more on RBOC vs. RBOC
Delivered-To: dfarber+@xxxxxxxxxxxxxxxxxx
Date: Tue, 20 Apr 2004 14:53:01 -0700
From: brent.hunsaker@xxxxxxx
Subject: RE: more on more on RBOC vs. RBOC
To: dave@xxxxxxxxxx
Dave,
The fixed 30-year depreciation is a misnomer. The copper wire was
depreciated at 30 to 40 years, passive fiber at 30 years, electronics is
much less than that and is based on services provided. Your added features
to the basic phone services is due to new digital equipment. Change to
equipment in the CO is also due to capacity, physical and functional. The
electronic portion of the CO upgrades continue to increase traffic in the
same physical space. One example is the movement of one D0 on one card to
24 D0s one one card and more. DSL services has come slow due to intial
inertia but once they get moving they keep moving.
The ILECs are also willing to use politics and legal action to delay
compitition. This is part of the reason that local fiber service companies
are having a hard time starting up.
Deployment practices also contribute. With ILECs the process of deployment
of new types of equipment takes years just because of the process. If they
choose to overcome that process of lab demo (1-2yrs) to field demo (1-2yrs)
to field trial (1-3yrs) to greenfield deployment to referbishment of
existing areas, then you would see a more competitive ILEC. This process
allows the ringing out of all problems in electronics, deployment, field
service, support and maintainance.
With WDM and DWDM implementation on fiber the electronic upgrades would
move more quickly. The limit with fiber is the optical plexers. Right now
diplexers and triplexers is expensive. Half of the CPE electronics costs
are these plexers. As the costs of those go down the CPE costs go down.
As the ILECs choose to change their processes and these costs go down the
depreciation periods for fiber vs. wireless start to converge. So, this is
just a bit more complex that what is being discussed here.
Thanks,
Brent
-----Original Message-----
From: Dave Farber [mailto:dave@xxxxxxxxxx]
Sent: Monday, April 19, 2004 6:11 AM
To: ip@xxxxxxxxxxxxxx
Subject: more on more on RBOC vs. RBOC
Delivered-To: dfarber+@xxxxxxxxxxxxxxxxxx
Date: Mon, 19 Apr 2004 09:05:50 -0400
From: Dana Blankenhorn <danablankenhorn@xxxxxxxxxxxxxx>
Subject: Re: [IP] more on RBOC vs. RBOC
To: dave@xxxxxxxxxx
Reply-to: Dana Blankenhorn <dana@xxxxxxxxxx>
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Joel has a good point. But there's more basic economics at work here.
Bell infrastructure is based on 30-year depreciation schedules. So are all
the CLECs he mentions.
The way to compete against the Bells is going to be based on Moore's Law. A
network that combines Wi-Max and Wi-Fi to reach competitive fiber is using
Moore's Law. They're using equipment they can pay for, and replace, after
three years. Those CLECs Joel mentions were not. Their facilities, even if
fully utilized, would not be paid-off and replaceable after 3 years.
No matter what the Bells do they can't get away from depreciation. They have
those incumbent networks to support. All their fiber-to-the-home talk is
also based on 30-year depreciation.
I personally think 30-year depreciation is a sucker's game. And I'm
wondering when some people with capital will put their money where my mouth
is. I suspect it's already happening, quietly, under the surface. (If you
publish this note, Dave, some of that investment may well come to light,
courtesy our multi-thousand member staff of crack reporters.) And the next
few years will be very interesting as a result.
Dana Blankenhorn danablankenhorn@xxxxxxxxxxxxxx
Progressive Strategies Business Strategy analyst
http://www.progstrat.com http://www.corante.com/mooreslore
Get A-Clue.Com Free http://www.a-clue.com
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