Michael Gurstein on Tue, 26 Jun 2001 19:54:21 +0200 (CEST)

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[Nettime-bold] Only 5% of laid fibre is lit in USA

(Unless one or another of the Nettime elf-lords exerted an editorial
edi(c)t, my note as below was lamentably foreshortened. I'll try again.



(This is my contribution to an on-going discussion on the e-list
Broadband@vcn.bc.ca which covers Broadband in Canada.)

In economic terms the current problem with laid fibre is called
"overshoot?"... The result of (take your pick)
imperfect information, entrepreneurial exuberance etc.etc.

I would think that there are two factors at work here... Competition to get
the fibre in the ground before one's competitor and hope that there is a
market down the road (whoever is funding this is really the
culprit?/villain?/victim?) (the same friendly bank that turns down your
request for a $10,000 line of credit...just loves to fund things that have
long and funny names they don't understand and that glow in the dark during
PP presentations).

But the real reason is that the major cost of fibre is digging up the ground
and once that is done, the incremental cost of another gazillion units of
bandwidth is very close to zero.  So if laying one fibre is good, laying 20
is better (and not much more expensive) and laying 100 is even better and
and so on and then along come the boffins who are continuously at work
figuring out how to pump more bits through the existing fibre so as to
increase the return from already sunk fibre (or twisted copper) investments.

So the argument by the WSJ and everyone else about the amount of unlit fibre
is for the most part specious... its like criticizing PC owners for the
amount of unused processing capacity they are getting with their upgrades
from $3000 486's to $1000 Pentium 3's or whatever--the issue is not the
amount of unused capacity but simply that the hardware is a necessity and
the amount of unused capacity is part of the package, adding very little to
the overall cost.

The real question, that I haven't seen any figures on is how many installed
bundles (or the length of installed fibre cables) are currently completely
unlit.  I would guess that these figures would show a startlingly different
result and indicate that the industry was probably pretty much on target
with only a relatively minor overbuild and particularly in heavily
concentrated markets where the demand would be likely to increase
exponentially once the applications start rolling out.

Mike Gurstein

Michael Gurstein & Associates
Vancouver BC CANADA

(Visiting) Professor of Management
New Jersey Institute of Technology
Newark, NG

----- Original Message -----
From: "Colin J. Williams" <cjw@sympatico.ca>
To: <broadband@vcn.bc.ca>
Sent: Monday, June 25, 2001 8:13 PM
Subject: Re: [Broadband]: Only 5% of laid fibre is lit in USA

> Why was this waste of human and other resources permitted?
> Is it so that we can the benefits of a competitive marketplace?
> If so, are the benefits commensurate with the waste - not to mention the
added waste of
> layoffs, due to a boom or bust ICT economy?
> Cheers
> Colin W.
> David Sutherland wrote:
> > Eric Lilius wrote:
> >
> > > Is it the case in Canada that only 5% of the existing fibre is lit?
> > >
> > > Funding the recommendations of the Broadband report could be seen  as
a way of
> > > using up the oversupply of fibre and related hardware..... a form of
> > > welfare that might actually help out us rural (50K if you are lucky)
> > >
> > > Tech crash yielding glut of bandwidth
> > > Like the railway builders before them, fibre-optic firms fear it may
be years
> > > before their costly networks are used
> > >
> >
> > The problem is that nearly all the fibre was laid in an attempt to get a
piece of
> > the lucrative urban market.  In Ottawa, for example, as I write this,
three firms
> > are installing 70 conduits under all the downtown streets.  Each conduit
can hold
> > multiple 892 strand fibre bundles.  Any one pair of fibres has the
capacity meet all
> > the needs of the downtown core.  While all this is happening, the
suburbs are not
> > served to say nothing of the rural areas.
> >

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