<nettime> Only 5% of laid fibre is lit in USA

["Michael Gurstein" <mgurst@vcn.bc.ca>]

(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
mgurst@vcn.bc.ca

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
corporate
> > > welfare that might actually help out us rural (50K if you are lucky)
folks.
> > >
> > > 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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