Some truth about Comcast - WikiLeaks style

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From nanog-bounces+bonomi=mail.r-bonomi.com@nanog.org Mon Dec 20 15:01:07 2010
Date: Mon, 20 Dec 2010 13:00:22 -0800
From: Leo Bicknell <bicknell@ufp.org>
To: NANOG list <nanog@nanog.org>
Subject: Re: Some truth about Comcast - WikiLeaks style

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In a message written on Mon, Dec 20, 2010 at 03:02:05PM -0500, Joe Provo wr=
ote:
> An assertion which was false; you can discuss the 'practicality' or
> whatever the experience has taught us as a nation, but to say "there
> are no" are "this datum generalizes for all" in most all of this=20
> and sister threads is a major error. There is no national scope,=20
> and the jury is still out if statewide scope [fpr video] is a good=20
> or bad thing.=20
>=20
> Sorry to muddy with facts, please resume pontificating.

Facts are good. It appears there are more areas with two or more
cable TV providers than I thought, and that knowledge is useful.
I still maintain that the current set of regulation, laws, and
economic realities have lead to insigifnicant compeition in that
area, but that's purely an opinion.

You are also correct that there is a lack of context in these
threads. There is a federal role (FCC, congressional), a state
role (state PUC's), and a local role (county/city/town PUC's).
Looking from the perspective of a town it's clear some have cable
compeition, for example. Look at it nationally, and it's a really
small percentage (on the order of under 2%, best I can tell so far).
One man's everyone is another's no one.

I guess the question is, if these overbuilds work out so well in the
cities where they do exist, why don't they exist more places?

As a character in a Robert Heinlein book says: "The answer to _any_
question that starts off 'why don't they..' is always 'money'."

For a cable built-out to be 'profitable', you have to get some particular
percentage of the 'covered' households to sign up for service. To support
multiple providers the total 'penertration' in that area has to be at least:
    #providers * break-even_subscriber_percentage

I have no idea what the current break-even percentage is, but (picking
numbers out of thin air for the sake of argument) if it is, say 30% of
the households within the service area, then there are simply "not enough
customers to go around", even at complete market saturation (where 100% of
the households have cable service) to support _four_ "profitable" cable
providers.

"Overbuild" is practical *ONLY* where: (a) the population density is high,
lowering 'per customer' costs, and (b) service 'penetration' is high enough
that the active subscriber base (as distinct from 'potential' subscribers)
sufficient to support the 'overhead' of two complete, parallel, physical
plants. This tends to be 'self-limiting', to up-scale, high-density housing,
neighborhoods. The 'raw economics' of the situation may well be distorted
by local government 'intrference' -- e.g., requiring a provider serve _all_
households within arbitrary boundaries, rather than just 'low hanging fruit'
areas.

2

Yup.

And that's just another argument in favor of muni fiber -- since it's municipal,
it will by definition serve every address, and since it's monopoly, it will
enable competition by making it practical for competitors to start up, since
they'll have trival access to all comers.

And since D-CATV is pretty much delivered over IP these days *anyway*,
it won't even be technically difficult for cable providers to hook up
customers over such a backbone.

Gee... I wonder if the teeny little town I live in wants to be the first
in our county to do that. :slight_smile:

Cheers,
-- jra

3

Muni-fiber builds do not "by definition serve every address."

Municipalities have their own priorities which tend to involve
police/fire water treatment/waste handling. Having worked on
fiber-builds/swaps with a couple of municipalities, and the corporations
that they set up to manage their facilites it's one thing when it runds
down the street in front of your building and quite another when you
want to extend a spur to some far flug location on the edge of town. The
fact that I can get a wavelength to county dump in Eugene OR the
composting facility in Palo Alto doesn't really do anything for the
residential access market.

4

[...]

The fact that I can get a wavelength to county dump in Eugene OR the
composting facility in Palo Alto doesn't really do anything for the
residential access market.

Why not?

You have to start with connectivity *somewhere*. If the economics work
out, *someone* will build the residential access market from those
access points.

The first phone in a community was boon to everyone. Later, the local
communications were build out to encompass others. The last mile ended
up getting regulated to ensure everyone had access to the new
technology.

Unfortunately, the regulatory regime got based on the service (voice)
rather than the infrastructure -- because no one ever guessed that
the two would be separable.

Some places could have local infrastructure monopolies run by
municpalities, others might be run by local co-ops, the state, county,
or even the feds. And they all might start with municipal fiber to
the city dump that allows others access lamdas...

5

Well, I think Joel's real point was that it's not necessarily a given that
just because fiber's being installed by (or under contract to) a city or
other municipality, that it will necessarily be run to *every single premise*
in that municipality.

And of course he's right, but there are lots of good reasons to do it that
way; buildings often change occupancy and purpose, and the dump, of course,
is *run* by the municipality very often, and you want all your official
facilities connected up anyway. And doing it all as one build probably
makes it easier to finance.

My personal favorite reason to do this is that it *increases the
property values in the municipality*, an assertion for which I have
no documentary evidence or studies. :slight_smile: (To clarify there, by "this"
I mean muni fiber in general, not necessarily passing every premise,
though Metcalfe's Law probably applies here as well...)

Cheers,
-- jra

6

Uhm, D-CATV is not IP just quite yet. Sometimes I wish that's the case, but it's still very much RF.

There are several vendors that sell GPON solutions that support RF over fiber, and there's always IP TV.

Frank

7

But to keep this on topic, Comcast doesn't serve every address either!

In Ann Arbor, Michigan (home of NANOG), I spent many hours attending the
local cable board meetings. Comcast refused to build toward various
*downtown* buildings, because the underground facilities would never pay
back the cost ("never" being upwards of 30 years). This is not just an
ex-urban issue.

When the board explored non-renewal of Comcast's franchise for failing to
comply with its contract, they learned that's almost impossible. Court
cases around the country side with the industry over municipalities.

In an unrelated Michigan case, where a large business signed a written
contract (to expand) in exchange for tax abatement (but didn't expand),
the Michigan Supreme Court ruled that the contract was mere "fluff and
hyperbole" required to obtain tax breaks and government favors.

http://www.michiganliberal.com/diary/7723/

It's a "right" to make taxpayers pick up the cost of subsidizing
private industry....

8

Moral of the story, municipalities need to write the contract so that they get their tax abatement only AFTER they have completed the agreed-upon expansion. No tax abatement now, promised expansion later "fluff and hyperbole".

But even better, they need to stop writing monopoly contracts. It was a good idea 100/40 years ago, to get the first company to put in the first telephone/cable network. It is no longer working to serve citizen needs to keep giving monopoly contracts.

jc

9

Hmm. I had acquired the idea, from looking at the setup screens on the
latest gen SciAt converters that it was, at very least, FDM IP multicast;
that is, MPEG2 over IP multicast, and then multiplexed 4:1 or so into
multiple broadband carriers, but sent as IP multicast streams and
decoded that way. No?

Cheers,
-- jra

10

That's not my understanding.

Frank