Monday, 20 April 2009

Why is it so hard?

John, understandably, rants about other countries getting fiber to the home, and we in North America do not.

There's a myriad of issues of why this is. One is definitely population density. Fiber is still more expensive per foot than copper. Outside downtown urban cores (Toronto, Montreal, Vancouver) the cost per subscriber does get higher. There's a reason why most of the nations going Fiber to the Home are those with very large and dense cities.

Another is legacy infrastructure costs. We've been at this game longer in North America. There's a sunk cost for the infrastructure we already have, which makes companies reluctant to replace their stuff. It is always easier to build where nothing (or virtually nothing) existed before.

Yet a third reason is potentially cultural:
For Japanese consumers, having the absolute fastest service is as much a status symbol as anything else, he added. "We haven't seen a huge spike in usage... it's not like people are downloading five times as much video from YouTube."

When people are willing to pay whatever it takes to stay ahead of the Joneses (or the Satōs as the case may be) there's profit motive for any supplier. Here in North America, we want everything as fast as possible for free.

And then there's the regulatory aspect. During the tech boom of the nineties, many companies were getting into the service game and were installing fiber links all through major cores. Cities and citizens started getting fed up, because each new run being installed required that roads, sidewalks and personal property get ripped up to lay the new lines. In reaction, some cities started banning or delaying new installs just to keep traffic flowing. This isn't a small thing. To get below the frost line (there's that Canadian climate issue) any distance run has to be trenched to lay the conduit. You can't just drill horizontally through the earth for any great length. This requires cooperation between the municipalities, the carriers and the citizens affected.

Lastly, (and this is probably the biggest), there's no incentive for the telcos to lay fiber. As long as all the competitors involved are content to wring as much profit as possible out of their existing networks, no one is going to make the necessary investment to leapfrog the competition. If either Bell, Rogers, or Telus decided to roll out fiber in a big way, AND the customer demand arose to justify it, the other 2 firms would quickly upgrade or risk being left behind.

So what do we do? Is this the kind of investment that the Canadian people want? Or are we content to slowly slide behind the rest of the world? (It may not be a competitiveness issue from a business standpoint. Fiber based Internet access is available to most large businesses in large urban areas, and the cost is constantly dropping.)

Us tech heads in the office all agree that we need to resurrect a government monopoly to kick start this. Treat communication infrastructure the same way we do basic services (roads, sewers, water, etc.) but with a fundamental change. Setup a Crown Corporation that lays all the communication infrastructure necessary (to as many communities as possible, not just large ones) and sell access to providers. The Crown Corp would not be responsible for content, just for the infrastructure that enables communication. Bell, Rogers, et al would have to pay a set rate for access and then would compete with each other to attract customers. (Cool, apparently great minds do think alike.)

What do you think? Do we need to upgrade our communications infrastructure? If so, how do we make it happen?

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