On Telecommunications
Premises:
1. Within 30 years most homes and offices in middle-class communities in the world will have fiber to the home (FTTH). The community exceptions will be those communities where private or public monopolies are protected from competition including local community government competition.
2. Communities without FTTH will slide into third-world status or at a minimum be severely disadvantaged when competing with properly connected communities.
3. The most likely economic model to succeed in the world as a whole will be government ownership of the FTTH just as most roads are owned by the government or quasi-governmental entities.
4. In the USA it is likely that Internet connections will be purchased from private companies using the government FTTH. In other developed countries it is likely to be provided free or at little cost to the consumer by the government.
5. It is likely that cable TV service will be replaced by pure video-on-demand provided by private businesses over the FTTH owned by the government.
6. Due to its small band width, telephone service is likely to come free to homes with subscriptions to other services.
7. Cell phones will be the norm for communications between individuals. Cell towers will be replaced by much smaller discreet antennae connected to the fiber grid and serving much smaller overlapping radii. This will allow wireless Internet connectivity for uses not requiring huge band widths. Uses requiring large band widths will use fiber.
8. The cost of all of the services listed above, excluding content charges, will be less than we pay today for combined cable TV, telephone, Internet and cell phone services.
9. FTTH lines will be above ground where they are maintained by private industry and will be moving underground where they are provided by government. It will take at least 60 years to move the majority of the lines underground even with government involvement.
10. In the USA private telephone, cable TV, cell phone and Internet providers will fight the loss of their quasi-monopoly status with all of their economic might. The only reason they will not succeed will be because of the obvious superiority of the systems in other countries.
11. Private competition is the best economic system in any economic area in which both the consumers and the providers exist in quantity. Where there are very few suppliers, monopoly or quasi-monopoly conditions will prevail. Monopolies and quasi-monopolies usually provide inferior services at inflated prices. A telecommunication monopoly can exist in a discrete local area such as an individual city because it is economically difficult for a private companies to overbuild an existing provider.
Conclusions:
Government intervention as a common-carrier for telecommunication band-width is a necessity for any community wishing to compete in the future world economic environment. Because of the ability of exisiting large quasi-monopolies in the United States and their ability to influence Congress with money, the United States will stay behind other countries where such corrupting influences are suppressed. Ultimately the United States will crush the monopoly providers out of necessity as it becomes apparent that the United States is falling behind other developed countries in this field.
Local demand will insure a government owned system where local governmental entities are not prohibited by law from providing such services and larger governmental entities have not provided the service.
Facts supporting premises:
Premise 1 & 2:
FTTH is already happening in entire countries. South Korea, currently the most connected nation, is implementing such a plan on a national level. There a super fast connection costs less than $30.00 per month where in the United States a slow connection is currently about $50.00 per month. Other countries are pursuing a similar strategy. The FTTH Council, http://www.ftthcouncil.org , lists fiber optic communities in 43 states pursuing a FTTH plan.
Japanese consumers can get an Internet connection that is 16 times faster than the typical American DSL line for $22 per month. In France, you can get super-fast DSL together with unlimited phone service and 100 TV channels for $38 a month. Across the globe, it is the same story.See http://muniwireless.com/
While all of this has been happening, the U.S. has slipped from fourth to 16th in the world in broadband use per capita. See reports from the International Telecommunications Union http://www.itu.int/
At a National Association of Telecommunication Officers and Officials (NATOA) conference in 2001 a company quoted a price of under $1,800.00 per home to put FTTH in every home and business in Hendersonville if they could get pole space from the private monopolies using the public right-of-way. Just eliminating the monopoly increment in telephone and cable bills would pay the cost for the replacement of all current infrastructure.
Premise 3 & 4.
The most likely telecommunications economic model to succeed in the world as a whole will be government ownership of the FTTH just as most roads are government owned. Of the countries ahead of the USA in per capita Internet usage most have governmental participation and funding during the initial build.
This does not mean that there will be no competition. With a common carrier FTTH it is possible to have dozens of telephone companies and cable companies and Internet service providers all using the same fiber. There is no duplication of infrastructure as Hendersonville's dual cable and telephone wiring system. This is the economic model of the UTOPIA project in Utah involving 14 cities working together. See http://www.utopianet.org/ for the details.
Figures just out from the OECD (Organisation for Economic Co-operation and Development), report 137m broadband subscribers throughout the OECD countries and that's up 18m since the last figures, six months ago.
It's interesting to note that voice and video services are increasingly being provided over these connections.
Korea continues to be top of the list with 25.5 subscribers per 100 inhabitants, with The Netherlands following up close behind with 22.5, mainly due to comprehensive cable penetration.
The strongest growth over the last two reports, i.e. 12 months has been Finland, the Netherlands, Iceland, Norway and the United Kingdom.
The US is at 12Th position (14.5 subs per 100), with the UK sitting one slot lower at 13Th (13.5 subs per 100).
Over all of the countries, DSL is still the preferred method (61.2%), cable modems (32%) and what they describe as 'other technologies', i.e. fiber optics, LAN, satellite and fixed wireless sitting at 6.8%.
This doesn't include all countries on ITU list, where the United States is ranked 16th.
Not finished.
Jim Fuqua
20 October 2005
