Executive Summary

One of the significant challenges facing network operators today is the high capital cost of deploying next generation broadband network to individual homes or schools. Fiber to the home only makes economic sense for a relatively small percentage of homes or schools. One solution is a novel new approach under development in several jurisdictions around the world is to bundle the cost of next generation broadband Internet with the deployment of solar panels on the owners roof or through the sale of renewable energy to the homeowner. Rather than charging customers directly for the costs of deployment of the high speed broadband network theses costs instead are amortized over several years as a small discount on the customer’s Feed in Tariff (FIT) or renewable energy bill. There are many companies such as Solar City that will fund the entire capital cost of deploying solar panels on the roofs of homes or schools, who in turn make their money from the long term sale of the power from the panels to the electrical grid. In addition there are no Energy Service Companies (ESCOs) and Green Bond Funds that will underwrite the cost of larger installations.

For further information and detailed business analysis please contact Bill St. Arnaud at bill.st.arnaud@gmail.com.

Thursday, January 29, 2009

Competition most important tool to increase broadband deployment

[Here are a couple of good pointers on why competition may be the most important tool to increase broadband deployment. As far back as August 1993 in an article in Scientific American, it was noted that competition was the main driver for the rate of adoption of many technologies from basic telephony to the PC computer. In that article they compared the rate of adoption of the telephone versus cable, VCR, PC etc. The telephone took over 75 years to reach 50% penetration, while cable TV took 35 years and the PC and VCR less than 15 years. There was a clear correlation between the average cost as expressed in per capita income of these technologies and their rate of adoption. And of course what drove down cost was competition. Where there was lots of competition – PC and VCR, prices dropped and adoption rates skyrocketed. Where there was no competition, as in the case of telephone monopoly, prices and adoption declined very slowly. Excerpts from Scott Bradner’s column and posting by Dirk van der Woude on Gordon Cooks excellent Arch-Econ list – BSA]


Obama's broadband stimulus: throwing money at wrong target?
The Pew Internet & American Life Project just published the results of two surveys on Internet connectivity it ran over the last year. This report shows that not all that many people are blocked from getting broadband Internet access because it is not available in their area. There is no question that there are big parts of the country where broadband access cannot be obtained unless you are willing to use a satellite service. It is hard to tell in how much of the country this is true because of the poor statistics the FCC has been collecting. (See "All's well with U.S. broadband deployment (says FCC).")

The Pew report says that some people (more than 15%) have no interest in getting online. Another 6% think the price is too high, and 5% have usability problems. The president's plan is unlikely to change these numbers much.

The current draft of the broadband part of the stimulus package focuses on providing grants to companies that are willing to deploy wireless or wired broadband in underserved areas. The bill mandates open access to any services that result from such grants.

But, if the Pew report is correct, the stimulus money and open access policies might only result in a few percent of additional broadband users in the United States. Figuring out how to get more competition into the picture so that prices could come down might yield a greater return.
[From posting by Dirk van der Woude]

ECTA, the European Competitive Telecommunications Association, yesterday released the latest installement of its regulatory score card. Good reading and below an interesting quote (pag 12). (Hat tip to 'you know who you are').

"It may be tentatively concluded from these and other results found by analysing data reported in the Scorecard together with July 2008 broadband data reported by the European Commission and OECD that infrastructure and effective access-based competition may complement each other in stimulating high broadband take-up rates, and take-up of higher speed services – both of which are necessary to justify and reduce risks in investments in access upgrades such as FTTH.

The positive relationship between incumbent retail DSL lines and LLU also suggests that the benefits of access regulation through increasing overall take-up of broadband may also enable the incumbent to increase its own take-up rates. Although data is not yet available to assess the effects quantitatively, one might also postulate, following similar logic to unbundling of copper loops, that the take-up of fibre access and higher speed services available over it could be stimulated through unbundling and that such expansion and competition could also facilitate increased demand for the incumbents own fibre services."

Whole report: http://www.ectaportal.com/en/basic651.html