Sunday, December 20, 2009

Rural Utility Construction - Natural Gas Distribution Network vs Broadband

Ideology and economic theory is present in nearly every facet of our lives.   I have noted in the past how some people have applied a "Social Justice" meme upon the area of technological development and access to such innovation.

As a technologist I agree that technology is trans-formative.  A child that has access to the information that today's technology allows easy access to definitely has the advantage over others who have no such access.

At the same time some people are dismissive of the economic reality that remains in regards to the business case for a network build out for a sparsely populated area, for example and the role of government supplanting corporate service providers when there is no such justification.  Furthermore I have a raw nerve for people who attempt to make the case that the United States is "behind" other nations in the world in regards to the quality, pervasiveness and speed of our networks.  If not bold face lies these are a molestation of the facts as they don't make an "apples to apples" comparison.

Such was the case with a recent edition of "On The Media" heard on NPR.  (Please note - as I type this the "onthemedia.org" web site is down and thus I am not able to post a link to their audio report.  I will come back and update this blog entry later.)

The hosts from "On The Media" do a rather poor job in hiding their hand with respect to their progressive-leaning bias.   The interviewer in the story tried as she could to play "Devil's Advocate" against the "Telecommunications Activist" firm representative that she was interviewing.  The show host took her framework for evaluating health care and used Canada as the reference point for good as she asked how the USA compared with Canada.  If she knew any better she would have known that this was the wrong nation to choose.  Canada is expansive and sparsely populated and thus these dynamics undercut the case for an expansive wired broadband system throughout the nation.

Instead the telecom activist took the question and shifted the focus.  He rattled off some tired claims about the days of dial up in which multiple ISPs competed over the telecom service provider's physical network.  This was a preposterous comparison.  This was the VOICE network and our analog dial modems were merely an overlay on top of it, accessed by dialing a number.  An IP broadband network is fundamentally different.

If we focused upon "value add" with regard to forcing fixed line carriers to share their networks with their competitors his argument falls on its face.  Today's notion of an ISP has fundamentally changed.  Today there is competition on the medium of access (DSL, DOCSIS, Fiber, Satellite, Cellular, WiMax).  I can choose to obtain my e-mail services and/or my web site hosting from a myriad of competitors while riding over these access provider's networks.  I would like for the telecom activist to tell me the value add of a Covad - which merely did billing services using the LEC's facilities for their access.  This man in the middle added more provisioning headaches than benefits.

I won't go into detail in this post but if someone seeks to press my button they only need to make the claim that Norway, South Korea and Japan have better Internet access than does America.  The truth is there is no other nation in the world which has the matrix of Speed, Geographic Expanse and Population that comes close to the United States' Internet infrastructure.   There are more than 90 million broadband users in the USA.    China, which has 4 times the people and a far larger land mass has about 50 million.   You can look at various other posts on this blog in which this claim is thoroughly refuted.

RURAL NATURAL GAS vs BROADBAND

This past week Vice-President Joe Biden traveled to North Georgia to tell of a federal sponsorship of a 260+ mile fiber ring from North Carolina into northern Georgia.  Its purpose is to provide high speed Internet access into the sparsely populated areas in this mountainous region which is presently undeserved.


Biden appeared with Gov. Sonny Perdue in Dawsonville to announce a $33 million federal stimulus grant for the network. The money is coming from a federal program that seeks to spread broadband technology.

Officials from the North Georgia Network Cooperative say their new fiber-optic system will tie into existing networks in Atlanta and North Carolina and make high-speed Internet access available in Dawson, Forsyth, Habersham, Lumpkin, Rabun, Towns, Union and White counties.

As envisioned, the network will reach 42,000 households and 9,209 businesses and connect 245 community institutions, including public schools, universities, hospitals, and government facilities. Businesses and schools in North Georgia have long complained about the lack of high-speed Internet services, according to the cooperative. The cooperative, meanwhile, is projecting the work will create 837 “direct” jobs and almost 21,000 “indirect” jobs during the construction.

I have to admit that I am torn on the issue.  In a previous job in which I was on a bid team which sought the technology services contract for the government of Georgia I saw the impact of the limited high speed facilities had on Southwest Georgia.  These sparsely populated rural towns can't justify the investment by corporations on high speed trunk lines.   Thus the existing facilities used to link their voice traffic and which have been upgraded over time, trunk segment by trunk segment had to do.  There is no question about it that this fiber ring between NC and GA would assist in putting more aggregate capacity in.

At the same time look at the numbers.  From the article there will be a total of  51,454 potential nodes on this new network.  ( I read this as the final count of drops upon the yet to be defined access network.  This fiber is a trunk line.  It will not have 51,454 nodes directly attached to it. For the sake of argument let's assume that the $33 million includes both the fiber trunk and the access network.).

Thus the average cost per node will be $651 in network build out costs alone.  This does not include the electronic switching equipment or the salaries for the telco employees that will operate the network and perform customer service and billing.   I won't bother to make an encompassing cost model for this but if the price point for entry-level DSL is $14.99 today - there will be an extended amount of time to recoupe the build out costs and operating costs. 

Some people don't understand the difference between a "trunk circuit" which is a core network component and "DSL" which is merely access.   The bulk of the network investment resides in the access network.  Just as your own body has far more capillaries in total length than it does veins and arteries - so is the case with a telecom infrastructure.  I support the $33 million investment in the 260 mile trunk line.  I saw with my own eyes how various Caribbean nations have benefited from the multi-million investment from "Columbus Communications" in which their billionaire owner laid a trans-Caribbean fiber cable which linked a large portion of the islands into the United States for Internet access.  I get it.

The conflict over the strategic direction resides in the access network.
Yesterday as I was driving my children home from a birthday party I decided to take the backroads in order to avoid the crushing Christmas traffic on the main road from my town to the place where the party was held.   I ended up taking a joy ride through Merriwether County Georgia.  Ironically my fast 3G signal switched to the slower 2.5G signal and thus my smartphone based GPS began painting the screens slower.   I decided to ignore the voice commands that the GPS was giving me as it constantly told me to take a u-turn.  The trail that I had originally used to get to the place was indeed the quicker route.   I had to use my own navigation regarding how to find GA Hwy 16.   It turned out that I was further south on Hwy 79 than I had figured.

As I drove down a sparsely populated state highway my son asked "Daddy what are those 'submarine looking things' next to everyone's house?"



As I looked around I did notice that every single house that we had passed did in fact have a propane tank outside of it.
I told him that those were "gas tanks" that the people used for heating and cooking.  I then went into the explanation that we have gas coming into our house as well except that there is a network of pipes buried under the ground that carry our natural gas into the house.   There are not enough people living around here to justify the pipes.  Thus a truck with a big tank on the back of it comes and fills up their tanks when it is empty.

At that point the comparison hit me.   Why isn't a Natural Gas Pipeline any more of a "right" than is High Speed Broadband?

The reason why these sparsely populated areas do not have a natural gas pipeline "access network" is because it is not cost justifiable to build such an array of connections per the people who are nodes on this network.  Sure the need for a "truck roll" to refill your gas is less of a convenience than having a virtual unlimited supply via a pipeline.  The costs of the infrastructure as applied to any rational return on investment does not compute.

Fear not though - I am not arguing that these rural towns should be mired in the stone age and have analog dial up or even satellite based broadband.  What I am arguing is that these new high speed fiber trunks should have a 4G wireless connection such as WiMax or LTE to provide services to these sparsely populated places.  It would be a mistake to upgrade the present analog twisted pair facilities.  Wireless Broadband provides the right mix of limited infrastructure costs per the need to construct a tower rather than a granular distribution grid.  And the high speed IP network that is demanded - including support for VoIP.



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I also agree that technology is trans-formative. A child that has access to the information that today's technology allows easy access to definitely has the advantage over others who have no such access.