| Saving A Billion |
| Written by Dave Burstein |
Saul Hansell’s NY Times article saved the U.S. taxpayer about $1B by raising doubt about a “tax credit” for Verizon. The fix was in, I was told, until Saul pointed out Verizon would collect even if they didn’t add an incremental broadband line or add another job. Subsidizing Verizon to expand their build makes sense, but not handing them money despite no increase. So I began to think about other ways to save a billion or more in broadband and Internet TV. DSL/Fiber: Connect everyone interested in a new neighborhood at the beginning, rather than rolling a truck each time. The Koreans and the Japanese did this successfully, by sending out a sales team ahead of their connecting each building. This was part of Britain’s 21st Century Network; they had to raise the cost projections substantially when they dropped the idea. BellSouth intended similar in their IP conversion. Mobile: Start including femtocells today, even if the cost requires you to charge the customer <something reasonable> rather than giving them away. Femtocells can divert to landlines as much as half of all U.S. mobile calls, instantly freeing up bandwidth. That immediately reduces the bandwidth demand on the mobile network and the need for upgrades. AT&T is angering customers because they simply don’t have the capacity for the iPhone 3G in many areas. Femtos are available in carrier quantities for under $100 today, and many customers will pay most of that for the improved indoor coverage. Yahoo BB, AT&T, and probably Verizon plan massive rollouts across their entire territory in a few years as costs come down. It’s time to begin, at least on a smaller scale/lower subsidies. TV programming, U.S.: Immediately kill the “must-carry” provisions which are starting to raise programming costs about $2B/year. That’s money from consumers/carriers given to stations that are free to air, an old political deal gone sour. It’s going as a monopoly rent to the existing stations, not significantly increasing programming expenses. Government: Don’t give subsidies where they aren’t needed. In Britain and Germany, don’t provide “universal service funding” for lines already in place. Extreme rural lines may be high-cost to install, but once BT or DT has the line in they are profitable to operate. There aren’t many new houses being built in the UK these days, so they don’t need to install many lines. In the U.S., we’re paying $400M a year for “high cost switch support” even though virtually no one has installed high cost switches for five years or more. Softswitches are a tenth the cost, and available as a service to the smallest carriers as well. This should be phased out as existing switches depreciate. |
