| Millions of Verizon Lines for Sale Explain Why Some Areas Unserved |
| Written by Dave Burstein |
 John Killian is “continuing to look at rationalizing our access line business, especially in non-FiOS areas through strategic alternatives." Verizon put about 10M lines up for sale in 2002. These areas have some of the thinnest DSL deployments in the developed world. Few bids came in close to the prices Larry Babbio was looking for, and meanwhile VZ treated the territories like the Romans treated the Sabine women. New Hampshire was 62%, Vermont 69% and Maine 69% while Verizon looked without success for a buyer. They eventually financed Gene Johnson of Fairpoint who bid so much he defaulted on the loans he took for the purchase. Jim Attwood and Bill Kennard of Carlyle took Hawaii off their hands for $1.6B. They are two of the smartest in the business, but are already in bankruptcy. I'd expect the lines for sale include West Virginia, southern Virginia, upper New York State, and much of the former GTE territory across the nation.
Virginia including the D.C. suburbs was 65%; West Virginia 74%, and New York State 76% (Latest FCC data, 12/07.) Subtracting out New York City and suburbs, D.C. suburbs, and a few larger cities, most of the Verizon area in thes states has less than 50% availability. That's not because of population density or terrain. North Dakota was 88% and Iowa 85%, while rural and mountainous areas in Britain were over 95%. Verizon put about 10M lines up for sale in 2002, and virtually ended DSL upgrades for any of them. I have strong but unconfirmed rumors many AT&T areas are for sale. Qwest, Frontier, and other regionals are also seeking buyers. It's ignorant to say that “the only reason areas are unserved is the prohibitively high cost of reaching rural homes,” and therefore large subsidies are almost always required. About half of the 4-7% “unserved” can be upgraded to cable modems for a total cost of less than $500, mostly at 50 meg. A significant fraction of the last 2-4% can reach 5 meg over DSL for a similar price. In the U.S. the majority of “unserved” homes have fallen through the cracks for other reasons. Cable offers modems to about 29 out of 30 of their homes, an admirable record. Both Comcast and Time Warner Cable tell me they reach 99% of their territory. The remaining 1 out of 30 are perhaps half of the “unserved.” Some of these homes are odd corners of the big companies, others small rural cablecos possibly still analog only. Reasonably priced backhaul (“special access”) is all most of them require; subsidies, if needed, are in the hundreds, not thousands.
|
$10B a year in ICC/USF has brought phone service to almost all the rest. A significant share can get 5 meg down, 1 up, with $200 repeaters. Others can get megabits with wireless. Very few will require the $5K and more subsidies, much less the $18K California is offering. A faster satellite is one option for them as well.
