> Some of you may be interested and/or affected by this...
> <https://potsandpansbyccg.com/2018/05/08/centurylink-and-residential-broadband/>
I worked for 19CL for a bit and half a lifetime for another company
with the green squiggly.
Now I work for a "take no prisoners" company in the industry that
invested heavily in cable. There was a reason why this company bought
up all the cable providers in the area. It's because of broadband. We
knew that we could deliver far higher bandwidths over the cable
infrastructure than over copper twisted pair. It had nothing to do
with the TV aspect, as that is a revenue stream with a soon
approaching sunset. We're always looking beyond the "now" and two or
three evolutions down the road.
Compare that to my last employer that thought it was a great idea to
buy Earthlink!
The reality is that the traditional ILEC phone companies are in DEEP
trouble. The cable companies dominate the urban areas and operate as
CLEC's. As such, they ALWAYS have the ability to pick and choose their
customers. That's why you don't see cable tv service in the
countryside. It costs around $100,000+ per linear mile to build out an
area with any technology (copper, fiber or cable), between outside
plant and equipment. We CLEC's can choose to not build out areas where
CAF II funding is still not enough to break even on. But the ILEC's,
with huge rural footprints, such as Centurylink, Windstream, Frontier
and Verizon have to decide where to spend money. And residential is
the last place to do it.
So, here is the scenario:
I can choose to spend $30 million dollars to update the network to
serve 3000 customers. $10,000 per customer. Great! Fantastic. But what
happens when the customer decides to just have a cellphone? $10,000
down the drain. Oh, but what about TV and broadband? (triple
play--voice, data, tv). Two of those three are revenue negative and
the one that is revenue positive is easily heisted by a competitor.
The telephone companies are losing their shirt.
The thing that killed the telephone industry was access termination
fees. When you made a long-distance telephone call and it cost you 20
cents per minute, about a third would go to the telephone company
where the call originated, a third would go to the telephone company
where the call connected to and a third would go to the long-distance
carrier. Those percentages changed HUGELY depending on where. These
fees are what paid for the cost of the telephone network to your
house. Your monthly telephone bill covered the cost of people
servicing your line, but really didn't cover any infrastructure costs.
But that form of revenue has gone away. It's almost entirely gone. So,
the thing that subsidized the buildout of the telephone network and
all the equipment upgrades is entirely gone.
So, the companies tried to recoup some of that lost revenue on the
data side by modeling the LD/Access/Termination model. But that got
thwarted by the "Net Neutrality" stupidity of 2010. The ability to
fund network infrastructure through usage was removed and the only
revenue stream is whatever you can charge the customer for their
network connection. As those fees get higher, you see more Chris
Trask's who get their Internet access from a coffee shop. Consider
that Netflix (just Netflix, not including Youtube, Hulu, Prime, etc.,)
is nearly 40% of all Internet traffic. Theoretically, Netflix should
be helping pay for the network in some form. But they don't. They just
pay for their physical pipes to a few meetpoints and say "screw you"
to the broadband providers. So that's why your Internet costs what it
does--you're paying for somebody else to watch "Game of Thrones".
So, the companies are abandoning residential and even small businesses
because of the fickle nature of the customer and the fact that their
is no ability to recover costs. It's a revenue negative situation.
"Line Loss" (customers leaving) is accelerating and the end is not
going to be pretty because whoever is the ILEC is going to get cooked.
CAF II was just a way to delay the inevitable. The nice thing is that
residential customer loss is actually good because Centurylink's
revenue is negative on nearly all of them.
AG Schnozz
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