[OT] Verizon/FairPoint sale (was: Comcast!?!?)

[Ben Scott]

  I'm going to start out by stating explicitly: I'm not against the
Verizon/FairPoint sale.  I'm not exactly in favor of it, either.  Most
of all, I'd like unbiased, accurate, complete information about it.
Unfortunately, I'm pretty sure I'm not going to get that.  Given what
I know, if it were up to me to say "yes" or "no" on the sale (and only
the sale), I'd say let it go through.  But it's not up to me.  So more
than anything, I'm trying to encourage the exchange of information and
an all-around better understanding of the situation.

On Nov 16, 2007 10:36 AM, Bill McGonigle <bill at bfccomputing.com> wrote:
>>> Vitts wasn't regulated the same way telcos are.
>>
>> Why not?  Vitts was a telco, a Competitive Local Exchange Carrier,
>> per the NH PUC [1].
>
> Perhaps a bad choice of words - they weren't the cable plant operator
> or the ILEC.  The important part here is as Vitts went away, nobody
> said, "oh, no, we can't get telephone service from anybody".

  Oh, well, that's something else.  That does not mean Vitts was
regulated differently.  That just means that only a certain population
cared when Vitts folded, and that population wasn't big enough to do
anything drastic about it.  It would appear the regulations are the
same.  No?

  So I point out that you, yourself, might be in a similar boat: If
the people in charge at the PUC couldn't get good telecom service, I'm
sure they'd do something about Verizon *then*.  But since it's just
you people who have the misfortune to live in a rural area North of
Concord, well, then, that's no big deal.  Unless you are you.  In
which case, it's a big deal, indeed.

  Now, like I said, whatever's written on paper doesn't really matter.
 They'll call out the National Guard before they let the PSTN shut
down, and worry about making it "legal" after the fact.  But that's a
damn expensive way to get phone service, and I doubt it would help you
get DSL, either.

> Sometimes life is like that - that doesn't mean the
> government should interfere in markets.

  Didn't you just post a link to the FCC website declaring that they
should do exactly that?

  Or should the government only interfere when it means you might get
high-speed Internet?  ;-)

  I'm not trying to be a troll: My goal here is to point out that a
lot of people hold such phrases as "free market" or "competition" in
awe.  They're a sacred part of the Church of the American Dream.
Myself, I'm all for them, when they can work, but I don't hold any
illusions that they work for all situations.  Sometimes, capitalism
fails miserably, and clinging to it like a drowning man won't help.

  "Holy cows make the best hamburger."

  Like I said, my goal here is to make sure we all take our blinders
off -- myself included.  My hope is that by reasoned discourse, we can
all beat each other into objectivity.  :-)

> At some point the value of the plant is sufficient that
> somebody will want to own and run it.

  Sure.  Doesn't mean that'll be good for anybody but the acquiring
company, though.  Indeed, from what I know, history seems to suggest
corporate bankruptcy is usually fairly bad for the customers of the
company.

  Never forget that it is a consequence of laissez-faire economics
that the customers who made the mistake of choosing the looser in an
economic battle deserve what they get, and should be hung out to dry.

>>> Odds are the worst case is the PUC would allow them to refinance and
>>> charge a stranded-costs fee.  Otherwise PSNH customers would have
>>> been in the dark for the past 20 years.
>>
>> Right, and NH has some of the highest electric rates in the country
>
> Only in PSNH country.

  Thanks for making my point for me!  :-)

> I didn't read it that way - they say that Fairpoint is overpaying for
> the value of the plant and that if all of their worst-case scenarios
> came true they'd burn all their cash-on-hand to cover their interest,
> expenses and dividends.  So, if everything goes wrong they're still
> not bankrupt.

  Ah.  Well, that sounds somewhat better, although "burn all their
cash-on-hand" doesn't exactly sound promising.  Would that just mean
they'd run out of money later rather than sooner?

  Unfortunately, I'm not really qualified to interpret big corporate
financial statements.  Of course, I have to ask: Are you?  (And if you
are, how do I talk you into becoming the GNHLUG Treasurer?  :)  )

> the PUC doesn't have credibility here.

  No argument there.  Maybe the proper solution is to have everyone
write their state legislature and have them fix *that* problem?

> But I do believe they're taking the correct approach by trying to
> allow the private sector to solve the problem ...

  Keep in mind that ILECs are not "free markets", by any stretch of
the imagination.  In particular, all the proposed Verizon/FairPoint
sale does is change one monopoly owner for another.  Now, it may well
be that FairPoint would be the lesser of two evils.  Having dealt with
Verizon a bit, I suspect so.  But don't kid yourself about what this
is.

On Nov 16, 2007 4:46 PM, Bill McGonigle <bill at bfccomputing.com> wrote:
> Government (as local as possible) would contract out maintenance of
> the roads to the most competitive business.

  That is generally exactly what happens now.  Unfortunately, one can
not cure all ills just by sprinkling a little capitalism on them.

> Market forces would drive down the cost and improve the quality.

  The problem with both roads and ILECs is that they are what are
known as "natural monopolies".

http://en.wikipedia.org/wiki/Natural_monopoly

  It simply is not feasible to have an unlimited number of
organizations stringing cables on poles (or planting poles on public
right-of-ways).  Even without network effects, there simply isn't
enough physical space.  And network effects (named after this very
industry) mean a trend towards monopolies even if space wasn't an
issue.

http://en.wikipedia.org/wiki/Network_effect

  One proposed alternative which may help is called "structural
separation".  Briefly, it means one company owns the common
infrastructure -- copper/fiber on the poles, CO buildings, termination
points, etc., -- but is forbidden from participating in proving
service on same.  This would, in theory, give other companies a chance
to compete in offering service over the common infrastructure.  The
usual analogy is to package delivery and roads.  UPS, FedEx, DHL, and
innumerable others use the common infrastructure (roads).  UPS doesn't
own the road, and thus can't give preferential treatment to their
trucks.

  I don't know if structural separation would actually work, but it's
an idea with more merit than a lot of others I've seen.

  Disclaimer: Though who have been abused by the ILEC tend to be in
favor of structural separation.  Maybe I'm just parroting my peer
group's groupthink.

On Nov 15, 2007 6:44 PM, Bill McGonigle <bill at bfccomputing.com> wrote:
> So, I build a 1.5 mile wireless/wired network with a neighbor to get
> signal up the hill.  But it's not good, I don't want to maintain it,
> and unlicensed bands suck with trees ...

  You may want to check out the isp-wireless mailing list.  There are
lots of people who are meeting those sorts of challenges.  (Aside:
isp-wireless is the only ISP-Planet mailing list I'm on with any real
activity left.  I suspect that's telling.)

http://isp-lists.isp-planet.com/isp-wireless/

-- Ben