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Written by Ken DiPietro
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Monday, 07 March 2005 |
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Page 2 of 3
If
we can accept a couple of admittedly completely invented premises,
let’s take a look at what a worse case scenario might look like.
For
the sake of discussion, we are going to assume that VoIP catches on in
such a large way as to double the number of users that convert each
year while discontinuing the use of their landline. Starting from the 3
million user number we assumed to be the conversion rate this year we
get the following:
2006 – 6 million users switch
2007 – 12 million users switch
2008 – 24 million users switch
2009 – 48 million users switch
2010 – 96 million users switch.
Guess
what? In another five years a total of 186 million users have abandoned
the ILECs POTS network! Okay, we can all assume that this scenario
won’t happen, right? Let’s face it the ILECs aren’t stupid, if they saw
something like this starting to happen they would react to the
situation and stem the hemorrhaging one would think.
Let’s look at the options or at least the ones I can see.
They
could lower their price but that is self-defeating, as they need to
maintain an earnings level that will be able to support the network.
Since they are always telling us that they are broke I am going to have
to assume that they can’t really drop their rates too far without it
seriously hurting themselves.
Well, they can make it more
attractive for us to stay by adding in services or bundling services.
This cost money so once again they are losing the revenue stream and as
we discussed above there is only so much to give.
This brings us
to the crux of the matter. What they can do is to completely invest in
a new technology that will allow them to create new revenue streams.
This is a pretty serious gamble on their part – especially if we factor
in the necessary capital they would need to invest. Remember, we know
the ILECs are broke, they have repeatedly told us so and I believe I
can speak for everyone when I say we know they are telling us the
truth, they always do!
Based on the information provided by the CIA Fact Book
the US has just over 4 million miles of roads inside our borders. If we
use that figure as a rough guide and multiply the total miles of
roadways time the lowest credible number we can find for the
installation of fiber ($5K/mile) we come up with an answer of
$20,000,000,000. Overall, that doesn’t seem like a lot of money except
we haven’t connected a single customer to the fiber yet. I am not sure
how to even go about estimating the number to assign a cost to connect
every residence and business to this fiber backbone but I am sure it
will be equal to the number we just arrived at above.
Let me share with you how I arrived at that number.
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