The New York Times’ Ken Belson has this piece today about the downside of Verizon’s sale of local access lines. Belson took a trip to New England, Vermont to be precise, to get a look at the dismal broadband access situation for the predominately rural state, a situation that’s bound to worsen now that Verizon plans to sell off the 1.6 million local phone lines it sells in Vermont, New Hampshire and Maine.
In a classic example of the rich-get-rich and the poor-get-poorer, Verizon plans to sell off the low-margin lines to give itself financial head room for the fiber optic upgrades it plans in already broadband-rich urban markets…and there’s no blaming the telco for this fiscally sound decision. But, chances are good that the purchaser of Verizon’s lines won’t deploy broadband any more widely than Verizon has.
The economics of providing broadband in rural areas are discouraging, too. The cost of upgrading an existing copper line that runs from switching stations to remote homes can be as much as $5,000, according to the National Exchange Carrier Association. Such costs are prohibitive for phone companies, which typically want to make back their money within three years, said Victor Glass, the director of demand forecasting at the carrier association.
Part of the problem is that as a big company, Verizon gets so much less from the universal service fund, a federally mandated source of phone company subsidies in rural areas, than do small companies and a potential acquirer would, apparently, inherit Verizon’s lousy subsidies. One part of the telecom reform bill that will not likely pass this year provides for $500 million in subsidies for broadband deployment in rural areas, not a huge amount of money given the high costs of stringing wires along low-density byways, but a step in the right direction as part of universal service reform.
Barring some new move by the feds, it looks like Vermont and the rest of rural New England is stuck. Even Wi-Fi networks need help for these less-than-profitable areas.
Alternative broadband providers who could fill that gap face problems, too. Jake Marsh, who runs Island Pond Wireless, a company that beams high-speed Internet signals over strings of antennas, has signed up 250 customers and has a waiting list just as long. But to expand, he is counting on towns getting state funds to help defray the installation costs.
Cynthia Brumfield at 3:43 PM|Comments(1)
Nice commentary on the article. I think this is an excellent example of where municipalities or even the state need to take matters into their own hands. There is huge disparity of wealth in this region, and without state intervention some folks will be left behind.
Posted by: Andrew Schmitt at September 28, 2006 4:47 PM
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