Internet and Telephone for the 21st Century, Goals and Part One of the Puzzle

The recent release by the FCC of rules regarding the change from copper to fiber is a small step in the right direction.  American's need upgraded service since too many are still on an aging copper systems for phone and internet. If they have DSL it does not qualify as high speed.  The real question is how do we as a nation accomplish this feat.

First we need to decide how long it should take to achieve this changeover.  At the current pace it appears that the end of this century is not as likely as certain places freezing over first.  What is a reasonable goal.  The realistic goal of equipment manufacturing and manpower in a lean telecom industry would point toward a long time frame of 30 or 40 years. This is far to long.  A more reasonable goal from an economic standpoint would be 10 to 15 years for 80 percent of Americans and another 10 for the last 20 percent.

The second part of the equation is how to accomplish this task.

The telecom industry is still mired in the first half of the 20th Century when the myriad of byzantine regulations, tax rules and deals were cut that made Ma Bell a government sanctioned monopoly.

The starting point for a discussion would be to change the whole way telecom companies book and depreciate the change from copper to fiber.  Currently those rates can vary from just a few years to decades.  What we need to do is change the way the phone companies can deduct these expenses for tax purposes and perhaps also for their financial statements.

The way to push the upgrade from copper to fiber through as quickly as possible is to make the cost of the change not as a new purchase of new assets but as an expense that can be deducted when the the new equipment is put into service.  When the phone company turns a whole area from copper to fiber and gives universal service of fiber to the home or business then all monies expended for that part of the project can be expensed by the phone company.

The size of the area could be as little as a neighborhood or subdivision.  A key point is that no area may be bypassed due to ease of installation or economic reasons. The companies can not be allowed to 'cherry pick' the upgrades.  This means that central office equipment can be deducted only when all lines in the office are converted from copper to fiber whereas the equipment and lines in the field could be deducted once all households and businesses in that area are converted to fiber.  This provides incentives for quickly changing whole regions while giving quick recovery as segments of fiber are brought on-line.

The benefits of whole towns and areas gaining access to real high speed lines in the 100mb range would be in economic development, content availability and sustainability of infrastructure.

The key take away point is the change of the conversion of copper to fiber to a maintenance expense rather than a capital investment.