++++++++++++++++++++++++++++++ Neofast, Inc, Making internet easy 541-969-8200 509-386-4589 ++++++++++++++++++++++++++++++ From: Fred Goldstein Sent: Tuesday, December 21, 2010 2:41 PM To: WISPA General List Subject: Re: [WISPA] Flexible rules promised for wireless At 12/21/2010 05:14 PM, MDK wrote: Fred gave his reasons, which if I were to answer to, I'd have to quote him, but the gist of what he said, was that the NEXT operator to come along would have to pay MORE to compete than the original. >Yes, to reach the first customer, as well as on a per-customer basis, which >sets the price. If Bell has 100% of the market and you don't have lines, then >you'd have to pull a line to reach your customer. That's a huge cost compared >to their being able to use existing lines. If you won a 25% market share and >they had 75%, then if your cost per mile were the same as theirs, your cost >per home served would be three times theirs. If you don't know the impact of >that, look at RCN's sad history. Hint: It's in my book. Five billion >dollars lost in four years. The average cost per customer goes UP as you expand, not down - when discussing wires. And nobody starts a telco based on having ONE customer. Instead, you pull lines and invest in plant to develop a business model that's better priced than your ILEC's average and undercut them to gain marketshare where you pass the customer. Yes, I know somewhere you have ONE customer, I had that experience a few years back, myself. This is because you have to reach farther and to less dense customers as you expand. Since that lowers your cost / customer, it allows you to siphon off the less costly to provision with lower prices, and it raises the cost per customer of the incumbent, as they lose customers in close (cheap) and their mix becomes more and more costly, as yours goes down... Eventually, the ILEC is a non-viable entity and will either be broken and consumed by competitors, or it will divest itself into smaller, lower-cost units. There ARE NO NATURAL MONOPOLIES in this business. There are natural sizes of maximum efficiency, and to be above or below will result in you being less than fully competitive. By their nature, the incumbents are too large to be efficient and are, given the proper political environment, fully vulnerable to competition.
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