I don't have the author's permission to distribute this, so I haven't identified him. This was sent by a member to Jim Haynie and me. Dave

From graduate school buddies, I KNOW that power companies are trying to mine their rights-of-way for growth market opportunities. It's also quite clear that in their search for niche markets, they're over-reaching. Grasping at straws.

We know a few other things, too, and I believe they roughly describe the achilles heel of the PI problem: * The cable industry was forced to pull in a fiber optic network, in order to control leakage from their systems and prevent RFI to Air NAV/COM systems, along with amateurs and public safety bands. The industry also saw internet access demanding wideband back-channel capability, which supported this build-out. * Telco's couldn't afford to simply replace their Cu based outside plant (POTS, or plain old telephone service), to support DSL activity. As a result, DSL is constrained to within 3 miles of a central office, or a line concentrator to which they pulled fiber. * Telcos DID pull in massive amounts of long-haul fiber, to support forecast growth, much of which didn't materialize. 80% of the fiber pulled in during the 90's remains dark. Thus, there is massive inventory of fiber, which can come online very cheaply. It's estimated it will take 20 years for demand to catch up with supply. * 80% of the SMSA's had fiber to the curb in 1996. That number is now well above 90, I believe. Haven't had opportunity to verify, but the FCC knows. * Thus, the technically capable telcos and cable operators have both recognized and responded to the market requirement. (which was grossly over-forecast. If in doubt, see Cisco, Lucent, et. al.) * Satellite operators(e.g. Hughes Network Systems Direct Access) have built out residential TV and entertainment distribution without a back- channel. They are presently introducing bidirectional wideband for commercial users, which will compete with the pricing of terrestrial fiber and dedicated satellite links. HNS website has details on this. * From a business perspective, we know that market share and profitability are closely related. Ted Leavitt @ Harvard documented that 30-40 years ago, in a study called PIMS, or Product Information Marketing Survey. The derivative work is what drove GE's strategy decisions over the last 30-40 years. Short form is this: In a stable market, you will find between 3 and 8 players. #1 will have 35% market share or more, and reflect 20% pretax profit. #2 will have 27% share, and have 14% pretax. #3 will have something like 15% share, and only show 8-10% pretax. Everybody else will have miniscule share, and be wondering why they didn't buy CD's. But they hang on until dynamics force them to fold. * Precisely what IS it that the power company can provide, which would destabilize a market already overserved by existing competitors, and thereby provide a new and compelling technology to the consumer? * There is already excess infrastructure. Some of it uses RR rights of way, and perhaps PI r.o.w., as well. * The potential for acceptable ROI can't be demonstrated, in the face of a surplus of national bandwidth inventory. i.e., there can be no demonstrable cost advantage. * They don't control content. That's increasingly held by a smaller and smaller cadre of large firms, which are driven by precisely the same market dynamics as I described, above (and recently supported by the FCC, in their modified ownership rules). To grant the BPL expansion request, therefore, would be to enable a technically marginal player dabbling in a highly questionable business venture, without the slightest hope of success, and with great potential harm to other services.

From a policy perspective, if the FCC doesn't want to appear to close doors on market opportunities...then they should grant a limited field trial, wherein PI can demonstrate that they neither impact other services, and offer something which is not already available in a competitive market. Pick one or two SMSA's, and trial it.

However, granting the BPL request will further destabilize the market in which cable and telco's are operating--the robustness of which is at the core of our national economic situation. I would argue that the PI BPL proposal serves no one. Surely not the communications industry. Possibly not the power industry. Definitely not the economy or the sitting administration.