In the Boston Globe today it was announced that the Commonwealth submitted a request for $105 million of Federal Funds. The Globe states:
"The Massachusetts Broadband Institute filed its request for the funds on Aug. 14....The agency wants to spend $100 million to create a fiber-optic data network that would reach into 43 western Massachusetts communities .......the network would be used by municipal governments and would sell access to private companies.....which in turn could sell broadband services to households and businesses.... state estimates the project could ....... bring high-speed Internet service to more than 20,000 households..."
We had performed several feasibility studies in this area and reading what is published raises several issues:
1. We estimated that the all in costs per HH exclusive of franchise costs was $3500. That means for 20,000 HH one would expect the all in costs as $70 million. Thus what is the other $30 million for?
2. What about a franchise. The state seems to be providing a backbone. But once you put something on a pole you need a franchise, the major barrier to entry for Verizon, especially with Comcast. So is the State exempt, nice try.
3. One should remember the Big Dig, starting at $2 billion and going to $20 billion and still not done. So why think this will ever get completed.
4. Also think Mass Port Authority or Mass Turnpike. If a business wants transport from the Mass Broadband what do they think the Mass Broadband will do any differently from any other Mass agency.
5. The comments indicate that Verizon may sell off the western Mass properties. As we have argued for seven years that is their strategy. Why keep copper if you are no longer in the business. Mass has just done Verizon a favor, they gave them the excuse to leave.
6. If you are building a commerical real estate property the first thing you better do is get an anchor tenant. Who is going to do that function?
7. If Mass is doing the backbone who puts all the other stuff there like drops, installs etc and what are the terms of the transport agreement and what remedy does a seller have. Most likely none.
So if you liked the Big Dig you will love this one as well.
"The Massachusetts Broadband Institute filed its request for the funds on Aug. 14....The agency wants to spend $100 million to create a fiber-optic data network that would reach into 43 western Massachusetts communities .......the network would be used by municipal governments and would sell access to private companies.....which in turn could sell broadband services to households and businesses.... state estimates the project could ....... bring high-speed Internet service to more than 20,000 households..."
We had performed several feasibility studies in this area and reading what is published raises several issues:
1. We estimated that the all in costs per HH exclusive of franchise costs was $3500. That means for 20,000 HH one would expect the all in costs as $70 million. Thus what is the other $30 million for?
2. What about a franchise. The state seems to be providing a backbone. But once you put something on a pole you need a franchise, the major barrier to entry for Verizon, especially with Comcast. So is the State exempt, nice try.
3. One should remember the Big Dig, starting at $2 billion and going to $20 billion and still not done. So why think this will ever get completed.
4. Also think Mass Port Authority or Mass Turnpike. If a business wants transport from the Mass Broadband what do they think the Mass Broadband will do any differently from any other Mass agency.
5. The comments indicate that Verizon may sell off the western Mass properties. As we have argued for seven years that is their strategy. Why keep copper if you are no longer in the business. Mass has just done Verizon a favor, they gave them the excuse to leave.
6. If you are building a commerical real estate property the first thing you better do is get an anchor tenant. Who is going to do that function?
7. If Mass is doing the backbone who puts all the other stuff there like drops, installs etc and what are the terms of the transport agreement and what remedy does a seller have. Most likely none.
So if you liked the Big Dig you will love this one as well.
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