Discussions with James ENCK

This week I was able to spend some time speaking with James ENCK (of the universally revered EuroTelcoBlog) about fiber. I always look forward to talking with James because he really understands telecom markets and is such an entertaining speaker. In fact, I believe he's the only person I've ever seen get a standing ovation after a telecom presentation. :)

James examines telecommunication markets from a slightly different perspective than I do - as an investor. That's one of the reasons I was so interested to get his take on new fiber developments.

One of the themes to emerge from our discussion is how investors are starting to view telecommunication firms differently in general. There is a lot of talk in various telecom circles about the business moving towards a utility-type model with longer-term investing perspectives and predictable returns.

Now how I tie this idea back in with our network. We, as users and residents, are better at gauging demand than operators since we actually subscribe to the services and know our reservation prices. Operators, on the other hand, should be better at providing services than our small neighborhood (comparative advantage).

We can both benefit if our residence puts in the dark fiber once we determine there is sufficient demand. We may also be willing to pay a premium for the faster access than operators would be able to charge - given they typically have national pricing plans. This leads to our current stalemate situation. We may be willing to pay for better access but the operators figure it's not worth their while extending faster access to us at the national rates.

Our own fiber network helps resolve the stalemate by capturing some of the extra willingness to pay in the local network rollout in exchange for faster connections ahead of the market's current schedule. We can all win because there is less risk for the operator and faster connections for us.