back to article Larry Page snuffs out ‘too expensive’ Google Fiber project

Google is drastically scaling back its Fiber initiative because it’s too expensive – and only a fraction of the expected subscribers ponied up. Insiders speaking to The Information suggest it had only signed up 200,000 subscribers, far short of the trajectory needed to achieve 5m in five years. The publication also reports …

Actually an argument for a public utility to own the last mile

> Broadband requires eye-watering investments but it has never been very profitable on its own, requiring cross subsidies from telephone or media services.

This is an argument to create a national or a series of state-level agencies or public utilities chartered to do nothing but build and run the fiber to the home. Then all the media companies could compete to deliver the goods, while the maintenance of the fiber itself would be completely free of the various forms of stealthy monopolistic behaviors. The utility would simply be responsible for maximising throughput, with source-agnostic quality of service.

Public utilities and government agencies are better at handling these kinds of infrastructure commitments, and are (one hopes) less likely to sully with the cross subsidies. What governments are _not_ good at is participating in markets and trying to be businesses. The plain fact is that the last mile of fiber to the home is an infrastructure problem that could be solved relatively quickly with a government commitment to an authority with the capability to make this happen, rather than throw money after rat holes trying to bribe media companies into doing this.

There is an analogy worth pondering. The rail systems in here in the US _could_ have been turned around in the late 1960s, in such a way that today's passenger trains would be fast and efficient. At that time the railroads were all teetering on bankruptcy and were bailed out with forced mergers and various other means, including some nationalization - Amtrak was one unworkable result. The alternative that would have made sense for the future would have been for the US to nationalize the rails but not the companies, turning the rails into an analogue of the Federal Highway System and allowing all rail companies to compete on service of the actual trains. As demand grew, the rail system could have been grown in the same way.

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Re: Actually an argument for a public utility to own the last mile

Magnificient idea for the rail system.

Only if we could have that in the UK, just imagine how good it would be to have the rails as one company and the trains companies as independent companies, that bid for the different services.

It would be cheaper and more efficient!!

Or it could be a cesspit, and a simple way for banks and politician buddies to make a quick buck from the government, as it has happened in the UK.

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Anonymous Coward

"Public utilities and government agencies are better at handling"

Evidently. you never lived in a country where there was a state monopoly over telecommunication. I did. It meant very expensive prices for subpar services. The main focus was not in delivering customers what they needed - after all they had no choice - it was on ensuring high pays and well paid retirement plans (without paying for it, just relying on taxpayers money....) to employees and executives - usually chosen among the politicians friends.

The Internet here took off very slowly because even local calls were paid per minute, and long calls were thereby expensive. Why? To keep investment low - make people call less and you don't overload the lines, so you don't need to increase capacity much. Is something alike what you want?

What is needed is a "stick and carrot" approach. If telcos want the permission to bring broadband to remunerative areas, they have to bring elsewhere too - maybe with some state subsidies.

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Re: Actually an argument for a public utility to own the last mile

I somewhat suspect it would be easier and less problematic for large and medium cities/metros to have their own fiber utility than states, it likely is not even an option to have it be a federal agency.

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Re: Actually an argument for a public utility to own the last mile

The rail idea was tried in the UK. It sort of worked, but nowhere near as well as hoped. Lots of problems, such as a giant swarm of lawyers whenever something went wrong.

As to public ownership of comms, I'm old enough to remember that in the UK. It was absolute rubbish, and it took months for a phone line order to be processed. It's the usual public enterprise problem - what's the incentive for them to be efficient when you can't even sack employees that goof off? If it helps, imagine your Department of Motor Vehicles in charge of your broadband.

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Anonymous Coward

Re: Actually an argument for a public utility to own the last mile

Sadly we can't move forward with any of that until the United States implements public funding for elections. The existing large ISPs paid off government officials to prevent municipal broadband bills from being introduced, and that's why the FCC can't force them to open up to competition from Google. Thus Google is stuck trying to work out deals privately with the ISPs, which inevitably end up being far too expensive because the ISPs hate Google.

Pay attention to the voting record of your local politicians. This year's election gives us the chance to throw out a sizeable portion of the DINOs and RINOs, maybe enough to tip the scales back in our favor.

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Re: "Public utilities and government agencies are better at handling"

Evidently. you never lived in a country where there was a state monopoly over telecommunication. I did. It meant very expensive prices for subpar services.

You just described AT&T, a bastion of free enterprise capitalism for almost 100 years. In fact, they most likely helped build your government controlled phone system.

Now that the U.S. has more competition, we have a variety of choices... of high price, subpar services.

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Re: "Public utilities and government agencies are better at handling"

"What is needed is a "stick and carrot" approach. If telcos want the permission to bring broadband to remunerative areas, they have to bring elsewhere too - maybe with some state subsidies."

Many countries including the US are trying that, but the telcos add up the numbers and find themselves in the red (IOW, being forced to wire the sticks makes wiring the city unprofitable) and would rather walk away from the whole thing.

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Re: "Public utilities and government agencies are better at handling"

Evidently. you never lived in a country where there was a state monopoly over telecommunication.

I did.

Privatization kind of worked.... but only when Telmex started getting real competition. Even then, competition was mostly on large cities, while the rest of the country remained with awful customer service. At my mom's town, getting a new landline = 30 days. At Mexico City, 24 hours or less. But oversubscription is an issue everywhere, with varied results:

Telmex: Get a real IP, low latency, you might get your full Mbps but most of the time it will drop to 50%.

Cable co's: Get CGNATted IP, high latency, traffic shaping and all the awful crap Comcast was doing in the US before the FCC slapped them. (Worst. Experience. Ever.)

Axtel: Get a real IP, low latency, mostly high data rate. Coverage is still limited to major cities, and even then it might not be available in your neighborhood.

Totalplay: No idea if they do CGNAT, low latency, high data rate. Only available in major cities.

The main difference between Mexico and the US is that most of the country is covered by Telmex, which isn't stellar, but at least it isn't trying to screw over their customers. In the US, the cable co's are the ones covering most of the country, and they DO want to screw over their customers. Which is why municipal broadband sounds like a far better option.

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The UK

Several people have commented on how infrastructure should be in the public ownership, then others say how the UK isn't a shining example of what happens when infrastructure *is* in the public ownership. But the UK infrastructure is actually heading in another direction: Non-profit (or heavily regulated for-profit)

Rail: First, everything was nationalised. Then everything went for-profit private sector. Now, the infrastructure (Rails and some stations) is a government backed non-profit (Railtrack) and the trains are run by for-profit companies.

Phones: Again, everything was nationalised. Then for-profit BT was formed. Then BT was slowly split up, and Openreach (last mile cables) is slowly being pushed towards a non-profit standalone entity.

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Re: Actually an argument for a public utility to own the last mile

EXCELLENT write up.

The only snag with the government involvement is that we (in the US) have a large number of people who do not want more government regulation, which is rather short sighted and sad. Having some kind of nation-wide regulation along the lines you suggested would only benefit everyone...

I mean, who would not want 1 Gbps to the door, consistent all over the country...???

It would also solve the great digital divide. We still have too many people being forced to use friggin' dial up and kilobit speeds as we all know, well, they suck.

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Re: "Public utilities and government agencies are better at handling"

Anybody much older than 30 in the UK also lived in an era when there was a state-owned phone network, and it was pretty awful. Expensive, inefficient, unreliable, over-manned and under-invested. In 1984 the vast majority of local exchanges were still based on ancient Strowger equipment.

People forget...

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(Written by Reg staff)

Re: Actually an argument for a public utility to own the last mile

Please show your sums.

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Re: Actually an argument for a public utility to own the last mile

The important point about the public paying to lay the fibre is we can then privatise it, getting back a fraction of the cost, but allowing corporations to make loads of profit!

I'd add the joke icon. Except it's what we do.

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Re: Actually an argument for a public utility to own the last mile

Best of both worlds! The government could build this company, the massive costs of getting fibre to every door absorbed by the tax-payers, then the whole shebang could be sold off to friends and acquaintances of the ruling party for a pittance and then leased out again at eye-watering prices. I really don't see a downside to this. It's would be brilliant! No... hang on. Not "brilliant" but that other word...

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Anonymous Coward

Re: Actually an argument for a public utility to own the last mile

Actually the rails were once for profit, then nationalised in 1948 and became a political kick ball until now.

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Re: The UK

> Rail: First, everything was nationalised. Then everything went for-profit private sector. Now, the infrastructure (Rails and some stations) is a government backed non-profit (Railtrack) and the trains are run by for-profit companies.

No.

First private companies built and operated the railways.

Then maturing technology and systems led inevitably to fewer, larger companies.

Then the government almost bankrupted the rail companies by underpaying for services requistioned during WWII.

*Then* "everything was nationalised" on the cheap.

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Vic
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Re: Actually an argument for a public utility to own the last mile

It's would be brilliant! No... hang on. Not "brilliant" but that other word...

British?

Vic.

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Anonymous Coward

Re: Actually an argument for a public utility to own the last mile

It does work for the water, gas and electricity networks - sort of.

You have a single carrier for the last-mile connections, where it makes no sense to have multiple competing infrastructures. Then other providers sell you the high-value services on top of that (like electricity generation and gas supply) and compete with each other. Admittedly you can't choose your water.

If there was already one fibre going into every house, and different providers could compete to connect the other end and provide your IP and telephony services over it, this could work. It *did* work for ADSL with local-loop unbundling, where Openreach was providing nothing more than the copper, and the providers put their own equipment into the exchange.

Unfortunately, with FTTC, Openreach have gone higher up the value chain again - and they see no reason to give this up, or to replace the copper.

The cheapest way to do this would be a whole city at a time, but even that is hugely expensive: just look at how NTL and Telewest spent billions and went bust. And their business model was predicated on selling high-value services (i.e. pay TV), not just vanilla connectivity. And they only rolled out to high-density areas with maximum return.

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Re: "Public utilities and government agencies are better at handling"

In Italy the monopolist asked you a monthly fee for any additional telephone *plug* and ringer you installed in your house (of course many ignored it, but it was illegal, and if a nasty technician spotted it...) Also, only its own telephones could be plugged into the line, again, rented...

One of the first fiber provider, which had almost a monopoly of high speed connections, tried to limit the default number of devices you could plug to three (checking the MAC addresses, of course almost everybody bypassed that with a switch in front of the telco device), and put you into its NATted network which didn't allow some kind of traffic... unless, of course, you paid more...

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Re: Actually an argument for a public utility to own the last mile

Anyone who doesn't want to PAY for it, that's who.

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WTF?

Re: gudguy1a Re: Actually an argument for a public utility......

".....who would not want 1 Gbps to the door....." The majority of taxpayers, especially if they are being asked to pay for it. And please do explain what you think the average punter would want a 1Gbit service for?

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Anonymous Coward

Re: Actually an argument for a public utility to own the last mile

The fact is government already does 99% of what you suggest. Sewers and electric utility lines are what every single broadband provider uses to run their wires. Government does the heavy lifting, and they just string a few wires up to the network of underground pipes and above ground poles.

We pay not only to create this infrastructure, but those public utility crews you see every week digging up or stringing up something while obstructing commuter traffic are not only doing maintenance but little extra changes and maintenance that has nothing to do with the purpose of the utility but to provide access so a broadband provider and come in and fix something with thier system.

Since we already pay for building and maintaining it, we might as well own it and let the Broadband companies pay us for the privilege of raking in huge profits through it.

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Shock, horror, physical infrastructure is expensive.

This is why cable companies go bankrupt, only to be bought up for a pittance so that someone else can inherit their cables and then NEVER RUN ANOTHER CABLE AGAIN.

This is why BT used to be a nationalised service - because the initial infrastructure is hard and expensive and nobody would put it in otherwise.

And this is why you can't get even a telephone line, fibre cable, or anything close if you live out in the sticks. The price of several kilometres of ANYTHING, strung, hung, pulled or blown through other people's property and over and under roads is stupendously expensive. It's just that simple.

Which is why I don't get why building ANY road is not legally mandated to include huge, massive pipes under it while you're there. One for water, one for sewage, one for electrics, one for gas, one for data, one for whatever, etc. Again - infrastructure costs in privatised industries never happen until it's immediately profitable, and we end up with a bloody mess that's too expensive to replace or expand.

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"Which is why I don't get why building ANY road is not legally mandated to include huge, massive pipes under it while you're there."

It adds to the bill, and public works end up being footed by the taxpayers. Ask them how they feel about tax hikes.

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As someone involved in a massive build out of fibre across a municipality spanning 100km end to end, I can say that the cheapest individual connection we did was to a guy "in the sticks".

10 km to the nearest neighbour by dirt road or through forest, the excavator used a knife-like implement to cut a small trench into which the fibre cable went, since it was the sticks with dirt roads and no preexisting infrastructure to speak of, he could just to ahead full steam cutting through other roads and intersections. On the way back he flattened the roads he had cut through. Took half a day.

Meanwhile in the village, there was all sorts of existing underground structures that needed to be navigated around, paved roads that needed repavemebt if they were disturbed, roads that could not be cut even temporarily and had to be drilled under.. Each single connection cost significantly more than the one for the guy out in the woods.

Amusingly, people in the village think part Iof their sign up costs went to subsidising those living out in the woods, but it was in fact the other way around...

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"Shock, horror, physical infrastructure is expensive."

You're right, it IS expensive.

However, the quality of modern fibre means it only has to be laid down once, and rarely replaced. Maybe once every couple of decades or so.

In the mean time, replacing the gubbins at either end will ensure progressive speed increases.

I guess google have quit thinking big and would rather concentrate on short term ROI these days.

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Re: "Shock, horror, physical infrastructure is expensive."

"However, the quality of modern fibre means it only has to be laid down once, and rarely replaced. Maybe once every couple of decades or so."

But even laying it down ONCE is prohibitively expensive. Put simply, they very act of DIGGING is expensive, full stop, for one of three reasons: 1) the area you're digging is already built up, so you have to get permissions to tear them up, block them, or find convoluted ways around them; 2) you're crossing sensitive ground and therefore need environmental analyses and so on, since spoiling natural resources is increasingly a no-no; or 3) you've got to to A LOT of it.

Laying down ANY cable, regardless of the amount, is the hard part here.

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Re: "Shock, horror, physical infrastructure is expensive."

"I guess google have quit thinking big and would rather concentrate on short term ROI these days."

They're a public company. The investors FORCE them to think short-term.

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Anonymous Coward

Public works end up being footed by the taxpayers. Ask them how they feel about tax hikes.

Lower or eliminate bribes and over-expenditure to pay them, and I'm quite sure money for that magically appear...

Actually I'd like my taxed to be used for something useful and not be thrown away in subsidies for people who in turn elect those people who bribes them...

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So...

No light at the end of the tunnel .... errr Ducting then!

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Oh well

Plenty more money to waste on self driving cars instead then.

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Re: Oh well

Unless they charge train rates for what are essentially taxi rides, self-driving cabs will suffer the same taxi stigma.

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Re: Oh well

In comparison they're much cheaper. They're also a pure technology play with a potential massive dividend on selling / licensing the results.

Becoming an ISP requires massive initial capital outlay with the promise of steady cashflow at some point in the future. But it never really fit in with the rest of the business which is OTT. Add to that the retrenchment tactics of the monopolistic incumbents.

Doubtless some of the technological lessons learned from the project will find their ways into other projects, particularly the Nest stuff.

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Welcome to telco, Google.

costs a million bucks a mile to lay fiber. without lighting it up. you can't white-box your way out of that one.

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Who in their right mind ...

... would want Google as their ISP ...

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Anonymous Coward

Re: Who in their right mind ...

The rates Google were charging made the incumbents look like Scrooges. Cheap sells.

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Unhappy

Re: Who in their right mind ...

Some users can apparently only choose between Verizon, AT&T and Google. The first two offer eye-watering prices and customer service, and Google makes sure you're never alone browsing the interwebs.

Tough choice.

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Re: Who in their right mind ...

Nearly everyone in the southeastern suburbs of Salt Lake City, for one example. My present alternatives include Comcast (high price, pretty good speed) and CenturyLink (lower price, max available speed "up to" 20 Mbits/sec). Goole have started turning on fiber in SLC proper, but never got around to stating plans for the suburbs.

As an aside, there was a multicity consortium, UTOPIA, which pretty much stalled 5 or more years ago before reaching many of its potential customers. So much for government doing the job.

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Re: Who in their right mind ...

As others have mentioned, it depends on your options. I had a choice between AT&T and Comcast. I was leaning toward AT&T and getting basic connectivity. (I don't have a great deal of traffic) I had the full speed Google fiber active for a year at $70/month. During that time I had 4 outages that always seemed to happen when I was out of town, meaning my systems were off line for close to a week each time. I had one poorly installed cable (service call to change the fiber connector), one fiber jack failure (likely was the issue for the first call), and at least two outages where Google was tinkering with configurations and reset my router to 'default' settings. Since I had ports forwarded and didn't use 192.168.0.x, it required me to reconfigure each time. Which required a call to tech support because resetting the router caused it to stop recognizing the Google supplied password. This of course means the front line support can't fix it and have to pass it to the back office team that only works M-F 8-5. After a year I gave up and downgraded my service to the free option. And I've had no problems in the year since.

It took about 6 months from sign up to connect for me. My mom signed up about a month after I did and it was over a year before they contacted her to install. In the mean time Time Warner gave her a much better deal to upgrade with them. So there are two subs that Google lost through mismanagement.

I suspect they would have had a much higher uptake if it didn't take so long between sign up and install. Considering many had already been waiting for quite a while from announcement to sign-up.

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Anonymous Coward

Re: Who in their right mind ...

Google is your ISP if you use google.

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Re: Who in their right mind ...

Do you think the other ISPs don't inspect your traffic just as much?

Google's US ISP play was about jumpstarting the broadband market so that things like YouTube UHD would be more viable. Google needs good infrastructure to sell and serve ads.

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Anonymous Coward

Who wants hardware?

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Free market cures all ills

Except that it doesn't. It will never pay out unless it has a quick return. Even the US railroad example: the first railroad buildings threw up shoddily-built track, such that the US Corps of Engineers had to follow on a few years layer and rebuild and repair grades, cuts, trestles, etc. The myth of the mighty capitalist was, in fact, a story of buccaneers grabbing Gov't goodies (land etc) in return for the minimum possible build, with the Gov't having to pay to make it safe, while the railroads continued to soak the market until that wasn't possible any more.

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deployed to wrong markets

so you rolled it out in large cities that already have a lot of competition and wonder why the sign up rate is so low.....

Why not go for areas with low completion or none at all. where i live i can only get satl. internet there is no broadband otherwise. only one company ATT and they have no intention of doing fiber wanting to force all the users to their over priced "wireless" options.

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Re: deployed to wrong markets

The areas with low competition are that way for a reason: not enough userbase to justify it. Odds are the one provider ONLY agreed to build on condition of exclusivity. It's as noted in the article. Running wire out to the sticks (or even small communities far from a trunk line) costs money and usually involves environmental hoop-jumping (a necessary evil if you want to protect precious natural resources). They're going to demand a return on the investment.

And don't think the government can bail you out of this jam. Federal, state, and municipal budgets are strained as they are, and no one's going to accept a tax hike, not even for broadband. Many will just make do; they did it with 14.4kbps before, they can do it again. Who needs 10Mbit/sec anyway?

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Bugger. Not going to come over here and give Opensore a run for its money then. That was always going to be a dream though I guess.

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selective wireless?

" selective wireless, rather than wireline infrastructure. It’s a lot cheaper."

Also 1000x more power hungry, and 10,000 times (or much worse) capacity / speed per customer.

It's not actually even cheaper per user than fibre if a per user minimum 10Mbps at peak time and design contention of 20:1

Wireless is just a cheap way of adding undefined coverage with almost no subscriber install cost.

Only point to point microwave links give better than 10 Mbps at peak time at low contention, You don't need many users on 100Mbps LTE to see speed drop to 0.5Mbps, as the headline speed is a perfect signal at full strength and one user. For a sensible size cell with just 10 users the average can be 3Mbps.

Ancient analysis, not out of date as you can't repeal Thermodynamics.

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Re: selective wireless?

"It's not actually even cheaper per user than fibre if a per user minimum 10Mbps at peak time and design contention of 20:1"

It is when you're more than a couple miles from a trunk like or have something environmentally sensitive between you and it. The big cost in wired broadband is the wire (both installation and maintenance). At least you don't have to maintain air, and rural transmission permission is likely much easier than with land rights: less chance of interference.

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Re: selective wireless?

"Ancient analysis, not out of date as you can't repeal Thermodynamics."

You may not be able to repeal, but you can still cheat it and find ways to cram more stuff into the same spectrum until you hit the Shannon Limit.

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