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All-IP Network Produces $100B Real Estate Windfall

timothy posted more than 2 years ago | from the they're-not-making-any-more dept.

AT&T 229

Hugh Pickens writes "Daniel Berniger writes that one of the unexpected consequences of AT&T's transition to HD voice and all-IP networks is that the footprint of required network equipment will shrink by as much as 90 percent, translating into a $100 billion windfall as the global telecom giant starts emptying buildings and selling off the resulting real estate surplus. Since IP connections utilize logical address assignments, a single fiber can support an almost arbitrary number of end-user connections — so half a rack of VoIP network equipment replaces a room full of Class 4 and Class 5 circuit switching equipment, and equipment sheds replace the contents of entire buildings. AT&T's portfolio goes back more than 100 years, even as commercial real estate appreciated five fold since the 1970s, so growth of telephone service during the 20th century leaves the company with 250 million sq ft of floor space real estate in prime locations across America. 'The scale of the real estate divestiture challenge may justify creating a separate business unit to deal with the all-IP network transition,' writes Berniger, who adds that ATT isn't the only one who will benefit. 'The transition to all-IP networks allows carriers to sell-off a vast majority of the 100,000 or so central offices (PDF) currently occupying prime real estate around the globe.'"

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Watch it be sold off for a song (1)

Anonymous Coward | more than 2 years ago | (#39010533)

Somebody will benefit from it, but not the customers. We're not important enough to merit such consideration.

Re:Watch it be sold off for a song (5, Interesting)

TapeCutter (624760) | more than 2 years ago | (#39010591)

Oh I don't know, back in the late 70's I was paying $2/min + operator's fee to call the UK from Oz, equivalent to about an hour's minimum wage per min. Now it's about $4/hr and min wage is ~$15/hr. By my reckoning that's a couple of orders of magnitude drop in prices over the last 35yrs.

Re:Watch it be sold off for a song (1)

the Hewster (734122) | more than 2 years ago | (#39010595)

I pay 0€/min to call oz from France using the freebox.

Re:Watch it be sold off for a song (1)

Anonymous Coward | more than 2 years ago | (#39010635)

There's no such thing as a free call, unless you're using a gifted HAM radio.

Re:Watch it be sold off for a song (1)

DarwinSurvivor (1752106) | more than 2 years ago | (#39011531)

There's no such thing as a free call, unless you're using a gifted solar powered HAM radio.

Re:Watch it be sold off for a song (3, Insightful)

poetmatt (793785) | more than 2 years ago | (#39010769)

That's because of advances in technology and competition, not because of ATT passing their savings onto you.

Re:Watch it be sold off for a song (2, Funny)

Anonymous Coward | more than 2 years ago | (#39010815)

I thought you used hot air balloons, rainbows, big storms, and magic shoes to call Oz. Just don't pay attention to the man behind the curtain...

Re:Watch it be sold off for a song (0)

mwehle (2491950) | more than 2 years ago | (#39011237)

How are you defining "order of magnitude"? Commonly this means a factor of ten, so if your phone call today is a couple of orders of magnitude less expensive than in the late 70's, the cost of today's phone call would be about 1 percent the previous cost. In your example, however, the current price seems to be about 26 percent of the previous price.

Re:Watch it be sold off for a song (5, Informative)

Anonymous Coward | more than 2 years ago | (#39011493)

Then you need to practice your unit conversions, here's a trick I learned in engineering - put each conversion ratio in parentheses and make sure the numerator and denominator are equivalent. Then add as many ratios as necessary to convert all unwanted units into something relevant. This technique makes it possible to do complex unit conversions while guarding against careless mistakes. A quick double-check that each unwanted unit occurs exactly once in each a numerator and denominator so they can be canceled, and you're good to go.

Old price = $2/min * (1 man-hour/$2) = 1 man-hours/minute
New price = $4/hr * (1hr/60min) * (1 man-hour/$15) = 0.0044 man-hours/minute
Or 225 times cheaper for a minimum-wage worker, clearly more than 2 orders of magnitude.

Re:Watch it be sold off for a song (0)

Anonymous Coward | more than 2 years ago | (#39010633)

Won't be sold off for a song. AT&T will profit greatly.

Re:Watch it be sold off for a song (2, Insightful)

Anonymous Coward | more than 2 years ago | (#39010903)

Um, the real estate belongs to AT&T, not its customers: precisely what is it that the customers are supposed to expect from any sale of real estate?

Re:Watch it be sold off for a song (2)

todrules (882424) | more than 2 years ago | (#39011615)

Um, the real estate belongs to AT&T, not its customers: precisely what is it that the customers are supposed to expect from any sale of real estate?

More real estate flooding an already over-saturated market, dropping prices even further.

So... (5, Funny)

Bradmont (513167) | more than 2 years ago | (#39010539)

So this means they'll be able to charge less for service, right?

Re:So... (0)

Anonymous Coward | more than 2 years ago | (#39010547)

In ur dreams...

Re:So... (5, Insightful)

Anonymous Coward | more than 2 years ago | (#39010559)

Being able and actually charging less are two very different things.

Re:So... (0)

Anonymous Coward | more than 2 years ago | (#39010575)

Yes, it does!

Look forward to brand new super fast and super cheap broadband in a state near you!

Please mod parent Funny (5, Insightful)

AliasMarlowe (1042386) | more than 2 years ago | (#39010577)

They're reducing their costs, not their prices.
Prices will go down if there is competitive pressure. Which apparently, is largely absent from the US market.

Re:Please mod parent Funny (4, Insightful)

Anonymous Coward | more than 2 years ago | (#39010599)

Yes. Cheaper running costs, not only from the reduced equipment demands, but from all the staff that they no longer need to employ to fill all of those buildings.
So, they make hefty profits from all this, a lot of people lose their jobs and naturally prices will rise, because customers need to pay for this amazing new technology that'll give them 'better service quality.'
I may love technology and improved efficiency, but I can't help seeing this kind of thing and thinking that we (i.e. everyone except the telecom companies) might be better off without it.

Re:Please mod parent Funny (4, Insightful)

GLMDesigns (2044134) | more than 2 years ago | (#39010767)

Look at movies from 50 years ago and see the floors full of secretaries. Those jobs are all gone now. Look at movies from 100 years ago. There were horses. The horse-shoers all lost their jobs. 120 years ago 80% of Americans worked in farms now 2% do. Look at all those lost jobs.

Efficiency is good. It helps.

If what you were saying was correct we should get rid of concrete mixers and pumps and have slews of people mix the concrete and carry it in buckets to where it needs to be poured.

That would be silly wouldn't it. Again increasing efficiency in the system is a general good.

Re:Please mod parent Funny (4, Interesting)

AliasMarlowe (1042386) | more than 2 years ago | (#39011223)

Look at movies from 50 years ago and see the floors full of secretaries. Those jobs are all gone now. Look at movies from 100 years ago. There were horses. The horse-shoers all lost their jobs. 120 years ago 80% of Americans worked in farms now 2% do. Look at all those lost jobs.

I get what you're saying, but sometimes the details are more complicated than a first impression would suggest.

For instance, the population of horses in the US [horsetalk.co.nz] has been increasing since the 1950s, but is still only half its peak of roughly 20 million which occurred about a century ago. The number of farriers in work has probably tracked the number of horses (farriers also put shoes on mules, but there is much less demand for this). Of course, many horses are used for recreation nowadays rather than for work, so the breed proportions have shifted from mostly coldblood draught horses to mostly warmblood and fullblood riding horses. Also, the geographic distribution has changed so that most horses live in regions just outside urban areas, rather than in farmland; the farriers' work has followed the horses.

If you dig around on the web, you can find some historical estimates of US horse populations, which can be taken with as many grains of salt as you think appropriate:
1867 = 8 million
1915 = 21 million
1940 = 6 million
1950 = 2 million
1960 = 3 million

efficiency is all fun until the revolution (0, Flamebait)

decora (1710862) | more than 2 years ago | (#39011233)

those old industries were replaced by new ones. well, now, there are no new industries. and the social safety net, to keep people afloat between careers, is being destroyed by ideologues.

you can argue all you want about efficiency, but at some point, when you have 50% unemployment, and you just have masses of people wandering the streets with nothing to do and no opportunity to work, they either have to depend on their parents, or starve to death. in that case, efficiency is not 'better'. its a recipe for a violent, horrific, bloody revolution, brought about by mass starvation. see Russia, 1917

Re:efficiency is all fun until the revolution (3, Insightful)

Alomex (148003) | more than 2 years ago | (#39011343)

You are making the same argument that Luddites were making in England 200 hundred years ago. What happened in between is that the work week went down from 76 hours a week to 40 hrs a week. A similar move needs to happen now, but with increase in vacation time to about a total of two months a year.

Problem is that this would mean a modest drop in wages so you wouldn't be able to afford your McMansion and second SUV in the garage but we as a society just don't seem ready to give that up.

Re:Please mod parent Funny (0)

Anonymous Coward | more than 2 years ago | (#39011477)

Good or bad, it is amusing the way the article avoids mentioning the additional financial benefits that will come from related job reduction (at least janitorial and security staff, if everyone else is already gone).

Re:Please mod parent Funny (2)

DerekLyons (302214) | more than 2 years ago | (#39011107)

Yes. Cheaper running costs, not only from the reduced equipment demands, but from all the staff that they no longer need to employ to fill all of those buildings.

Virtually all of those buildings are the equivalent of a modern data center - they don't employ all that many staff (relative to their size) in the first place. Plus, that number has already been steadily dropping for decades as the equipment has decreased in size and amount of maintenance required.
 

So, they make hefty profits from all this, a lot of people lose their jobs and naturally prices will rise, because customers need to pay for this amazing new technology that'll give them 'better service quality.'

Well, you're at *least* a decade too late in your concern. The people have already lost their jobs with each wave of upgrades, and the new technology is already widely deployed. (Which is, duh, why they have a surplus of floor space.)

Re:Please mod parent Funny (2)

GLMDesigns (2044134) | more than 2 years ago | (#39010609)

Absolutely. If there is no downward pressure on prices then prices will not fall. But there is. Landlines are falling by the wayside (don't have the figures handy) and there is competition among the wireless services. Right now ATT may have a temporary windfall but I don't see it lasting that long.

Re:Please mod parent Funny (2)

DarwinSurvivor (1752106) | more than 2 years ago | (#39011567)

Have you noticed that most of the landline companies and most of the cellular companies are actually the SAME companies? Why would they compete against themselves?

Re:Please mod parent Funny (4, Insightful)

Rockoon (1252108) | more than 2 years ago | (#39010735)

It is unlikely that the costs that these properties incur are significant compared to the total operating costs of AT&T. The $100 billion is in the value of the properties themselves, and as such the sale of them arent supposed to effect the price of service that AT&T provides.

Car analogy: You are an independent contractor and own a $60,000 car. You wouldn't charge less for your services just because you sold the $60,000 car.

Re:Please mod parent Funny (3, Insightful)

timeOday (582209) | more than 2 years ago | (#39010887)

Prices will go down if there is competitive pressure.

It might happen. One company's "windfall" at operating with reduced capital is another company's reduced barrier to entry. In your own job, if your workload suddenly drops, do you think, "whee, now I can goof off all day," or do you think, "uh oh."

Re:So... (3, Insightful)

LWATCDR (28044) | more than 2 years ago | (#39010625)

Actually long distance has really come down a lot. You can get unlimited long distance on most land lines pretty cheap and most cells have unlimited long distance nights and weekends. There was a time when long distance was super expensive. Even 12 or so years ago it was not all that cheap. Today it really is pretty dang cheap. I would say that a lot of the benefits are already here.
I guess no one here took economics. Demand drives pricing not the cost of production. If you can produce a high demand product inexpensively you make big profits. Ideally competition drives down prices because the costs are low enough that others will undercut your pricing. That has actually been working in the long distance phone market in the US. VOIP providers like Vontage, Comcast, and so on plus cell providers have pushed down the cost of land line long distance. The Telcoms are pretty evil as a rule but voice long distance pricing is not exactly one of their big sins today.

Re:So... (3, Informative)

postbigbang (761081) | more than 2 years ago | (#39010745)

You also need to remember that the older AT&T said that ATM (Asynchronous Transfer Mode) and LAN-E (Ethernet over ATM) would rule the world.

They invested in tons of stuff, and only the dark fiber is paying back. Now, scattered through neighborhoods across the country, are enormous beige cans full of DSL equipment, blighting the hemisphere. Instead of doing FTTH, they continue do deploy various versions of DSL. Their "micro central offices" get state sanctioned easements and right-of-ways that the new AT&T rarely has to pay for.

Utilities once belonged to the people, and the rights of ways and easements were granted to them. Now they own this stuff, just like when the mutual insurance companies were gobbled up by WellPoint and others, they turned enormously valuable assets into private enterprises owned by shareholders. People that owned the mutuals got benefits, but not in proportion to the new for-profit shareholders.

Conclusion: tax the living hell out of AT&T's real estate property assets. Tax them like a noose.

Re:So... (2)

demonlapin (527802) | more than 2 years ago | (#39011609)

Utilities once belonged to the people

Not in the US, they didn't. Aside from municipal water supplies (which arose largely because installing water and sewer systems involves ripping up all your streets, something that isn't going to work without local gov cooperation) and the US Government's hydroelectric power organizations, utilities are private. In many rural areas, water is provided by privately-owned co-ops.

Not "be able to" but "have to" (3, Insightful)

overshoot (39700) | more than 2 years ago | (#39010631)

Their land-line business is regulated at set rates of return on investment. Sell off the capital base and they'll be required to reduce their land-line rates proportionately.

Or at any rate, that's the theory. Actual results depend on public rate commissions. Wise citizens pay careful attention to them, and this is an election year.

Re:Not "be able to" but "have to" (1)

SomePgmr (2021234) | more than 2 years ago | (#39010667)

I wonder if they could take the cash windfall and pump it into infrastructure, call those infrastructure investments, "cost of doing business" and keep the rates high by amortizing those costs. Triple win for them. Better network, significantly lower recurring costs, keep the rates high.

Not rate of return any more (2)

isdnip (49656) | more than 2 years ago | (#39011527)

The large (Bell and other) telephone companies are not regulated on rate of return any more. They are on "price caps". Only the smallest carriers, the mom'n'pops and subsidy-dependent rural ones, are on rate of return. That's why the Bells have laid off so many people and stopped investing - they are milking their old plant for all it's worth.

Re:So misleading. (0)

Anonymous Coward | more than 2 years ago | (#39011499)

at&t Isn't AT&T it's a baby bell which adopted the name.

Cheaper bill? (-1)

Anonymous Coward | more than 2 years ago | (#39010541)

And will that translate to cheaper bills for customers? Just wondering..

So windfall for them.... (0)

Anonymous Coward | more than 2 years ago | (#39010551)

but the end consumer won't see crap out of it, including improved network performance, capability, or reduced costs...

Not lower bills, higher margins, bigger bonuses. (2, Insightful)

erroneus (253617) | more than 2 years ago | (#39010555)

Need I say more?

And the buyer is... (0)

Anonymous Coward | more than 2 years ago | (#39010571)

... the nsa, to put more snooping equipment in. Cheap too, that with the real estate bust and all that.

Office space glut! (2, Insightful)

Anonymous Coward | more than 2 years ago | (#39010573)

The summary sounds all rosey and it is just as simple as selling off unused office space. In order to sell something you need someone willing to buy it. It sounds like the office-space market is going to get flooded with office-space getting sold at liquidation prices in an already sucky economy. How many people are out of work and how many companies have folded? There's already lots of empty buildings. Oh, you now AT&T will unload even more office space? Yeah, this sounds great! Sigh.

Office space? Data center space. (4, Informative)

snsh (968808) | more than 2 years ago | (#39010617)

Many of those telco facilities will probably remain as data centers, not office space. They're already built out as data centers.

Re:Office space? Data center space. (0)

Anonymous Coward | more than 2 years ago | (#39010671)

Fine. It will be a Data Center glut.

Re:Office space? Data center space. (1)

otis wildflower (4889) | more than 2 years ago | (#39010807)

So... Colo glut?

Re:Office space glut! (1)

Nutria (679911) | more than 2 years ago | (#39010621)

Eeeevil Landlords are going to suffer (yay!!!) because rents will plummet, and commercial construction will plummet throwing even more laborers out of work (boo!! or yay if your goal is to foment revolution).

Of course, ATT could just hold on to most of these hard assets, selling them off slowly while boosting their balance sheet in the meantime.

or managers can claim 'future revenue' and pad (1, Interesting)

decora (1710862) | more than 2 years ago | (#39011261)

their bonuses for the current quarter, telling everyone they 'made 100 billion dollar profit' for ATT. then they quit ATT and move to some other 'finance' job where they pull similar tricks. now maybe ATT later goes bankrupt because what it had book as 100 billion in assets could never be sold for 100 billion, and one weekend everyone realizes this at once and there is a massive selloff and dis-investment. (hey, its the mortgage meltdown all over again).

then we get the ATT bailout, and a bunch of other bailouts for the commercial real estate investors, etc etc. yay capitalism. yay efficiency.

Re:Office space glut! (1)

Larryish (1215510) | more than 2 years ago | (#39010729)

Which means that small businesses and start-ups can afford more floor space.

Successful business doesn't just mean bringing a good product at the correct price with effective advertising.

Successful business also means looking over this corpse of an economy and picking the eyes out of it.

Re:Office space glut! (1)

TheRaven64 (641858) | more than 2 years ago | (#39010805)

Not really, because they're quite geographically diverse. $100bn sounds a lot, buy then that's only $2bn per state. Given the cost of office space in city centres, that can be as little as one floor of an office building in each major population centre in the USA. Finding someone who wants to buy it all is likely to be impossible, but finding people who want each bit should be quite easy. On the other hand, finding someone willing to pay 15% of the sale price per annum is also probably quite easy, so it's a bit surprising that they want to sell it - $15bn / year in the profit column would probably look quite good on the balance sheet and would mean that they could easily reclaim some of it if they needed more space in the future. Unfortunately, execs get bigger bonuses if they sell off assets that aren't needed right now...

Re:Office space glut! (1)

w_dragon (1802458) | more than 2 years ago | (#39010927)

AT&T's core business is telecom, not renting real estate. Real estate requires a whole bunch of lawyers and employees that aren't required for running a phone system. Companies that try to profit off things that aren't really related to their business tend to have trouble competing with companies that focus on an area.

Re:Office space glut! (2)

TheRaven64 (641858) | more than 2 years ago | (#39010977)

So you spin off a wholly owned subsidiary to do the management. AT&T leases them the buildings for $10bn a year. If they make less from them than that, then it's a tax write-off. If they make more than that, AT&T gets a dividend.

Re:Office space glut! (1)

mjwalshe (1680392) | more than 2 years ago | (#39011445)

and Central offices/ Exchanges aren't your normal office blocks in design so its not just a simple switch from one use to another.

Alas, they have to buy spyware with the savings (2, Interesting)

davecb (6526) | more than 2 years ago | (#39010601)

The Australian telcos, who are being converted to an IP backbone, found there were some difficulties. Because they must operate a wiretapping facility [citation needed] for their various police forces, they have to invent and build one for voice over IP. Being a new initiative, this is fraught with risk, unexpected costs and scalability issues.

This will be true of any telco in a legal regime where the government requires the telephone companies to provide the mechanics needed for spying on their customers.

--dave

Re:Alas, they have to buy spyware with the savings (3, Interesting)

cdrudge (68377) | more than 2 years ago | (#39010613)

They don't have to buy the spyware. The government will buy it for them.

Re:Alas, they have to buy spyware with the savings (2)

stefanb (21140) | more than 2 years ago | (#39010713)

Not where I come from. In Europe, telco's have to foot the bill for lawful intercept equipment. They can charge the agencies only a nominal fee for intercepts. Industry organisations have estimated the additional capital expenditure at up to a hundred million Euros for Germany alone.

Re:Alas, they have to buy spyware with the savings (2)

davecb (6526) | more than 2 years ago | (#39010861)

That's true of Canada, too.
As far as I know, it is also true of the U.S.: the telco must be able to wiretap a certain percentage of their customers without service degradation, and do a traffic analysis of up to 100% of their customers at all times. The latter is easy for telephone companies: they just use their existing billing systems.
The latter is easier in Europe, where billing for local calls is normal, and amazing hard for non-telco IP shops (ISPs), as they don't bill by the connection.

--dave

Re:Alas, they have to buy spyware with the savings (2)

Splab (574204) | more than 2 years ago | (#39010909)

Not so fast there. Here in Denmark, police will show up with their own hardware and ask to have a port replicated.

Are you referring to the laws of logging? Those are incurred by the ISP and they can charge for police to lookup information; but when it comes to wiretapping police generally don't want the telco workers to know who is being looked over the shoulder.

Re:Alas, they have to buy spyware with the savings (1)

trevelyon (892253) | more than 2 years ago | (#39011025)

This is true in Europe. I worked on a IP over satellite project there and our project had to fund the lawful interception for all countries in the footprint. I'm unsure of how it is done in the U.S. because even before the patriot act some of the things they were doing were very questionable as to being constitutionally legal (carnivore anyone). It's in the government and telcos best interest to just be quiet about things like this.

Re:Alas, they have to buy spyware with the savings (1)

oPless (63249) | more than 2 years ago | (#39010781)

VoIP wiretapping is easy if you you run a VoIP server - how do you think all those wonderful call centers record your conversations "for training purposes" ?

Re:Alas, they have to buy spyware with the savings (1)

DarwinSurvivor (1752106) | more than 2 years ago | (#39011589)

VoIP wiretapping is easy if you you run the VoIP server the person is calling - how do you think all those wonderful call centers record your conversations "for training purposes" ?

There's a problem here (5, Insightful)

overshoot (39700) | more than 2 years ago | (#39010619)

Regulated monopolies are generally allowed a fixed return on investment. For instance, all of that copper laid down in the twenties though the seventies is listed as an asset that the telcos get a few percent profit on each year. And that includes those buildings.

That means that AT&T will make a windfall of billions, but will also reduce their capitalization (and thus profits) going forward. They'd best invest wisely.

Re:There's a problem here (1)

transporter_ii (986545) | more than 2 years ago | (#39010645)

As a monopoly, they should be required to invest some of the windfall into running DSL to rural locations. In fact, they should want to do this anyway, because people who have data, don't need a land line. That's the one ace in the hole they have, to make people keep a land line and pay for a cell phone, otherwise, it's just a cell phone.

But in our culture of greed, the choice between smart investments that will pay off later, vs. HUGE bonuses now....that's a tough call.

Re:There's a problem here (5, Informative)

tgd (2822) | more than 2 years ago | (#39010717)

As a monopoly, they should be required to invest some of the windfall into running DSL to rural locations. In fact, they should want to do this anyway, because people who have data, don't need a land line. That's the one ace in the hole they have, to make people keep a land line and pay for a cell phone, otherwise, it's just a cell phone.

But in our culture of greed, the choice between smart investments that will pay off later, vs. HUGE bonuses now....that's a tough call.

Infrastructure run to rural locations *never* pays off later. It never has, and it never will. The only reason rural places even have phone service is because the government taxes everyone else and pays the telcos to provide it. For some strange reason in the US, we believe that you have a right to infrastructure no matter where you live. You can pay 1/10th the cost of living of being in a city, and make the people in the city pay for your subsidized access.

Verizon was smart in New Hampshire when the state pulled that BS on them. The state said "if you run FTTH in any town in NH, you have to run it to EVERY town in NH". The problem with that? Northern NH is very rural and very poor -- a combination that means the cost for running fiber is astronomical and very few people would even buy the service. Verizon told the state to screw, and sold everything to Fairpoint and pulled out entirely. The end result? Not a single new town in the state has fiber service, everyone who had it has dramatically lower quality service, and Verizon avoids a money pit. Everyone loses except Verizon.

I find it strange that you're advocating forcing corporations to subsidize people who don't want to take the responsibility of the choices for where they live, and you've got a Ron Paul sig. Very strange, that.

Re:There's a problem here (4, Interesting)

JoelClark (150479) | more than 2 years ago | (#39010785)

NH politics aside, I don't think we want to build a society where you must live in an arcology just to get basic infrastructure. Yes I am using hyperbole, but it is to shed light on the obvious flaw in your thinking. Believe it or not, corporate america could actually have the aim of making our country a better place if our society actually valued that.

Re:There's a problem here (3, Interesting)

Oligonicella (659917) | more than 2 years ago | (#39011403)

"I don't think we want to build a society where you must live in an arcology just to get basic infrastructure."

It's a philosophy, not a construct, but I get it and to answer, we don't. Basic infra - elec/phone - has already reached all but the most remote areas. So, there's no need to fret that.

If, however, you seriously believe that if I choose to move literally two hundred miles from anywhere, society has an obligation to run "basic infrastructure" out to me? Please.

When I bought my farm I knew before I moved there it was in the sticks. Guess what? I had elec and phone. Those are the "basic infrastructure". Water is called a well and septic takes various free forms. High-speed and other tech advancements are not "basic".


"Believe it or not, corporate america could actually have the aim of making our country a better place if our society actually valued that."

Our society valued forcing them to, or our society valued making our country a better place? Those are not inclusive concepts by nature.

Re:There's a problem here (-1)

Anonymous Coward | more than 2 years ago | (#39011473)

actually from logical side optimal would be if 98% of people would live in BIG cities and 2% (or less if we can make food with less people using technology advancements) should be living on crops-land/farm-land and working as farmers.

for those 98% FTTH and other costly infrastructure should be feasible
for those 2% no point subsidizing anything, simply let costs of those people rise, and subsidize produce like we do already so it stays competitive with 3rd world countries, cost of producing food.
  - internet can be point to point wireless link (much faster and cheaper in long term)
  - local electricity generators(diesel/bio-fuel)/sun/wind generators (no point transferring electricity for them from the other end of country),
  - local small scale sewage processing equipment/water purification equipment that can also be used at same time for watering crops, providing water to farm animals ...
  - since they have point to point wireless link we could use combination of home schooling and distance learning instead local schools
  - post delivery could be severely reduced to 1 day/week for them (or even less as in ONLY when it is needed), for both letters/amazon orders and farm/crop items (like seed for example)
  - for hospital it could be more optimal using choppers for rare occasions that these people get some more serious disease or if its not serious people in their household could drive them few hours to nearest hospital, or if distance detection/prescription is option (with some local automatic medical equipment on location) doctor could use that same internet
  - for cell phones local cell tower on their house would be perfect low cost option, and wireless connection for land phone if they really need it
  - for store use Amazon/E-bay instead taking advantage of those once-a-week deliveries
  - for entertainment internet TV (cable TV over wireless internet) and internet itself are good enough

in my opinion:
  - living in big city - optimal
  - living in very small 100% farm ONLY community (no post office, police, traffic police, local school, hospital or anything similar) not optimal but we have to make food somewhere, so minimize infrastructure costs per FARMING person
  - living in small town - not optimal i can not see any need for these, except to provide nice suburban-like small community for RICH folk to increase their quality of life, and in that case they are more than able to pay for any infrastructure needed themselves (since they are rich)

also we should try to reduce number of farmers needed as much as possible, maybe even lower than 1% of population ( less than 3 million for entire America)

Re:There's a problem here (1)

O('_')O_Bush (1162487) | more than 2 years ago | (#39011039)

I see that aws a problem with our communication infrastructure being privatized, not with people living outside of cities for their plethora of valid reasons.

Re:There's a problem here (0)

Anonymous Coward | more than 2 years ago | (#39010703)

Or policymakers could look at this glaring detail and rewrite rules to determine profit so they're based on goals like rural coverage, QOS, or new services introduced.

When you're done laughing, remember to tip your waitresses -- I'll be here all week.

Re:There's a problem here (0)

Anonymous Coward | more than 2 years ago | (#39010997)

I'm sorry, but didn't the divestiture of the 1980s (1984) eliminate the "regulated monopoly" thing ?? They are no longer required to provide service, like was stipulated in the 1934 consent decree. ALSO, he IS right about the Copper, BUT, they started eliminating copper in the late 1970s. Replacing it with an Aluminum alloy. So there MIGHT be less copper than we imagine.
The tenet is correct, though, AT&T will reap a significant amount of money, AND a reduction in taxes. And give us less, and POORER service as a result. BUT, do NOT look for the elimination of the Central Office just yet. a VAST majority of the plant is still 48 volt, Tip & Ring. In oder to GET dialtone, and DIAL, a LOT of the switching equipment will have to remain in place until ALL the household equipment is recovered AND upgraded.
This will take YEARS.

Reduced sq ft means less jobs? (2)

abdupattoh (2431326) | more than 2 years ago | (#39010649)

It seems to me that a half rack of equipment of gonna take a lot less employees on site to babysit than rooms of equipment. Sure some of those jobs will stick around with the new business that takes over, but that will seemingly be the huge cost reduction for the company.

Re:Reduced sq ft means less jobs? (2)

grumling (94709) | more than 2 years ago | (#39011149)

It's even better: Since it only takes up 1/2 a rack, you just put in 2 of them. When one fails, just swap over to the backup. Send a tech out in a few days to swap out the bad part (or better yet, send a Cisco tech out to swap out the bad part), while the NOC watches.

Re:Reduced sq ft means less jobs? (0)

Anonymous Coward | more than 2 years ago | (#39011209)

You figured it out... That is exactly what they are doing.

But my rates will still go up (3, Insightful)

TraumaFox (1667643) | more than 2 years ago | (#39010661)

So really, how much of that $100 billion will actually be reinvested for things like improving national infrastructure and providing better service to customers, or anything that isn't cutting bigger bonus checks to top execs?

There's some bad things to go along with this. (1)

pecosdave (536896) | more than 2 years ago | (#39010685)

For regular voice it's not really a problem, but for other things it can be, fortunately those are going away also.

The problem is digital voice. IP Voice service almost always has some compression and decompression involved which creates a delay between a word being spoken and being heard. This is why you get an echo instead of feedback when you have your buddy has his speakers up to high on a Skype call. Usually not much of an issue, but I have noticed an increase in trying to talk over the top of one another since voice has gone IP. Used to the near instantaneous transmission the older equipment had let you pick up on ques from the other side that allowed for more politeness.

This doesn't matter much to most people, but it's why NASA went with analog over fiber for the DVIS system [nasa.gov] (which I have a minor role in supporting at JSC) and why the VIS system we are slowly replacing it with also doesn't use "normal" compressed IP, we're going back to copper on VIS.

It's also going to have an affect on modems. I know most consumers don't use modems anymore and even most business uses have gone away, but there are still some uses here and there, credit card processing, backup connections etc.. The transition to IP for sound can be the work/not work on a less than stellar connection otherwise.

I personally think going to IP is great, but I felt the need to play devils advocate for just a moment.

Re:There's some bad things to go along with this. (1)

pecosdave (536896) | more than 2 years ago | (#39010715)

NEED MORE COFFEE

VIS is the Apollo/early shuttle era system DVIS replaced, and also why the touchscreen devices DVIS uses for terminals are called "keysets" despite the lack of having any keys or buttons of any type. VIS had a pile of push buttons.

No, the system DVIS is being replaced by is called DVICE, it's using copper. It also has touchscreens, only instead of the really old "break the beam" screens it has what I think is a resistive touch screen, but I'm not 100% on the type.

Re:There's some bad things to go along with this. (1)

timeOday (582209) | more than 2 years ago | (#39010971)

Hmm, the problems you note are certainly issues with VOIP using consumer equipment on a shared Internet connection (such as my Ooma device over my Comcast Internet, or your Skype box), but I had assumed AT&T's telephone IP backbone probably has dedicated bandwidth allocations, generous bitrates, and cut-through routing [cisco.com] to avoid the inherent latency of store-and-forward packet switching.

Re:There's some bad things to go along with this. (2)

grumling (94709) | more than 2 years ago | (#39011231)

You are correct. Voice "circuits" still use 64Kbps per call, 4Khz audio rolloff, and very mild compression. About the only thing that may cause problems is latency caused by an over-utilized trunk, but that's almost unheard of. Even the VoIP systems that share normal Internet traffic in the channel can be used with credit card and fax machines.

VoIP can deliver extremely high quality service. AT&T has been using it since the mid-1990s in their long distance network and no one seems to have noticed.

Re:There's some bad things to go along with this. (0)

Anonymous Coward | more than 2 years ago | (#39011113)

All of your 'analog' calls over the public telephone network are already most likely IP based, or at the very, very least digital. This isn't talking about AT&Ts last mile, this is 'edge to edge' routing across AT&T's core. Plenty of bandwidth there.

Pass it on. (1)

sgt scrub (869860) | more than 2 years ago | (#39010711)

AT&T will lay off people, close buildings, and profit thanks to improvements in technology.

Re:Pass it on. (0)

Anonymous Coward | more than 2 years ago | (#39010743)

AT & T bought these things when they needed them. Now that they don't, they're selling what they're not using. What else should they do? To the extent they are a regulated monopoly, they can probably be required to do certain things. Probably someone will tell them.

Has the author visited a datacenter? (0)

Anonymous Coward | more than 2 years ago | (#39010747)

Voice is such a small amount of network traffic these days this will probably just make room for more datacom equipment without expanding. You may be able to consolidate a few, but footprint matters. Shutting down 90% of the COs out there would mean massive rerouting of all the fiber in the country and huge CO-to-home links necessitating FTTH with real optics rather than cheap PON stuff they use today. Not to mention less optimal routing increasing latency and severity when a CO loses power - this falls into the Very Bad Idea category.

Also note the switch to fiber (1)

Antique Geekmeister (740220) | more than 2 years ago | (#39010759)

The bandwidth of fiber optic is ridiculously larger than that of the same weight and diameter of a bundle of copper. So is the electrical cost of a long bundle of fiber, which does not waste anywhere near as much electricity and energy on simple conductive losses of telephone wire driving DC electricity across dozens or thousands of miles of electrical wiring in a single building. Unfortunately, we've turned right around and wasted the resources elsewhere. Providing network traffic to every single electronic device in our homes and offices, "paperless" offices with a dozen times as much useless and unpreserved priinted material going in the recycling bin every day, and the _amazing_ proliferation of electronic spam of every sort continue to overwhelm office resources. Let us also not forget all the glowing LED's and short lifecycle portable devices sitting on recharging stands all day: that represents a very real cost, even though it's coming out of our home and office budgets, not the telephone colmpany's budget.

The tradeoffs are also fascinating Take a very good look at the "fax" business, which remains active for legal documents and all sorts of office document, although every step of the system has been replaced by a superior transmission or reproduction.

RTFA! (0)

Anonymous Coward | more than 2 years ago | (#39010801)

TFA says $500bn, not $100bn! /Stefan

Is it safe? (0)

wisebabo (638845) | more than 2 years ago | (#39010813)

Sorry if I've been living in a cave for the last few years (decades?) but is putting our voice communications over the same technological infrastructure as supports the Internet such a good idea?

I mean isn't having completely separate systems for certain things good? When we have a power outage, the toilets still flush and the (simple) telephones still work. When a water main breaks the elevators still run and... you get the point.

So what happens when a hacker brings down the critical routers supporting a major metropolitan area? Or everyone tries to simultaneously download a video the latest sex tape of Hillary Clinton with Newt Gingrich? Having regular phone services cut off (as well as emergency 911 services) would not be good.

Re:Is it safe? (1)

pecosdave (536896) | more than 2 years ago | (#39010847)

Still different distribution channels. Usually, even if they tie into the same fiber bundle at some point, telephone data is usually isolated from normal internet traffic. Someone correct me if I'm wrong, but on the commercial voice end telephone still gets it's own fibers and will still have it's own powered huts for tying into old fashioned analog phones, even if the back/switching end it IP.

Re:Is it safe? (1)

wisebabo (638845) | more than 2 years ago | (#39011079)

Really? This IP based voice traffic remains separate from "regular" Internet traffic all the way from the originating phone to the end phone?

If true, I'm surprised but I guess that's ok. I can see how converting to packet based technologies WITHOUT sharing the "Real" Internet's infrastructure could still make it worthwhile to do so. I'm a little afraid that there's too much temptation to mix it in with normal traffic (or share other pieces of hardware like routers or even power supplies) to save even more money but maybe there are strict rules against doing so.

Maybe.

Re:Is it safe? (1)

Anonymous Coward | more than 2 years ago | (#39011177)

usually separated yes, and when not, it's virtually separated using MPLS tunnels which are heavily QoS'ed so that telephone traffic has priority over the hello kitty videos

This started long before IP (1)

Anonymous Coward | more than 2 years ago | (#39010839)

I remember about 15 years ago taking a tour of the Verizon central office in Worcester, MA. One floor (I believe under ground) had the backup batteries (and enormous copper bus bars to carry the current), one floor was split into two rooms (one for a Nortel DMS switch, the other room for a Lucent 5ESS), and toward the top of the building, a complete floor of decommissioned electromechanical switching gear. You could smell the old cloth covered wiring and rack after rack of relays. The room, and all its long obsolete equipment, was in essence a testament to the comparative efficiency of the Lucent and Nortel digital switches downstairs.

Multiply this by the thousands of central offices that scattered the US (I remember estimates of 10,000 Class 5 offices at the time), and that makes for a lot of unused space.

The difference is that you couldn't sell just a floor of a telco central office - all you could do is leave it dark and unused. If VoIP makes whole buildings obsolete (and I don't doubt it - I've worked in the industry for three decades now, at Bell Labs, Lucent, and now Cisco, and I have seen first hand the changes in the technology), then the carriers will have a real estate issue to deal with.

I don't know whether unused buildings contribute to the carrier's rate base (i.e., investments and expenses they can use to calculate what they charge). I do know my wireline phone bill is much larger than it was 20 years ago, and I'll be darned if I can justify why.

AT&T market cap is $176bn (1)

Anonymous Coward | more than 2 years ago | (#39010853)

A $100bn windfall in real estate is significantly out of line with their market cap - it would imply the stock is massively undervalued.

A number of posters have suggested this should translate into lower prices for service. Unfortunately, even if it were real (and it is not), this would be a *one-time* windfall and should have no effect on pricing going forward.

What about the batteries? (0)

Anonymous Coward | more than 2 years ago | (#39010871)

Telephone exchange buildings devote at least as much space to the huge lead-acid 48 volt storage batteries which power the system.
Rack after rack, floor to ceiling is stacked with these monsters. That is why when the electric power goes out at your house, the landline telephones will continue to work.

Are the all-IP telephone networks going to eliminate the batteries? If so, it will eliminate the reliability of the phone system. I've lived through
the aftermath of hurricanes where we were without power for days, yet the telephones kept working.

Re:What about the batteries? (1)

grumling (94709) | more than 2 years ago | (#39011279)

No, but since there's not as much equipment to power, they won't need as large a battery plant to get the same runtime.

The big change is that CPE needs to have backup power as well.

I wonder (0)

Anonymous Coward | more than 2 years ago | (#39010915)

I am amazed at the mechanical and electrical complexity of the old phone systems.
How many relays and switches had to move for you to make a phone call from NY to LA with these mechanical switches. Technology and modern methods are much more technical and complicated but with that technology, it is out of site, out of mind I guess. Being done with software and packets, you don't "see it" so it looks less complicated.

Electronic exchanges since circa 1970 (1)

flyingfsck (986395) | more than 2 years ago | (#39010991)

Why only have a 'windfall' now? Electronic exchanges have been around since about 1970, making thousands of electro-mechanical switch buildings obsolete. The latest miniaturization step is just one in a long series.

Where we will lose (1)

Antibozo (410516) | more than 2 years ago | (#39011007)

... if we're really losing all the COs, is in emergency telephone service during extended power outages.

My Verizon FiOS land-line only works for a few hours after a power outage starts, because they provide only a small UPS to operate the network interface at my site. No more full-time talk battery, folks.

What about backup power? equipment sheds don't hav (2)

Joe_Dragon (2206452) | more than 2 years ago | (#39011041)

What about backup power? equipment sheds don't have the same type of backups that the big offices have. And it's a lot to send techs out to each equipment shed with portable generators and keep then fueled. Right now the cable co's some times have to do that and they can't cover the full system with what they have.

Laugh (1)

koan (80826) | more than 2 years ago | (#39011211)

And with it will go jobs the economy slumps again and no one wants to pay for prime real estate, and to boot their phone system will be less reliable, more prone to attacks and hacking.

More Windfall (0)

Anonymous Coward | more than 2 years ago | (#39011331)

When they sold the buildings for the real-estate cash, luckily no personnel occupied those buildings and the decommisioned network equipment didn't need operators.

Unexpected? (1)

subreality (157447) | more than 2 years ago | (#39011389)

Who wasn't expecting it? Reducing your infrastructure footprint is bullet item 1 on practically any presentation on "let's switch from big, stateful, slow circuit-switched stuff to small, stateless, fast packet-switched gear". Is there anyone who's done networking in the last decade that didn't know this? Didn't they get the memo?

Oh, right. AT&T. They don't care. They don't have to.

$100B? Okay.... (1)

R-ballbat (975796) | more than 2 years ago | (#39011435)

This isn't from AT&T, it's from an outside analyst making wild guessimates. There are enough little errors throughout to make me doubt their big numbers. For example, AT&T installed their 145th 4ESS switch in 1999. There were few (if any) remaining 4ESS switches in SBC at the time they took over AT&T. Yet the PDF states that there are 5000 such offices.

The other point is that as older equipment has been removed, newer transport and local access equipment has taken up a good fraction of that freed space. This equipment tends to have higher heat output which either requires lower equipment densities or increased cooling or both. Given the existing HVAC systems and the building designs, this almost always results in more spread out equipment than in the past. Then there's the space for all of the new fiber terminations.

so at&t will be giving some of that back to th (1)

Dan667 (564390) | more than 2 years ago | (#39011467)

since US Taxpayers subsidized large portions of this upgrade, right?

Berninger is simply full of guano (5, Insightful)

isdnip (49656) | more than 2 years ago | (#39011561)

The huge savings in telephone company real estate happened over 20 years ago. Their big buildings were built for electromechanical switching systems, mostly installed between 1920 and 1970. The digital switches mostly installed in the 1980s were a fraction of the size, leaving lots of empty space in the big buildings. Some space has already been repurposed. And some is available, but the Bells don't want to give it up because it would make competition easier.

Most of the real estate still used by telco gear is for line drivers, the stuff needed to run analog phones. Whether these are fed by VoIP or TDM doesn't matter; 90 volt power ring and 48 volt battery take space. They also take power, but home-based analog terminal adapters (local battery) use even more, so centralized power (common battery) is a net savings.

Berninger is simply repeating Cisco memes, that somehow the magic pixie dust of IP makes everything wonderfuler. It's bullshit, but somebody has to call them on it.

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