All-IP Network Produces $100B Real Estate Windfall 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.'"
Re:Watch it be sold off for a song (Score:5, Interesting)
Alas, they have to buy spyware with the savings (Score:3, Interesting)
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 (Score:4, Interesting)
They don't have to buy the spyware. The government will buy it for them.
Re:There's a problem here (Score:4, Interesting)
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:Please mod parent Funny (Score:5, Interesting)
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
or managers can claim 'future revenue' and pad (Score:2, Interesting)
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:There's a problem here (Score:4, Interesting)
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:Please mod parent Funny (Score:2, Interesting)
Look at movies from 50 years ago and see the floors full of secretaries.
And ~30 years ago there were floors full of accountants. Then the spreadsheet came along, and got rid of a lot of the previously manual number crunching.
Remember, "computer" used to mean a person who computed numbers 'by hand'.
Re:There's a problem here (Score:2, Interesting)
Interesting theory. But Verizon got out of the landline business in Vermont and Maine at the same time, because Verizon just didn't want to be in the landline business, coupled with a huge tax advantage they got in transferring debt to Fairpoint, which predictably went through bankruptcy afterwards to shed itself of that debt.
Your theory that universal phone or electrical or internet service in rural America is unfairly subsidized by urban dwellers is also debatable. The value of your phone is greater if you can call even your rural relatives with it. The value of internet commerce is greater if goods are available to and from those in rural areas. And the cost of your big-city rent is lower than it would be if people like me weren't working remotely from rural communities, using the available electricity, phone and internet connections, but instead had to move into the center cities to work.
Without universal services, the overall economy would be smaller, so there'd be less cake to share as wages for city workers, your rent would be higher, because far more of us would have to live in the city to work our trades, and you might save a few bucks a month on your phone bill. Overall, that's a big loss.
Re:Watch it be sold off for a song (Score:4, Interesting)
Right, but you're looking at real estate, meaning a 10x10' easement on the sidewalk near an office building, a 20x20' easement at the edge of a neighborhood (next to the well pump) and other tiny buildings. You might be able to stick a hotdog stand in there or a neighborhood convenience store, but it would have no windows, and is set back from the road by 20-30 feet, on the far side of a park.
These spaces are largely utility space, like a mechanical floor in a skyscraper. That said, there are a couple of larger switching buildings in each city, for example this monster [g.co] which sits about 15 stories tall and is surrounded by single and double story homes. We call it the zombie apocalypse building because there are no windows on the first floor (or any of the other sides) and the back side has a deep wide loading ramp that sinks in to the earth like a moat. About four miles down the road there is a slightly more sane building [g.co], which looks more like a traditional warehouse or datacenter, and will probably be converted in to one at some point (many datacenters in Dallas are repurposed and upgraded railway warehouses along I-35). This amounts to a couple of big buildings in major cities, but I would argue that most of the 250 million square feet comes in chunks 400 sq feet at a time or smaller, and includes legal rights to telcom closets in office buildings, etc.
Re:There's a problem here (Score:4, Interesting)
Towns evolved from villages, which evolved from market squares Start off by having a few ranch homes. Every week, they go to church, and once a month there are town hall meetings. That requires a church and a town hall both for various ceremonies, and a bank to store valuables, along with a sheriff and a mayor. Every two weeks or month there's a trade market. There's also a barber shop, beauty shop, doctor, dentist, hotel and hardware store on the high street. Earlier times they had a blacksmith. If they are lucky, there might just be a railroad station too, that takes them to big city. With smaller villages, the fire department is volunteer based as everyone works locally. In larger towns, they will have a full-time fire department.
Maybe there are factories to convert farm produce into other products, like fur, linen, tinned food. A nearby mine can produce various metals and gemstones, to make machinery and/or jewelery. Might even be a brewery Once technology became sufficiently advanced, you had clockmakers, musical instruments makers, carpenters, plumbers, roofers, painters, artists, sculptors and decorators. As the population grows, you can have more specialization like schools, colleges, universities, research institutes.
The rate at which any particular location can advance is really dependent on how many people and goods they can get travelling through. Coastal areas have the advantage of being next to the sea, or a large river (London, New York, Paris, Los Angeles, San Francisco). Other places may have the advantage of being next to the only pass through the mountains.
Re:Please mod parent Funny (Score:5, Interesting)
That will affect your bottom line and allows you to charge less for your services and still earn the same amount of profit. If you're in a competitive market, then you probably will do so to some degree in order to get or keep business.
That makes no sense. If I'm a business owner, I'm interested in maximizing my profit. If the competitive nature of the marketplace means that charging less will enable me to increase my profits by acquiring more customers, or maintain my profits by not losing customers, I'd already be doing that with or without the windfall. No, if I have a $60K immediate windfall, plus an ongoing decrease in operational costs, I just improved my profitability. There's no reason to lower my prices, assuming I'm already competing successfully -- which means that my customers are happy with my services at my current prices relative to the competition.
The only way your scenario makes any sense is if I'm already bleeding customers because my prices are too high, and I'd already cut my profitability to the bone and still can't lower my prices enough to be competitive without losing my shirt. In that case, the $60K windfall is at best a short-term band-aid. I can lower my prices to shirt-losing level and still stay afloat for a while by living on the windfall, but once it's gone, I'm right back where I was. So it really only works if the difference between me being able to stay afloat and not is the cost of the ongoing operational expenses related to the truck.
But assuming I'm already competitive and profitable, why in the world would I want to lower my prices? If your long-lost aunt left you $100K would you go talk to your boss and say "Hey, you can lower my salary because I have this other money I can live on"?
Re:Please mod parent Funny (Score:4, Interesting)
Cold, Warm, or Hot blooded refers to the horse's temperament.