Copper Based Ethernet Meets Commodity Inflation
I remember back in 2006, there were a small group of advocates for ethernet over copper. Some of these people started equipment companies that are still around today. I remember one entrepreneur telling me that all the big service providers are going fiber to the home (FTTH) and the result will be a lot of unused copper. He went on to say that it would be easy to start a new service provider that could acquire all the unused copper for a low price and then sell a high speed data service using some sort of copper bonding technology. The copper bonded solution would never be as fast as fiber, but for most customers the speeds would be more than enough and price of the service would be so cheap that it would be compelling. I was reminded of this conversation when I read this story about MegaPath using Adtran copper bonding technology to deploy ethernet services.
Back in 2006 no one was thinking that we would have a global credit crisis that would result in central banks around the world easing monetary terms and in the case of the Federal Reserve, deploying two or three or more years of quantitative easing. One of the by products of QE1 and QE2 and QE3 (maybe) has been the lift in commodity prices. Spot copper was ~$2 in 2006 and today it is $4.12 with a high of $4.65 this year.
I found this story out of the Palm Beach Post interesting. “Thieves have cast 33 miles of Interstate 95 into darkness in Palm Beach County by yanking out the underground copper wire needed to power the overhead lighting. The wire can be sold to metal recycling companies for as much as $3 a pound. State officials say it will cost $200,000 to replace the wiring and install anti-theft devices to prevent thieves from removing it again. During the past four to six months, state transportation officials say, 18 sites in Palm Beach County have been hit by thieves, who removed 175,000 feet of wire.” I find it interesting that we never had any real price elasticity to dark fiber. That was a big theory for a number of people after the first bubble collapsed; that by 2010 fiber in the ground would become fully utilized (i.e. scarce) and therefore the price for metro and long haul waves would rise and dark fiber would take on the characteristics of a commodity.
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