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posted by on Monday March 27 2017, @06:47PM   Printer-friendly
from the dogs-and-cats-living-together,-mass-hysteria dept.

Submitted via IRC for TheMightyBuzzard

Years in the making, a proposal to mandate the installation of fiber conduits during federally funded highway projects might be gaining some new momentum.

If the US adopts a "dig once" policy, construction workers would install conduits just about any time they build new roads and sidewalks or upgrade existing ones. These conduits are plastic pipes that can house fiber cables. The conduits might be empty when installed, but their presence makes it a lot cheaper and easier to install fiber later, after the road construction is finished.

The idea is an old one. US Rep. Anna Eshoo (D-Calif.) has been proposing dig once legislation since 2009, and it has widespread support from broadband-focused consumer advocacy groups. It has never made it all the way through Congress, but it has bipartisan backing from lawmakers who often disagree on the most controversial broadband policy questions, such as net neutrality and municipal broadband. It even got a boost from Rep. Marsha Blackburn (R-Tenn.), who has frequently clashed with Democrats and consumer advocacy groups over broadband—her "Internet Freedom Act" would wipe out the Federal Communications Commission's net neutrality rules, and she supports state laws that restrict growth of municipal broadband.

Blackburn, chair of the House Communications and Technology Subcommittee, put Eshoo's dig once legislation on the agenda for a hearing she held yesterday on broadband deployment and infrastructure. Blackburn's opening statement said that dig once is among the policies she's considering to "facilitate the deployment of communications infrastructure." But her statement did not specifically endorse Eshoo's dig once proposal, which was presented only as a discussion draft with no vote scheduled. The subcommittee also considered a discussion draft that would "creat[e] an inventory of federal assets that can be used to attach or install broadband infrastructure."

Source: https://arstechnica.com/information-technology/2017/03/nationwide-fiber-proposed-law-could-add-broadband-to-road-projects/


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  • (Score: 2) by bob_super on Monday March 27 2017, @08:05PM (5 children)

    by bob_super (1357) on Monday March 27 2017, @08:05PM (#484841)

    An empty conduit is not an asset on a balance sheet.

    The potential for the empty conduit to start producing dollar signs, which is a function of conduit continuity and places served, is an intangible asset which a monetary value can be attached to, when discussing company value. An imminent use of the conduit can be advertised to stakeholders, provided proper disclaimers about contractual risks are included.

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  • (Score: 4, Insightful) by goody on Monday March 27 2017, @08:38PM (2 children)

    by goody (2135) on Monday March 27 2017, @08:38PM (#484854)

    An empty conduit is not an asset on a balance sheet.

    I'm not an accountant, but I think you're mistaken on this. It is an asset, regardless if it's currently generating revenue. If you purchased a stack of servers, installed them in a datacenter, but didn't have any customers hosted on them, your accounting department would definitely consider that a fixed asset and would shriek if anyone attempted to classify it as an intangible asset, regardless if it's generating revenue or not. Empty conduit and often the labor to install it is capitalized and depreciated. Strategic placement of it and the revenue it could potentially generate can increase the valuation of a company, but the conduit itself is still an asset, regardless.

    • (Score: 3, Interesting) by bob_super on Monday March 27 2017, @10:55PM (1 child)

      by bob_super (1357) on Monday March 27 2017, @10:55PM (#484927)

      First, does the road belong to the company? Usually not, so not an asset.
      Second, if the conduit is a mandatory feature of the road, is the conduit considered a separate asset? I'll got for "unlikely"
      Third, can you even depreciate conduit? Your rack of servers (you're fired for having spent CapEx without customers, btw) is a depreciating asset, per accounting rules. But empty conduit may or may not be, depending on your business. If you build roads, and you haev to put conduit in the road, it's probably treated like the drainage or even the rebar. You don't get to depreciate materials.
      Fourth, your conduit has a negative intrinsic value. It doesn't generate cash by itself, and you need to spend more money (or get a partner) to get it started generating value. Until then, it's a liability, if it could make you fail the road's SLA (Big storm clogs a conduit after idiots removed a cap, you gotta clean it).

      Owning access to the conduit might indeed raise the perceived value of the company, but I'd like someone to show me where you'd put it on the books.

      • (Score: 2) by goody on Tuesday March 28 2017, @04:52PM

        by goody (2135) on Tuesday March 28 2017, @04:52PM (#485294)

        OK, maybe we're talking apples and oranges on some of this. In the case of a contractor installing conduit as part of the highway project, no, it's not their highway, it's not their conduit, so it's not their asset. But for a telecom company installing a conduit, it's their conduit and it's an asset.

        You can depreciate conduit, it would just have a very long depreciation period. A desktop computer might depreciate out three years where I could see fiber conduit going 20, 30, or 40 years. IRU fiber leases often go 15 or 20 years, so it's conceivable fiber conduit depreciation would go as long or more. It has a long useful life. While the duct itself may be treated as a consumable material and ordered and tracked as such while under construction, it's still part of the network and an asset once built. Whether an item generates revenue or not doesn't change whether it's an asset. (If it did, a company that loses money each year would never have any assets on their balance sheet, which is very unlikely.) I don't think one can use an analogy to tie fiber conduit to things like drainage or rebar, as highways are government owned. However, if you owned something like a building or a racetrack, you probably can capitalize things like drainage and rebar as it's improving or creating an asset. So considering something a material doesn't disqualify it from being or becoming part of an asset. One can also capitalize labor associated with installing the material and make it part of the asset. Operating costs are a different thing. If you had to pay an annual right-of-way fee or perform maintenance, those would be liabilities, separate from the asset on the books. If the operating costs or initial capex exceeds the revenue, that doesn't negate it being an asset.

        All that said, depending on your business, your mileage may vary :-D

  • (Score: 2) by Justin Case on Tuesday March 28 2017, @12:20AM (1 child)

    by Justin Case (4239) on Tuesday March 28 2017, @12:20AM (#484946) Journal

    Yeah I'm thinking you haven't run a company.

    If you spend money and have nothing to show for it (salary, building rent, heating bill) that's an expense. If you purchase a tangible item (pipe, delivery truck, printer) that's an asset.

    So accountants play all sorts of games trying to get expenses reclassified as assets, because assets add up on the balance sheet and make stockholders happy, while expenses are perceived as money gone and make stockholders unhappy. For example, you pay the developers salary to build that new website and then try to claim the website as an asset of some dollar value, thereby reclassifying the salary expense. This is easier if you can outsource the work: look, we bought these pipes-in-the-ground for $X million, already installed. Not only is it an asset we can hold or sell to someone else later (it will be worth $X+Y million next year), it has the potential of generating future revenue and that makes stockholders happy too.

    • (Score: 2) by bob_super on Tuesday March 28 2017, @12:30AM

      by bob_super (1357) on Tuesday March 28 2017, @12:30AM (#484954)

      And I'm thinking you don't know how building a road, following a requirement list, works...
      The gravel, rebar and concrete are not assets, nor are the drainage pipes.

      A right-of-way (your conduit) is an asset, but the value is pretty dang hard to write down in a balance sheet, because its access depends on what's in the contract for building the road, and its value is highly volatile (demand) and depends on someone else having a similar right-of-way nearby (like the train tracks or the utility poles).