FIBRE STRATEGIC ASSET

New Operators, New Types of Carriers

With large-scale programs underway by carriers such as NTT East, NTT West, Korea Telecom, and Verizon, the vast majority of homes subscribing to FTTH are served by ILECs.  Until 2006, NTT East and West together represented a major percentage of the world’s FTTH subscribers.  On the other hand, there are hundreds of FTTH projects in service or under construction that are owned by electric-power utilities, municipal or local governments, real-estate corporations, competitive LECs (CLECs), or consortia of utilities, investors and local participants.  Many of these non-ILEC operations are community based, often with less than 50,000 subscribers.  The US, for example, had about 1.5 million FTTH subscribers at mid- 2007, of which Verizon accounted for two thirds.  The remainder were served by more than 300 different operators, including independent telephone companies, utilities, municipalities, CLECs and real-estate developers.  This means that the average number of subscribers for these community-based FTTH systems was less than 2,000.  Of course, these numbers will change because many projects are still in construction and haven’t nearly approached the targeted number of subscribers.

 

FTTH Can Attract New Residents

In the US there are several companies that work with real estate developers and communities to plan, design, install and operate FTTH networks.  One of these companies, Zoomy Communications, has estimated that about 50% of new homes in are in “master-planned communities,” and 45% of those communities have owners or developers that want FTTH.  Many groups are promoting broadband Internet access for a range of socioeconomic benefits, including education, health care, telecommuting, etc.  These groups cite academic papers and survey data to show that broadband access networks are resulting in higher real-estate values, higher community tax bases, and more attractive environments for businesses and home¬owners looking for new locations.

 

Fibre for Future Proofing

Another factor that carriers consider when deciding how to upgrade their networks’ capacity is technical obsolescence.  That is, how rapidly are bandwidth requirements changing, and how long will the new broadband or FTTx technology remain suitable?  For more than a hundred years, this question was not an issue for the copper loop plant.  The device at the end of a line – the telephone – was not undergoing major changes, at least not in terms of the bandwidth it used, and the capacity required for loop transmission was well understood.  Since the Internet revolution began, operators have had to accommodate a much wider range of equipment that may be put on the end of the line.  As a result, the bandwidth required can vary significantly from one subscriber to another.  On average, the bandwidth requirement has shown a consistently increasing trend from dial-up modem rates of 3 to 56 kbps in the 1990s to xDSL and FTTx rates in the Mbps or tens of Mbps in the current decade.  If the decision to build an all-fibre network is seen as risky, because the investment may not achieve adequate payback, then the decision to build a lower-capacity DSL or FTTN network may also be risky if the bandwidth proves inadequate and a second investment later becomes necessary.