BROADBAND COMMUNITIES is the leading source of information on digital and broadband technologies for buildings and communities. Our editorial aims to accelerate the deployment of Fiber-To-The-Home and Fiber-To-The-Premises.
Issue link: https://bbcmag.epubxp.com/i/145944
bandwidth hawk The Marathon Play: Thousands of Services Are FTTH deployers here and abroad entered to win? By Steven S. Ross / Broadband Communities D espite the obvious superiority of fber to the home, North American fber deployers are passing only about 2 million homes per year. Granted, the pace of new housing construction is slow, Verizon is winding down its FiOS build and the federal stimulus program is ending. However, the key issue is that investors and many stakeholders believe FTTH is just too expensive. Tough Verizon has sold of footprint in difcult-to-deploy areas, FiOS still passes a million new homes a year. Te reason is obvious. On average, a FiOS customer buys more than $150 a month in services. Tat provides enough proft to satisfy Verizon shareholders, even if the company is running the race quietly, at a sustainable pace, so as not to spook Wall Street. Verizon is in it for the long haul. It is running a marathon. Cable companies average less than $100 in monthly revenue per customer. But why would a telco want to emulate that? What's the point in shaving 15 or 20 percent of the cost of a network build if it cuts the revenue potential in half and if much of the revenue is from supplying low-margin video service? And why would a municipality not want to enable broadband services that aid economic development? Indeed, as my article in this issue points out (see p. 80), if a deployer can average $50 gross proft a month per customer, it can aford to deploy to as few as eight customers a mile, even if it has to borrow 100 percent of the money for the build and pay 10 percent interest. Te triple play – voice, video and Internet access – is a starting point, but it takes a lot of runners, er, services, to turn a marathon into a real race. Let's start calling it the "marathon play." It's a winner. LESSONS fROM AUSTRALIA Looking Down Under ofers a useful lesson. Australia is building a National Broadband Network that is, as designed, more than 90 percent FTTH. However, the Labor Party, which initiated the build just as the recession took hold, is expected to lose control to a conservative coalition in elections this fall. Te conservatives want to scale back the commitment to FTTH, leaving perhaps three-quarters of the country served by wireless or DSL (fber to the node). Te Coalition's leader, Tony Abbott, has been quoted as saying 25 Mbps per household is enough. 6 Tere are plenty of arguments in fber's favor down there. Australian telecom analyst Paul Budde (www.budde.com.au), who spent time in Washington, D.C., during the debate on the U.S. stimulus program, has made them: • Australian Internet penetration is among the highest in Asia and higher than in the U.S., at more than 80 percent. • Broadband access revenue is growing and should reach $3.7 billion this year. With about 6.5 million households as customers, that's about $50 a month for poor service. Fewer than 4 percent get more than 10 Mbps, compared with 49 percent in South Korea. • Business use of cloud services is increasing as backups and shared data travel over faster connections. • Data transfer is growing rapidly, particularly as consumers make greater use of smartphones. • Te network build is passing about 6,000 homes a day; 90 percent of homeowners passed are opting for free connections, and 50 to 60 percent of them are buying services even though most homes were passed only in the last 12 to 18 months. Also encouraging: Kevin Rudd, a key architect of Australia's ambitious plan, has taken over again as Labor prime minister. In addition, though the conservative coalition says it wants to deeply cut back on FTTH, it confusingly says it will honor existing contracts. Half the FTTH deployment is under contract and due to be completed by 2016. Te Australian government is funding the network itself, but third parties that pay for access provide services; the hope is that there will be hundreds of them ofering thousands of online products. Tough the government has quietly pushed the network's potential for delivering health and education services, the discussion has been reduced to a few sound bites – the biggest argument over the last month, for instance, seems to have been over the size and shape of street cabinets. Te real issue for Australia, as for the U.S., is economic development. Fiber can do the job, and though it may cost a little more, it will give back a lot more. v Contact the Bandwidth Hawk at steve@bbcmag.com. | BROADBAND COMMUNITIES | www.broadbandcommunities.com | July 2013