Broadband Communities

NOV-DEC 2013

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.

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Page 24 of 134

BANDWIDTH HAWK Good Prospects for 2014 The FTTH deployment business is beginning to look normal again, even considering the fact that much of this year's fber deployment in the U.S. was powered by the last of the 2009 stimulus funds. 2014 SUMMIT FREE WO R K S H O P S Austin, TX April 7 By Steven S. Ross / Broadband Communities A lot of people have been talking about how badly the fber-to-the-home industry is doing. But that's old news, and it's no longer true. Part of my job, as you might expect, is to take the pulse of the industry I write about. Tat means going to a lot of conferences, Wall Street seminars and private meetings. After 2008, I saw that the worldwide recession, along with predatory pricing by Chinese suppliers, dampened enthusiasm for FTTH in many quarters. However, the pulse quickened substantially in the past year. Te last of the federal stimulus funds, combined with the frst stirrings of a housing recovery, produced the best year for fber to the home since the 12 months ending in March 2009. In some ways, the 12 months that ended in September 2013 were the industry's best yet. According to market research by Michael Render of RVA LLC, • Net new FTTH customer connections in North America totaled 1.04 million from March to September and 1.7 million from September to September, both records. • New homes marketed totaled 4.2 million over 12 months – just shy of the 2008 record – and reached 2.8 million in March–September 2013, a record for any six-month period. • New homes passed with fber totaled 3.4 million, the most since 2009. • Tere were 665,000 new video customers for the year, hardly a record, but fber was the only transmission medium to gain video customers for the past two years. You can read all the details in "FTTH Expands at a Record-Setting Pace" on p. 32. Fewer suppliers now share the business, as many vendors have merged or fallen by the wayside. Under strong pressure from the U.S. government, Chinese vendor Huawei is abandoning the American market. I have mixed feelings about that. Huawei is accused of posing a security risk, but many U.S. vendors manufacture equipment in China. Lower equipment prices make FTTH more afordable, and that means FTTH networks are more likely to be built. Still, the initial purchase cost of equipment is only a small part of the overall cost of building a fber network, and American vendors, though unable to routinely match Huawei's pricing, compensate with more fexible fnancing and invoicing. Two trends power FTTH deployments right now. Te frst is the push toward gigabit-per-second bandwidth pioneered by Google and several smaller players. New network capabilities 18 beget more network services – a virtuous feedback loop. Only fber can handle new revenue-generating products and services designed for high-bandwidth environments. It is little wonder that FTTH customers pay, on average, a monthly bill of more than $150, half again as much as the average cable or DSL bill for customers surveyed by Render. Te second trend is a sharp increase in housing starts concentrated in the MDU rental market. MDU fber systems are easier to fnance than communitywide systems (I'll discuss that in depth during a free preconference workshop at the BroadBand Communities Summit this April in Austin), and highly mobile tenants, a young demographic, had great bandwidth in college and want it where they live now. In a primer BroadBand Communities published last summer for the Australian market ( Primers/ftthprimerAUS_Aug13_webFINAL.pdf), we pointed out that full FTTH for Australia would be slightly more expensive than the FTTN plan favored by the winning Liberal Party Coalition but had a far stronger business case because of the higher revenue potential. Tat view has since been ratifed by Australian government ofcials, even though they opted for the FTTN plan anyway. New fber-enabled services also spur economic development, help care for the aged and invalid and even obviate the need to issue new FCC regulations – the call for à la carte cable pricing, for instance, has been muted by the existence of over-the-top video service providers. In fact, looking toward 2014, perhaps the biggest regulatory threat to new FTTH deployments is a push by politicians in many states to restrict municipalities and other public entities or public/private partnerships that want to build their own networks where incumbent providers (typically milking old, obsolete systems) refuse to do so. As I said at the start of this column, we go to a lot of meetings. But you don't have to go to many at all. Get all the information you need at BroadBand Communities' regional economic development conferences and at the annual BroadBand Communities Summit, April 8–10 in Austin. Come a day early for the workshops, which are free to conference registrants. v Contact the Bandwidth Hawk at | BROADBAND COMMUNITIES | | NOVEMBER/DECEMBER 2013

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