FTTH

FCC universal broadband cost estimate doesn’t factor in performance

The FCC said that giving 100 Mbps broadband to every home would cost $350 billion, which is about half what we think it would cost to give every household FTTH and therefore pretty consistent with our own models. The FCC also said you could provide 50 Mbps for $50 billion, and our model says that’s a third of the actual number.

The relationship between broadband cost and service performance is complex, and we suspect that most planners simply haven’t delved into the details at this point. The issue here is that public policy goals in broadband might be aggressive because of intense industry lobbying, but that real progress is unlikely to be made toward universal service unless there are major compromises in performance.

We are covering this issue in depth in October’s issue of our newsletter/journal Netwatcher.

Cable companies look at RF over Glass for video delivery

In yet another sign of stress for the IPTV camp, cable companies are looking hard at their own RFoG or linear RF over glass approach, as more telco experience is showing that to be the best way to deliver broadcast channels and (some say) even some video on demand.

A cable shift to fiber to the home has been a possibility for years as the potential of FiOS becomes clear, but the timing of the shift depends on more effective RFoG architectures, which are now emerging.

Our models suggest that there is a narrow range at present where any FTTH approach is too expensive to support and DSL-IPTV is still cost effective.  Below a certain economic density, DSL-IPTV can’t produce decent ROI. RFoG could lower the minimum density for FTTH and so threaten IPTV-DSL as a strategy for telcos, which are likely to adopt some of the principles of RFoG themselves for areas othin in demand to be served by PON. So far, cable appears to be looking at the technology for greenfield builds.

AT&T’s U-verse: The beginning of the end?

AT&T’s new deal with DirecTV may be the beginning of a shift away from U-verse toward the “Homezone” satellite-and-IP/VoD hybrid model, according to rumors we’ve heard.

The problems with U-verse are that the service has an extremely high pass cost—on the order of 4 to 6 times that of cable—and that the limits of DSL in delivery of both content and Internet make U-verse very vulnerable to DOCSIS 3.0 competition. The IPTV model has become more complex and costly over time, and faces its greatest challenges in conjunction with interactivity and HD programming.

We’re also hearing that more EU operators are looking at the linear RF broadcast model of FiOS. Cable has a parallel channel for TV, and competing with cable without that capability is likely to be increasingly difficult no matter where you are in the world. Some cable operators, like Time-Warner, are also now looking at the linear RF FTTH model for green fields, which would be a blow to IPTV supporters.

Global broadband to become universal service?

Worldwide broadband subscribers have reportedly passed the 400 million mark, and some telco planners are now seriously looking at broadband as their “dialtone” service in both wireline and wireless—but beyond 2011.

The decision to move to a universal broadband delivery would increase capex, but it is apparently being driven by the cost of the dualistic voice/data structure that is now in place. The barrier is monetization of broadband, which has lagged expectations for both wireless and wireline. Operators believe that additional capital and operational savings are also likely to be necessary. We provide some insight into current operator views of the future in the next issue of Netwatcher which will be released this weekend.

Metro and access drive ‘09 deployment focus

It is becoming increasingly clear that 2009 will see the most action in the metro and access space. Worldwide, operators are looking very hard at FMC and femtocells, and we believe that there will be some deployments even in the US by 2H09.

There are also a number of competitive initiatives from competitive access providers aimed at Ethernet services and enterprise customers, attempting to play off the corporate desire to gain headroom in access to leverage with later tactical purchases of services.

 Our research is showing that worldwide focus on infrastructure spending will be strongly in the access/metro direction in 2009 and even in 2010.

Cox cable considers FTTH model

Cox Cable has issued an RFI that includes requests for PON/RF distribution with high-speed broadband, very similar to the FiOS model of Verizon. The RFI leaked last week at NXTcomm but had been rumored even before that show.  It is apparently a true RFI, meaning that there is no immediate expectation of an equipment order. We hear that Cox is simply preparing an internal position paper on alternatives for plant modernization, given the current war between cable and telcos that provide video.

The question cable operators must answer is not only whether they can deploy FTTH, but how widespread telco FTTH could become. A cable industry study previously showed that the cable plant, even DOCSIS 3.0, could not compete with full FTTH should it be deployed. Our own modeling shows that Verizon could expect to reach about 70% of its customers with FTTH, that AT&T could reach perhaps 26%, and that Qwest could reach only 11% without significant shortfalls in ROI or significant improvements in cost or revenue.

RF over Glass: Cable’s answer to telco FTTH

The cable companies are taking the threat of FiOS seriously and promoting technologies that are more suitable for deep fiber and FTTH in their own plants. The activity is concentrated in what is called “RFoG” or RF over Glass, meaning mechanisms to perform the opto-electrical transformation from optical delivery of multicast RF to the CATV plant that already wires the homes. We are hearing that the idea is not to go with fiber to the home despite reports to the contrary, but rather to take more of a fiber-to-the-curb approach, wiring perhaps a dozen homes at the maximum into a CATV span off an RFoG fiber plant. Verizon has been looking at a similar notion of using a remote and MoCA to run cable into the home to reduce fiber provisioning costs in areas where the ARPU won’t justify true FTTH. We believe that there will be more and more outside plant “wiring” using a combination of fiber and coax, even among the carriers.