Posted 08/2000
FTTH: Take Two
FIBER TO THE HOME MAKES A COMEBACK
By Gail Lawyer
It was an idea ahead of its time. More than a decade ago, service providers attempted to deploy fiber to the home (FTTH) and deliver new services, such as video on demand, to consumers. But, at the time, neither consumers nor the FTTH technology was ready for prime time, causing that model of video on demand to go the way of the New Coke.
BellSouth Corp. (www.bellsouth.com) was one of the early players to test out FTTH. About 15 years ago, the telco started researching a FTTH model, says Dan Spears, research director for BellSouth Science and Technology. BellSouth built out FTTH in a few places and discovered that in the late 1980s, the technology was too expensive to justify deploying, and not stable enough.
So, instead of running fiber all the way to the home, BellSouth went with a fiber to the curb (FTTC) approach, eventually bringing fiber within 12,000 feet of about 89 percent of its total customer base.
In the ensuing years, though, BellSouth didn't lose hope for FTTH. In an internal study, the telco predicted that by 2001, end-to-end FTTH would be less expensive to deploy than FTTC.
Turn the clock ahead 10 years or so. Spears admits that BellSouth hasn't put out a request for proposal (RFP) for its FTTH plans yet, but the company is committed to start deploying FTTH by this time next year.
Why the change of heart? The ever-increasing demand for bandwidth to homes and businesses that fiber is best suited to deliver. There are new applications, such as streaming media and the rebirth of video on demand that are difficult to deliver over today's local connections. And there are new technologies based on international standards, such as the one for ATM passive optical networks (APONs), that are available and passing tests for reliability and economical deployment.
"It's heating up," says Claude Romans, director of access networks for consulting firm RHK Inc. (www.rhk.com). "It's being driven by broadband access, since asymmetric DSL [ADSL] doesn't reach every home and business."
Industry deregulation within the last four years is also providing an incentive for deployment of FTTH. Service providers "can now combine services," says John Jutila, vice president of marketing for cable network products at Alcatel USA (www.usa.alcatel.com). "The larger potential revenue stream allows for bigger-loop investments."
Already BellSouth is testing FTTH solutions based on the APONs standard. The first test began in November 1999, with fiber passing 400 homes north of Atlanta. BellSouth has several trial customers on the FTTH system, says Spears. The fiber was laid in an existing community, rather than in a new construction area, in an effort to minimize risk of service outages. "We wanted operational experience with APONs, so we're only doing data now," says Spears. "So if there's a problem with APONs, only the data service will be affected."
Eventually BellSouth will add other services to its offering, including voice over packet and video, Spears adds. Testing for both of those services is under way now.
The arguments for FTTH are compelling.
"If anyone puts in infrastructure now, are they going to put in one that limits the future, or put in one that can deliver today's services and be ready for the future?" asks Joe Dooley, director of product management at Optical Solutions Inc. (www.opticalsolutions.com), a vendor of FTTH products.
It seems some service providers agree with that assessment.
Home Town Solutions, a CLEC created by a partnership of Federated Telephone Cooperative (www.fedtel.net) and Agralite Electric Cooperative (www.ag-web.org), is spending almost $6 million to roll out FTTH in Morris, Minn., a town of about 6,000 people served by incumbent US WEST Inc. (www.uswest.com).
"It may be a little more expensive, but at least we won't be outdated," says Kevin Beyer, Home Town Solutions' general manager. "We thought it was important to future-proof, rather than face limitations three years or so down the road."
In mid-June, Home Town Solutions began building out fiber to residential customers to deliver dial tone, long distance, high-speed data and video services. Not only is Home Town challenging the incumbent telco, it's planning to take on the local cable franchise as well.
Beyer estimates that in order to break even, he'll need about 50 percent of the town to make the switch to Home Town Solutions. To be profitable, Beyer says, the company will have to attract at least 65 percent.
Unlike Home Town Solutions, which is doing a network overbuild, some CLECs are taking the greenfield approach and building FTTH in new neighborhoods, working in conjunction with real estate developers. Among this breed of CLEC are ClearWorks.net (www.clearworks.net), which is based out of Houston, Texas, and Canadian provider Futureway Communications Inc. (www.futureway.ca).
But this revival of FTTH is just gearing up. The number of homes with fiber optic access is slim. Industry estimates reveal that fiber-only networks currently pass a few thousand homes, and most of them are part of trials of FTTH technologies rather than real, commercial deployments.
"DSL and cable modems are interim technology," says Jutila, referring to the respective copper- and coaxial cable-based services. "However, those interims could be around for a long time."
"To a large extent, fiber to the home is still a fanciful idea," says Carl Garland, principal analyst of network services at consultancy Current Analysis Inc. (www.currentanalysis.com).
But FTTH is slowly, but surely, becoming a reality. "Fiber is being pushed deeper and deeper," says Jutila. "First, fiber was deployed in the core long-distance network. Now, the largest demand is in the metro markets. The wave is moving it into the access market."
General consensus is that fiber to the home is inevitable, says Dooley. However, now there are only a handful of vendors, including OSI, who are developing and manufacturing products for FTTH deployment. Many of the solutions being used today are proprietary. But with an international standard for APONs in place, service providers expect that larger vendors will soon take keener interest in developing products for the FTTH market.
Return on investment (ROI) is the key factor when considering FTTH, says John Gibbs, director of marketing in the Communications Access Systems division at Marconi Corp. plc (www.marconi.com). "If someone puts in fiber to the home," he notes, "they have the ability to offer all services over one architecture."
That was the logic behind Rural Telephone Service Co.'s (www.ruraltelephone.com) decision to put in FTTH as it moved beyond its telco territory. Through its competitive subsidiary Nex-Tech Inc. (www.nex-tech.com), Rural Telephone is taking on SBC Communications Inc. (www.sbc.com) in a few western Kansas cities.
Larry Sevier, Rural Telephone's general manager and CEO, says the company opted to do FTTH because "bandwidth is unlimited for the future. We decided to pay more now to set ourselves up for the next 20 years."
In Norton, Kan., Nex-Tech is just getting ready to build its FTTH network, which is scheduled for completion by this winter. The take rates already are promising, judging from the reported pre-selling activity.
"We have signed up 80 percent of the community, and we haven't built the network yet," says Sevier. Services offered in Norton will include a bundle of local and long-distance telephony, 56kbps dial-up Internet and cable TV for about $56 a month. High-speed Internet access will cost an additional $49.95 a month.
Throughout its incumbent and competitive territories, Rural Telephone says it has about 1,400 customers served by fiber. "Video is the prevalent service," says Sevier, noting that the company currently is testing basic telephone service over the FTTH network.
While many of the initial trials and deployments have involved single- family homes, FTTH is no doubt going to play an important role in bringing advanced services to multiple dwelling units (MDUs) such as condominiums and apartment complexes.
That's just the tack CoreComm Ltd. (www.core.com) is taking. In late May, CoreComm announced the formation of a new subsidiary, tentatively called CoreComm FiberCo. The game plan for FiberCo. is to build fiber directly to MDUs, leveraging CoreComm's existing "smart build" networks, which include switching, collocation, a metropolitan fiber ring and leased local loops.
From CoreComm's metro fiber rings, FiberCo. will bring fiber-based services directly to apartment dwellers in Chicago; Cleveland and Columbus, Ohio; followed by Boston, Detroit and New York in the next several months. Among the bundled package will be telephony and high-speed Internet access. On the horizon is the addition of video services.
"Data service will be the killer app," says Michael Peterson, CoreComm's vice president of corporate development. FiberCo. will be able to offer 10mbps initially, and easily upgrade that to 100mbps, should the consumer so desire.
"The bandwidth demand continues to increase," adds Peterson. "Players with the most robust network are in the position to gain significant market share."
CoreComm's FTTH plan worked out to be more cost-effective than other methods of high-speed access methods, according to Corning Inc. (www.corningfiber.com), which is CoreComm's preferred provider of optical fiber, cable, hardware and fiber management systems for the project. "We did extensive modeling, looking at all the network architecture options," says Brenna Embree, senior market analyst for Corning. "We concluded that we could install fiber networks and make it more economical in the long term because of advanced services."
It won't be the "gee whiz" factor that gets FTTH deployed. Instead it will become a necessity if service providers want to deliver the bandwidth-hogging applications for which consumers are beginning to clamor. The ability to deliver advanced services, such as digital video or streaming media from the Internet--and garner premium prices for them--will be the driving force behind service providers' decision to deploy FTTH.
Current technologies have limits that fiber doesn't. For instance, with ADSL, customers typically get speeds of 1.5mbps, though those closer to the CO may see speeds of up to 8mbps. But something like high-definition television (HDTV) requires 20mbps delivery speeds. "If HDTV becomes popular, it will take something like fiber to deliver it," says RHK's Romans.
Spears agrees. "We can't wait until someone wants HDTV to start building this out," he adds.
