Industry Ponders How to Best Deliver Services

Carl Weinschenk

The telephone industry is facing a very interesting quandary. On one hand, all-fiber builds offer elegant solutions and robust triple- and quadruple-play possibilities.


Verizon clearly is opting for this approach. However, a good deal of money can be made by leveraging existing copper, though the resulting service platforms are more limited.


AT&T is mixing its approach. The company released interesting results about its U-Verse fiber-to-the-node (FTTN) deployment at the Merrill Lynch Communications Services Forum this week. The most impressive figure cited in this Light Reading report is that the company expects weekly customer additions to increase from 12,000 to 40,000 by the end of the week.


That wasn't the only number of note. The executive who made the presentation -- John Stankey, the president of the company's telecom operations -- said 60 percent of the new video customers are coming from cable operators, a percentage that exceeds expectations. Perhaps so, but it also suggests that U-verse is taking a large chunk -- perhaps comparatively more -- from the direct broadcast satellite sector. Stankey said that half of the new broadband customers also are new to AT&T. If so, this is good news for the telco, since a totally new customer is better than one that is cannibalized from another company service.


Not everybody has fiber fever, however. This Broadband Reports posting excerpts a CNET Q&A with new Qwest CEO Edward Mueller (there is a link to the entire interview). Asked if Qwest is going to deploy fiber-to-the-home, Mueller replies that it is too expensive. When prodded by the interviewer, he says the company is comfortable with offering video through a third party, DirecTv.


Phone companies face strategic choices that will have an effect on their success -- and perhaps even survival -- going forward. Telephony Online deals directly with cable/telco positioning, essentially from the telco point of view. The tension is whether to go quickly and provide a couple of services via DSL or take more time but offer more robust fiber-based triple- and quadruple-play services. The third option -- the one taken by AT&T -- is a fiber/copper hybrid.


There is a second related question that is particularly ticklish for companies that decide to fully transition to fiber: How much investment should they make to new approaches to DSL? The Telephony Online writer says the move to slower-to-build fiber infrastructures has pushed back his prediction on when telco will pass cable in the subscriber race. If he is correct, the change -- from this year to 2011 -- gives cable operators three more years to gain and cement customer relationships.


This is a truly international initiative, with much of the development done in Asia. This week, The Fiber-to-the-Home Council Europe held its annual event. Connected Home2Go reports that the council says there now are more than 1 million FTTH subscribers in Europe. That's a lot, but the context is that Verizon alone has 1.5 million U.S. subscribers. The piece says the growth rate from 2006 to last year was 30 percent, and suggests that continued great growth is likely. That's true in Europe, Asia and the United States, particularly for telcos that see DSL as a long road to obsolescence.

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