Fiber: Best of the Rest

Carl Weinschenk

Carl Weinschenk spoke with Chris Roden, research analyst, Parks Associates. Roden worked on recently released Parks research that suggested that there will be 18 million fiber subscribers and about 2.5 million broadband over power line subscribers by 2011.

 

Weinschenk: What was the study about?
Roden: The report explored alternative broadband access methods. We focused on broadband over power line, an emerging technology with very little deployment. We also looked at the fiber to various places, which is referred to as FTTX. We were looking at alternatives to traditional DSL, cable and narrowband dialup.

 

Weinschenk: What were the highlights?
Roden: We found out fiber has the biggest potential. That came not only from our primary research but also our secondary research interviews. Fiber will become really mainstream in five years, meaning it may not be the most subscribed, but probably will be number three. Our prediction is that by 2011, there will be 18 million subscribers.

 

Weinschenk: It's interesting: BPL and fiber are the two extremes in terms of speed. One is the fastest out there, while the other is a cut above dialup. Why did you group them together in the study?
Roden: We approached it from the perspective of looking at things that are not today's mainstream options. Both have very different futures, and we believe they have very different targets in terms of where they are being deployed and will be deployed. BPL, if it does take off, will be a rural solution in areas in which it is not now cost-effective for fiber or DSL or cable to deploy. BPL works because power line is pretty much all over. Fiber is a whole different bag. Verizon and AT&T have very aggressive plans.

 

Weinschenk: So where do the contestants stand?
Roden: It will be a three-horse race. With other minor alternates, it will be fiber, DSL, cable and then everything else.


 

Weinschenk: Your numbers say that fiber - at 18 million subscribers in 2011 - is pretty far behind.
Roden: When you compare it to 27 million for DSL and 33 million for cable. AT&T had delays and some confusion on what its strategy is. If they start to firm up, with fiber-to-the-home instead of fiber-to-the-node, you could see an uptick.

 

Weinschenk: What is the dynamic in the fiber segment?
Roden: The two main drivers for fiber are that the telcos use it as a way to regain business that they are losing to cable companies. It's a defensive measure. The second driver for fiber is the increase in consumer demand for things like IPTV, VoIP and data services. The network will have to be upgraded to handle those.

 

Weinschenk: Verizon seems to be dominant in the fiber sector in the U.S. What's up with AT&T?
Roden: They are publicly firm in sticking to FTTN. Some people inside the company have been known to question whether the technology can handle the bandwidth necessary [for increased advanced services]. If you talk to people around the industry, I don't think they are entirely sold that this is the right solution. They think that if they deploy FTTN, they will have to come back in a few years and upgrade it.

 

Weinschenk: Where does that leave BPL?
Roden: BPL probably will always be a rural niche solution. By 2011, it will have no more than 2.5 million subscribers. For BPL to be successful, it has to be better than dialup. Right now, some companies out there are doing some tests, such as in Manassas, Va. In order to be a viable solution, it has to be better than dialup or it's just not worth it. Overall, the most important key for BPL is utility companies. The big thing for them is smart grid services, load management. Basically improving their efficiency. It's those types of things that need to be proven for utilities to receive value.

 

Weinschenk: Utilities are not known as trend setters. Is this a problem?
Roden: Even when it is rolling out to customers, utilities are not the ones providing it for the most part. They are wholesaling to third parties. It is definitely a revenue opportunity for an industry that does not usually have a lot of extra revenue rolling in. It's a double-edged sword. Utilities are slow to adopt technology. It's a great thing, but it has to be proven to them. Most of them don't have the finances or marketing to know how to handle that.



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