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Grass Roots Fiber Booms

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News Analysis
Light Reading
10/6/2003
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Forget the RBOCs. When it comes to playing a key role in North American fiber-to-the-premises rollouts, municipalities are the stars.

That's the message behind two access gear contract wins announced today. Allied Telesyn Inc. says a wholesale network backed by the Utah Telecommunications Open Infrastructure Agency (UTOPIA) will be using its residential broadband gateways to provide voice, data, and video services to 18 Utah cities, starting early next year (see Allied Telesyn Gets Into Utopia). The rollout involves about 15,000 homes and businesses.

Separately, Wave7 Optics Inc. announced it will supply access gear to the Jackson (Tennessee) Energy Authority for POTS, IP telephony, video, and high-speed Internet services over a new fiber optic network set to pass over 31,000 homes and businesses (see Wave7 Wins in Jackson).

According to Michael Render, principal of Render Vanderslice & Associates, 180,300 North American homes now have access to fiber service, nearly none of which comes from incumbent telcos.

In contrast, Render says municipalities and public power utilities are responsible for about 32 percent of installed fiber stateside.

"The biggest wins have come from municipalities, utilities, independent telcos, not MSOs or RBOCs," says Michael Wearsch, VP of North American sales at Wave7. Today's announcement represents the company's biggest equipment sale yet, he says.

Today's announcements are among the largest access contract awards to hit the wires lately. But they're part of an ongoing pattern. Most recent equipment awards in the fiber access arena have been for municipal groups or regional utilities, including ones with Optical Solutions Inc. (see Optical Solutions Lights Minnesota) and Alcatel SA (NYSE: ALA; Paris: CGEP:PA) (see Alcatel Wins FTTU Deal).

The two entities in today's news are prime examples. Both UTOPIA and the Jackson Energy Authority reflect state legislation encouraging the creation of local entities responsible for fiber buildouts. This is turn mirrors national emphasis on local or regional initiatives (see FTTH Council Applauds Supremes).

These regional groups have grown out of grassroots demand for better services. Their funding reflects an emphasis on regional development. In UTOPIA's case, the goal of "a publicly owned advanced telecommunications network over the last mile to all homes and businesses within member communities" has been backed by municipal bonds. In Jackson Energy's case, it's part of a utilities conglomerate funded by rate payments.

In contrast, FTTH projects started by regional Bells must compete with the carriers' existing DSL services, and the RBOCs have been reluctant to build out fiber where the promise of big returns may not be immediately guaranteed. Thus, projects appear to be stalled, or at least on a long timeline contingent on evaluations that haven't quite materialized (see SBC Ratchets Up PON Politics).

Meanwhile, RBOCs have found municipal broadband efforts annoying. The Federal Communications Commission (FCC) also has questioned the rights of municipalities to offer their own telecom services in several high-profile cases. So far, no RBOC or legislative body has managed to squelch the trend, however, as these contracts indicate.

— Mary Jander, Senior Editor, Light Reading

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