FTTH's Benefits Are Not That Easy to Prove

3:30 PM Calix executive admits his efforts to prove the economic impact of FTTX buildouts went somewhat awry

September 28, 2011

3 Min Read
FTTH's Benefits Are Not That Easy to Prove

3:30 PM -- ORLANDO -- FTTH Council Conference 2011 -- When David Russell set out to answer the question, "Does FTTH Drive Economic Growth?" he was pretty sure the answer was yes.

But, as the Calix Inc. (NYSE: CALX) executive confessed to a packed room here this morning, it turns out the answer might be no. Or maybe, "We don't know yet." Or even, "We can't prove it one way or the other."

That's a tough thing for a guy to admit at an FTTH event, especially when he represents a company selling FTTH gear.

Using an interactive database that measures economic growth (an Edward Lowe Foundation database created by the man who invented kitty litter -- I kid you not!), Russell looked at the impact of a group of well-known FTTH projects on the economic development of their communities, measured by business creation and job creation.

They turned out to all be municipal builds, not because that's what Russell set out to do but because these five FTTH buildouts were the only ones that met his criteria: They had been around for five years; were true, all-inclusive builds; and were the commercial centers of their MSA (metropolitan statistical area). That latter provision was necessary because the database didn't sort data down to the individual town.

Based on what is available today -- data through 2008 -- Russell looked at the growth between 2004 and 2008 and compared the results from the towns served by FTTH with the rest of their states. It turns out that of the five -- Bristol, Va./Bristol, Tenn.; Dalton, Ga.; Jackson, Tenn.; Reedsburg, Wisc.; and Windom, Minn. -- only three did better in business creation than other towns in their state. In both Dalton and Reedsburg, business creation trailed other areas of Georgia and Wisconsin, respectively.

When it came to job creation, only Bristol and Dalton did better than other towns in their states. But that's not to say they added jobs. Bristol actually lost 3 percent of jobs and Dalton 9 percent.

So only the Bristol area did better than the rest of its state (it was measured against Virginia) in both job and business creation.

It's no coincidence that Bristol is often cited as the poster child for FTTH success.

This certainly doesn't mean that FTTH is failing to live up to its economic promises. Some of those attending Russell's presentation pointed out that telecommuting and home-based businesses are enabled by FTTH and might not be measured by a national business database.

Nor is the benefit of FTTH on education, health care and population retention -- all goals of rural FTTH in particular -- measured by Russell's calculations.

One woman from an Iowa telco said her customers demand the high-end data packages that FTTH enables because otherwise their data-addicted kids won't visit them. That struck me as truly sad until I realized that my adults kids probably wouldn't hang around our house much either if they came home and found no broadband.

But Russell's admittedly ad hoc study did show a couple of things: First, economic development doesn't magically happen because you build fiber to the home. And second, the FTTH industry might want to consider digging a little deeper to generate more proof of fiber's positive impact on the economic health of the regions it serves.

— Carol Wilson, Chief Editor, Events, Light Reading

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