CIR: Fiber-to-the-Hype

The fiber access market is misunderstood, according to a recent report from Communications Industry Researchers Inc. (see CIR Issues FTTx Report). And the reality is far less dramatic than many observers would like to believe.

On the one hand, the market is growing. In "Access 2003," CIR forecasts that deployments of "Fiber to the X," including fiber to the home (FTTH) and fiber to the business (FTTB), will enjoy sizeable double-digit increases over the next five years. FTTH in particular will grow by at least 80 percent a year:

But CIR senior analyst David Gross cautions that growth will build on a very small existing base, particularly in the case of FTTH. "Fewer than 1 percent of all homes in 2007 will have access to fiber," Gross says. Further, progress won't come from the places some industry observers have expected.

Instead of a burgeoning market driven by regulatory progress and a clamor for newfangled applications like video-on-demand from RBOC customers, Gross says the FTTx market will be served by independent rural telcos and municipalities -- and video will have little or nothing to do with demand.

"Video on demand isn't doing that much. It costs more money and provides less selection than DVDs by mail," Gross says. He says the big applications for FTTH may not even have been invented yet.

Instead, FTTH is being driven by municipalities and independent telephone companies looking to build networks in areas where there's room for alternative services to compete with those of ILECs and cable TV providers. One such area comprises the Western United States served by Qwest Communications International Inc. (NYSE: Q) in its US West regional network -- Idaho, Utah, and Wyoming, in particular.

For FTTB, growth will be steady but slow, and it will be driven not by big businesses but small ones, such as law firms in office buildings that seek a faster link to other office buildings. The provider will be the owners of those buildings.

Gross says there also won't be any dramatic technologies stepping up to relieve pent-up demand in the last mile. PON (passive optical networks, which deploy passive splitters to siphon bandwidth among multiple users) will always be a niche market, Gross maintains. Free-space optics likewise remains too costly to be practical. Wireless LANs will probably take root faster than other solutions, but a mix of technologies will ultimately evolve to rule the last mile.

In the end, Gross says, patience must replace hype as the source of planning for FTTx. Certainly, that's a less exciting look at the market, but perhaps a more sensible one.

— Mary Jander, Senior Editor, Light Reading

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FinBurger 12/5/2012 | 12:14:25 AM
re: CIR: Fiber-to-the-Hype Hey, has anyone looked at the profitability of Telecom analysts, lately? He he.

Crap salesmen in a cesspool, that's what they are.
OptixCal 12/5/2012 | 12:14:22 AM
re: CIR: Fiber-to-the-Hype Don't you just love guys like this? These clowns seem to make their livings searching for those small rays of hope that the rest of us might have, only to have these Grinch-like gnomes throw weed killer on the few struggling seeds of technology that might - just might - sprout into some sort of useful business that might provide, 1)additional services, 2) added revenue, 3) the possibility of jobs and, 4) just a little bit of happiness. Crawl back in your hole, Mr. Grinch.
sevenbrooks 12/5/2012 | 12:14:21 AM
re: CIR: Fiber-to-the-Hype

How often do you think that anybody reads one of these articles and says "Gee, I guess I will change my network direction on what an analyst says."

Now for real, the products in this space are not ready for primetime. The cost models are off still. The features aren't there. So, is this poised for takeoff tomorrow. Nope. How many large company RFPs are being issued? How many products are in labs?

rjmcmahon 12/5/2012 | 12:14:18 AM
re: CIR: Fiber-to-the-Hype Now for real, the products in this space are not ready for primetime. The cost models are off still. The features aren't there. So, is this poised for takeoff tomorrow. Nope.

Let's do some corrections here.

The costs aren't the problem. Initial costs are roughly around $35M for around 25,000 homes and 5,000 businesses. That's roughly equivalent to the cost of building one 20 screen AMC theater.

And operational costs are orders of magintude less.

If costs aren't the problem, what are?

First, the ROI motives of a capitalist will never be satisified with a bandwidth abundant infrastructure which trades bandwidth as its economic basis. Coupling the "services" to the infrastucture is a fatal mistake which kills all the value.

So its a public infrastructure.

That presents the real problem, a political one. The RBOCs have become the second largest lobbying group on the planet, behind energy/DoD, and they couldn't care less about serving their society. (They think things like caller id every decade are innovative new "services"). Due to their laziness, technical incompetence, and cronyism with folks like Tauzin, they have learned to feign competition while claiming profit status. They do this so they can continue to extract their taxes.

Unfortunately, the broadcast media, built on advertising, is no better.

There is hope.

There are hints that the FCC is now starting to wake up to the fact that the market is moving towards monopoly, and that our new communications infrastructure, and our economic growth, may be delayed by at least a generation or two.

Let's hope the people start waking up to the industry which has the power and which believes in the commitment to serve. And then maybe the reign of fraudband will be shorter lived than the reign of Saddam.
st0 12/5/2012 | 12:14:09 AM
re: CIR: Fiber-to-the-Hype Not sure about hype. The needs is almost pressing: The 2 hr movie is approx. 4Gb at current stage (just look at the DVD-5 capacity). I would like to view movie online and down load/doing other things at the same time: that required more than 1Mbps speed (0.5 for the movie and 0.5 for other stuff). If you play computer games on line with full effect, you would need more (e.g. 3D or virture 3D). With SAR or other scary things going on, going to cinema may be less of the attraction for the kids. The demand sure will be driven by the screaming kids want more bandwidth (I bet if you can provide FTTH with 1Mbps capacity at $100-150 per month, plus downloading movie HDTV quality for $5-15 per movie.. you will get a lot of screaming kids force there poor Mom and Dad into action (never under estimate the kids power). Now, HDTV format is the key, if the format exceed the capacity of current DVD, that means you can not really store it anyplace for fast easy re-sale (like the MP3 thing). .... oh, well, a bit too much down to the road...
There sure is a hope somewhere, if you can get rid of the "smart" analyst.... save money and put the $ into tech development... these guys just the overhead without value add---my 2 cents).

lastmile 12/5/2012 | 12:14:06 AM
re: CIR: Fiber-to-the-Hype FTTx and FTTH is the next step that the IT industry needs to consider seriously if they are concerned about survival.
LR picks up a topic to induce readers to exchange garbage on this board.
For example "Effect of War on Telecom" generated a lot of trash.
LR continues to bash all events related to the progress in the fiber industry. The fact remains that Copper is a No-No.
Fraudband and Saddam Hussain have a lot in common.
rjmcmahon 12/5/2012 | 12:14:05 AM
re: CIR: Fiber-to-the-Hype Fraudband and Saddam Hussain have a lot in common.

It is sad when false prophets steal the future opportunties of a society. Matthew 7:15 comes to mind.

Beware of false prophets, which come to you in sheep's clothing, but inwardly they are ravening wolves. Ye shall know them by their fruits.

What fruits does fraudband offer to our society?
fgoldstein 12/5/2012 | 12:14:04 AM
re: CIR: Fiber-to-the-Hype FTTx is the answer. Now what's the question?

That's hardly a way to allocate scarce capital nowadays! It was indeed all the rage in the 1990s, but at this point it's incredibly hard to even find a banker willing to loan a carrier money to buy surplus gear at ten cents on the dollar, let alone find anyone willing to pay to install FTTH.

Yes, for green fields in rural areas, FTTH pays off, and that's where it'll go. But most places have copper, and copper delivers most of the revenue for no additional investment. DSL was a mid-life kicker for copper, and while it isn't as good as glass, it increased copper's revenue potential without rolling many trucks.

Right now, the ILECs own the OSP, and control the services that run over it. The Powell FCC majority is ferociously anticompetitive. They would be happy to let somebody overbuild with FTTH, but they also know that it's less likely to happen in most places than, say, to have Saddam get US citizenship. Praise impossible competition while shutting down competitors who are getting their start leasing ILEC copper. I'm not talking UNE-P resale, which is irrelevant to this debate; I'm talking DSL, as well as competitors who might want to lease future FTTH, and who might have content more desirabe than whatever the Bells want to ration out.

The ideal answer is to have outside plant separated from service delivery, so that fiber pullers (OSP) could shop their services to anyone who is willing to pay them, and aggregate enough of them to make it a go. The FCC won't push it, the pigopolist ILEC managers won't push it, but the economy needs it. Our best hope is antitrust law.
optical Mike 12/5/2012 | 12:13:55 AM
re: CIR: Fiber-to-the-Hype Stories from participants in the Palo Alto FTTH Trial

st0 12/5/2012 | 12:13:54 AM
re: CIR: Fiber-to-the-Hype why said:
"Reality: Your local cable company already provides your house with well over a Gbps...today. It gives you local broadcasting and digital movies on demand, and you can surf the net at the same time at over 1Mbps. Cable modems serve over half the home surfers in the US.

More IP bandwidth will be had from broadband wireless networks. This will be the next battle field, with both cable companies and telcos installing hotspots in MickeyDees, Starbucks, etc...and eventually out into the 'hoods.

And if they screw around with delays, Intel and Microsoft will disintermediate the local service providers entirely with direct device to device networks. The message here is work with them, or suffer the consequences.

In the face of broadband wireless, FTTH is DOA.


we must live in different places.... cable provide home with Gbps right now? I wish.
Intel and Microsoft take over local provider? scary thought.... butter have my wired ATT handy for 911 call... wouldn't count on the realiability of microsoft... (when was last time you see a blue screen on your computer?).

hehehe...not me, Why, not me...

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