Even as BellSouth Corp. (NYSE: BLS), SBC Communications Inc. (NYSE: SBC), and Verizon Communications Inc. (NYSE: VZ) pursue their high-profile FTTP request for proposal with forecasts of reaching hundreds of thousands of homes in 2004 (see RBOCs See Three Ways to FTTP and FTTP Booty Tough to Peg), their recent earnings reports showcase growth in copper-based DSL.
In their October reports, the three collectively posted 661,000 new DSL customers, an average increase of 11 percent from the previous quarter. They now boast 6.5 million DSL customers nationwide. In all their recent financial announcements, DSL, along with wireless, was cited as key to recent revenues. Further, the RBOCs indicated that DSL adoption is attracting customers interested in combination packages of voice and data, a key for fighting customer churn.
Table 1: RBOC DSL Deployments to Date
|Carrier||DSL subscribers added in 3Q03||Total DSL subscribers to date|
|Source: Company announcements|
Analysts say RBOCs are doing so well with DSL that they'd be hard-pressed to start displacing it in favor of fiber anytime soon, particularly given that they're only just emerging from the worst downturn in their history. The DSL fun is just beginning, it seems, after a long ramp-up (see DSL Growth Explodes in 2003).
"We remain skeptical that the RBOC FTTP deployments will be as aggressive as stated... The RBOCs remain committed to their DSL deployments, and the bandwidth of DSL is sufficient to deliver broadband data and voice to their customers," writes Sterling Perrin, senior research analyst at IDC, in a recent email.
If demand for video grows substantially, that could change things, Perrin says. But even then, there's evidence that DSL technology, with tweaks, can handle video delivery -- at least in areas where copper is upgraded and dense. In Italy, for example, provider FastWeb SpA offers customers TV-over-DSL via 4-Mbit/s-per-home connections (see FastWeb Piles On the Users).
The argument's been made that Italy is a country in which the copper is relatively new and of a high quality, and distances between carrier facilities and homes are short and dense. Even so, there's evidence that U.S. carriers are interested in ongoing improvements to their copper infrastructures in order to expand DSL subscriptions. And those improvements could put FTTP on the back burner.
Verizon, the only RBOC viewed by analysts as really serious about deployment of FTTP, claims publicly that reaching 60 percent of its customer base with fiber within the next five years is a goal (see FTTP Bidders Slashing Prices?). But in its third-quarter report, the carrier said it has upgraded 74 percent of its copper infrastructure to handle DSL and that it "remains on track" to make 80 percent available to DSL by the end of 2003.
Meanwhile, others say it's likely the RBOCs will consider FTTP for a modicum of new buildouts but take another tack with fiber in their existing networks. Namely, the carriers will insert fiber strategically in the middle of their networks, instead of running it all the way to customer premises. Such a strategy would shorten the distances DSL signals need to travel, increasing data rates to support higher-speed services like digital TV.
Fiber-to-the-curb, a version of this approach, is already embraced by BellSouth as a key method of bringing fiber to the home. That carrier has tangled with the FCC over the semantics (see FTTH Dispute Boils Up).
Bottom line? What the RBOCs plan to do with FTTP is up in the air, but it's pretty clear they're nowhere near shelving DSL. Indeed, at least one analyst, Tom Nolle, president of CIMI Corp., has long maintained that RBOCs are ready to sacrifice FTTP plans to further DSL interests. He views the FTTP RFP mainly as an information exercise (see A Closer Look at PON Econ). From his perspective, more fiber in the loop may be a key goal for the RBOCs, but they're not about to sacrifice precious DSL revenue to FTTP buildouts that could cost them ten times as much to get going as DSL -- without payback guarantees to match.
— Mary Jander, Senior Editor, Light Reading