So what’s it all mean? The most common interpretation of SBC’s big announcement is that telecom spending is back, and fiber access is where the action is. But this interpretation is simplistic, and, for the most part, just plain wrong.
Why’s that? First of all, there weren’t many details on what type of equipment SBC would be buying to deploy these new FTTN networks, so it’s a major leap of judgment to pick who’ll benefit (example: “Buy JDSU!”). More on this later.
Secondly: Overall, SBC hasn’t necessarily said that aggregate capital spending (capex) numbers are going up. After all, technological advances mean it should be able to do more with less money. Keep in mind that SBC’s capex budget in 2003 was about $5 billion. So if that figure holds, and it spends $5 billion over five years on FTTN – the middle end of the range – it’ll only consume about 20 percent of its capital spending budget. These numbers are still relatively small compared to bubble-era spending.
To put things in perspective, the cable industry spent nearly $100 billion over eight years to build out its networks, according to the Congressional testimony of Comcast chief Brian Roberts.
All of this isn’t necessarily bad. It’s great that SBC’s acknowledged some advances in technology, that it's willing to make the investment in broadband, and that it may now be able to do so in a measured, calculated fashion. I do think it will accelerate the deployment of broadband. But where folks get this wrong is what it means for specific technology platforms.
I think the big winner here isn’t PON or even fiber optic doodads. It’s DSL, as well as the packet-switching, routing, and aggregation gear – such as the broadband remote access server (B-RAS) – that's needed to deploy and manage DSL services (see New DSL Network Architectures).
Here’s why: The advent of newer technology in the DSL market, including the ADSL2+ standard and coming VDSL gear, much of which has been displayed here at Supercomm, means that service providers can squeeze in even more bandwidth than ever before. ADSL2+ will get them to 25 Mbit/s, which is plenty of bandwidth for voice, data, and video – even HDTV.
According to SBC, it’s defined its new FTTN strategy as pushing fiber deeper into residential neighborhoods, but not necessarily directly to homes. The bulk of cases will most likely make that last leap to the home over copper lines. It’s actually quite a sensible strategy: Push fiber out as far as you can without the hassle of digging up everybody’s yard and laying fiber – 50 percent of the cost of which comes in the form of expensive labor, according to research from Light Reading Insider. Then use new, improved DSL to make the last leap of a few thousand feet.
There’s evidence that this is a growing trend among service providers, as they have been demonstrating a healthy interest in B-RAS gear. The next-generation B-RAS targets higher DSL subscriber counts and quality-of-service technology that will allow service providers to deliver different levels of service. Service providers like this stuff.
Will SBC deploy fiber directly to some homes? Of course – but most of those are likely to be in new developments, which is a tiny percentage of SBC's present telecom plant. FTTH will happen eventually, but right now we’re hitting the sweet-spot of DSL deployments, and the technology is really starting to come together.
This all comes as good news for broadband enthusiasts, but be careful about the assumptions you make about specific equipment categories. Service providers will continue to experiment with a wide range of access methods and technologies, including PON, Ethernet-over-fiber, DSL, and wireless.
It’s also clear that throughout the telecom downturn, innovative access technologies such as ADSL2+ and newer B-RAS gear have been marching forward – giving the service providers more tools with which to pursue a multifaceted broadband strategy.
— R. Scott Raynovich, US Editor, Light Reading
For more on this topic, check out:
- The Light Reading Insider reports:
Passive Optical Networks: 21st Century Access?
- The Heavy Reading report:
Next-Generation DSL Equipment: The Path to Profitability.
For further education, visit the archives of related Light Reading Webinars: