Ethernet Operators Face Up-Front Costs
But significant upfront costs in deploying gigabit Ethernet -- laying fiber to the user’s door -- emerged at last week’s Gigabit Ethernet Conference in San Jose, Calif.
One service provider rolling out gig E to the home, the Grant County Public Utility District, said it would spend $120 million in the next five years, laying fiber to "all the farms, homes, and businesses" in the rural, mid-Washington region (see http://www.gcpud.org/zipp/default2.htm for details).
The county doesn't expect full payback on its investment for at least 15 years, according to Jonathan Moore, its senior telecommunications engineer.
"Right now we're spending $3,500 per home, but we expect that to drop to about $2,100 per home by 2003," he told delegates at the conference. The county already has 1,700 customers using the open-access network to order Internet, phone, and cable television services from a growing list of providers, paying approximately $75 to $80 a month for a combination of all three.
Other operators also appear prepared to pay big bills to connect customers, judging by comments made at the conference by Steve Albanese, director of information systems at CPI Wireless, a former division of Varian, which manufactures microwave and satellite components.
Albanese says his company's decision to purchase Ethernet services from Yipes Communications Inc. was helped in part by the service provider's willingness to dig a trench for free.
"We didn't have to put down a penny until it worked," says Albanese, who admits that CPI got "an early-user discount" when Yipes paid for about $40,000 worth of fiber-digging and hookup costs to link CPI Wireless's building with the local fiber loop. Yipes also threw in an Extreme Networks Inc. (Nasdaq: EXTR) customer-premises Ethernet switch as part of its service.
Free gifts aside, Albanese says Yipes's services delivered as promised, allowing the company to completely replace the frame-relay network it used to rely on for its 1,300-node network, which spans six locations in the U.S. and Europe.
"We now have four times the bandwidth for about half the cost of the frame-relay network," says Albanese, adding that provisioning headaches with the previous network of T1 (1.5 Mbit/s) leased lines "almost made me quit my job."
In general, the cost of laying fiber to customer sites "is not so exorbitant that it gets in our way," says Jerry Parrick, Yipes’s CEO.
Parrick points out that fiber-access alternatives to digging trenches do exist, such as existing power or sewage conduits. However, he admits that fully half of Yipes's current customers have needed some type of construction work to bring fiber inside, a task that Parrick says can cost between $50,000 and $60,000 per building. Yipes is sometimes able to share the construction costs with other service providers, he adds.
Of course, having to lay fiber can also delay service provisioning considerably, and might also limit the speed at which Ethernet-based services can be deployed in general. If you’d like to share your views on this topic, take Light Research's new interactive poll, at The Future of the Metro.
-- Paul Kapustka, Editor at Large, Light Reading http://www.lightreading.com