Fiber to Home: Dream Deferred?

A slew of recent developments has focused attention on the ever-elusive market for fiber to the home (FTTH), which would provide residential homes with high-speed fiber optic connections. The seemingly fragile hopes of companies developing technology for this market appear to be getting both a boost and a bust.

Here's a rundown of the "good news, bad news" headlines within the last few days:

Good News

Bad News
  • On February 5, despite lobbying by members of the Fiber-to-the-Home (FTTH) Council consortium (see Congress Gets Lobbied), Congress failed to pass an economic stimulus bill with a key broadband provision that would give tax credits to companies investing in FTTH gear.

NOTE: Alcatel SA's (NYSE: ALA; Paris: CGEP:PA) layoff of about 140 employees at an R&D center in Raleigh, N.C., appeared to include a fiber-to-the-home project, another potential bad news item. Now, Alcatel says that the FTTH project in Raleigh was unaffected by the layoff, and that the roughly 100 people deployed in that effort remain at work. "This is an important project to us," says an Alcatel spokesman.

Industry sources say the news amounts to temporary setbacks and small gains in a market that continues an upward climb. “The market is beginning to show growth, but it is going to be modest for a while, with a lot of small announcements,” says Mark McDonald, VP of the business unit at Marconi PLC (Nasdaq/London: MONI) devoted to fiber to the home and business. He anticipates the FTTH market will more than double by the end of next year.

Marconi has been behind one of the key small announcements recently – the running of fiber to about 680 homes in Virginia (see Verizon Deploys Marconi) using its PON (passive optical network) gear. While still very small, this project is important to FTTH vendors because it signals the interest of a key RBOC in testing solutions. Other recent contracts show that small providers, usually backed by municipal governments, are the main deployers of FTTH right now.

Dynamic Table: Recent Fiber to the Home Projects

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Today’s deployments include many solutions, like Marconi’s, based on PON gear. PON is a technology in which fiber is split with passive couplers, enabling bandwidth from a single high-speed connection to be shared amongst customers (see PON: The Dream Is Alive). The technique appeals to FTTH service providers because it reduces the amount of fiber (and associated operating and maintenance costs) assigned to individual residences.

Marconi has made PON the linchpin of its FTTH strategy, but there are other solutions, too. Vendors such as PurOptix Inc., Wave7 Optics Inc., and World Wide Packets Inc. use active components, not passive couplers, to distribute broadband services to homes (active components, like lasers and amplifiers, are more expensive than those that simply split optical channels). (See Optical Taxonomy, page 5 for more.)

Other products are in the works. Ethernet-based PON products are emerging to replace the gear that’s generally based on Asynchronous Transfer Mode (ATM) today (see Alloptic Pushes PON Scheme). And startups such as Iamba Technologies Inc. purport to have yet another take (see Introducing Iamba).

Despite the proliferation of solutions, getting the backing of incumbent carriers has been difficult, to say the least. SBC Communications Inc. (NYSE: SBC) has conducted trials here and there, and reportedly is planning to roll out service in San Francisco this year. BellSouth Corp. (NYSE: BLS) has conducted several trials but doesn’t have much to show for it. Large international carriers, including Bell Canada (NYSE/Toronto: BCE), are rumored to be readying FTTH trials.

But little has come of these activities. “Yes, there’s been a slight increase in the number of trials, but we’ve been seeing fiber-to-the-home trials for close to twenty years now,” says Barry Moon, senior analyst at RHK Inc. “Lots of the companies involved in past trials aren’t even around anymore.”

Moon says the recent flurry of FTTH publicity may have been part of the vendors’ efforts to convince Congress of the merit of recent economic stimulus legislation. He says FTTH won’t really take off until carriers can make money doing it. Fiber needs to be run to places where services will actually be used, he asserts.

Specifically, services need to be cheap enough that most homes can afford them – and that hasn’t been the case in past proposals, which have sometimes specified pricing in the hundreds of dollars per month per homeowner. “Failures occur where the deployment plan doesn’t match the spending habits of the general public,” Moon says.

Right now, municipalities and governments have become most involved in FTTH as a means of developing their own communities, often with government funds. These groups, such as Central Texas Utilities and the City of Palo Alto, Calif., offer readymade customer bases, are fairly well funded, and usually own the rights of way to the homes they’re trying to reach. Some companies also own HFC networks that can be extended to serve other broadband requirements.

”We call these 'MLECs,' for municipal local exchange carriers, and we see about 200 of them nationwide,” says Jeff Gwynne, cofounder and VP of marketing at Quantum Bridge Communications Inc. Gwynne says Quantum Bridge, a key player in business PON access, is still considering how best to approach the FTTH market, but he thinks there may be a $400 million to $600 million opportunity among the MLECs.

So what's next? According to Bob Whitman, treasurer of the FTTH Council board, who also works at Corning Inc. (NYSE: GLW), the FTTH effort needs the boost of a couple of really strong deployments by big carriers.

"Municipalities are going to offer just one-time builds. What's needed are service providers with large areas and clear plans to help move things along," he says. "We're all hoping in the incumbents."

— Mary Jander, Senior Editor, Light Reading
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The_Holy_Grail 12/4/2012 | 10:58:21 PM
re: Fiber to Home: Dream Deferred? FTTH is just one of many delivery mediums. I would suggest players in the field look at why all the DSL providers couldn't make it and then try figure out how not to slip down the same rat hole.

Can someone explain to me how a small company can make this a success with the large upfront capital required? As the article pointed out, only the large carriers can make this happen on a wide scale deployment. Unfortunately, these large carriers also tend to be the slowest in deployment of new technology.

I like the ePON approach since ethernet has been well proven, well understood, and demonstrated to be cost effective in the LAN markets. So, I would expect WAN just to be another extension of ethernet

I think FTTH will coexist with copper to the home and wireless solutions. Of the three, fiber is most attractive in terms of the ability to offer the most amount of bandwidth
data_guy 12/4/2012 | 10:58:21 PM
re: Fiber to Home: Dream Deferred? Also a deployment in the Grant County Public Utility District, Wa. Trial deployment was with WWP, don't know who was ultimately picked.
How about the same type of article on FTTB(usiness) trials and deployments, failed and successful?
Lafite 12/4/2012 | 10:58:20 PM
re: Fiber to Home: Dream Deferred? Etherguy,

I don't know a ton about what they have actually developed, but there is a company called Actelis that claims to have something along those lines, from 10 to 100MB speeds over copper wire.


etherguy 12/4/2012 | 10:58:20 PM
re: Fiber to Home: Dream Deferred? i'm hearing it can be done. anyone have any data on this? no pun intended. seriously, people said no way you could get 1.5mb/sec over twisted pair and dsl came along. now you can get 6 megs. can ethernet carry 100 to the home? that's the holy grail, is it not? it could be ilecs' answer to mso's...
h 12/4/2012 | 10:58:19 PM
re: Fiber to Home: Dream Deferred? It was a 1 billion contract

future data 12/4/2012 | 10:58:18 PM
re: Fiber to Home: Dream Deferred? I'm in a remote location in Japan (Suwa). My home in Japan has had FTTH for the past year with 4 Mb/s access. My years of travel and experience has shown me that Japan's consumers typically have access to technologies an average of four years before the US gets over the debate and decides to impliment. Today's date is 2/8/02 and for those who would like FTTH. The good news is, "Its coming". The bad news, "You'll have to wait for the debate to finish and inventories to turn".
Litewave 12/4/2012 | 10:58:18 PM
re: Fiber to Home: Dream Deferred? Author: etherguy
Subject: 100mb ethernet over copper?

Apparently Elastic Networks is about to launch such a beast. Not sure of the repercussions of the Paradyne acquisition though.
temporary 12/4/2012 | 10:58:18 PM
re: Fiber to Home: Dream Deferred? I have become a believer in the future of fber to the home. There is a lot to say for the simplicity of offering a high bandwidth passive connection between the central office and the home. How can we justify the hassle of trying to put intermediate switching in the neighborhood compared to the cost of letting the consumer buy an optical Ethernet box?

Deployment timeline is simple to determine. No service provider can afford to be the third set of data on the telephone poles. There are three competitive pressures on twisted pair. First, over optical over builders can just drive twisted pair out of the network, in combination with cable modems. Two, the baby bells can see the writing on the wall and begin selected replacement of twisted pair. And third direct broadcast satellite can move toward such a great number of television channels that force cable operators to begin offering optical upgrades.

The strongest financial driver is the increase in per viewer ad revenues that accrue as more channels target niche markets. This is already obvious in cable networks that offer more directed offerings in appointment television with more directed advertisement. As channels increase, the majority of consumer purchases can be cued from direct television marketing, provided proper channel searching techniques are available. Its easy to calculate the total number of supportable channels from a number of angles, but the most direct computation is based on the number of specialty paper magazines available on the market (3000).
ericwaynedavis 12/4/2012 | 10:58:17 PM
re: Fiber to Home: Dream Deferred? future data,

was the access plant in your area recently scrapped and replaced for any particular reason?

in my travels, I have noticied that carriers will "upgrade" a network only when needed. in berlin for example, they have a failry modern narrow-band pon system that has been buil out since the wall came down. i dont know this for a fact, but i suspect that east berlin infrasturcture was in bad shape.

one of my colleauges in israel told me that they (Bezeq) have to rely on wireless acces because there are certain villages that constantly war with one another and destroy the infrastructure of the opposing side whenever possible. wireless increases their immunity to sabotage.

i live in a bellsouth service region. i used to work for bellsouth many years ago. i can state for fact that they do not replace infrstructure just because they can. i have personally seen outside plant cable (i.e. twisted pair) that has been in service since the 1901-1910 period. the "if its not broke don't fix it" adage truly reigns supreme.

because the continental us is not too often subject to natural disasters or war time destruction, our access plant tends to live a long time allowing the ilecs to really get a complete return on their investment.
nosehairs 12/4/2012 | 10:58:16 PM
re: Fiber to Home: Dream Deferred? I thought the average life of outdoor copper telephone lines was about 20 years, and therefore telephone companies are often replacing some small percentage of their outside plant. Is this just another urban legend?

Another reason to replace existing copper with fiber is because the existing outside plant simply can't provide the newer services without some upgrade, and as long as the outside plant is being upgraded it may as well be replaced with fiber.
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