FTTP Booty Tough to Peg
The three Baby Bells said to be interested in the fiber-to-the-premises (FTTP) market have put in a tall order, and one with a wide range of possible outcomes.
One possible outcome: billions of dollars in new spending. Another outcome: close to zilch.
The request for proposal (RFP) Verizon Communications Inc. (NYSE: VZ), BellSouth Corp. (NYSE: BLS), and SBC Communications Inc. (NYSE: SBC) sent to telecom equipment vendors in June states asks for bids on three different scenarios ranging from 50,000 homes to 640,000 homes during 2004, according to sources close to the proceedings. Each of the phone companies is in talks with vendors at the moment to finalize details for lab testing that will begin next month, so the companies are still months away from actual deployments (see FTTP Bidders Slashing Prices? and Carriers Give FTTP Update). But a glimpse of the information those vendors were asked to supply during the selection process gives some idea of how aggressively the Bells are heading into FTTP -- at least on paper. Vendors in contention for the Bells' business had to provide, among other things, price forecasts for five years of deployments (homes passed) at three different volume levels. Though the Bells have never released these figures publicly, Light Reading has learned the forecasted FTTP volume levels, which are represented in the chart below.
|Low Forecast||Mid-Range Forecast||High Forecast|
|Single Family Homes||50,000||345,000||640,000|
But that's the high end of expectations. Here's the less appealing scenario: The RBOCs are said to be looking for aggressive pricing in the RFP. What if they could lower things to $1,000 per subscriber? If they were targeting the lower range of 50,000 residential customers over the next few years, that would peg the total money involved at a much less exciting $50 million.
But the big question is, would they move that fast? If the Bells hit their mid-range forecast for the first year of deployments to single family residences, they would easily surpass the number of fiber-to-the-home installations to date.
|Homes Passed||Homes Connected|
|Source: Render Vanderslice & Associates|
— Phil Harvey, Senior Editor, Light Reading