Fiber Players Giddy Over FCC Ruling
As everybody’s who’s anybody in telecom was busy issuing press releases yesterday reacting to the Federal Communications Commission (FCC)'s ruling on what should be done with industry regulations, the only true shouts for joy seemed to be coming from the fiber-to-the-home crowd (see Powell Loses FCC Vote, The Five Stooges and FTTH Council Celebrates FCC Decision).
While the Commission dashed the incumbent carriers’ hopes for deregulation on the telephone network side, it gave them drastic regulatory relief for broadband facilities, and particularly fiber-to-the-home (FTTH). This means that fiber rollouts anywhere, and especially in the last mile, will be removed from the so-called unbundling rules that today require the Bells to lease their facilities to their competitors at set, low, wholesale prices.
“I think that it’s a great step forward. We’re very enthused,” says Fiber-to-the-Home (FTTH) Council president, Mike DiMauro. “This was one of the last major obstacles that needed to be removed… This ruling should help speed up the deployment.”
Opponents of the regulations have long complained that forcing the RBOCs to give their competitors cheap piggy-back rides over facilities they themselves have had to pump a lot of money into, is no way to get them to invest. According to an FTTH Council press release yesterday, the Bells account for only 2 percent of all fiber deployments to the home today.
All that can now change, according to many FTTH enthusiasts. A study by Cambridge Strategic Marketing Group (CSMG) estimates that over the next decade, incumbents will spend an additional $41 billion on FTTH and that fiber will be rolled out to six times more homes following deregulation of the sector.
The RBOCs themselves were too busy moaning yesterday to say much about the new opportunities they saw on the broadband side, but vendors of the gear needed to deploy fiber to the home were certainly celebrating (see Verizon Vents Over FCC Decision, Qwest Laments FCC Ruling, BellSouth Bemoans FCC Ruling, and SBC Reacts to FCC Vote). “Any time you can remove a barrier, it’s a good thing,” says Jeff Gwynne, the senior vice president of marketing and business development at Quantum Bridge Communications Inc. “And this was a big one.”
Not everyone is so enthusiastic, however. Many critics of the broadband and fiber portions of yesterday's FCC ruling insist that the regulations aren’t the only disincentives to RBOC investment in FTTH. For starters, fiber deployments are extremely expensive, and just getting a better return from leasing the installed lines to competitors may not be enough to inspire carriers to start counting out their change, observers say.
“It doesn’t seem to me like there’s any pressure on them to start trenching and laying out fiber,” Farooq Hussain, an analyst with Network Conceptions LLC, says. “Those kinds of migrations are not like a stampede, at least not with the incumbents… They can only do it inch by inch.”
“It does take away some disincentives,” agrees i2 Partners LLC analyst Andrei Jezierski, “but I frankly don’t think it means a whole lot. There’s no rationale for rolling out fiber to the home now.”
Another reason the Bells may continue to drag their feet on fiber deployments to the home, observers say, is that the services they’re delivering in residential markets simply don’t need the super-high-speed links that fiber provides. “The only real play for a high-speed link to the home would be for video -- and the cable companies already have that base covered pretty well,” Craig Johnson, an independent analyst based in Portland, Ore., writes in an email. “And almost all the plays that the RBOCs have tried in the "content delivery" game have gone by the wayside.”
Deployment of fiber-to-the-business, on the other hand, will probably get a much bigger adrenalin rush once fiber is deregulated, Johnson says.
The skeptics don’t rattle Gwynne’s belief in FTTH’s future. “Maybe they’re not in the trenches day-to-day like we are,” he says. “Carriers are already spending real money on this… In 2004 they’ll go at it in a big way, I think.”
— Eugénie Larson, Reporter, Light Reading