October 2001

BY BROUGH TURNER

First it turns out the FCC's "high speed access" includes all premises (residential or business) with a connection "capable of delivering speeds in excess of 200 Kbps in at least one direction" -- rather disappointing for a speed freak. The FCC numbers include 3.6 million cable modems and 2 million DSL lines. More recent numbers from the National Cable and Telecommunications Association claim nearly one million new cable modem subscribers per quarter with 5.5 million as of June 2001. And estimates by Parks Associates are that total U.S. households with broadband connections reached 8.6 million as of June and will reach 11 million by December 2001. So DSL is up and cable modems are soaring. But with 105 million households in the United States, there's a long way to go.

Meanwhile 1.2 Mbps doesn't reliably support movies or even full-screen, TV-quality video. What will it take to get the next generation of high-speed access -- 10 Mbps or 100 Mbps or better -- to my home? Technically, fiber to the home (FTTH) would be best, but a wireless connection could do it or, potentially, a cable company's hybrid fiber-coax (HFC) network. But who has the incentive or the financial strength in these times of telecom troubles?

DON'T LOOK TO THE ILECs
The incumbent local exchange carriers (ILECs) are the most profitable segment of the telecom industry today, but their near-term focus is long-distance service. Long-distance service may be a declining business for AT&T, MCI WorldCom, and Sprint, but it's a potential growth business for the ILECs. As legal restrictions drop, they can offer this additional service to their existing, nearly captive, customer base at competitive prices and with the convenience of one bill. When added to a profitable local service franchise, long-distance service will provide the ILECs with revenue growth for the next five years or so. But the chances of an ILEC installing fiber to my home are nil. As regulated monopolies, their focus is on maintaining the status quo.

Indeed, if you look at the ILECs' accomplishments in the past decade, only two things happened -- installation of digital loop carrier equipment in their cable plants and successful marketing of CLASS services (call waiting, caller ID, three-way calling, etc.). For the next decade, the ILECs will focus their efforts on getting into long-distance and, strictly in response to the cable industry's success with cable modems, the ILECs will make some headway with DSL. So if we can't look to the profitable ILECs to provide really high-capacity connections to the home, where else should we look?

IS CABLE THE ANSWER?
The cable industry is also a monopoly and thus fairly slow moving, offering only those new services that have proven paybacks. Nonetheless, the cable industry has been able to leverage its coax cable plant to offer high-speed Internet access (even though it took them five to seven years to go from trials to volume deployments). Today, each of the top seven U.S. cable operators (representing 80 percent of U.S. cable subscribers) has most of their cable plants upgraded for two-way operation; that is, the infrastructure is nearly all cable modem-ready. And cable modem service is now a proven, profitable business, so cable companies are rolling it out at a rate of nearly a million new subscribers per quarter.

As a next step, there are several companies offering equipment that could allow cable companies to deploy high-speed Ethernet service, either over existing HFC networks (Narad Networks) or as an evolution path from their HFC networks (Harmonic). But there are a lot more people to connect at 1.2 Mbps before the cable operators will begin to think about offering 10 Mbps or 100 Mbps service to the home.

HOW ABOUT THE CLECs?
Certainly we have all heard about the "collapse" of the CLEC industry. However, not all CLECs have perished. Indeed, during the past two years, while everyone has talked CLEC doom and gloom, the number of telephone lines in the United States served by CLECs has increased from 3.5 to over 8 percent. Many CLECs who focus on specific business segments in specific geographies, and who own a significant portion of their own facilities, are succeeding. And they are helping the growth of the metro-fiber market, but only to commercial buildings, as successful CLECs focus on business customers.

WHAT ABOUT WIRELESS?
Mobile service providers can't help. At best, their "3G" technology promises 2 Mbps connections, but its rollout will take 5-8 years and will only reach 2 Mbps for stationary users in specific locations.

There are fixed wireless offerings that range from T1 speeds to 155 Mbps or more. But these require expensive equipment on expensive spectrum, so high-capacity service is only marketed to business users beyond the reach of fiber.

Most interesting is my wireless LAN card (IEEE 802.11b at 11 Mbps). While it's a short distance technology -- typically no more than 300 feet from a base station -- wireless LAN coverage is rapidly showing up in commercial settings including hotels, airline lounges, and Starbucks coffee shops. There are also community groups using 802.11b technology to provide local service (see http://www.toaster.net/wireless/community.html, for example). For now, these services are limited by the T1, DSL, or cable modem connection of their base stations, but if I can get really fast access, this is a way to extend it to neighbors at up to 11 Mbps.

THE POWER COMPANY
There's one more player who has connections to your home today -- the power company. So far, most power companies who have become active in data communications have done so through partnerships. There's a tremendous potential here, but datacom is hardly the power companies' area of expertise.

IF YOU WANT IT DONE RIGHT, DO IT YOURSELF
So, with all the existing players focusing on their current businesses, is there any way I can hope to get really high-speed communications to my home in the near future? One way is for a community group to take matters in its own hands.

An example of the do-it-yourself approach comes from a neighborhood in Umea, Sweden. This community installed fiber to every home in the fall of 1999 (see http://www.acc.umu.se/~tfytbk/mattgrand/). Organizers convinced 60 out of 62 homeowners to participate. The cost (in late 1999) was about $2,000 (U.S. dollars) per home -- about $1,500 per home to bury the fiber (also a coax for cable TV, plus spare fibers and spare copper pairs!) and $500 for 100 Mbps electronics. Their ongoing cost is $10/month/home for 100 Mbps service. This is real 100 Mbps service within their neighborhood and to other servers in their city, but their city is only connected to the rest of the Internet with two 34 Mbps links.

Granted, Sweden does place a lot of importance on being one of the world's leading countries in the field of information technology and telecommunications, so there are cultural reasons why this may have happened in Sweden first. But a trickle of news about FTTH projects has also been coming out of the United States and Canada. While not up-and-running as I write this, Palo Alto, California has an FTTH trial that is close to starting. Futureway Communications in Canada is wiring new housing developments in and around Toronto. And new carrier WINfirst has received regulatory approval to build FTTH networks in several western U.S. cities. Of course, Futureway and WINfirst are just beginning development, while Umea has been online for more than a year.

Also, Futureway and WINfirst are new communications carriers, not community groups like that in Umea. As new carriers, they have to negotiate franchises, or at least access to rights-of-way, with local municipalities. And here politics is as important as economics. When there was just one power company, one phone company, and one cable TV company, municipalities were accommodating to utility companies. But with the Telecommunications Act of 1996 came a flood of new companies wanting to build long-distance and metro infrastructure. The Act also imposed equal access requirements on states and municipalities. Rampant demand plus new federal mandates are forcing municipalities to update their policies and ordinances. For example, Washington, DC, has new rules that limit digging on certain streets to only twice every five years, so new service providers must wait and must coordinate their installations. The net effect of the ongoing boom is substantial added complexity for cities and for service providers.

Sweden and Canada are examples of technically advanced countries where local governments are actively involved in fiber network construction. In Sweden, the city of Stockholm and the Stockholm County Council jointly established a wholly owned company, Stokab, as their vehicle "to provide dark-fiber network capacity for all IT players in the Greater Stockholm area." And in Canada, which leads the world in "condominium" fiber projects, fiber construction projects are shared between municipal governments, school districts, and commercial companies.

In typically U.S. fashion, I distrust government solutions, especially if the government must run a high-tech business. But perhaps there is another approach. Suppose my local government installed micro-conduits from each house to a neighborhood concentration point, and then left each household to contract with the service provider of their choice. After all, many developing suburbs assess homeowners for the costs of upgrading formerly rural neighborhoods from septic systems to newly installed public sewers. These assessments are can run over $10,000 per house, far beyond the cost of flexible conduit to each home. While this approach may sound far-fetched today, it won't be a great leap for the next generation.

With enough publicity on successful installations of community-based fiber in other countries, we will see action in the United States. The technology is available today. And the United States is too large, too diverse, and too competitive to get left behind for long. But for now, I'll be chatting up my neighbors and, in parallel, looking into wireless and free space optics.

Brough Turner is senior vice president of technology at NMS Communications, a leading provider of hardware and software technologies for developers of high-value telecommunications solutions. For more information, call NMS Communications at (508) 271-1000. E-mail to the author (addressed to brough_turner@nmss.com) is also welcome.

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