FTTH NASHVILLE COVERAGE AT A GLANCE - Broadband Properties

Nashville conference
This of course influences the number
of homes passed by FTTH because
brand-new developments breaking
ground or planned now are heavily into
fiber; it looks to us to be 80 percent of
the homes in new developments, MDUs
and master-planned communities. Developments
that were conceived earlier
are also heavily using FTTH, but not at
that rate.
As the cable operators deploy RFOG – radio
frequency over glass – it will give them a
platform to move to more traditional FTTH
architectures in the future. RFOG buys them
six or seven years of headroom.
Raising Revenue
BBP: Is there any evidence that ARPU
[average revenue per user] is up at all in
FTTH households We certainly see
ARPU around $90-$100 per month for
cable company triple-play households,
and Verizon is claiming average tripleplay
ARPU $20 or more above that for
FiOS. But again, that’s based on reporting
we’ve done in communities where
they compete, and in some others.
Render: Yes, ARPU is definitely higher,
because with fiber you can provide more
services. I think Verizon has seen that
but the smaller guys have seen that even
more so.
BBP: Are there any particular services
that come to mind as killer applications
We’ve been publishing news of many innovative
high-margin apps but we have
no good data as to just which ones are
revenue or profit leaders.
Render: I don’t know. These additions
to triple-play services are still not providing
much revenue. It’s all still in an
experimental stage as far as the business
case is concerned. Take videoconferencing.
Experimentally, the technology is
doing very well, but in terms of numbers
it’s not big. Off-site storage and security
and all those kinds of things are starting
to produce real revenue, though.
BBP: We see providers are trying to get
beyond the commoditization of “cablestyle”
video by expanding video on demand.
Verizon announced that it’s going
to get its VoD catalog up to 10,000
choices. But do you see any hint at all of
North Americans doing what the Japanese
have been doing At NTT there are
hundreds of thousands of services offered
by its partners and each one brings
in a little bit of revenue but at a very high
margin as near as we can tell. So 5 to10
percent of the revenue might provide 15
to 20 percent of the profits.
Render: We keep looking for this here,
but there’s no evidence I can cite to give
you statistics yet. There are trends in
that direction, however.
BBP: Many of those killer apps are on
the Web anyway. So what happens is
that the ILECs here are selling the commodity
bandwidth, which is good, but
the cost per Mbps is drifting downward.
And the guys on the Web are getting
the revenue, though with lower profit
margins than in Asia because marketing
is more difficult for them against the
clutter of the Web itself. Billing is also
difficult because they have only a weak
customer relationship.
Render: It’s difficult to predict how revenue
distribution per service will be spread
around in the future. Certainly it’s not all
going to go to network owners.
New FTTH Technologies
BBP: RFOG (RF Over Glass) is getting
more notice because there are now suddenly
many vendors offering this alternative
to Ethernet for DOCSIS networks.
Are you seeing more RFOG builds I
think you said there were a half-dozen
RFOG builds as of last September.
Render: There’s definitely more interest
in 2008. Many cable providers are experimenting
with RFOG.
BBP: The MSOs or the little guys
Render: Mainly the little guys, but the
MSOs are experimenting with it as well.
They’ve got little trials going here and
there. They’re waiting for standards.
They see the writing on the wall when it
comes to FTTH and this is a compatible
FTTH technology for their networks. I
think they’re starting out with RFOG
in greenfields and serving commercial
premises.
BBP: RFOG is not cheap for them to
do, and this gives them only six or seven
years of headroom, I would think. Do
they eventually have to switch over to a
more Ethernet-standard network
Render: I think so. Choice of technology
that makes sense for an enterprise is
based in part on its existing knowledge
base and in part on ego. As you know, a
lot of people are looking at developing
RFOG equipment and of course a lot of
the big potential deployers are going to
hold off for something standards-based.
As they deploy RFOG, this will give
them a platform to eventually move to
more traditional FTTH architectures if
they deem it best.
BBP: Vendors that were late or shut out
of the move toward GPON and left in
the slower-growing EPON end of the
business have been pushing RFOG, but
of course there are GPON vendors doing
RFOG as well. It’s difficult to make
any money off this. Looking at the tea
leaves, do you see any people leaning toward
one vendor
Render: I don’t have any solid information
there. I think there is room for
several players.
Overbuilding
BBP: Are there any parts of the county
particularly hot for fiber, aside from areas
in or near the Verizon footprint
Render: It does vary. Aside from Verizon-impacted
areas, FTTH tends to
be hottest in areas where there’s a lot of
independent ILEC activity. Examples
are Iowa and Texas. Of course there are
different factors around the country.
August/September 2008 | www.broadbandproperties.com | BROADBAND PROPERTIES | 97