Hundreds of small independent telecoms, broadband service providers, municipalities and cable television companies have brought gigabit-enabled, all-fiber service to a total of more than 1.4 million North American homes—about a quarter of all fiber to the home connections on the continent.
This massive deployment comes with barely any of it attributable to funds from the $7.2 billion federal “broadband stimulus” package passed in early 2009, according to a report the Fiber-to-the-Home (FTTH) Council released in May.
The study, conducted by Washington, DC-based RVA Market Research, found that all-fiber networks are now available to 16 percent of homes in North America, with 5.8 million homes now receiving television, high-speed Internet and/or phone service over these networks.
Fiber Competition Increases
While a large portion of the FTTH deployment thus far has been due to Verizon’s $23 billion dollar investment in overbuilding its wireline service in many areas, the report noted that more than 750 service providers are now deploying fiber to the home across North America.
Most of those 750 companies, according to the report, are small, independent telephone companies that are replacing their copper lines with end-to-end fiber in order to ensure their future competitiveness as broadband providers.
The study further found that more than 65 percent of small independent telephone companies that have not upgraded to FTTH said they would very likely do so in the future. Another 11 percent said they were “somewhat likely” to upgrade to fiber. More than 85 percent of those that have already deployed FTTH said they would be adding more direct fiber connections going forward.
Telcos Flocking to Fiber
Mike Render, president RVA and the author of the study, said there are a number of reasons independent telecoms are flocking to FTTH, including the need to replace aging copper lines, the opportunity to include video in their service offerings, and in some cases the availability of rural broadband loan programs and stimulus funds.
“A common element of these small [incumbent phone carriers] and the municipal FTTH systems is that when they roll out their all-fiber service they get remarkably great take-rates, averaging above 50 percent,” said Render, referring to the percentage of households that subscribe to the new service after receiving information about it.
“In many cases, these small telephone companies are longtime family-owned businesses that are deeply involved in local affairs and are responsive to their community needs for faster broadband as a key to future economic development,” he added. “That’s why so many of these companies are looking to get into FTTH or expand their deployments.”
Demand Pushing Fiber Roll-Out
Scott Testa, professor of business administration at Cabrini College in Philadelphia, says the small telecom providers are often providing the fiber to remain viable as an increasing portion of the population, including those in rural areas, demand high-speed communications.
Gregg Dunn, a partner with Schottenstein, Zox & Dunn law firm in Columbus, Ohio, who specializes in telecommunications issues, says small telco fiber roll-out is “a mixed bag.”
“Some of the best deployments are by very small operators,” Gregg said. “But sometimes cities want to develop certain areas, but the incumbents won’t go there. If there are no big pipes, [commercial developers] will not build in advance of the infrastructure.”
Dunn said that municipalities can help add fiber laying the groundwork at the same time the city makes road, sewer and other infrastructure improvements.
Government Does Little to Help
Eric M. Page, partner in the Richmond, Virginia, office of LeClairRyan, a corporate consultant law firm, points to market pressures spurring the uptick in private-sector broadband investment.
During the dot-com boom of the late 1990s and early 2000s, “there weren’t a lot of applications that were very bandwidth intensive,” he said. “But now the applications have caught up.”
“The private sector is pretty good when it comes to supply and demand and economics in operating things as efficiently as possible,” Page added. “When the government gets involved in providing the thicker pipes, there are a lot of additional fees, making it harder [for fiber projects] to be profitable.”
Page added that the companies that have involved fiber are more economically viable moving forward, though some may have moved quicker on installations because there was a concern that if they didn’t, municipalities might go there own way in determining the fiber build out.
Phil Britt ([email protected]) writes from South Holland, Illinois.