Ottawa fibre-to-the-home experiment hits a snag

An innovative trial to bring a dedicated fibre optic link to 250 households in downtown Ottawa has failed to sign up any customers, due to a combination of existing regulations and a lack of competitors in the ISP market. But despite the hurdles, a policy analyst with Google says having customers own their own fibre could become a model for the future. An innovative trial to bring a dedicated fibre optic link to 250 households in downtown Ottawa has failed to sign up any customers, due to a combination of existing regulations and a lack of competitors in the ISP market. But despite the hurdles, a policy analyst with Google says having customers own their own fibre could become a model for the future.According to Bill St. Arnaud, a long-time champion of fibre-to-the-home (FTTH), the fibre has already been strung onto poles with the assistance of dark fibre company, P2P Fibre Systems Ltd., "but we're struggling to find a company that's willing to sign up residential retail customers."The chief research officer at CANARIE Inc., who stresses that he's spearheading the initiative outside his responsibilities with the not-for-profit advanced Internet organization, says this is due to the fact that there are no longer any independent "retail" ISP's left on the marketplace. The "handful" that survived against Bell and Rogers, "are focused on serving the small business market," he explains.St. Arnaud says the initiative is aiming for an eventual subscriber pick up of just 10 to 15%. One reason for aiming so low is that cable TV services won't be offered as part of the package. He attributed this decision directly to existing broadcast regulations, which make it difficult and uneconomical to offer cable TV. "You really need cable TV services of some sort if you want to sign up customers."With only a 10% subscriber take up it will cost $2,700 per household to participate in the trial. This cost would drop to just $800 per household if the trial could achieve a 100% take-up.Describing this dynamic as "the tyranny of the take up", St. Arnaud maintains that when you have a maximum of just 15% of subscribers, "it gets really, really hard to finance the business case."To move the project forward, St. Arnaud is currently brokering discussions with P2P Fibre, the start-up company that helped string the fibre, and energy services companies (ESCOs), as well as a couple independent ISPs. Pairing up with ESCOs is an attractive option, he says, as there are more than 100 companies currently reselling energy in Ontario."Tying that into the resale of energy ... would allow a novel business case, that will open up a whole new market for the resale of energy."There are other alternatives open to the trial as well. "What we're looking at is rather than signing up with one of these (ESCOs), who want a pound of flesh, is to register directly as a gas/electrical reseller."For its part, P2P Fibre's president and co-founder, Rene Hatem says he is, "happy to be the stringer and owner of the cable," and doesn't have any plans to widen the company's commitment beyond ensuring the fibre gets connected to a service provider and to households.Fibre, he notes, "has two ends to it" and "finding that service provider is one of the elements that needs to fall into place."If you go to a homeowner and ask them to pay $2,700 to get a fibre drop to their home, for example, the first question they'll ask is: ‘What does that get me?' "What it gets you is nothing if the other end of the fibre doesn't go somewhere interesting," says Hatem, who left his position as chief technology officer at CANARIE late last year to launch P2P Fibre.Given their position at the head of the market, says St. Arnaud, Bell and Rogers have shown no interest in supporting the initiative."The cable companies are really holding all the access right now ... They've got a 100 megabyte network, they've got voice and they've got the video franchise."Down the road, the telcos may be more receptive to the idea of FTTH. "They're losing business to the cable companies and they know they have to put in fibre ... so they're struggling to find a new business model," he adds.A model for the future?The trial has been getting attention on a Harvard University blog, following a posting by a Google policy analyst. Derek Slater says the Ottawa experiment is significant in that it is one of the first in North America to attempt to prove-out alternative methods of getting broadband access to the home."Getting more robust access to the Internet is clearly an important objective in the States and around the world and it's important to consider all the different ways to get there ... rather than relying on traditional methods," he said in an interview with Network Letter.The key to coming up with the right model, he says, "is to throw out as many experiments as possible." In some cases, these initiatives will be led by municipal governments, "other times they're just collective action by people."Municipally driven FTTH, for example, is already a reality in cities like Amsterdam and Burlington, Vermont. The deployed fibre in these communities, which runs back to a dedicated access point, provides consumers with the opportunity to select from a menu of competitive providers.St. Arnaud also points to Inuk Networks of the U.K, a Terry Mathews-owned company that has so far been very successful in delivering free Internet, telephony and cable TV to consumers. "How they make their money is by selling eyeballs to broadcasters."When Inuk tried to bring its business model to Canada, however, they "ran into a stone wall" of the same broadcast regulations that have - thus far - impinged the progress of the Ottawa FTTH trial. Instead, the Canadian subsidiary is operating a pilot project at the University of Waterloo, where students receive free IPTV and VoIP services to students living in residence.Google's Slater points out that he's not trying to push the Ottawa model as the best solution and maintains that it's important to bring attention to any experiment which meets his primary goal of getting fibre to more households."But who knows: it might just be crazy enough to work."

Ottawa fibre-to-the-home experiment hits a snag

News | August 5, 2008

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