‘Homes with tails’ idea turns network investments on their heads

A new concept in broadband networking aims to make fibre to the home (FTTH) more affordable for service providers by having homeowners essentially purchase the cables that provide last-mile broadband connectivity. Such a strategy could also make it more attractive for the telcos to deploy FTTH. For telcos, the homes-with-tails notion makes sense because it removes a substantial financial burden. Some of them have long argued that FTTH is economically unfeasible: too expensive, with too long a wait for any sort of return on the investment. "Now you just have services, so you can go in with a much lower take up rate, rather than try to pay down cost of infrastructure," says Bill St. Arnaud, chief research officer at CANARIE Inc., Canada's advanced network organization in Ottawa, and a long time advocate of customer-owned fibre. Known as "homes with tails" the idea turns the traditional FTTH investment model on its head. Whereas telcos would normally be expected to pay for the fibre-optic cables running to customers' premises, in the homes-with-tails scenario the homeowners themselves would buy the cables coming into their houses. At the same time, Canada's telcos are losing the battle against cable companies for broadband service superiority, and FTTH is considered one way for the phone companies to fight back. Any opportunity to make FTTH a more reasonable investment could help the telcos stay in the broadband game. The homes-with-tails idea comprises three pillars, according to a recent article authored by Tim Wu at Columbia Law School and Google policy analyst Derek Slater for the New America Foundation - a non-profit public policy group: 1. Individual fibre strands are sold to consumers. 2. Companies and governments could sell the fibre. 3. Governments could provide tax credits and other mechanisms to help consumers afford the fibre. The homes-with-tails concept supports a healthy communications services market, and more choices for customers, the authors write. "Consumers would have the opportunity not only to get a fast broadband connection, but also benefit from greater competition and lower prices in the retail service market." The paper also includes a chapter on a pilot project for a customer-owned network involving 400 homes in downtown Ottawa. The goal is to create a business case for customer-owned fibre by partnering with power companies to sell cheap electricity and fibre together. Homes with tails isn't all that different from current condominium fibre networks, according to St. Arnaud. In Switzerland, for instance, Swisscom has opened its fibre-optic infrastructure to allow competitors to own strands on the network. Why not offer homeowners the opportunity to acquire strands as well? Bell Canada and Telus Corp. didn't respond to our questions on the matter. Although cablecos could also implement a homes-with-tails infrastructure, it wouldn't make much sense. "The cablecos are sitting with all the aces, and they know it," says St. Arnaud. He explains that the hybrid fibre-coax networks used by Rogers Communications Inc. and other cable companies provide fast broadband connections already. "There's no incentive for them to change their business model at all," St. Arnaud argues.

‘Homes with tails’ idea turns network investments on their heads

News | January 7, 2009

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