Time running out for telcos to install fibre to the home

The big telcos are in a bind: they want to leapfrog the cablecos' coaxial infrastructure - jumping from twisted copper to fibre, yet can't afford to lay down a last mile optical network across the country. Meanwhile, competitive local exchange carriers (CLECs) are installing fibre and securing significant future revenue. Have the telcos waited to long to act?"The telcos are short-sighted," Mark Tauschek, senior research analyst at Info-Tech Research Group, tells Network Letter. "They are trying to compete with triple play, and the cable companies are better equipped with infrastructure. In Canada the ILECs are all reluctant to make the spending needed for fibre to the home - it's an enormous undertaking."But the long term cost could also be huge. The longer they wait, the more the big telcos will lose market share to the cablecos and those CLECs that are laying fibre."The cablecos' coax has the capacity to do all they need for the foreseeable future," says Tauschek. "They can stream several HD channels simultaneously, provide hi-speed Internet and phone. Right now the likes of Videotron and Cogeco don't need fibre - but for the telcos, twisted pair copper is not enough."Meanwhile, small ILECs like Wightman Telecom Ltd., in Elora ON, and Huron Telecommunications Co-operative Ltd. (Hurontel) in Goderich ON, are making inroads. Wightman offers fibre to the home (FTTH) in the communities of Mount Forest, Harriston, Listowel and Palmerston, and Hurontel has plans for Goderich and Ripley."We are investing millions of dollars and putting the fibre backbone throughout the town boundaries," says Pat Smith, business development manager with Wightman. "The basic plan will give you 20 Megabits - that's fast."Wightman is a good example of a CLEC on the move. The company became a CLEC in 2005, and has been expanding ever since - it has added 11 towns to its original market and now offers services in 17 towns. As it lays down fibre it is securing market share, potentially, for generations to come. It would be unlikely that the larger ILECs would install competing fibre. As well, the CRTC has no plans to legislate optical network sharing, and improved Wi-Fi or the much anticipated WiMAX aren't about to deliver HD television. In effect, this means that as small CLECs lay down fibre they will have a lock on their markets."Right now, whoever puts in fibre will be the ultimate winner for the long term," says Arvind Chhatbar, CEO of Enablence Technologies Inc., an Ottawa-headquartered company that designs, manufactures and sells optical components and systems. "There is no next generation that we know of," he adds. "This is why Verizon will take the lead in the States."Tauschek argues that, like Verizon south of the border, the big Canadian telcos will have to find the money to invest in a national roll out of FTTH."Right now Bell is focussing on fibre to the neighbourhood," he says. "They might get a POP to a condo or an apartment building and rely on copper to the individual units. The problem is that they are pushing the laws of physics with copper."It's become something of a race against time for the telcos."For Bell to get fibre to its customers will take five years at minimum," says Tauschek. "For Verizon in the States it will be at least that long."Either way, Tauschek argues that it's urgent for the ILECs to find a way to get more capacity."Those little guys who are bringing fibre to the home can bring in four HD boxes with 30 Megabits down for Internet and a phone. Bell can bring 5 Megabits down, one HD box and a phone. And the CLECs can do it for the same price, or cheaper. Bell will get blown out - it has already happened to some extent on the cable side with the likes of Rogers and Shaw eating Bell's lunch."And those little guys have some powerful arguments to deliver to their communities, suggesting that FTTH is a means to competitive advantage and can increase property values. Chhatbar argues that fibre is in fact that last big wave in telecommunications' infrastructure."We are likely to see a major transformation," he says. "This is the third, and perhaps the last. First it was the telephone, then it was cable, and now fibre."

Time running out for telcos to install fibre to the home

News | September 22, 2008

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