Fiber to the Home - Silicon Valley Should Be Ashamed

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Viodi View Newsletter - October 12, 2005

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Fiber to the Home - Silicon Valley Should Be Ashamed

By Ken Pyle, ken.pyle@viodi.com, Managing Editor, Viodi View

FTTH –Two Cities, One Goal:

Beg or build are a cities options for bringing Fiber to the Home, stated Fort Wayne Mayor, Graham Richard. Both he and Lafayette Louisiana Mayor, Joey Durel, had come to a similar conclusion that the construction of a fiber to the home infrastructure was a necessity in order for their communities to compete with global competitors that currently have superior telecommunications networks. The mayors, however, took two completely different approaches to achieve this common goal.

Like Mayor Richard, Mayor Durel’s initial outreach was to the local Bell South and Cox representatives. He quickly realized that it could be years before these relative telecommunication behemoths would ever deploy fiber to the premise networks in Lafayette. Lafayette simply did not meet the criteria for the type of investment required for the sort of comprehensive fiber network that would not only connect to the residences of Lafayette, but the colleges and other community institutions.

Durel was somewhat reluctant to have the city potentially compete with private industry. He quickly became a convert to the idea of a municipal fiber to the premise network when he realized that private industry would not commit to such an effort in the near-term. In Lafayette, this happened in1896, when outside interests would not invest in electricity infrastructure. Durel claims that if Lafayette business people had not formed the Municipal Utility, electricity would have not been available until the 1930s.

Economic development is a huge driver for this project and Durel showed an interesting chart comparing Chicago and St. Louis in the second half of the 1850s. This chart indicated that the city of Chicago’s strategic decision to invest in the railroad infrastructure caused its population to explode compared to ST. Louis, which focused on the older canal transport. A special election was held and the voters approved the Municipal build by a popular vote of 62% to 38%. The fight to the vote was ugly and included lobbyists, special legislation and dirty political tricks. It is still embroiled in political wrangling. They are planning on offering the cable and other services at retail and I get the sense that, the mayor at least, is underestimating the challenges of obtaining content.

Mayor Richard of Fort Wayne likened the importance of Fiber to the Home as the equivalent of building the interstate highway system in the 1950s in terms of Fiber to the Home’s impact on economic development. Richard pointed out that a mayor is measured on the local economy and how many jobs are created. Fiber to the Home is one part of a holisitic group of programs designed to make it easier to do business in Fort Wayne. Seeing that Verizon had not slated Fort Wayne to be included in Verizon’s first 50 FIOS communities, Mayor Richard began schmoozing and selling Ivan Seidenberg, the CEO of Verizon.

Richard said that they provide open arms to investors and, that with a FTTH infrastructure, Fort Wayne is a great test location for broadband applications. The city is setting up “I-Teams” to create some new applications by helping their citizens with their educational attainment, healthcare and security. For instance, study buddies are seniors, who other wise might be somewhat confined, tutoring adolescents. With broadband, the two don’t physically have to be together, which is often difficult for these two age groups.

The city pre-permitted Verizon’s efforts, so when Verizon broke ground they did not have to deal with the normal delays caused by the regulatory process. These efforts paid off as Verizon changed their plans to include Fort Wayne and will, by the end of 2005 have most of the city built with approximately 110,000 premises with fiber deployments. As I upload this on my 300kb/s connection, all I have to say is does FIOS know the way to San Jose?

It's All About the Operations

Chelan PUD has had a Fiber to the Home network for awhile. What makes their network unique is that it is being run as an open access network – reminded me of the Video Dial Tone days from the early 1990s. They have 14 Internet access providers riding on this network. The provider that is offering a double play of voice and data has garnered 85% market share.

One of their wholesale customers just launched a bundled offering of voice, data and video, so it remains to be seen how well this new service provider does at obtaining market share. Central to making this work is a web portal that the various wholesale providers can access to determine status of work orders and other operational information. This web portal ties into Chelan’s Operational Support System, which is supplied by ETI Softare. Pete Pifer of ET SoftwareI , pointed out that, like content strategy, operators need to consider operations early in the planning process. Otherwise, the success of the system will be limited by manual processes.

It will be interesting to track the Chelan experience, especially after they sign up multiple video service providers. Their platform could be perfect for a content provider, such as Disney, which has aspirations of forming direct relationships with customers. Acquiring and marketing content is a huge challenge, so the wholesale video model makes sense in theory. In reality, there have not been many organizations that will provide the retail arm for these wholesale networks.

OEN [Optical Entertainment Networks] hopes to help the municipal, telco or private developer who has aspirations at operating the network, but do not want to worry about marketing and selling video services. OEN’s founders’ roots are with Intertainer and, like Intertainer, they have some big ideas that could change the existing business models.

They are an aggregator of content, but their 100% focus is on Fiber to the Premise Networks. With this as a premise, they are free to change some of the rules of the content game. Where they plan to make their money is through the creation and distribution of very targeted, low-cost video advertising which will provide precise reporting. In many ways, what they are doing promises to offer Google-like capability for video distribution networks.

Some Raynet sightings:

TriAccess Technologies, where old Raychem friend Brian Bauer works, debuted their first product; a single chip receiver for RF implementations of Fiber to the Home. This chip looks to make it easy digital design engineers to implement RF circuitry (all of the tough part is done). This features sensitivity that should provide additional optical budget for a given Carrier to Noise ratio. Bernd Hesse is now working for Novera Optics, a company that has developed a Fiber to the Premise product that blends the best of PON and Active Fiber.

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