THE CABLE PIPELINE

Has Verizon seen past the critics of FTTH in realizing that it will ultimately be the (End Game)? Do not try to convince the Cable Industry like Comcast or Time Warner Cable, or Telco’s like AT&T, who have their own version of what the broadband landscape should look like, at least in the near term. Not to be too over optimistic; FTTH is costing Verizon on the front end.

If you peer into where Broadband, Video, and Wireless is headed, both in the short and long-term scheme of things, one must wonder how their networks will stand up with the onslaught of applications, file sharing, video content, and femtocells. Their current platforms were engineered to carry data, not all of the above, and not at the speeds consumers, and businesses, will demand. Unfortunately, HFC relies heavily on a shared bandwidth with linear programming limiting its ability in offering a flexible bandwidth for broadband. Docsis 3 was supposed to eliminate this problem, but not to the extent of competing soundly with FTTH.

My research indicates that FTTH is about 20% more expensive to deploy than HFC on the front end. However, the added costs are where the differences end. FTTH take rates for direct overbuild competitors are about 70%, up from the normal 30-40% compared to HFC. Reliability, and higher quality drive those take results with a competitive feature of adding new revenue generating services down the road. In essence, it is both a short and long-term strategy.

Notably, making a case for this type of capital commitment has to be a (hard sell) in the confines of the boardroom. After all, companies have been making stellar profits, even in a down economy, while continuing to believe that building capacity, redundancy, and low latency does not add to shareholder value. A switch to FTTH would take time and money, something executives should be planning for now, and not just relying on CableLabs’ Docsis 3, or AT&T’s U-Verse to carry them through to the end. Unfortunately, executives continue to believe in the short-term, which correlates to the quarterly profits Wall Street has mandated for them.

However, looking forward technologically is seemingly not on the Cable Industry’s immediate agenda; but it should be, and faster than anyone imagined a few years ago. Consider that municipalities, and yes, countries are getting on the FTTH bandwagon, bypassing traditional cable construction while realizing the many benefits of this type technology.

Other benefits include being a green technology, a cheaper alternative to maintaining copper wires, while not running out of capacity for a long time to come. Yet, there are still the naysayers with the opinions that; why spend the money if immediate profits are good, and consumers are not jumping in mass, (off the bandwagon).

Is this not why the FCC is currently re-visiting the rules governing broadband, that restricting capacity on company networks has initiated a firestorm of concerns, not only from consumers, but also from businesses with stakes like Google? The point is that an investment in a long-term technology like FTTH might keep governmental agencies from over regulating your industry out of business, and at the same time may keep immediate and future competitors at bay. Does that not make good business sense in the long-term?