FIBER TO THE EVERYONE

A year ago, Supercomm was abuzz with the news that the three biggest Baby Bells would use their combined might to lower the price of fiber-to-the-premises technology through massive deployments. A year later, BellSouth, Verizon Communications and SBC seem starkly divided in their approaches to FTTP.

The Baby Bell troika has separated into three disparate mindsets: Verizon has been the most aggressive in its drive to deploy FTTP, SBC has been slower (instead pushing DSL deployment at a swift clip), and BellSouth has reaffirmed its preference for fiber to the curb, arguing for regulatory parity between FTTP and FTTC before it will invest further. The buzz over FTTP, however, seems to have tripled.

Verizon's vow to feed fiber to 1 million homes in 2004 was met with skepticism from some industry observers who suspected the carrier's FTTP plans were all talk. But Verizon answered that skepticism in May when it announced Keller, Texas, as the first city to reap the benefits of its wide-scale FTTP rollout. Keller's 16,000 homes will be hooked up this summer, Verizon promised, and with eight other states to follow, the company reaffirmed its aggressive goal of 1 million homes for 2004.

“FTTP is real,” Paul Lacouture, president of Verizon's network services group, said from a press-tent podium in Keller that day with proud defiance.

Sell-side analysts didn't need to be convinced FTTP was real. Worldwide spending on fiber access equipment topped half a billion dollars in 2003, according to IDC, and it will rise to nearly $2.5 billion by 2008 — a 37% compound annual growth rate.

But while Verizon was inviting the press to Keller, SBC was quietly installing fiber in Oconomowoc, Wis., for a trial to be conducted in the first “model homes” of the Pabst Farms planned community now under construction. SBC is due to have 3 Mb/s symmetrical broadband service to those model homes (there will be about 23) turned up by the time the homes are finished in August.

Pabst Farms is the first of five trials SBC will conduct this year, the company announced in January. The next one, in Canton, Mich., will occupy the same general time frame (lasting about a year, according to SBC) but will be the first SBC trial to include overbuilding in addition to greenfield deployment. By conducting these trials in different geographies and with varied approaches, SBC hopes to triangulate FTTP economics, learning how outside plant equipment operates in hot and cold extremes and how different deployment factors — aerial vs. underground fiber, greenfield vs. overbuild — affect costs.

“This is just the toe in the water, so to speak,” said Ernest Carey, SBC's vice president of advanced access technologies. “We've been building copper for a lot of years, but we haven't been building FTTP for a lot of years, and we've probably got some things we need to learn.”

To address these deployment scenarios, SBC has so far named only one equipment vendor, Alcatel, whose passive optical networking (PON) gear SBC claimed its preference for two years ago when it installed the stuff in San Francisco's Mission Bay development. “We've got our hands full learning the Alcatel stuff,” Carey said.

But to the growing number of impatient municipalities that are catching on to the economic and marketing benefits of FTTP, Ethernet-based equipment often holds more appeal than the ATM-based PON (APON) favored by the Bells so far. Last year research firm CIR predicted municipalities would represent more than 70% of the FTTP market, and municipalities have a track record for choosing Ethernet FTTP.

The city of Provo, Utah, begins construction this month on an FTTP network to reach about 30,000 commercial and residential dwellings using standards-based Ethernet access devices from equipment vendor WorldWide Packets. Though the Provo project is not yet the biggest WorldWide Packets equipment deployment in the U.S. (that distinction belongs to Grant County, Wash., with its roughly 5200 subscribers), it should become the biggest over the next two years, as the city expects subscriber counts to top 10,000. A city-owned utility in Jackson, Tenn., is rolling out a similarly sized network using proprietary Ethernet FTTP gear from Wave7 Optics.

“Systems vendors and suppliers need to … realize the significance of Ethernet equipment in fiber access networks today and understand that G.983 APON will play a minority role in the global market,” said an IDC report published this month.

SBC executives have acknowledged the appeal of Ethernet but lamented that it wasn't suitable for deployment the last time the carrier went shopping for FTTP systems. That reputation is changing, say equipment vendors. WorldWide Packets recently won contracts with British service provider ntl and China's Great Wall Broadband Networks, “accounts that have really put the seal of approval on the fact that this solution is carrier-class,” said Barry Kantner, WWP's vice president of marketing.

“When we were planning Mission Bay, [Ethernet FTTP] technology wasn't as mature as it is today,” SBC's Carey said. “Two years from now, we'll probably be interested in something that none of us are thinking about now.”