The impact of public policy on fiber to the home

Joe Savage, President
Fiber-to-the-Home Council, North America

As President of the Fiber-to-the-Home Council ("FTTH Council"), I am pleased to share with SpeedMatters readers our latest statistics on North American FTTH deployment, prepared by RVA Market Research in September 2008. This information is available in a 33-slide presentation available at http://www.ftthcouncil.org/UserFiles/File/RVA Update Sept 08(1).pdf.

A few highlights from the most recent data include: North America remains the fastest growing region for FTTH deployments; FTTH service providers now number more than 600; and that 90% of FTTH subscribers are either satisfied or very satisfied.

One very important point for SpeedMatters readers is that public policy has a big impact on broadband deployment -- particularly relating to next generation networks like FTTH. Slide 9 of the RVA presentation shows historical FTTH deployment, including its rapid acceleration following the FCC's unanimous August 2003 decision to lift "unbundling" requirements on FTTH deployments by incumbent telephone companies.

Under unbundling, the incumbent telcos like Verizon and AT&T were required to lease parts of their networks to competitors at below-market rates. This requirement had been imposed a few years earlier as a way to spur competition over the legacy copper network. But it clearly discouraged investment in fiber networks -- the telcos simply couldn't predict the return on investment if they had to share the investment with competitors. As a result, under unbundling FTTH deployment by the major telcos had been limited to a handful of test cases around the country. The FCC's decision to lift unbundling on FTTH was meant to clear a barrier to telco investment, and it worked. In 2004, Verizon decided to make an initial investment in FTTH, which became known as "FiOS." The 2004 investment was expanded in 2005 and thereafter, and today FiOS passes millions of homes. In addition to Verizon's deployment, AT&T began deploying FTTH in new home developments. As a result, FTTH equipment costs dropped, allowing smaller companies and some municipalities to deploy FTTH as well. The FCC's 2003 decision to lift unbundling on FTTH therefore is an example of a public policy decision with extraordinarily favorable results, and we would urge policymakers to go slow when considering re-regulating the industry. In our experience, if broadband providers cannot predict the return on a new investment, they will be reluctant to make it.

Another important point from the FTTH statistics is bandwidth usage. Slide 23 uses SpeedMatters data from March 07 to March 08 to measure the increase in average downstream bandwidth over FTTH during that period, showing average growth from 5.2 megabits per second to 7 megabits per second. (Again, this is the average – not the heavy users, who consume much more.) Thus, in one year bandwidth usage over FTTH jumped 34%. That's a big increase. If bandwidth demand continues to grow at that rate, then the average FTTH downstream usage would be 12.5 megabits by 2010 and 54 megabits by 2015.

This is why the FTTH Council has joined with CWA and others to call for passage of a national goal of having 10 megabits available to every American by 2010 and 100 megabits by 2015. Last year Senator Jay Rockefeller and Representative Anna Eshoo introduced Congressional resolutions calling for such a "100 Megabit Nation" goal, and we hope to see Congress adopt those goals formally next year.

Many thanks to CWA for the great work it is doing with SpeedMatters. It is an important initiative to show the value of broadband technology for America and the need for improvement in broadband infrastructure. Viva SpeedMatters!