What the heck is going on with fiber to the home? There seem to be a lot of announcements about new fiber deployments. Isn’t there a problem with fiber deployment costs in many areas? Are we headed to universal fiber broadband after all? The answers to these questions relate to the collision between demand and competitive forces on one hand, and hard deployment economics on the other. We’re surely going to see changes, but they’re going to make the broadband picture more complicated, not more homogeneous.
Demand shifts, when they happen, change everything, and streaming video is such a shift. Consumers have long been substituting viewing recorded video rather than live, and as companies like Amazon, Hulu, and Netflix started offering streaming programming from video libraries, many have discovered that the broader range of material gives them more interesting things to watch. We have more streaming sources than ever today, and companies who had relied on live, linear, TV programming are finding that they’re struggling to maintain customers in that space, while their broadband Internet services are expanding.
It’s really streaming that changes the broadband game, and the fiber game. Streaming 4k video works well for most households at 100Mbps, better at 200Mbps for large families, and those speeds are beyond what can be delivered reasonably over traditional copper-loop technology. Cable companies, whose CATV cable has much higher capacity to deliver broadband, is already pressuring the telcos in the broadband space, and fiber to the home (FTTH) is the traditional answer.
FTTH, even in its passive-optical-network form, has a much higher “pass cost” than CATV cable (today, roughly $460 per household for PON versus roughly $185 for CATV), and both these technologies are best-suited for urban/suburban deployment. Telcos like Verizon, with a high concentration of urban/suburban users and thus a high “demand density”, have countered cable companies with fiber effectively. Where demand densities are lower (like AT&T), there’s a risk that going after urban/suburban users only would offend a large swath of rural customers, and even create regulatory risk. AT&T, staying with our example, has lagged Verizon in fiber deployment, though they’ve been catching up recently.
Streaming video demand, and competition between CATV and fiber, has been increasing telco tolerance for higher fiber pass costs, which in any case have fallen roughly $150 from the early days of Verizon’s FiOS. The big problem with both CATV and fiber is the need to trench and connect the media. You need rights of way, and you need crews with equipment, who have to be very cautious not to cut wires or pipes in crowded suburban rights of way and easements.
Another factor in the fiber game is that suburbs are growing, which is gradually making the suburban areas more opportunity-dense, and improving the return on fiber. It’s a bit too early to take the assertions that COVID will drive a major relocation push seriously, but it is possible that people who have accepted the benefits of city life are more likely to rethink the risks. WFH isn’t going to empty cities, but it may swell suburbs enough to shift the economies of fiber a bit…if only a bit.
The game-changer, potentially, is 5G in general, and millimeter-wave in particular. Feed a node with fiber (yes, FTTN), use 5G to reach out through the air a mile or so to reach users, and you can achieve a low pass cost. Just how low depends on a lot of factors, including topology, but some operator planners tell me that a good average number would be $205 per household. Something like this could deliver high-speed broadband to rural communities not easily served by any broadband alternative. Not only that, the technology could be used by competitors to the wireline incumbent; all you need is a single fiber feed to the town.
“Predatory millimeter-wave” may be the decisive technology in fiber, deployment, ironically. In the first place, it’s a direct consumer of fiber in areas where FTTH is simply never going to happen because of low demand density. Second, it’s the only realistic model for competitive home broadband in areas where a competitor would have to be established from scratch. Finally, it’s good enough to support streaming services, but not as good as fiber, so it’s going to tip the scales on pass-cost tolerance further, encouraging telcos to deploy fiber in suburban areas previously considered marginal.
There is also a chance that the FTTN deployment associated with millimeter-wave 5G will help expand FTTH. Clever planning could encourage symbiosis between the two fiber models. You could create a PON deployment, some sites of which were FTTN nodes rather than homes/businesses, and reach out from the edges of FTTH for a further mile or so. You could also selectively feed PON from a traditional fiber-fed node as well as supporting millimeter-wave.
Where millimeter-wave broadband could really shine is in conjunction with the utilities. Anyone who runs wires or pipes can pull fiber, and many have done that. The question for many who have is how to leverage it effectively, and the 5G/FTTN hybrid could do the trick. Some of my broadband data modeling worked on what I called “access efficiency”, which relates to how dense the rights of way are. In many rural areas, access efficiency is such that a majority of the rural population could be reached from a utility right of way. If we imagined a kind of “linear PON”, with fiber feeding 5G-mm-wave nodes along a right of way, any site within a mile or so of the right-of-way could be reached. If the cost of one of those nodes were reasonable, it could be a better option than fiber-to-the-curb, which then relied on MOCA cable for the household connection.
I think we’re going to see some fiber expansion. We’ll also surely see more people predicting universal fiber, but in the US at least I don’t think there’s any realistic chance of that. In fact, too much focus on impractical fiber strategies could end up hurting technologies that will actually boost fiber deployment overall. 5G/FTTN may not satisfy the fiber-to-everyone school, but it would radically improve broadband access, and increase fiber deployment too. That should be our goal.
Will even 5G/FTTN create universal gigabit broadband in the US and other countries with similar demand density variations? Not likely, but that’s more a public policy question than a technology question. While we’re answering it, people who live in sparsely populated areas are likely to find themselves with fewer, and poorer, broadband choices.