In a building broadband-service war with telephone companies, in which strategy often centers on bandwidth one-upmanship, it appears some cable companies are choosing to fight fiber with fiber in select battlegrounds.
Opinions differ among industry vendors and observers, but there are at least a few examples of cable operators creating fiber-to-the-home networks, primarily for new housing developments to ward off a telco competitor.
The question is whether the expense for these all-fiber builds and the problems with managing somewhat-alien consumer-access devices will be worth the effort to secure customers.
RIO RANCHO ROLLOUT
That’s something Cable One Inc. is trying to find out with its all-fiber build for the 6,800-home Mariposa development in the northwest Albuquerque, N.M., suburb of Rio Rancho.
It all started when the home builder, High Desert Investment Corp., came to Cable One in spring 2005 and asked that it install the all-fiber network to serve the community, according to Gary McDonald, general manager of the operator’s Albuquerque system.
No formal contract or exclusive arrangement was struck, but Cable One agreed to the request and will foot the bill for the all-fiber buildout.
“They wanted commonality to be data- and phone-service delivery, and they wanted to be able to tout this as 'Tomorrow’s Neighborhood,’ ” McDonald said. “They wanted to make sure the cable provider, the data provider, the telephony provider was pushing fiber as far into the neighborhood as possible.”
WAVE 7 TAPPED
Cable One then turned to Wave7 Optics Inc. to supply the optical design, the networking gear and the customer devices. That includes the Optical Line Terminal placed in neighborhood nodes that manage the video and data traffic flowing between the customer and the network.
For video, Wave7 is supplying Cable One and other operators with a system that delivers traditional MPEG-2 signals across fiber optic connections.
Traditional cable video-transport schemes aren’t going away anytime soon, said Joe Martin, Wave7’s vice president of marketing. “We’ve really designed an architecture that is very friendly to that, and we have a lot of patent-pending technology in our solution that is very attractive” to cable operators, he said.
The neighborhood line terminals in turn feed Optical Networking Terminals located on the side of customer homes. The terminals take in the traditional MPEG-2 signals and funnel them over coax to a customer’s set-top box, while moving data and voice traffic is sent using Ethernet or phone lines over an Internet-Protocol connection to a business router, a home-gateway router or home PC.
Cable One isn’t the only operator looking more closely at all-fiber builds, according to Martin. Started by a group of former cable executives, Wave7 has seen a steady increase in interest among cable operators for its products, he said.
Much of the activity is still in the planning stage. But projects such as Cable One’s fiber build in Albuquerque are representative of several projects in development now with cable operators.
“I think the Cable One build really shows that there is a perceived threat in the MSO space with regard to telcos coming online and getting in before them,” Martin said. “I think the mentality is, 'He who comes with the fiber first, rules.’ ”
OPTICAL COSTS FALL
One reason for that interest is that prices for optical-network systems and access gear are falling close to that of traditional cable gear, Martin noted.
Fiber-system costs do depend on the type of fiber line and the way the network is designed, so Martin said concrete cost estimates between fiber and traditional cable hybrid fiber-coax systems weren’t available. “But we know that over time, through modeling we’ve done, that they are very close now.”
CableOne is estimating the Mariposa fiber buildout will price out at a 15% to 20% premium compared to a traditional cable build. But in return, it will get a network that doesn’t require power-sucking electronic components or drop boxes that must occasionally be accessed by a repair technician when a customer turns on cable modem or digital cable service. That could save Cable One in operational expense down the road, McDonald said.
Not everyone is as bullish that cable companies are moving over to all-fiber networks in mass numbers.
Scientific Atlanta provides fiber-to-the-premises equipment — most notably to Verizon Inc.’s FiOS network service — and cable hybrid fiber-coaxial systems, and it sees most of its cable customers sticking to the traditional mix of coax and fiber, according to Tony Stanley, director of fiber-to-the-premises and telco network products at Scientific Atlanta.
That said, SA has seen some cases where cable operators cross over and tap fiber-to-the-premises gear, particularly for affluent housing projects where the developer puts the telecommunications services up for bid. In those cases, if a cable operator is squaring off against a telco, offering direct fiber-fed services may be the only way to compete for the contract.
“In some cases in these upscale communities, they prefer fiber for communications,” Stanley said. “In a lot of those cases there is a lot of pressure on the service provider to use fiber-to-the-home for access, because that is the most advanced thing they can put in. It also adds to the salability of the real estate.”
But such cases are the exception rather than the rule, and for developments where cable operator doesn’t face a telco competitor to claim the connection to a new home, considering an all-fiber design isn’t in the cards because “they don’t have the incentive that the telephone companies do for increased revenue,” Stanley added. “The cable company has a pretty good revenue stream coming from the home in voice, video and data, and that’s a pretty solid broadband network.”
Another challenge for cable all-fiber builds is that their network management systems are geared to deal with traditional coax-fed consumer devices including cable modems and set-top boxes.
Throwing in an all-fiber play would require these systems to also oversee telco-centric optical network terminals and optical line terminals, and that is easier said than done, Stanley said.
“If you go in there and put in a fiber-to-the-home plant, you have to have a strategy for dealing with (optical-network terminal) units at the side of the home,” he pointed out. You have to be able to market services differently, and network connections are different. So there are a lot of things in there that will cause them some anxiety and additional expense.”
That is true for Cable One, which must create systems in its own control center to monitor and provision the services delivered to the Mariposa community residents. Because the access gear is different from the standard cable modem or home gateway, “it has put us on a very steep learning curve,” McDonald said.
VENDORS STEP UP
Help could be on the way from the vendor community, according to Wave7’s Martin. Many equipment providers, including Wave7, are coming up with more operator-friendly management and back-office systems to run an all-fiber network next to an existing hybrid-fiber coaxial plant.
For example, Wave7 has developed a system that allows for a standard radio frequency return path from the set-top box to the network — just as traditional coax-fed set-tops have. That return path allows the cable network to communicate with the box, sending instructions to authorize service and display the appropriate channel lineup.
By detecting and delivering these signals, the Wave7 system allows operators to use the same set-top boxes in fiber-to-the-home deployments as they do among hybrid fiber-coax systems, Martin said.
“So you don’t need to purchase new set-top boxes or put IP set-top boxes in,” he said.
In the long run, even CableOne is not looking to make the Mariposa project the standard for all new home construction buildouts. It is in part a trial to see how an all-fiber network proves out over time.
“It’s important that everybody understands that we’ve got an assumed business model, and the biggest challenge for us and anybody in our position is trying to determine whether that business model is realistic,” McDonald said. While that is a big challenge “we are looking forward to getting into this thing and seeing what happens on a day-to-day operational basis.”
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