| JULY 14-16, 2014

Telecom think tank dissects FTTP issues

by Cheri Beranek Podzimek

Overview
A forum discussion among FTTP service providers revealed three areas of common need in FTTP: business planning, labor optimization, and the right equipment.


In 1959, Webster's Dictionary added the term “think tank” to its pages. Defined as “an institution, corporation, or group organized for interdisciplinary research,” the concept described was commonly perceived as being stuffy -- a bunch of lab-coated professionals discussing theories.

Nearly 50 years later, the think tank concept was applied to the FTTP marketplace -- but with a real-world, highly practical format. Six telecommunications firms from across the country gathered in one room to dissect the pressing issues surrounding effective FTTP deployment. As each of the six is a pioneer in the field, their extensive experience brought a multitude of issues to the table for this inaugural user forum sponsored by Clearfield Inc. in Minneapolis.

Cincinnati Bell's Brian Schrand described the importance of the right marketing approach in FTTP service acceptance.
 

The agenda was open-ended, by design, but specific in its expected outcome: Provide a venue for telecom professionals to share their common issues, challenges, and successes. But in contrast to a more conventional seminar or panel presentation where a select few share their experiences with a larger crowd -- oftentimes boasting of success with limited insight into day-to-day practices -- this environment was designed to establish honest disclosure of problems and then foster practical dialogue about how to address some of the challenges the telecom industry faces with FTTP today.

Over the course of the two-day forum, a number of issues surfaced. Forum participants from Cincinnati Bell (Ohio), ComSouth (Georgia), FairPoint (Washington), Matanuska (Alaska), Paul Bunyan (Minnesota), and SureWest (California) debated concepts ranging from fiber asset management to battery usage. Three clear areas emerged as focal points, however:

 

  1. business planning
  2. labor optimization
  3. equipment.

A better mousetrap won't guarantee success

The primary discussion centered on the realization that success cannot be measured in terms of customer acquisition. Rather, it is gauged according to the increase in revenue per customer. The participants talked about the importance of aligning subscriber revenue to their capital equipment investment. In other words, it was agreed that capital equipment additions had to be made in tandem with increases in take rates.

Some hard lessons were learned when assuming, “If we build it, they will come.” Two of the forum participants, FairPoint and ComSouth, experienced disappointment early on. After a technologically successful FTTH deployment, they discovered that many subscribers were only interested in one or two services. They quickly ascertained that an aggressive marketing campaign was needed to carry the message (and the fiber) to their prospective customers' homes.

Larry Jenkins of SureWest asserted that new technology has enabled the development of better fiber terminal designs.
 

“We focused all of our energies on designing a reliable, cost-effective, and high-performing network, but failed to do the business planning necessary on how we were going to attract subscribers in our CLEC communities,” Charles Patton of Georgia-based ComSouth commented. “It forced us to pull back a little and regroup.”

ComSouth launched a telemarketing initiative to introduce its FTTP network and associated product offerings. Obstacles were encountered along the way, including training the outside marketing firm on how to best present the advantages of the product. While success took much longer than expected, the firm is now pleased with the results.

Conventional subscriber acquisition planning has centered around marketing long-term contracts to potential customers. However, Cincinnati Bell (CBT) is considering a dramatic alternative. “Our marketing team believes that once subscribers experience our network performance and service, we'll be able to not only retain the customer but also add revenue per customer with new add-on offerings,” noted Brian Schrand of CBT. As a result, CBT is teaming their aggressive build plans with an equally aggressive marketing campaign that requires no commitments or contracts for some services.

Current industry studies support these findings. RVA Market Research reports that FTTP subscribers experience an 86% satisfaction rating with their Internet service, in comparison to a satisfaction rating of 60% to 66% for DSL and cable modem.

Controlling the real costs of FTTP

As a member-owned cooperative, Paul Bunyan, a northern Minnesota-based independent, was among the earliest pioneers in FTTP. From as early as 2002, the company enjoyed very high take rates on their builds. During its first five years, when FTTH was still in its infancy, there was a great deal of focus on reducing capital equipment costs. The company, along with the majority of other telecom service providers, applied significant pressure on capital equipment providers to reduce the costs of their products.

That was then, this is now. It was agreed among all participants that the next stage of FTTH deployment will be focused on operational costs -- since a full 70% to 90% of the actual costs of deployment are associated with labor and engineering.

“As a cooperative, we have the benefit of customer ownership and participation,” explained Greg Carlson of Paul Bunyan. “We learned a lot during our first builds -- often through trial and error. We chose to do much of the early work ourselves -- partly because, at the time, there wasn't the required level of expertise using an outside contractor.

“Today, we continue to build upon our internal expertise, but we also control the overhead costs associated with trenching using outside sources,” Carlson continued. “As we've acquired new properties, we've focused on extending our internal engineering expertise while leveraging the expanding levels of experience available in the contractor market.”

While all participants agreed that clear, detailed, and documented expectations were crucial to successfully working with outside engineering and contracting firms, they also felt that ways to control labor costs needed to be built into the products with which they worked.

Most participants had tried a variety of electronics platforms and many have an established practice of deploying a heterogeneous environment of PON architecture in one part of the network and active in another. To control operational expenditures, however, the challenge going forward was to look for passive products that enable consistency of architecture and design.

“We've done time studies, and at CBT we know we can significantly reduce labor time by implementing a single passive architecture across the network,” offered Schrand. “Because our FTTP network is brownfield, where each build is unique and different from the last, I'm not a fan of pre-engineered solutions where cable lengths are standardized or where connectorization is moved to the field. We needed an architecture that was consistent from the inside plant to the outside plant to the access sites. Not only was our technical training time greatly reduced, but service turn-up time was reduced and we could accurately budget the time required in the field.”

Design equipment for the network

By virtue of its longevity in the FTTH business, Paul Bunyan was again a giant in the room on the matter of equipment design. According to Greg Carlson, the carrier is able to sidestep a lot of landmines by applying common sense and ingenuity to its builds. “We were early, so many of the products we used in those first networks were prototypes from our vendor suppliers. We learned a lot -- and that included not settling for a product that was designed for somebody else's network. This is a competitive market, and as the customer I can expect and deserve attention to our unique requirements.”

Larry Jenkins of SureWest concurred, citing new cassette technology as an example. “Due to its adaptable architecture, we've developed fiber terminal designs for the field and central office in ways that weren't practical or cost-effective in the past,” he explained.

The equipment discussions focused on the individual telecom's product offering and service, especially as it related to subscriber turn-up time, troubleshooting, and other unexpected “down the road” issues. The role of fiber management in terms of customer access, cable pile-up, reliable fiber protection, and the ability to reenter any type of fiber management device for troubleshooting purposes was dissected. “Fiber management cannot be underestimated as a significant tool in ensuring the reliability of the network,” asserted Rod Schultz of Matanuska.

A number of conclusions -- or, at a minimum, considerations -- were reached at the inaugural Clearfield User Forum. On a granular level, tactics to maximize marketing and product effectiveness, while minimizing labor costs, were entertained. On a macro level, it was agreed that a significant educational initiative on the value of FTTH is needed at the consumer level.

Overall, one concept was unanimously endorsed: The Clearfield User Forum was a highly effective platform to exchange ideas, and plans for the next gathering are already underway.

Cheri Beranek Podzimek is CEO of Clearfield Inc.

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