Build-out costs limit fiber expansion

Nov. 1, 2007

Utility investment in fiber revolves around “capital deepening,” rather than network expansion, despite widespread fiber-optic use, finds a Utilities Telecom Council (UTC; www.utc.org) report. “The State of Utility Fiber 2007,” authored by KEMA Inc. for the UTC, surmises that utilities expand fiber networks when cost-sharing opportunities arise with customers or partners. Most utilities interviewed “sold dark fiber to carriers as their primary customer base, typically about half a dozen.” Other partnerships involved ISPs buying fiber from utilities to connect residential and business customers.

The majority of utility investments in fiber go to increased Gigabit Ethernet capability or DWDM on congested routes. Network capacity and diversity take more prominence than network expansion, the report finds. Utilities will, however, invest in fiber expansion with partners, distributing the cost of build-out, or when customers can absorb excess fiber and share implementation costs.

Utilities price dark fiber on an individual case basis, abandoning outdated methods such as fiber-per-mile. Fiber routes and capacity can be expanded through “tradeoff agreements,” wherein a utility might barter fiber for right-of-way or another method that would offset the costs of straightforward expansion. These may be installing optical groundwire on new transmission lines or replacing groundwire on existing lines; selling excess capacity for help paying the fiber installation costs; or meeting internal requirements, such as relay circuit or corporate WAN connectivity.

Despite this reluctance to build more infrastructure, fiber is critical to telecom plans at utilities, says William R. Moroney, president and CEO, UTC. The UTC report analyzes fiber technology evolution and broad market trends. Successful fiber management involves adapting to fiber’s changing role, Moroney says.

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