Fiber-to-the-farm

BY DON GALL AND MITCH SHAPIRO

An FTTS project in a rural county of Washington is testimony to the steadily improving economics of all-fiber networks in a bandwidth-hungry world.

Our exploration this month of FTTS (fiber-to-the-subscriber) architectures and deployments takes us to Grant County, Washington, a largely rural area where some residents still don't have basic telephone service.

Working with Wide World Packets (WWP), which has developed a Gigabit Ethernet-based FTTS, Grant County's publicly owned electric utility aims to transform this telecom backwater into a leader in advanced fiber-based broadband networks, services, and business models.

Like every FTTS project launched today, the Grant County network carries a still-heady per-home price tag and could face unforeseen operational challenges. But its very existence in a rural area is testimony to the steadily improving economics of all-fiber networks in an increasingly bandwidth-hungry world. It also highlights the potential role public utilities can play in bringing fiber-based open-access platforms to largely rural areas, where broadband upgrades are often low priorities for cable and telephone companies pursuing higher rates of return in larger markets.

The Grant County Public Utility District (GCPUD) network, dubbed Zipp, will bring two dedicated fibers to each customer location, where a Gigabit Ethernet gateway should provide enough bandwidth to ensure that Grant County will be among the nation's most broadband-enabled regions for years to come. GCPUD will also use the network for internal communication functions, including remotely reading customer meters and eventually to provide real-time energy-management services that promise to save the utility and its customers money.

GCPUD is currently testing WWP's Gigabit Ethernet platform and is expected to continue deploying the technology as it expands beyond its initial trial phase. As of early May, it had installed more than 7,000 fiber-mi and prewired more than 1,700 homes. The initial trial, which is in its final phase, involved 100 customers. Another 40,000 fiber-mi are budgeted for construction over the next five years, as the utility extends the network to 87,000 homes distributed across approximately 5,000 square miles of land area.

As expected, a gigabit all-fiber network doesn't come cheap. According to Jonathan Moore, GCPUD's senior telecommunications engineer, the utility is spending $3,500 per customer location today as it begins to deploy the network, with expectations that this cost will fall to $3,000 by year-end and $2,500-$2,600 by early 2002. About 85% of the network will consist of aerial plant.

Though these prices would not be well received by private investors evaluating a broadband network business model-especially in today's tight capital markets-Moore says GCPUD, "as a government agency" is "less time-constrained." He says the utility's business plan includes a 15-year capital recovery period, with the system expected to go cash-positive in six to seven years. That assumes take rates rise from an initial 5% to 40%, which Moore suggests could prove conservative.

WWP president and CEO Bernard Daines sees PUDs, with their longer time horizons, community-service orientation, and utility-related telecom applications as "first movers" in the deployment of his company's high-capacity but still costly technology, especially in areas underserved by the private sector. As these first-movers start driving volumes over the next year or so, WWP expects to get the cost of its electronics down to the $1,000-$1,200 per-connection range. But today, prices are about twice that level, according to a company spokesperson.

In March 2000, Washington's governor signed a law allowing PUDs to install fiber-optic networks but curtailing their role as retail service providers. This restriction on retail sales and its historic public-utility orientation led GCPUD to adopt a wholesale Internet protocol transport business model for Zipp. The

utility charges $4 per terabit of data flowing into the network with a minimum monthly access charge of $40, which covers up to 10 Tbits of traffic flowing into the network. (GCPUD does not charge customers for downstream traffic they receive from the network, though retail service providers do.) There is also a one-time installation fee of $300.

According to Moore, the capacity of the Gigabit Ethernet network allows for a nonblocking architecture, which removes all bandwidth-management issues in the loop. He says savings on laser costs by using passive-optical-network architecture aren't enough to justify that approach and that the cost of lasers and other device costs are plummeting. The bottom line is, he recommends dedicated fiber-to-the-home (FTTH).

The initial Zipp deployment is taking place is the county's two largest cities, Moses Lake, with a population of more than 30,000, and Ephrata, the county seat, with more than 5,000 residents. The latter, according to Moore, was roughly 50% wired by early May. Ephrata has a housing density greater than 100 homes per mile. The density in Moses Lake, which includes more multiple dwelling units, is somewhat higher.

Zipp's link to the outside world is NoaNet (Northwest Open Access Network), which has leased long-haul fiber capacity from the Bonneville Power Administration and installed at least 24 points of presence on its rural backbone network. NoaNet is a nonprofit corporation formed last year by 18 PUDs in the region, including GCPUD.

GCPUD is deploying fiber in a star topology with curbside cabinets housing fiber terminations and aggregation electronics for 288 homes. Striking a balance between the cost of fiber and the electronics was a key factor in this decision. At 288 homes and two fibers per home, the necessary electronics and related equipment fit well into 4x4-ft cabinets. If it expanded its neighborhood fiber distribution areas, GCPUD would have needed to deploy doublewide cabinets.

Initially, the cabinets will be connected to the headend/ central office using 1-Gbit/sec Ethernet trunking, with a plan to migrate to 10 Gbits/sec as warranted by demand. Field-terminated ST connectors are used for fiber termination to the WWP electronics. To save construction costs, all fusion splicing is completed during the initial build for 100% of the homes passed. Homes not taking service will have the pre-fused drop coiled up and attached to the appropriate telephone pole.

Moore says his contracted price for fusion splicing is $35 per splice. He is considering bringing this function in-house to control costs, a move we believe makes good sense. Our rough calculations suggest that the "average" fiber count in the fiber distribution will be well over 120 fibers. Given the amount of distribution cable and high fiber counts, one operational challenge for GCPUD may be the cost and time associated with repairing fiber cuts.

Mitch Shapiro has been tracking and analyzing the broadband industry for more than 12 years. He currently directs the strategic research program of Broadband Markets, which develops and markets proprietary databases, financial modeling tools, and strategic reports focused on the competitive broadband industry. He can be reached at [email protected].