Last-mile bandwidth becoming scarce in U.S., reports Phillips Group

A January 2001 report from London-based The Phillips Group forecasts an escalating growth in last-mile fiber build over the next two years as new players emerge to compete in delivering bandwidth and applications. Long-haul networks in the United States have been undergoing considerable expansion, and as these long distance carriers complete their networks, build is shifting to metro areas, still hampered by a bandwidth bottleneck.

The study, "Dark Fiber USA," focuses on the Tier I markets of New York, San Francisco, Los Angeles and Miami where The Phillips Group anticipates significant growth in order to counter a shortfall in capacity. "We have found that Tier 1 cities are experiencing a bandwidth scarcity," commented Annie Snelson, Senior Consultant, Photonics Markets, "which, when played out across the U.S., has profound implications and reveals the enormous potential for growth still to come."

The report found that the cities are at differing stages in the development of their infrastructures, and identifies new competitive players now emerging in metropolitan dark fiber markets.

Key dark fiber suppliers range from utility companies seeking to leverage their ownership of rights of way and forming telecom subsidiaries, to traditional and competitive carriers. The report suggests that metropolitan networks (planned and in construction) have substantial fiber counts, upwards of 432 fibers per cable with multiple conduits. In almost all cases, deployment of DWDM (dense wave division multiplexing) equipment is planned on these networks, and operators are equipping their existing infrastructure, resulting in a steady growth in the wavelength market.

However, the report also reveals that fiber cable from the manufacturers is in short supply, resulting in long lead times for fiber provisioning. This has created an increased demand for fiber already in place in the metro environments, which can be utilized immediately. In turn, dark-fiber pricing has remained relatively stable, but the report predicts a gradual decline in price as the total fiber capacity increases in some markets over the next 12 months.

"Dark Fiber USA" predicts that growth in dark-fiber demand from businesses will continue as the need for high-capacity, high-speed transmission rises. Carriers in the U.S. suggest that copper is no longer the infrastructure of choice to the building, both in terms of cost and capacity.

The study reveals the existence of BLEC's (Building Local Exchange Carriers), companies, which install and operate fiber networks in buildings, some packaging a "fiber-to-the-floor" offering with local and long distance service.

Real-estate companies are also entering the market, and are beginning to follow the example of the utilities, highways and other rights-of-way owners by allowing telecommunications companies to fiber-equip their buildings under new revenue-sharing agreements. Often, the property owners can obtain a fiber optic network without investment and emphasize their telecom space as they once did their location.

The economics for "fiber-to-the-home" (FTTH) have become increasingly compelling, and will be a cost-effective choice once passive optical networks prove successful at a residential level. "This may still be time away," adds Snelson, "but our research shows that companies now supporting FTTH believe that aggressive deployment now will be the key to future success. Bandwidth demand across the U.S. is latent, and still only a glimmer of the massive opportunity ahead."

For more information, visit www.the-phillips-group.com.