Fiber loops around cost

Fiber loops around cost

George Kotelly

Senior Editor/Features

Occurring appropriately in concert with this month`s editorial theme, the fiber-in-the-loop technology arena has suddenly erupted into a flurry of consequential activities, all of which revolve around expenditures. Some of the noteworthy developments involve two of the more innovative regional Bell operating companies changing their broadband network deployment strategy from hybrid fiber/coaxial cable to fiber to the curb because of decreasing equipment pricing; telephone and cable companies struggling with network technology, telephony and video choices and their related costs; and fiber-optic cable prices rising for the first time since Lightwave went to press.

Back in the mid-1980s, companies involved with fiber-optic technology predicted that fiber-optic cable would soon be connected "in the local loop" to every home and business. It did not happen then and it still has not happened in the 1990s, mainly because the market perceives fiber-optic products as being expensive.

Not so, counter fiber-optic network and equipment providers. As noted by Ray McDevitt of Ericsson Raynet in a Special Report article on fiber-in-the-loop (see page 42), numerous studies have shown that the life-cycle cost of fiber is equal to or less than copper and coaxial cable. Nevertheless, the local-loop market perceptions that copper and coaxial cable are less expensive to install, that both have been in use for a longer time and that both enjoy a gigantic installed base with related depreciation considerations all contribute to suppressing fiber-to-the-home technology on "imagined" economic grounds.

Indeed, hard market facts confirm that prices are decreasing steadily for opto-electronic components and equipment. Telephone companies Bell Atlantic and US West, for example, have now adopted fiber-to-the-curb networks--telephony-termed as switched-digital video networks--mainly because of financial reasons (see page 1). States Bell Atlantic spokesperson Shannon Fioravanti, "The cost issue was a key consideration for us to take a closer look at switched-digital video." According to press statements by US West officials, integrating digital video and telephony into fiber-to-the-curb networks should reduce the cost of providing both services.

Moreover, in another Special Report article, Don McCullough at Broadband Technologies Inc. contends that business and deployment factors help determine which fiber technology meets the networking requirements at the lowest cost (see page 36). He says, for example, that if a network operator`s business plan revolves around the delivery of lifeline telephony, analog and digital broadcast services, and interactive multimedia services, then fiber to the curb is the lowest cost alternative.

But the competitive local-loop arena does not mandate the delivery of diverse, interactive and expensive multimedia services. From the viewpoint of Gary Kim at Probe Research in another Special Report article, competing network providers need only to focus on the reliable delivery of currently available voice and video services (see page 46). The proven money makers, says Kim, are basic voice telephone and cable-TV services.

Whichever fiber networking technology excels, the hotly contested fiber-in-the-loop market is coiled for rapid expansion. Competitive telephone companies and cable operators that are battling for market share are expected to triple market sales to $2.5 billion during the next five years, claims market forecaster Frost & Sullivan (see page 52).

Unfortunately, not all of the technology trends point to decreasing costs. For the first time in at least a decade, intense demand has boosted the price of fiber-optic cable (see page 1). Industry leaders and analysts blame a worldwide shortage of optical fiber cable and the rising costs of plastics, raw materials, transportation and labor.

The course of connecting fiber in the loop directly to homes and businesses has dragged on for more than a decade. Progress has been challenging and methodical because of cost issues, but it continues to advance in the right direction to its ultimate destination.