Few network operators worldwide would question the truth that broadband infrastructure is the "new dialtone" of the network. And in most geographies, there is little doubt that competition and regulations are combining to encourage ever-faster broadband connection speeds.
Operators agree that competition and regulations combined could easily drive down carriers' return on investment (ROI) for broadband infrastructure and even profit margins. The conflict between competitive positioning and profit isn't a happy one, and it demands careful capacity planning analysis when considering broadband delivery technology options.
Four last-mile technologies for broadband infrastructure consideration
- Digital subscriber loop (DSL), a technology that reuses copper pairs installed for analog voice service in digital delivery applications.
- CATV coaxial cable, the technology used by cable TV providers to deliver television programming and updated to carry broadband using DOCSIS standards from CableLabs.
- Fiber to the home (FTTH), normally deployed in a passive optical network (PON) configuration.
- Fixed wireless broadband, which most often means the WiMAX (802.16) standard.
Note: Other options such as broadband over power line are being considered, but the capacity wars among traditional telco and cable competitors may push broadband speeds beyond the levels that could be reliably obtained using power-line delivery.
Pros and cons of broadband infrastructure choices
- The gold standard for broadband content and entertainment delivery is clearly fiber to the home. But the challenge is proving return on investment for FTTH, which has the highest "pass cost," meaning the cost to deliver it to a service area and position it for connection to the customer is the highest. That limits FTTH to applications where the economic density of a service area is high and average revenue per user (ARPU) is likely to pay back quickly on the investment. As a result, that usually means that FTTH must be used both for TV and broadband service delivery.
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Weighing the options on telecom network optimization
- DSL is the only technology capable of exploiting the current copper loop plant, which means that most telcos will have to base at least some of their broadband strategy on DSL for some time to come. A number of mature and evolving DSL technologies can provide broadband speeds ranging from about 25 Mbps up to a theoretical 300 Mbps over relatively short loops (1,200 feet) of bonded two-pair copper.
- Broadband wireless is an increasingly tempting option, particularly given the increased interest in WiMAX to provide city-wide broadband to "migratory" users who use laptops or tablets from a variety of fixed locations as they move through their daily activities. The challenge of wireless is similar to that of DSL: fiber-fed remotes would be required to feed each cell, and if the number of users and total traffic expected per cell is too high, performance will degrade sharply and users will be unhappy with the service. Thus, more cells will be needed and deployment costs higher.
Ideal broadband infrastructure plant choices emphasize the practical
The modernization of any outside plant, whether telco or cable, is an expensive proposition that can be undertaken only with reasonable assurance that ROI targets can be met. That usually means planning service enhancements and plant modernization to coincide, and probably means minimizing the number of steps taken from the present to the future broadband infrastructure to avoid stranded costs.
In their capacity planning analysis, telecom service providers should take five specific steps to weigh broadband physical plant modernization:
- Shorten the loop in brownfield applications wherever service changes make it reasonable to revisit plant topology. Broadband infrastructure expenditures that leverage current loop topology can be little more than a stopgap in a competitive market. The optimum loop length is clearly less than 3,000 feet and possibly as little as 1,000 feet.
- New builds should support fiber to the home or fiber to the curb, and plan for ways to exploit new fiber remotes in adjacent neighborhoods where practical.
- Look at cable technology for in-building wiring for multiple dwelling units and even dense residential housing. The Multimedia over Coax Alliance (MoCA) standard is evolving into a good technology for video and broadband content distribution.
- Plan carefully for video services. If broadband service delivery is likely to be limited for some time, it may be smart to rely on partnerships with satellite players to obtain multi-channel broadcast TV. In urban areas where over-the-air service is available, a pure broadband and video on demand (VoD) strategy may be more profitable and successful.
- Exploit wireline broadband connections with femtocells and hotspots to enhance the value of wireless devices and extend the range of coverage. This will help monetize the deployed wireline broadband infrastructure.
Regulation and competition can throw broadband infrastructure curveballs
Competition and regulatory policy are the two primary determinants of broadband services trends, and operators should monitor both these factors continually to assess the changes likely to come.
Here are a few examples that should be noted when doing a broadband infrastructure capacity planning analysis. Recently, Google asked municipalities to participate in FTTH trials to encourage setting higher broadband rate standards, which could impact carrier profit calculations. Google is also pushing for legislation that would require dark fiber as part of government construction projects, which would slow carrier infrastructure upgrade plans. On the regulatory front, the FCC recently announced its U.S. universal broadband service goal -- 4 Mbps by 2020, which is modest compared to other countries but designed to protect net neutrality. But in a surprising move, the FCC is now claiming the authority to regulate broadband to ensure enough people have access to high-speed services.
When doing a capacity planning analysis, issues that could impact broadband infrastructure sharing and net neutrality are of particular importance because they can affect not only the gross margins obtained for service (wholesale versus retail pricing for shared infrastructure), but also the expectations on broadband capacity and service quality. It's important to be objective in both areas, since bad assumptions will lead to bad plans and a bad outcome.
About the author: Tom Nolle is president of CIMI Corporation, a strategic consulting firm specializing in telecommunications and data communications since 1982. He is the publisher of Netwatcher, a journal addressing advanced telecommunications strategy issues. Check out his SearchTelecom.com networking blog Uncommon Wisdom.