Best of the ISP-Lists

Building Fiber Buildings

Members of the ISP-CLEC list discuss pricing and monitoring high-speed fiber Internet links. Since phone lines are expensive, fiber links can be economical.

On the ISP-CLEC list in November, SM inquired,

"Are any CLECs or others building fiber to the home?"

Some respondents noted that it is happening, and that it seems viable, particularly in Sweden:

[RB observed] "There are plenty of CLECs deploying fiber to business tenant buildings. RCN uses coaxial cable, as I understand, for the last thousand feet or so.

I did hear of a cable company in Texas that raised a huge sum to install fiber to its subscribers and run traffic over Ethernet. Of course, most ILECs are pushing fiber farther and farther out into the neighborhood. Lucent did a study a few years back; the cost per home wired was $2000. My guess is that it is difficult to make the economics work without huge penetration rates. In other words, it's very high risk.

But the economics of residential access do work in large multi-tenant buildings. Telia, the former Swedish monopoly, has been offering Ethernet service in large residential buildings in Stockholm. The price is under $50." [DSP added] "It's actually simple to make the numbers work. Selling cheap bandwidth doesn't look like it makes sense if you assume that a lot more bandwidth always means a lot more data downloaded. However, for the majority of customers it doesn't; many people will buy it for fast response.

I sell direct connections to my Ethernet to people in my building for $40/mo. I get more money for less use, and they don't even use a dialup phone line.

As a dialup provider, phone lines are my biggest expense by far. The potential risk is that it could only take one Napster junkie to destroy the economics, so doing this requires being up front with my customers that I'm selling them performance, not capacity. If they try to use it for capacity, I'll throttle them to make sure my performance customers don't even begin to feel any pinch.

My guess is that the majority of residential customers would be happy to buy performance on the same terms, but I lack the opportunity to test that notion."

Others contended that it's just too expensive to work:

[PT explained] "In newer housing developments, they are taking fiber to the base of the development or to the 'curb'. As for fiber to the home, it is ridiculously expensive to do it; I think the reality of fiber to the home is far away. The speeds that can run over copper for relatively short distances more than covers anything you would want in someone's house."

[CW agreed] "Fiber to the home is totally cost prohibitive. Almost all home applications have adequate communication coverage on copper. If copper is adequate, why replace it? The best bet for the CLEC today is to take their fiber to the ILEC's neighborhood terminal. Colocate your equipment at that point, and haul bulk services that better amortize your investment."

—End