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Significant Cost Savings for ISPs that Adopt True Fibre Optic Broadband

Friday, April 5th, 2013 (1:31 pm) - Score 1,615
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A new study of more than 350 ISPs in North America by market analyst RVA LLC has claimed that operators, which upgraded from slower copper line base broadband (e.g. ADSL) networks to faster fibre optic (FTTH/P/B) platforms, saved an average of 20.4% via operational expenditure (OPEX).

The study, which was commissioned by the FTTH Council Americas, suggests that the major savings were extracted through lower maintenance and repair costs. Related studies, some of which have been conducted for the European Commission (EC) by different market analysts, tend to show similar findings.

ftth cost savings 2013

Heather Burnett Gold, President of the FTTHCA, said:

This latest survey shows not only the continued build-out of high-bandwidth fiber to the home networks in North America, but also provides one reason why hundreds of small and medium sized telcos have been upgrading to fiber – it saves them real money in the long run.”

Michael Render, President of RVA LLC, added:

While it is clear from our survey that many prospective FTTH providers continue to face funding difficulties and regulatory uncertainty, many are still finding ways to upgrade to all-fiber because doing so reduces their maintenance costs and strengthens their opportunities to expand their subscriber base and offer customers more services.”

It goes without saying that the FTTHCouncil has a vested interest in plugging Fibre-to-the-Home (FTTH) style broadband connections, which can deliver stable internet speeds that most typically extend from 100Mbps (Megabits per second) and all the way up to several Gigabits. Most consumers would also welcome the prospect of a faster and more stable broadband connection.

Few tend to dispute that such infrastructure, once installed, is usually cheaper to maintain. By comparison copper lines are more expensive to replace and often also much more vulnerable to problems like interference, distance related performance loss, water damage and so forth.

But the main problem still tends to reside with the massive first-time cost of installing a new FTTH infrastructure, with a majority of the investment usually going towards civil engineering tasks such as street works (digging up pavements and roads etc.).

Lower maintenance costs are welcome but getting past that first hurdle, which is especially costly for connecting the “last mile” fibre directly into homes and businesses, remains the biggest single hurdle to overcome.

This is one reason why many operators, such as BT, have opted for hybrid-fibre solutions like FTTC that only take a fibre optic cable to your local street cabinet but retain the last mile copper run into homes over VDSL2; slower but cheaper to deploy. But in the future such networks might eventually need to become full FTTH platforms as copper lines could struggle to keep pace with growing requirements.

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9 Responses
  1. Avatar Michael

    In the UK one of the discussions we never have is the issue of how far you can do a speculative FTTP build, which is I believe critical to why we are seeing a predominantly FTTC build from BT (not withstanding the cost issue).

    If you were attempt to roll out residential FTTP then you cannot speculatively go beyond a public footway box, or a pole that you own. Unless the householder wants you to deploy then you cannot. So – if you deploy to a Cabinet you are not forcing the issue and are minimising unknown wasted expenditure as the copper terminates there. If you were to build speculatively to all footway boxes or poles – but were then not invited to connect a fibre service you have wasted investment.

    In urban areas with apartment blocks, MDUs as is the case in the US the demarc point is different so less exposure to lack of take-up.

    The BT FTTPoD solution is their way of minimising the speculative build risk, and is quite clever as I think today every FTTC Cabinet has 270 FIBRES running to it, just waiting to be exploited over time in PON and non PON modes (EAD).

    • Avatar FibreFred

      270 fibres to a cabinet? Are you sure, why would they ever need so many spare?

      There are definitely spares for bandwidth growth, but I doubt 270

  2. Avatar FibreFred

    All good and sensible stuff, but we can’t compare the US to the UK on this front can we?

    So Verizon deploy fibre to the home and reap all of the benefits, they don’t have to wholesale anything to anyone else 100% ROI, it will be the same when Comcast and others start to rollout FTTH in the future.

    Over here we have two main suppliers, one doesn’t wholesale (Virgin) the other (BT) has to wholesale and as such will get a much slower ROI.

    Apart from BT , Virgin and a few altnets no other ISP’s actually deliver anything to the home themselves

  3. Avatar Bob

    The economics though of a full Fibre deployment in urban areas are compelling. As the article states maintenance costs are far lower. No active equipment distributed around the streets I a non-ground benign environment for starters the. No expensive cooper in the ground and no copper to be stolen
    You also remove the need to maintain legacy voice networks and ADSL networks
    Demand is going upwards and a sensible approach would be a demand led rollout by Cabinet

    • Avatar FibreFred

      But as I’ve said, you can’t compare to the US, you also cannot “force” people to move to fibre and take out the copper and cabinets

    • Many of those people might receive such poor speeds that they may well wish they could force ISPs to adopt fibre.

    • Avatar FibreFred

      But what I mean is you could make it available but you couldn’t make people move to fibre and if you can’t do that these so called benefits start to wane

      I agree with what you are saying Bob but as for how compelling it is costs savings etc, you or I can’t possibly know, only the bean counters at BT will know how much they spend on copper maintenance vs how much it will cost to convert to fibre

    • the “no copper to be stolen” argument will only hold true for thieves that are intelligent enough to know the difference! 🙂

  4. Avatar zemadeiran

    All sounds about right to me,

    Once it is in place, passive fibre will of course be much cheaper to maintain.
    I think what is really holding Openreach/BT back is the national commitment to emergency communications access for the vulnerable in our society.

    I do however strongly feel that as battery technology (BBU) improves Openreach/BT can start to migrate over to full ip and remove the legacy switching.

    Thank you for the pdf’s FibreFred, zemadeiran likes :D…

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