Boasting the Savings of Moving from Copper to Fibre Optic Broadband

Telecoms operators that upgrade from their old fixed line copper based broadband (e.g. ADSL) services to a pure fibre optic (e.g. FTTH/P etc.) style network infrastructure could make significantly bigger maintenance, energy and reliability savings than initially predicted.

At present one of the biggest barriers to adopting a pure fibre optic network remains the massive first-time cost of physical deployment, although it’s long been known that some of this could be mitigated by longer term savings due to lower maintenance costs. But so far the evidence for this has been rather limited or hints at only modest savings.

Back in 2013 a study of more than 350 ISPs in North America by market analyst RVA LLC found that upgrading from a slow copper to ultrafast pure fibre optic network saved an average of 20.4% via operational expenditure (here). Good, if not amazing.

But now telecoms giant Verizon, which focuses on services around the USA where they use the word “fiber” instead of “fibre” (crazy stuff), has come out to boast about some of the huge savings they’ve made in moving away from their old copper network. Annoyingly they don’t provide any key financial data, but the savings can be roughly summarised as follows (broadly speaking fibre was found to be over 60% cheaper than copper).

Verizon’s Savings – Going from Copper to Fibre Optic

* Real Estate (Savings of 60-80%)
* Dispatches (Savings of 60%)
* CAPEX (Savings of 10-15%)
* Energy (Savings of 40-60%)
* Maintenance (Savings of 40-60%)
* New Revenue (60% of total value)

Not to mention that metal thieves are distinctly less likely to steal cheap fibre optic than lucrative copper telecoms cable. According to Sowmyanarayan Sampath, SVP of Transformation at Verizon, fibre has also proven to be 70% to 90% more reliable than copper, albeit somewhat depending on the network design.

Sowmyanarayan Sampath said (LightReading):

“The economics of fiber are fascinating. At the end of the day, the customer wins. When you do these business cases, almost 60% [of savings] come from new revenue as folks without fiber before get fiber. We see a fair amount of folks who use this opportunity to get better services. We’ve proven time and again this pays for itself. It is sustained pay back.”

By contrast some operators, such as BT in the United Kingdom, have continued to preference an increasingly complex upgrade to their existing copper line infrastructure (hybrid-fibre solutions like FTTC appear to be the order of the day). The network design might similarly become even more complicated once G.fast arrives.

But on the flip side a hybrid-fibre approach like FTTC is significantly cheaper to deploy (the predominantly FTTC method is gobbling around £5bn to reach 95% of the UK instead of £20-30bn via FTTH/P) and also significantly quicker to roll-out, not to mention being much easier to install in homes.

Mind you the figures for FTTH/P could do with some serious revision to reflect modern deployment methods and a hybrid-fibre starting point. For example, TalkTalk and Sky Broadband’s roll-out in York hints at a cost of £500 per property (this is provisional and may not yet accurately reflect the full cost), which isn’t far from FTTC territory, but equally that may not hold up outside of the cities where the pay back from smaller communities can be challenging. In the latter case B4RN’s roll-out is a rare exception, although even their deployment runs at around £1000 per property.

On top of that we’d caution against trying to make a direct Apples to Apples style comparison between BT and Verizon. Both have different network histories and operate in markets with different regulatory rules and taxation requirements. But clearly this is one topic that might need a fresh look.