Cheri Beranek, CEO of Clearfield, acknowledges that while fiber installation costs are the toughest part of making a FTTH business case work, the fiber management company is seeing vibrant results at traditional telcos, wireless operators and cable operators. As Beranek sees it, fiber management and fiber buildout is all about being able to align capital equipment costs with subscriber take rates. She claims that the company’s approach to fiber management will set it apart from its nearest competitors CommScope and Corning. Sean Buckley, senior editor of FierceTelecom, recently caught up with Beranek to talk about fiber management trends.
FierceTelecom: In a recent blog post, you addressed the capital challenges of building FTTH networks. What measures are service providers taking to reduce deployment costs?
Cheri Beranek: I think how fiber management has changed is that our core competitors have not changed at all. They have addressed the fiber infrastructure like fiber management was done 15-20 years ago when fiber was starting to circle the globe and when Verizon started to look at FTTH in 2000 and 2001. Corning, and what is now CommScope, were building products that were about the ability to bring fiber to a very dense environment in which service providers would put all of their money out in the field with the perception of if you build it they will come.
What we found is that fiber management and fiber buildout is about being able to align capital equipment and capital infrastructure alongside subscriber take rates. Whether you’re a small independent telco or whether you’re AT&T, it’s about cash flow and being sure that you’re optimizing the cash that you’re putting into for your capital equipment investment and turning capital equipment into subscriber revenues. Fiber management has changed to be able address that. Our Clearview Cassettes and our FieldShield products are all about helping service providers reducing the cost of deployment.
FierceTelecom: A number of different studies tout FTTH growth trends. What trends are you seeing out in the field?
Beranek: We see service providers being very aggressive, but we’re seeing them be aggressive in a disciplined way. If you look at when Verizon threw money around to put cabinets on every street corner and then after that they had to figure out how to light up customers. We’re not seeing that kind of deployment. Today, we’re seeing a disciplined approach in which service providers are identifying their potential take rates.
In some cases they are cherry picking environments where they can see a stronger take rate due to the neighborhoods they are serving. I don’t think we can fault them for that because these are for profit businesses. Being able to demonstrate the means by which to make fiber deployment cost effective and a good business requirement is good for everyone.
FierceTelecom: Verizon has touted a “one fiber” strategy for its Boston FiOS deployment by deploying fiber for residential, business customers and wireless. What’s your view of Verizon’s multifaceted approach?
Beranek: Our message is about a "fiber to anywhere" architecture. When we designed the Clearview Cassette and the FieldSmart architecture, it was about being able to provide a fiber environment for any type of deployment, whether it was wireline, cable or wireless. We got some pushback on whether 5G will be able to deliver gigabit services and is that bad for wireline deployment? Nothing can be further from the truth. True 5G performance won’t be possible without extremely rich fiber networks, and they will make FTTH and FTTB more possible if they are put in place.
FierceTelecom: Can we talk about rural areas? How is the rural FTTH market evolving?
Beranek: It is a very diverse space, but it’s how we built Clearfield to be as user- driven as possible. What differentiates us is we’re able to provide to a service provider whatever solution their situation might entail. When we started the company, we did a lot of custom design and the birth of the Clearview Cassette was to focus on custom configuration rather than custom design. The pioneers of this space are the Tier 3 providers such as GVTC in Texas.
Individual communities have understood that fiber deployment is key to their economic development and they’re looking for ways to make that happen. Some providers like Paul Bunyan Telephone are cooperatives and are member driven, but many are privately held companies that understand the means by which to truly not be dependent upon government subsidies and build out a fiber network that allows them to be independent.
We get a lot of questions about CAF II funding and the changes in the universal service funding (USF) world. Whether you’re a price cap carrier or not, you have to recognize that eventually, government involvement is not beneficial so you want to put yourself in a position where you are defining your own destiny.
FierceTelecom: One of the controversial broadband network topics is municipal broadband. How are you seeing this segment play out?
Beranek: We think community broadband and municipal-owned broadband is one of the biggest growth engines that this industry is going to see. AT&T, Verizon and Comcast are going to deploy in metro markets where there’s competition and where they are protecting their turf. They need to go where the money is. You’re going to have nucleuses of two to three lines of companies competing for your business, especially in multi-dwelling units (MDUs).
In communities outlying those metros, they are going to be left out unless they take matters into their own hands. Because we have more than 500 small telephone companies as our core customer base, we see ourselves as uniquely positioned to respond to the needs of the municipal market. One of our largest builds is the city of Longmont, Colorado.
FierceTelecom: Cable is another factor. While a number of companies are focused on leveraging HFC to deliver gigabit services, some are looking at some form of FTTH. How big of an opportunity is cable for Clearfield?
Beranek: Each quarter we announce our numbers and include in our 8K our field report. In our field report, we noted 20% of our business comes from wireless and cable TV companies. What we see in the cable market is they always had very dense deployments of fiber. They have been able to enhance the speed of their networks by collapsing their nodes and deepening the amount of fiber they have. They have gone from 576 homes served from a single fiber down to 288 as a means by which to enhance their speed.
One of our competitive advantages in working with the cable companies is the cabinet we use is shaped to our PON cabinet, which is used for traditional FTTH or fiber-to-the-business (FTTB) deployment. Cable companies have been quietly doing Greenfield deployments as a FTTH solution for some time. They are evaluating how to leverage DOCSIS 3.1 as a traditional HFC network for some neighborhoods and are also looking at how to deploy fiber deeper in other places.
They have been a bit less stringent than the telco guys have so they can deploy faster than the wireline guys. Cable guys have pretty much owned broadband with their broadband modems because DSL was never able to be effective. The wireline guys were in a position of owning the businesses, but that’s really starting to change because cable is working hard to go after business services.