CenturyLink's Ewing: Omaha FTTH network is a test bed

CenturyLink (NYSE: CTL) may only be serving Omaha, Neb., with a 1 Gbps Fiber to the Home (FTTH) service, but it's keen on seeing what competitive results it produces and whether they can be potentially replicated in other markets.

Speaking at the Bank of America Merrill Lynch 2013 Media, Communications & Entertainment Conference, Stewart Ewing, CFO of CenturyLink, said the company will look at the results it gets from this pilot network.

"I think we'll use that as a test bed to see again how well we can compete and penetration rates in that market versus other markets where we don't have Fiber to the Home," Ewing said. "If it makes sense to roll out fiber to other areas we'll potentially look at other areas, but that's out in the future as opposed to right now where we want to look at Omaha to see what kind of results we get there."

By comparison, local cable operator Cox Communications delivers 50 to 100 Mbps over its existing DOCSIS 3.0 cable systems.

Like its fellow RBOC counterpart AT&T (NYSE: T), CenturyLink has traditionally taken a conservative approach to its last mile upgrade strategy, leveraging a hybrid copper/fiber Fiber to the Node (FTTN) architecture.

In May, the service provider announced it would do a 1 Gbps-capable FTTH pilot deployment that will serve 48,000 homes and businesses in Omaha, Neb. It expects to have the FTTP network available to all 48,000 customers by early October.

What is different about the pilot in Omaha is that it leverages an existing HFC system built during the US West days to provide basic cable TV services. However, that company had not upgraded to a FTTN infrastructure.

"When we looked at it and the dense fiber they deployed in Omaha we decided to it was actually about the same cost to do Fiber to the Home as it is to do Fiber to the Node," Ewing said. "You get so much better performance from a speed standpoint and, we think, from an expense standpoint to see and track the same type of expense savings where Verizon has done Fiber to the Home."

Unless things change, Ewing said 2014 capital guidance to spend on projects like last mile broadband and Prism IPTV will be about $3 billion. In the event that the company does decide to expand the FTTH service into other territories, it would redirect existing dollars to the new technology, he added.

"We're probably $150 to $200 million a year doing Fiber to the Node, so we'd stop doing that and redirect those investments more to Fiber to the Home," Ewing said. "There are other areas within the capital budget where we are spending money to augment for bandwidth where we need to just have more capacity and I think there's dollars there we can take away and redirect."

For more:
- see the webcast (reg. req.)

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