Is Charter missing the boat on Opelika's muni broadband network?

Sean Buckley, FierceTelecomCharter's (OTC BB: CCMM) contention that its HFC (hybrid fiber coax) is more reliable than Fiber to the Home (FTTH) wasn't enough to sway Opelika, Ala.'s residents to not vote in favor of going forward with its community broadband network plan.

As told by Skip James, government relations director for Charter Communications, HFC is more resilient than a FTTH-based connection.

"This delivery system keeps the cost down for residential customers while supplying direct fiber optic connections to businesses requiring the maximum bandwidth available nationally," James said in an Opelika-Auburn News article. "If a coaxial cable is damaged by traffic accidents or excavation procedures, it can be repaired rather quickly, whereas a damaged fiber optic cable will take hours or days to repair, depending on the scenario."

This is an interesting argument, since cable networks also have a good share of fiber in them that are also prone to outages. Since only an estimated 40 percent of consumers actually know what FTTH is, MSOs and even other telcos like Qwest (NYSE: Q) like to run deceiving ads about their fiber network capabilities, but once you peel back the onion it's clear these last mile networks are by no means the same.

Like Charter, fellow cable MSO Comcast (Nasdaq: CMCSA) has its "Don't fall for FiOS" campaign that downplays the telco's FTTH network and that they too have a nationwide fiber network. Yes, Comcast, like Charter, does have a large fiber network, but that fiber network is to connect and aggregate its home run HFC connections, while Qwest has a hybrid copper/fiber-based FTTN network.

Ultimately, Opelika's residents did not seem to care, and approved the build out of the new FTTH network, which will include $33 million in bonds and a core fiber ring from the local utility company.

This new network will be a dual-purpose network delivering residential broadband services and even smart grid applications for residential energy management and likely for the utility to manage its own internal electricity management needs. Similar mixed use techniques have been adopted by the likes of Washington state's Mason County PUD 3 and Sun Prairie Water & Light (Sun Prairie Utilities) in Wisconsin. Although Washington state law prohibits utilities from offering retail services, Mason County told me they provide wholesale capacity to a number of unnamed household name service providers that typically have been forced to leverage a competitor's network. 

Following along the same logic, I think there are some obvious wholesale opportunities that could be created out of the Opelika network for Charter.

It appears that cable competitor Knology (Nasdaq: KNOL)--an operator that's dabbled in both FTTH and Fiber to the Curb (FTTC) itself and has applied for a cable franchise in Opelika--has signed on to deliver services over the Opelika network.

Knology's willingness to leverage Opelika's network got me thinking that perhaps the incumbent carriers that reside in towns they have largely ignored should look at these community networks as an opportunity to either expand their own service reach, backhaul their own network traffic, or provide new wireless backhaul wholesale opportunities.

I say this because as the fiber gets laid out to neighborhoods and homes, it will possibly pass near wireless tower sites that house multiple wireless operators in need of enhanced bandwidth. One idea is that Charter could build an aggregation point that connects multiple cellular providers that come into the market to Opelika's fiber network.

But the more likely scenario Charter and fellow MSOs, who are often joined by a chorus of their usual incumbent telco enemies, will take, as suggested in a recent Broadband DSL Reports post, is they will just litigate until the community provider gives up. Then when the venture fails, the incumbent carrier can just gloat about the outcome and go back to focusing on enhancing capabilities in their NFL markets.

Charter, of course, is not the only one opposed to the Opelika network. A community group called the Concerned Citizens for Opelika argues that only private companies, not government, should be providing broadband services to consumers.

Given the problems that some communities, including Utah's UTOPIA and smaller scale efforts by Davidson and Mooresville, N.C to build a profitable community broadband network, I can understand the group's concerns about spending taxpayer dollars on this model.

Still, if community feels it's not getting what it needs from the local service provider shouldn't they have the right to at least take a chance on building an alternative network that will give them capabilities that the incumbent is not likely to deliver anytime soon?--Sean

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