Fiber's here, but don't forget about DSL

It's easy to get caught up in the promise of Fiber to the Premises (FTTP).

Every consumer I know that has Verizon FiOS FTTP-based service, especially early adopters such as Taqua's VP of Marketing Fred Reynolds and my former Current Analysis colleague Bill Ho, rave about having fiber-based service coming into their respective homes. In particular, they emphasized the network speeds and the widgets feature that enables customers to get traffic updates on the TV.

Bear in mind that Bill and Fred both live in Virginia and Texas, which are two early strongholds for the service.

But even Verizon is trying to incentivize its DSL service where FiOS is not yet available. While Verizon added 300,000 FiOS net TV customers and 303,000 Internet subscribers in the second quarter, its DSL customer base fell by 117,000. Perhaps more revealing was that 75-80 percent of those DSL customers were lost to cable.

To prevent more cable defections, Verizon will offer DSL customers a one-year free subscription to NFL Sunday Ticket. However, I now hear that DirecTV will have to pay for the service.

Besides the discrepancy between DirecTV and Verizon, the other turnoff for some consumers may be the requirement to purchase a landline voice line. If Verizon is serious about retaining DSL subscribers that are on the fence, they may want to think about extending the NFL ticket offer to subscribers that want only a standalone DSL line. Verizon should realize that consumers want to leverage their broadband connection for other activities including voice calls from alternative providers such as Vonage.

Verizon's goal of wiring up every home and apartment, however, is anything but simple.

Wiring up a town with FTTP has the typical challenges of applying for construction permits and coordinating police details for traffic disruptions, but at least they can leverage existing telephone poles to string the optical cables from the CO to the home.

But cities pose the real challenge for deploying FTTP. A recent Boston Globe article highlighted not only the technical, but also the logistical and political battles Verizon is facing in rolling out FTTP in cities.

In a city like New York or Boston (where FiOS is not yet available), Verizon has to route the fibers through underground vaults and conduits that are often unusable. And since the majority of the city deployments are in apartment buildings, Verizon has to go and get the owner's permission for building access.

From there, as it's starting to do in New York, Verizon has to place an ONT in the living unit that's typically connected to either existing or new hybrid fiber coax cable in the living units. Even if the landlord or property owners agree to grant access, the service provider will then be required to install necessary equipment at certain times of a day, so as not to disturb residents.  

Other service providers, however, see DSL as a service foundation. Content to be the lone gunman in the ILEC broadband game, Qwest is expanding its Fiber to the Node (FTTN) network with ADSL2+ and now VDSL2 with 40 Mbps capabilities in select markets. Company CEO Ed Mueller thinks its FTTN network will be an anchor to deliver new online and possibly high definition video services.

My only misgiving about the Qwest's VDSL2 service is they don't reveal loop lengths used to achieve these speeds. Advertised VDSL2 data rates on copper decreases the further the distance is from the fiber node.

The RBOCs, however, aren't the only ones finding new utility in their copper networks.

Fiber to the premises-savvy independent ILEC SureWest is extending its IPTV services to its copper-based ADSL2+ subscribers. Initially launched as a higher-speed 10 Mbps data/voice service last year, SureWest is now extending Microsoft media IPTV capabilities to its ADSL2+ customers.

When I asked SureWest's CTO Bill Demuth last fall why he was enhancing his copper network, his answer was that he wanted to maximize their 75,000 existing copper lines.

"We have been overbuilding our territories with fiber, even in the ILEC territory where it makes sense," he said. "We're completely dedicated to fiber, but we also want to enhance primarily the data capabilities of the customers on that copper."

Telcos, if you're truly serious about competing with cable, you need to realize there's plenty you can still do with your existing copper network.

--Sean

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