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Written by Dave Burstein
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Monday, 27 May 2013 21:41 |
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 Legendary investor sees a profitable business model Operating profits on a fiber network are typically very high - once it’s built and customers acquired. So the key is building at low cost and getting customers quickly.
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Written by Dave Burstein
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Friday, 04 January 2013 01:35 |
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 Harstead and Sharpe of Alcatel base forecast on conservative traffic projections. 10’s of millions of homes, including millions at Verizon, have GPON connections easily capable of delivering a gigabit downstream to each home 99+% of the time. While the total is only 2.4 gig shared, almost never is the actual demand more than 1 gigabit. Any user needing their own gigabit is easily accommodated.
Hong Kong Broadband Network happily sells the gigabit service for about $30 but most are holding back. Australia’s National Broadband Network intends to offer the gig to millions starting in 2014. Verizon won’t sell more than 300 megabits.
That 2.4 gigabits shared, the GPON total, delivers a gigabit reliably surprises most people. The 2.4 gigabits is shared up to 32 ways, an average of about 70 megabits/home. In practice, the total demand is almost never even a single gigabit, leaving more than a gig for any user who demands it. Harstead and Sharpe examine the question of likely change over time as homes require more bandwidth. They believe looking at the peak throughput, not the average, is a much better measure of GPON.
Actual data is the average home draws an average of 100k-200k today, with the Alcatel paper sourcing that figure to Gartner/Cisco and some semi-official Japanese figures. Other estimates from actual networks are similar. Alcatel is presumably informed by the actual demand on the hundreds of carrier networks they support.
Peak usage is higher but still not enough to strain 2.4 gig GPON. Even assuming each of the 32 homes is watching Netflix and has several others in the home online, demand is only 5-10 megabits. Adding some HD video calls and the like doesn’t change that substantially. 10 megabits by 32 users (320 megabits) is less than 1/7th of the capacity of GPON.
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Written by Dave Burstein
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Tuesday, 23 October 2012 13:59 |
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Gigler/CityFibre in Bournemouth matches Google’s price
21,000 homes in England are being offered a true gigabit down, 500 megabit up, low ping fiber connection at a price similar to Google’s in Kansas City. £25/month ($40) has an 80 gigabyte cap, best thought of as an hour or two a day of HD video. £35/month ($56) has a 250 gigabyte cap, enough to watch most of prime time. £50/month ($80) is unlimited. Install is £50.
Greg Mesch’s CityFibre intends to cover the whole city of Bournemouth by the end of this year and is working in York as well. They manage 30,000 kilometers of fiber for private and government groups. CityFibre emerged after the financial collapse of i3 Group and now is building again.
I recently reviewed fiber economics at http://fastnetnews.com/fiber-news/175-d/4835-fiber-economics-quick-and-dirtywhere I concluded that in medium density areas the cost is about $1,000/home passed. Per home served that becomes $1,000 (nearly everyone) to $4,000 (25% take rate). That gets you to an easy gig today and an easy 10 gig in 2-5 years. CityFibre tells me their costs "are considerably lower due to the high density of homes in the areas in which we deploy and the fact that we are using a PON architecture and not point to point."
In general, the direct return from residential fiber buils is something like a decade away, too much for private companies. So going for fiber only makes sense for a company which can capture major externalities or other revenues. Google's a perfect example of externalities. What's good for the Internet is good for Google ad sales. CityFibre is aggressively marketing to Local Authority/Government, business and mobile. Gigler is already planning to sell voice. The $50 fiber business plan is still unproven but I’m getting more optimistic as additional revenue sources prove out.
If externalities are significant, then it becomes sensible government policy to overcome the corporate reluctance. A social investment can look to a 10-20 year payoff. Impacts of better broadband are usually overstated but I believe non-nil. I'm convinced just giving out money like our broadband stimulus is beyond the power of the U.S. government to do efficiently, and I suppose that's true elsewhere. Nationalization and direct government investment has problems as well. But I'm pretty sure that long term loans bringing down the cost of capital are natural here, preferably to entities with enough skin in the game to make sure the money isn't wasted.
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Written by Dave Burstein
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Tuesday, 25 September 2012 23:01 |
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 Can’t get high speed in Los Gatos, California but that’s not the story. It was too good to be a true story. Headlines around the world included “ Wozniak likes NBN so much, he's applying for citizenship” and “Woz Wants to Become an Aussie Citizen Because of Country’s National Broadband Network” . Half of the story is true - the Apple co-founder is hoping to become an Australian citizen, although he isn't giving up his U.S. citizenship. He does think NBN is good, and said so. He is unhappy that in the heart of Silicon Valley cable won’t come up his hill and Verizon can’t deliver more than 1.5 megabits. Reporter after reporter copied the original AFR story, including CNBC in the U.S. and the Telegraph in England. They should have checked with the source. When I did, Steve emailed
“I am taking the first steps toward my goal of Australian citizenship, which is to apply for an extended visa so that I can reside here. I have desired to find the path to accomplish this for decades. It has nothing to do with NBN (faulty reporting) although I'm always a staunch advocate for technology and bandwidth and sharing and internet freedom. But the two things are not connected. NBN is good in my mind and is a side benefit but that's all.”
Sorry to disappoint you, Steve Conroy. |
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Written by Dave Burstein
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Thursday, 18 April 2013 08:01 |
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2.4 gig split 32 ways = 2 gig to each? There’s no new technology in Sony’s “2 gigabit download” Nuro service in Japan, I originally wrote. But a reader points out that I was wrong saying "It’s the same GPON used by Verizon and dozens of other telcos. They are simply marketing 2.4 gig (shared) GPON as providing 2 gigabits to any home if the network isn’t loaded." While the connection from the network to the home is presumably unchanged, the usual CPE for GPON can't forward more than 1 gigabit to the home network.
In practice, very rarely will the 32 homes on a GPON node draw 400 megabits, so 2 gig would actually be available on demand. Ed Harstead of Alcatel examines the potential of GPON for peak performance and the likelihood of actually getting the speed at http://bit.ly/11ZcFXN. Only a few uses take advantage of performance over 100 megabits today, with cloud storage being the most interesting. Sony with the Playstation is also looking to an edge for gamers.
Sony may be using the new Lantiq Falcon, with an SFP Optical Module that can deliver the full 2.4 gigabits. That's unconfirmed, but I've included the pr for the Lantiq unit below. While two gigabits may be overkill for most homes, the speed may be usefui as GPON is emerging as backhaul for MDUs and wireless cell sites. Carriers including AT&T and China Mobile are testing GPON backhaul where previously they would have used Carrier Ethernet. Because of GPON's use in fiber home, the gear is remarkably inexpensive.
Great marketing move.
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Written by Dave Burstein
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Tuesday, 20 November 2012 01:25 |
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No digging most places per France Telecom
Marc Lebourges of France Telecom writes “there is enough availability in existing ducts to
accommodate fibre deployment” in France. That’s not true in the Netherlands or all of Britain, Lebourges observes, but makes sense. Fiber takes less space than copper, at least in PON deployments.
Because the fiber doesn’t require digging, it’s practical in most of France to have two or more competitive fiber carriers. The last loop, from the customer to the basement or neighborhood box, would be built by one carrier and shared. Behind that, each carrier would run their own fiber back to the exchange. He believes all but ~20% of the homes can have two fiber choices, many 3-5 carriers competing.
Those networks are now being actively built by FT & SFR and the fiberization of France is finally gaining steam. ARCEP has separately accepted that less dense or otherwise expensive areas will get VDSL for now, not fiber.
The 2011 paper, Competition via Investment, An Efficient Model for FTTH Rollout, is free at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1810505. Here’s an extract.
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Written by Dave Burstein
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Thursday, 11 October 2012 22:05 |
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Skanova/Telia makes long term deals. From Vermont to Lapland, communities wanting fiber connections often band together when telcos refuse to serve them. Some do well, especially those connected to successful municipal utilities. Others flounder because lack of management skill drives brutal costs. Two larger builds, Burlington and UTOPIA, have gone bust.
Ove Alm of Skanova/Telia offers an alternative. If the community will build the ducts and bear the main construction cost, Skanova is happy to maintain the facilities. They in turn lease to operators, including the parent TeliaSonera, who provide services. “We’re not the only company offering management,” Alm tells me. “That competition is one reason the system works.” Skanova’s common arrangement gives them an option to buy the system after seven or eight years, which they will probably exercise.
Operators in Sweden are looking at vectored DSL but are hesitant. “We have multiple service providers on our system whom we need to work with. We need a solution to the problem of sharing vectored systems. We also have some very old plant, often 60 years old. Running new fiber eliminates the problems we sometimes have with bad weather conditions.”
Alm’s speaking Tuesday at BBWF, Amsterdam.
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Written by Dave Burstein
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Wednesday, 12 September 2012 16:52 |
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Bodies on the street get $10 deposits. Early maps of Google's "fiberhoods" in Kansas City were ugly. Affluent, mostly white areas on the west side (green in the map) were scheduled. Poorer, mostly black, neighborhoods on the east side (yellow) were not likely to be covered.
Scott Canon at the Kansas City Star reported “many neighborhoods — chiefly the least prosperous pockets of the metro area — remain far behind the pace needed to hit the Google-established thresholds of customer penetration.” Google had offered a generous deal for the poor: $25/month for the first year for a gigabit to cover some of the install costs, then nothing for the next six years. Despite that, few of the east side neighborhoods reached minimum signup levels.
Google adjusted the levels, reducing them in areas with vacant homes. They did major press outreach, aided by almost every local politician. Most important, they put both paid staff and local volunteers out in the neighborhoods. They went to almost every community group meeting and even went door to door.
Initially, as Canon noted, “Even a cursory glance at the map showing which neighborhoods are likely to get Google Fiber — more than 80 have met Google’s requirements — shows a strong correlation between rich and poor Kansas City.... Places where incomes are lower seem to have little chance of getting Google’s Internet service.” Until the last minute, 30-50% of the city hadn't qualified.
Fiber economics are wildly different between areas with high and low take rates, so it’s natural for a provider emphasize the neighborhoods that will buy. There’s no easy solution to the important problem Scott raises. The results are clear that this kind of ‘demand aggregation’ may be a good business model but likely to exclude the poor.
Google intervened strongly and saved things.
Google map via Marcus Wohlsen of Wired.
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