This Industry Viewpoint was contributed by David W Wang
Recently we had two pieces of eye-opening news on fiber optic network. One is Google Fiber made an agreement with the City of Huntsville, Alabama to bring high speed broadband Internet to the community. The nuance for this case is that Google will use the fiber network the Huntsville Municipal Utilities is building in the city, rather than laying the network by itself as it did in elsewhere like Oklahoma City.
The second news is Verizon Communications will buy part of XO Communications - its fiber-optic network business for about $1.8 billion. Verizon said the deal will include XO's fiber-based Internet protocol and Ethernet networks that will help serve its enterprise and wholesale customers. Thus the niche value of XO’s fiber network to Verizon seemingly rests on the metro/local Ethernet transport and access to the enterprise buildings or compounds (the so called “lit buildings”).
This tells us, from the infrastructure development standpoint, giants like Verizon, AT&T and Google nowadays are mostly interested in nothing but two items: fiber optic network and wireless spectrum, which are the cornerstones for the next generation communications to take off. (Note: Verizon’s recent let-go of some its fiber assets in CA, TX and FL to Frontier is a different story because they happen to be part of the service bundle to spin off there.)
As a matter of fact, fiber is even more fundamental than spectrum: without fiber optic network, the spectrum can’t really function alone for the 4G LTE and incoming 5G data centric wireless network and services. Wireless -macro traffic from one cell tower pumped by small cell or WiFi or DAS to the network backbone, must rely on the wireline solution namely fiber optic network deployed to be backhauled and then transported fast and seamlessly to other destination towers.
Fiber therefore is everything to the telecom/IT industry today and tomorrow. Such a statement, however, may scare some folks still haunted by the so called “glut of fiber lines” back to the start of this century. What went wrong back then? The answer is simple: wrong location and timing. Wrong location means back then the fiber construction was very tilted towards the long haul and undersea cable legs, while the local and access ends remained mostly copper, hence lack of robust drivers for the Internet traffic. Wrong timing means while the new fiber network would need both long haul and local/metro buildout, they could hardly happen in parallel. So the long haul or backbone part went hot first. Unfortunately the stock market and investment return cycle then couldn’t wait long enough for the local/metro fiber network to catch up, before the long haul fiber frenzy bubbled out.
What happened after that was even more amazing. From 2001 to 2010, nearly a decade the US market was so shadowed by this “fiber glut” nightmare that many telcos and ISPs dared not to move further with their fiber deployment. (Note: Verizon was an exception though as it had the vision back in 2004-2005 to roll out its fiber to the home (FTTH) solution known as FioS, which to date remains as one of the two major revenue drivers for the company, besides wireless.). As the result, while a big part of the US local Internet services remained on the DSL and ISDN level over the copper lines, the other parts of the world, Asia Pacific countries in particular, have been quickly and aggressively building out their broadband fiber network nationwide all the way to homes and offices.
By the year 2010, Internet industry surveys showed the “developed countries” like the US and Western Europe were actually falling behind in Internet broadband services in terms of access speed and geographic coverage. In many US tier 2 and 3 urban regions, not even mentioning the rural areas, the Internet access speed was slow just like crawling.
Thanks to the post-2010 new wave of solutions and applications born from cloud computing, smart phones and tablets, and online social media, etc, the wake-up call finally rang loud to the US telecom/IT industry and market: we need a lot more miles of fiber optic network quickly and locally to boost the wireless data, cloud applications, and Internet of things.
Back to the fiber glut time, there was a saying “build it and they will come” which since then has been deemed as baloney. Now the City of Huntsville, AL and XO Communications prove it is not. They’ve built the fiber, and now Google and Verizon do come! Similarly, many regional and metro ISPs and dark/lit fiber providers are seeing successes too, as they build FTTH to residential communities or Gigabit Ethernet level connections between or among enterprise offices and major data centers, the end users do welcome it and sign on. Fiber is still fiber like the gold always shines. You only hear people complain when they don’t have access to fiber based network services, but rarely the other way around.
So it all depends on the right location and timing and we are here again with a new fiber heat shifting more to the local/metro transport and access solutions. Smart homes and cities, cloud and M2M all require robust fiber optic network to happen. For telcos, ISPs, dark/lit fiber construction firms, cable TV operators, and municipal utilities, they need to plan strategically and act boldly to become winners in this new wave of fiber network buildout, including to identify the demand and target users right, build the network to link the right areas or spots, and then promote the fiber via the right marketing strategies.
One caveat is that to deploy a fiber optic network remains an expensive business and new constructions may start to consume a lot of fiber cables. Hence the operators need to keep an open mind on the cable supplies. As the supply pressure mounting on the incumbent cable vendors, there are also emerging competitive fiber cable manufacturers out there who can offer the same quality of fiber cable but with much more competitive rates and delivery lead time.
Try out couple of their cable reels, verify with their trade references, or check on their cable samples are all smart approaches for a network operator to engage these competitive suppliers. After all, what can be better than the operator manages to deploy a new fiber optic network at the right locations, just on time, and with a great cost saving?
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