Should cable deploy fiber to the home?
The Wall Street Journal has gotten its hands on a copy of a "members only" report, issued by CableLabs, a research-and-development consortium funded by the cable industry, that suggests cable operators may be forced into an expensive upgrade to deploy fiber-optic cable to the home in order to keep up with Verizon Communications.
The report was cited in a story published on Thursday in The Wall Street Journal.
Since Verizon launched its
But it suggests that as Internet traffic grows and bandwidth-intensive applications, such as video, become more popular, cable operators will be forced to add more equipment to their networks to increase capacity. That could be very expensive. According to the story, CableLabs suggests in the report that it would be cheaper for cable operators to string fiber directly to homes rather than upgrade the existing network.
CableLabs has not made the report public. And it denies the Wall Street Journal's interpretation that it is recommending to its membership that they consider FTTH instead of following the existing upgrade strategy.
"The bottom line findings of the technical research report demonstrate that cable's technology is scalable and well poised to handle the capacity requirements of new services and major investment is not needed for cable to effectively compete," CableLabs said in a statement. "While it is nearly impossible to predict the future demand for more capacity to cable's already robust fiber optic network, our research also shows that cable's infrastructure can easily and cost effectively be upgraded as additional capacity is needed in the long-term."
In my opinion, if The Wall Street Journal is interpreting the facts accurately, the report's supposed findings aren't all that shocking. Pretty much everyone in the industry knows that deploying FTTH is the best way to future-proof a network. Fiber provides limitless bandwidth capacity, because traffic can be sent over different wavelengths on separate strands of glass. So it shouldn't surprise anyone that Verizon is putting itself in a very strong position for the future.
At least one Wall Street analyst said the situation for cable operators is not as dire as it appears. For the hypothetical scenario from CableLabs to come true, Verizon's fiber network would have to be deployed nearly everywhere.
Craig Moffett, an analyst with Sanford C. Bernstein & Co., points out in a research note published Thursday in response to the WSJ story, that that isn't going to happen--ever.
For one, Verizon is the only company aggressively deploying FTTH, and it's only deploying it in its existing footprint. So that means that people living in AT&T's territory or in Bellsouth's footprint won't be getting fiber-to-the-home.
What's more, even the folks in Verizon's footprint will have to wait a long time to get fiber. The company estimates that in the next seven years, it will likely only connect about 13 percent of the U.S. with fiber. That's a drop in the bucket compared to how many homes have access to a cable network.
No one argues that Verizon's fiber network won't have an impact on the competitive landscape. It already has in some parts of the country. But to assume it will drive cable companies in an expensive upgrade cycle to deploy fiber everywhere is just not realistic.