SBC looks to fiber for superfast Net speeds

Gartner analyst Kathie Hackler says the holy grail for local phone companies has always been putting voice, video and data into consumers' homes through one pipe--a pipe they control, naturally. see commentary

So-called fiber connections have long been viewed as the next step in broadband because they provide Internet access speeds beyond what is available through cable or DSL connections, or business-grade T1 or T3 lines. The new speeds would range from 10 megabits per second to 100mbps--or 200 to 2,000 times faster than a dial-up modem.

SBC will initially target small businesses, but it plans to extend the superfast connections to homes, a spokeswoman said. Further details on timing and availability were not immediately available, though the company's plans will be detailed in a keynote address by SBC Senior Executive Vice President Ross Ireland at the Networld+Interop networking industry trade show next week in Las Vegas.

Divisions of SBC have said they will install fiber connections into new housing developments, including one in San Francisco, which would provide Net connections of about 5mbps.

Analysts said SBC is likely to use the project as an experiment at first to gauge costs and customer demand. Consumer demand for Internet speeds beyond what is available through cable or DSL connections has not grown enough to warrant steep new infrastructure expenditures, although some small business might be willing to pay for the costs, some said.

"Why would a residential customer need a fiber connection?" said Shin Umeda, an analyst at the Dell'Oro Group, a communications research firm. "But on the other hand, by extending fiber out to businesses, they do have a customer base there."

How much speed is enough?
The need for tremendous amounts of Internet speed is still limited, because few sites on the Net provide anything like high-quality video or other applications requiring the bandwidth. Moreover, even a home with fiber connections will be slowed by bottlenecks elsewhere on the Net.

But SBC's plans tap into a long-standing vision on the part of the phone carriers to provide a single connection for customers to carry telephone service, high-speed Internet and cable TV signals. BellSouth is already trying this using fiber-optic connections in a small Atlanta community, while others have experimented with different forms of DSL service.

None of the previous efforts has proven cost-effective, however.

SBC's fiber expansion comes not long after it told regulators that it was cutting back on some of its other high-speed Internet expansion efforts. As part of the company's merger with Ameritech, it had originally planned to offer DSL service in markets outside its 20-state region. But the company recently said it would downgrade these plans to offer just telephone service, and wait on DSL until market conditions improved.

Nevertheless, SBC's so-called Project Pronto broadband effort to expand the reach of high-speed DSL (digital subscriber line) service inside its own region is still under way. The company's fiber plans are a new addition to the strategy, it said.

SBC announced in late 1999 that it would spend $6 billion to deliver the high-speed Internet, using new technology that would help bring DSL into suburbs and outlying areas that had previously been unable to get the service. Before the plan, the Baby Bells such as SBC had been widely criticized for dragging their feet on broadband services.

SBC is the nation's largest supplier of DSL connections for consumers. The company finished 2000 with more than 750,000 customers. But SBC also took some heat recently for raising its standard DSL price to nearly $50 per month, up from about $40.

A costly experiment
Although direct fiber-to-the-home connections are within the realm of today's technology, most carriers have said it's hard to make a business case for the expense at this point.

BellSouth has moved the farthest of any of the large telephone companies down this path, with a trial project involving more than 400 people in the Georgia town of Dunwoody. These individuals have connections of about 10mbps, blazingly fast even compared with cable modems or DSL.

Despite this promising start, BellSouth says it's in "wait and see" mode with the technology. Even beyond the cost of laying fiber cables to individual homes, the components needed to turn on high-speed connections are still expensive.

"We've had a lot of interest," said spokesman Jeff Battcher. "But the issue for us is really cost of infrastructure...We're in a wait-and-see situation to see where prices go and what the next generation of technology is."

Other projects are moving ahead. Palo Alto, Calif., for example, appears ready to start a fiber-to-the-home trial this summer after discussing it for several years. Technology companies such as Minnesota-based Optical Solutions are helping small carriers develop less ambitious but cost-efficient ways of feeding video and data over fiber connections.

Analysts say prices are coming down, and if evidence of demand emerges--which will require more broadband content to emerge on the Net--carriers may find more reason to make the investments in fiber equipment over the next few years.

"We're seeing a trend where carriers are taking fiber further out, closer and closer to the customer," Umeda said. "The technology has been evolving."