FTTH is inevitable

No matter what posturing now occurs, cable operators and at&t someday will switch access platforms and adopt fiber-to-home as the standard wired access approach. For the sake of pleasing investors, who seem to hate investments in FTTH that are the only long-term hope for any wired access provider, lots of companies insist they do not presently need to do so, and they arguably are correct.

Other small independent providers in very-rural areas likewise will insist they cannot afford FTTH. That ultimately will be resolved either by new forms of rural or high-cost area subsidies, or by some new hybrid delivery platform using fixed wireless as the tail circuit.

None of that is relevant. Demand continues to increase, and at some point, the only sane choice for a fixed network that has to deliver a minimum of 100 Mbps worth of data bandwidth, not to mention video, is FTTH.

We might be four to eight years away from that point. The precise timing, though, isn't so important. No matter what executives may now believe, they ultimately will have to scrap hybrid fiber coax and fiber to the node, for competitive reasons. When wireless broadband starts to offer anything close to that sort of bandwidth, no wired network is going to be able to avoid upgrading.

That doesn't mean it is sound business practice to deploy platforms of such bandwidth today, in the mass market. The ramp up frankly is best handled on a gradual basis, as local competitive conditions dictate, to conserve capital for a time when the move is unavoidable, under conditions where there is little incremental revenue to be gotten.

But that won't always be the case. One way or another, service providers are going to discover and then create funding mechanisms that make FTTH a rational choice. Just because we can't predict in precise detail what those mechanisms will be is not the issue. Neither could cable industry executives have rationally explained in detail what all the new demand for video choices would be if capacity were upgraded.

Nor could wireless executives, 10 years ago, have presented a clear and compelling line of argument about why text messaging, email or ringtones or music would be generating significant or growing amounts of revenue.

Though there now is an investor revulsion to financing "build it and they will come schemes," in fact that precisely is the history of innovation in the communications and entertainment business. When given choices, developers have responded and consumers have bought.

That doesn't mean every new application, or even most, are going to succeed in the mass market. The point is that we never are very good at figuring out what developers will dream up, and what consumers will flock to.

It is clear that supply creates its own demand, ultimately.