Policy makers, no less than fixed network service providers, face challenges never encountered before, when pondering how to stimulate faster deployment of fast fiber access networks. “It’s become a challenge for operators to know how much to eventually invest in fixed broadband networks and services,” says Jeff Heynen, Infonetics Research directing analyst. Some of us might say that is a very polite way of saying that industry executives are not certain how big a payback they might get from making such investments in fixed networks.
That is a huge development. In the past, neither executives nor policy makers or regulators had to question whether investment in fixed networks was profitable or not. In the monopoly period, within some reasonable constraints, investment automatically generated a return. That's the substance of "guaranteed rate of return," after all.
In the competitive era, when network access and transport are severed from applications, none of that can work. There no longer is any predictability of revenue, end user demand, profit margin or operating cost.
That makes a policy maker's job; a regulator's job or a service provider executive's job much more challenging.
“On one hand, fixed broadband is among the most profitable services a provider can offer," says Heynen. "On the other hand, the investment required to roll out or upgrade mobile networks is eating into their available capital.”
In other words, mobile investment now is a competitor to fixed network investment. As a result, the transition to next-generation fixed networks will take "longer than many in the industry had hoped."
Nor is the issue so "simple" as making the "right" technology choice. The business model for an incumbent fixed network service provider actually is an open question, at this point.
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