Old assumptions about what was possible are being redefined as first Google Fiber, and now many independent ISPs and a growing number of private efforts supported by local government assets are being launched or considered.
Before the process plays out substantially, we also are likely to discover that incumbents and attackers alike have redefined business models in substantial ways. Surviving incumbents will have taken out more costs than they believed possible.
Attackers will have established that low operating costs make the difference in the business model. And, along the way, new revenue streams are likely to emerge as crucial inputs.
It might finally be possible to monetize mobility services using Wi-Fi hotspots supported by such networks, for example.
One of the crucial assumptions of a 2013 DIscus Project white paper on high speed access network business models was the evaluation of possible business models where the key variables were where and what to bundle and provide wholesale.
Another more-recent paper reviewed models where more than one physical network operated, asking the key question: how many such networks are sustainable?
The conclusion, as you would expect, is that few such networks are sustainable in any given region or market: “two or three.”
Where the contestants are private firms, sustainable operations are possible in dense urban areas.
The study reached no conclusions about public access networks built and owned by local government units.
In recent days, there are some new innovations. Among the more interesting developments are the Google Fiber “fiberhoods” approach, where no construction occurs until a minimum number of customers sign up.
The fact that regulators allow such approaches is important, allowing service providers to invest only where there is enough demand to justify new gigabit connections.
The new cable TV DOCSIS 3.1 platform also is important, as it allows delivery of gigabit services across the entire customer base, without a retrofit of the physical plant.
For new housing developments, bundling network cost with home purchase prices in greenfield developments might be possible in some cases.
But most potential fiber-to-home connections are going to be retrofits, where that approach is not possible.
So it is noteworthy that a growing number of smaller Internet service providers and local governments are actively exploring, or launching, gigabit access networks, generally privately operated and funded, but with governments contributing some assets.
Just how important such efforts ultimately will be cannot yet be predicted. Still, it is almost shocking that networks as extensive as those built by Google Fiber, or as small as the smaller-town networks being built by small ISPs, are suggesting the business case for gigabit networks can work, even in markets where telcos and cable TV already operate.