Tuesday, August 23, 2016

Have FTTH Costs Mostly Hit a Limit?

“A decade has passed since the first FTTH network deployments, yet the cost of building
a network remains the primary obstacle to ubiquitous fiber connectivity for every household,” says Commscope.

From 2005 to 2015, the cost per home passed dropped from $1,021 to just under $700, Commscope notes. Those costs likely are fairly standard, no matter how big or small a firm might be.

The problem is that most of the cost of building a fiber-to-home network comes from civil engineering, not network elements.

Construction, civil works engineering, obtaining permits and right-of-ways account for roughly 67 percent of total cost, while the equipment accounts for about 33 percent.

So while GPON and fiber equipment costs have indeed fallen, skilled labor rates have risen.

In other words, a fiber-to-home network mostly represents construction costs, not network element cost.

My simple way of explaining this is that most of FTTH cost comes from “digging holes, then closing the holes back up.”

If so, then the cost of FTTH cannot be reduced too much more.

That is a key reason for the resurgence in interest in fixed wireless, which now is on the cusp of reaching gigabit speeds, and also soon will reap the benefits of new research efforts related to radios.

Also, spectrum costs will drop, partly from spectrum sharing, partly from use of unlicensed spectrum, partly from huge new allocations of spectrum that can support fixed wireless.

That is why fixed wireless and millimeter wave will be such a big focus at the upcoming Spectrum Futures conference. It is possible, perhaps highly likely, that fixed wireless will upstage fiber as a means for supplying consumer gigabit Internet access.

Here’s a  fact sheet and Spectrum Futures schedule, illustrating the planned discussion of access network business issues.

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