Monday, July 10, 2017

Can Easier Make-Ready Change the FTTH Business Case?

"Make ready" costs (the cost of readying an aerial facilities pole for a new set of communication cables) might represent $4,000 to $35,000 per mile of cost for a new distribution network. That represents about a low of two percent and perhaps a high of eight percent of total distribution network costs.

So it stands to reason that rules that lead to "make ready" costs that are lower, with execution faster, should improve the business model for either fiber to home or 5G small cell access networks.

Removal of barriers to investment in next-generation mobile and fixed broadband networks proposed by the U.S. Federal Communications Commission could lead to deployment of fiber-to-customer  facilities to 26.7 million premises that would not have gotten such investment under the older rules, according to an analysis by Dr. Hal Singer, Economists Incorporated principal, Ed Naef and Alex King,  partners at CMA Strategy Consulting.

Those moves would make it faster and less costly to deploy next-generation networks, including measures such as reducing pole-attachment costs, the time and cost of make-ready and barriers to copper retirement. Those moves potentially are significant because construction represents most of the cost cost of a fiber-to-home network.

The new rule also would accelerate legacy time-division multiplexing (“TDM”) product discontinuance and reduce barriers to locating and deploying wireless infrastructure.

If the rules are changed, Economists Incorporated estimates an incremental 26.7 million U.S. premises would be passed by fiber-to-home facilities, as the better business model would make the investment worthwhile.

The analysis also suggests that the change in rules would enable about 15 million new fixed wireless 5G locations to be added, about 66 percent of those being in rural areas.

The new line of thinking assumes that faster and lower-cost network construction includes “fiber deep” distribution networks that create radio small cell sites covering areas of 1800-meters radius, or 3600-meters diameter, using 3.5-GHz frequencies. That implies coverage of roughly four square miles from each such small cell.

In urban and suburban markets, that could cover significant homes per small cell In U.S. suburban areas, that might mean one small cell, using 3.5-GHz spectrum, might cover 200 to 600 homes.

Since connecting new customers represents such a huge part of the total "cost to serve a customer" ($830 per customer up to $1870 per customer, it is possible the ability to use small cells to supply a fixed wireless drop, not a cabled connection, would allow a huge improvement in business model.

Some still argue FTTH costs less to deploy than 5G fixed wireless. Others think 5G fixed wireless might well be more affordable than deploying FTTH.

source: Economists Incorporated

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