"Time" is an Important Variable for FTTH

Almost 40 years ago, an engineering vice president at a major connectivity provider quipped that “fiber is the future….and always will be.” The humor lay in the fact that deploying the “best network” requires a complicated assessment of what constitutes “best” for a particular contestant, at a particular time, with a particular combination of assets and constraints. 

We might note that the argument for fiber to the home as the ultimate solution has been “correct” for at least 50 years. But it also has not been the “best for my business today” for that same length of time, for every provider and in every geography, given the existing cost and demand curves. 

Today, the analysis is even more complicated by the change in demand. Where the business cases might once have been built on revenues from internet access, video entertainment services and voice, increasingly the fixed network business case is driven by consumer broadband and mobility plus enterprise use cases. 

"Cost per location" is one key input. But so is "expected revenue." "Cost per passing" and "cost per customer" as well as "revenue per passing" and "revenue per customer" also matter when competitive conditions prevail. The reason is that a great percentage of invested capital will be stranded, generating no revenue.

source: Semantic Scholar

The payback model necessarily extends beyond FTTH to mobility platform support and enterprise and business communications demand. The traditional arguments about lower operating cost remain. 

Evaluators might agree, in principle, that fiber to the home is the ultimate “best” solution in some cases, while also insisting other choices continue to make financial sense in the immediate time frame and for some business models. 

Rarely, if ever, in the access portion of the connectivity or computing businesses is there one single solution that works “best” for all use cases and requirements. Instead, architects and business managers have to balance numerous values and costs.

Among them, “time” is an important consideration, even if not shown in the formal cost and performance analyses. Basically, this dimension boils down to the time value of money. 

Making 10 Gbps internet access speeds available “right now” when demand is at far lower levels can be the wrong business decision. Generally, internet service providers want to match performance to customer demand and willingness to pay. Raw performance is not the only issue. 

Platform choices often boil down to “what works for the next decade, in the context of our fundamental business model choices?”

In other words, it can make sense to choose a less-capable platform now because it boosts revenue upside and reduces risk, even if that platform is not the “ultimate” solution. 

Lumen Technologies now estimates a cost less than $1,000 per passing for FTTH, in a 16-state territory that is about 70 percent urban and suburban, after the sale of former CenturyLink assets in 20 states, for example, about half what such investments might have cost two decades ago, and perhaps a third of what might have been necessary 40 years ago. 

But what makes sense for Lumen or many independent internet service providers does not make sense for Starlink, Comcast, many rural ISPs, T-Mobile or even Verizon and AT&T, in some instances. Starlink’s value is based on applications suited to constellations of low earth orbit satellites. Comcast can still rely on hybrid fiber coax as a mainstay, if not the sole platform. 

And demand is better matched to facilities cost in many rural, mountainous and hilly or heavily forested areas using some platform other than FTTH. 

T-Mobile will focus on both mobile and fixed wireless. Verizon, especially, will rely on 5G fixed wireless outside its fixed network footprint. 

The point is that there is no contradiction between the belief that “optical fiber to the home is the ultimate solution” and the countervailing arguments that other platforms make more sense in the shorter term, in many geographies, by ISPs with different business models, capital investment constraints or business models. 

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