JDS Uniphase (JDSU)

[cards16]

Surveys Gauge FTTH Future In Light Of FCC Review
Now that the FCC finally has released its long-awaited triennial review (see related story in this issue) that codifies its opinion that any new ILEC fiber builds will be free from unbundling strictures, the industry is waiting for the other shoe to fall regarding the onset of actual fiber-to-the-home, to-the-business and to-the-user services. A group headed by Verizon continues to evaluate its FTTH request for proposal circulated earlier this summer, and the Fiber-To-The-Home Council is champing at the bit, its members anticipating an avalanche of activity sometime next year.

Mike DiMauro, executive vice president/new business development for FiberCore Systems and 2003 president of the FTTH Council, believes the FCC's report "is important both to us and to the industry as a whole." Speaking with Fiber Optics News on the day the report was released, he added, "What it really means is that fiber to the home and fiber to the business are here, and we're ready to move forward. I'm sure we'll have many questions for Commissioner Kevin Martin when he keynotes our annual meeting in October." Putting on his FiberCore hat, DiMauro said, "From a company standpoint, we believe this is a step in the right direction, and it could free up the money carriers need to build out new fiber networks."

Current industry estimates put the cost of installing a dedicated fiber line to a home or office at about $2,000, down from the $4,000 it cost in 1998. And in a bold -- but probably unworkable -- plan, former FCC Chairman Reed Hundt, now a senior advisor to consultancy McKinsey & Co., reportedly is putting pen to paper to outline a national broadband buildout policy that would cost telecom users a subsidy of $20 per month until the high-speed network was built. Hundt estimates the project would cost $50 billion, but the network would be ubiquitous.

Matt Davis, broadband and FTTH analyst with The Yankee Group, now is watching Verizon and the other ILECs, waiting to see "whether they will be able to follow through with that kind of network." That concern is a common one nowadays, with optics-focused research firms and publications alike grappling with what is smoke and mirrors and what will be the real FTTH deal. ChangeWave Research (see related story in this issue) sent out some feelers of its own regarding the veracity of Verizon's FTTH plans, asking the question: "Based on your own knowledge of the company, do you think this is a serious effort that Verizon will fund aggressively or is it more a 'directional' statement to impress upon investors that the company is being aggressive?" Here's what its analysts were told:

9 percent of those surveyed believe Verizon seriously plans to build out a FTTH network
30 percent believe Verizon intends to build a FTTH network, but that its plans still are in the preliminary stages
33 percent say Verizon is using "directional statements" and press releases to impress investors
And 25 percent had no opinion on Verizon's plans.
And just to keep things on the up and up, the Information Technology Association of America (ITAA) wants the FCC to come up with a way to measure future FTTH progress. Says ITAA President Harris Miller, "Identifying FTTH reporting requirements will create transparency and help investors, telecom providers, policymakers, and consumers bring home the promise of broadband. The FCC reports should break down investment by state, metro area and zip code. A national consensus exists that new broadband investment and adoption will produce significant social and economic benefits."

Such a report would be a natural extension to existing requirements under FCC Form 477 (Local Competition and Broadband Reporting), he says, adding, "Good information about the pace of FTTH investment is necessary for application, content and other broadband service providers in our industry to make informed decisions about the available consumer market. [Because] some aspects of the triennial decision seem likely to move to the courts, FTTH investment transparency could counteract the potential impression that new investment is slowing as a result of pending litigation."

FON's Own Survey
In light of all the FTTH hubbub, FON decided to conduct its own state-of-the-technology survey, working last month with sister publication TelecomWeb. Our series of six short questions drew a lot of interest from such diverse companies as ADC, Cisco Systems, OFS, Corning, Sprint and Verizon along with such smaller entities as Teem Photonics, South Washington County Schools, General Machine Products and the Institute of Microelectronics.

In a nutshell, most of FON's survey respondents:

Believe FTTH will be deployed between 2010 and 2015,
Believe there is a viable market for such a service,
Believe existing telcos are the most logical providers of FTTH-type services, and
Believe hybrid fiber/coax will be the medium of choice.
Of the aggregate number of survey respondents during the four-week polling period, 29 percent were engineers, 21 percent were involved in top company positions and 17 percent were different flavors of managers. The rest of our respondents included analysts, consultants, bureaucrats and other fiber-related occupations.

"Without a doubt, 2004 will be the year for FTTH," says FTTH Council President DiMauro. "Electronics prices have continued to drop, there is significant RFP activity in the industry, and the FCC has now removed the single largest disincentive to FTTH investment. It is no wonder that we are experiencing an unprecedented amount of interest in our upcoming conference!"

>>Mike DiMauro, [e-mail]; Matt Davis, [e-mail]; Harris Miller, 703/284-5305<<