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SterlingJ85

join:2000-11-19
Voorhees, NJ

Move to PON already...

They already have a dense fiber network, one that comes close to customers already. Swap out the HFC components for PON, and their costs to deliver fast speeds and better quality service plummets. Why stick with cable, when can easily switch to PON. I would bet you in many areas the ROI would be made within a couple of years, when you factor in maintenance costs on the HFC network.
--
-Sterling

tshirt
Premium,MVM
join:2004-07-11
Snohomish, WA
kudos:4

Re: Move to PON already...

Except the most expensive part of FTTH is home equipment and INSTALLATION.
Someday Cable MAY go FTTH, but current HFC plants can fill the needs of MOST of their potental customers at a realistic price for quite a few more years.

SterlingJ85

join:2000-11-19
Voorhees, NJ

Re: Move to PON already...

Thanks to FiOS, those costs are wayyyy down from just a few years ago. If you consider the construction, and maintenance costs, I think it would be far more economical considering the benefit Comcast would gain as a competitor. I know in our area, we're already strapped for spectrum in the HFC plant. This is before trying to add even more DOCSIS/QAM channels to compete with 300 Mbps tiers and more HD channels!
--
-Sterling

tshirt
Premium,MVM
join:2004-07-11
Snohomish, WA
kudos:4
Reviews:
·Comcast

Re: Move to PON already...

Sure, everyone learned a lot from FIOS.
How to cut costs, but also how expensive it REALLY is, and how long the payback will be with a take rate in the 30-40% range.
The most telling lesson is how Verizon backed away from a nation wide rollout, transitioned to a few concentrated rollouts, and ahs slowed those to the absolute minimum required by their hard won franchise terms.
Their only path to payback is to force people onto fiber and kill the copper so that they can raise rates.
right now they get little benefit from the lower maintaince costs from the overbuilding of fiber, the only relief has been by ignore/negelecting their copper OBLIGATIONS.
at $1000 per home passed, and around $1000 per install, it's very hard to tempt any company to repeat Verizons experiment in FTTH
FTTA (fiber to the antenna) appears to be the telco's attempt to meet cables very successful D3 product.

SterlingJ85

join:2000-11-19
Voorhees, NJ

Re: Move to PON already...

To be fair, FiOS stopping further build out to get a "take rate" of 30-40% was not because of FiOS being unprofitable. It was because the CEO was afraid of shareholders, with no long-term vision. Verizon could quite easily fund FiOS expansion through their entire territory, as could AT&T. They choose not to, because they can get away cheaper, but with a poorer quality product. Long term, it's a stupid move. There are quite a few municipal ran FTTH builds, Paxio, Google, etc. that are all quite happy with their technology, and revenue and aren't feeling the need to file for bankruptcy protection!
--
-Sterling

espaeth
Digital Plumber
Premium,MVM
join:2001-04-21
Minneapolis, MN
kudos:2
Reviews:
·Vitelity VOIP

1 recommendation

Re: Move to PON already...

said by SterlingJ85:

There are quite a few municipal ran FTTH builds, Paxio, Google, etc. that are all quite happy with their technology, and revenue and aren't feeling the need to file for bankruptcy protection!

Google is weeks into having a product offering, Paxio has a deployment area that is smaller than a pinhole on a US map, and only the muni deployments with high take rates (ie, LUS Fiber) are above water.

With Orem's truth in taxation hearing next week, residents and city leaders are mulling over the findings from a legislative audit that shows that fiber-optic network UTOPIA is in its ninth year of spiraling debt and it doesn't seem to be improving.

It's not the greatest news the city could have gotten days before a hearing on raising property taxes by 50 percent.

Adding to residents' ire is the fact that of Orem's $3.5 million proposed property tax increase, the first since 1978, $2.8 million will be used to pay Orem's share of those UTOPIA debts.
Source: »www.heraldextra.com/news/local/c···c1c.html

There are definitely cases where FTTH deployments can work, but those are few and far between. The take rates need to be 60%+ for most FTTH deployments to be financially viable.

tshirt
Premium,MVM
join:2004-07-11
Snohomish, WA
kudos:4
Reviews:
·Comcast
The CEO would have no reason to be afraid if it was truely as profitable as you seem to believe.
Verizon can't even afford finish fios'ing their remaining territory, let alone what they abandoned.

Googlefiber can hardly be considered a muni, it is a highly subsidized (by Google much larger, highly profitable other businesses) experiment, that is far from profitable (their "income" so far is a few thousand $10 deposits, not legaly their money) with many millons invested.

PAXIO is also a private investment compay that has selectively developed fiber systems where it deems profitable. (redlining, wise investment, maybe both)

None of the three will go bankrupt, because none of them will overextend themselves to the degree Verizon started too, but then reliezed could not complete.
Once burned V wisely retreated to a more affordable position.

SterlingJ85

join:2000-11-19
Voorhees, NJ

1 edit

Re: Move to PON already...

..Verizon spokesman Bob Varettoni counters that the fiber investment turned cash flow-positive in 2008. The project boosted overall company margins in the first quarter of 2010, he adds. "Our FiOS initiative has higher [cash-flow] margins than our wireline segment as a whole. Therefore, FiOS is one of the drivers of improving wireline segment margins," says Varettoni. While he declines to respond directly to outside skeptics, he says that FiOS has a positive present value and generates returns on invested capital. In its January earnings release, Verizon said FiOS contributed 53 percent of consumer wireline revenue in the fourth quarter.

..In first-quarter 2012 in the Wireline segment, continued strong demand for FiOS services led to revenue growth generated by U.S. consumer wireline customers and continued gains in FiOS sales penetration. Globally, continued strong sales of strategic services helped mitigate lower revenues resulting from Verizon’s targeted efforts to eliminate products that do not meet the company’s profitability requirements, and continued secular pressures in wholesale.

..Consumer revenues grew 1.7 percent compared with first-quarter 2011. Consumer ARPU for wireline services was $97.88 in first-quarter 2012, up 8.1 percent compared with first-quarter 2011. ARPU for FiOS customers continued to total more than $148 in first-quarter 2012. FiOS services to consumer retail customers represented 63 percent of consumer wireline revenues in first-quarter 2012.

..FiOS penetration (subscribers as a percentage of potential subscribers) continued to increase. FiOS Internet penetration was 36.4 percent at the end of first-quarter 2012, compared with 33.1 percent at the end of first-quarter 2011. In the same periods, FiOS Video penetration was 32.3 percent, compared with 29.1 percent.

Sounds to me like it's just been the lack of will to spend their capital, because of investor backlash. With the amount of revenues Verizon is sitting on, it seems like a great time to start to replace more of their ancient wireline networks, and solidify their brand in all their markets as an unparalleled technology leader.
--
-Sterling

tshirt
Premium,MVM
join:2004-07-11
Snohomish, WA
kudos:4
Reviews:
·Comcast

Re: Move to PON already...

higher cash flow is great, but you'd be hard pressed to find ANY location in the rest of their wireline plant where the just invested (and now have to amortise over MANY years) an additional $3-5000 per home served ((2008 numbers) That is a HUGE amount of debt to take on.
Notice they didn't keep large portions of the wireline along with around half of the fios installed at that point (dumping the wireline was MOST important, and they could not afford to complete all the Fios areas started)
It would be a great time, But the will to invest in a 20 year plant when a/any player (including AT&T) can come in with a wireless play and take half the potential customers at a lower price point within a year or two.
who/what is going to make the other 18 years of payments?
openbox9
Premium
join:2004-01-26
Germany
kudos:2

1 recommendation

said by SterlingJ85:

To be fair, FiOS stopping further build out to get a "take rate" of 30-40% was not because of FiOS being unprofitable. It was because the CEO was afraid of shareholders, with no long-term vision.

No, it was to focus on the LTE build.
elefante72

join:2010-12-03
East Amherst, NY
The reason is that coax is an excellent and cheap last mile delivery mechanism which is already in place. As metal prices go up there will be a swap. They could always go coax->wireless if they needed to. fibre->RF transceivers are way more expensive (PON family or intermediate)..

With that said fibre is superior, by far. When clearcurve comes down in price you might see the switch.

I would surmise under new build conditions it may make sense to build FTTH, but that would mean 2 infrastructures to support and that means higher support costs for personnel.

It they need more bandwidth, they just split the nodes.

This is like uverse, except coax is far superior to 2wire.

Anon3

@vzbi.com

Re: Move to PON already...

For plants that are 750 or 870, it does not make financial sense to upgrade to 1Ghz or beyond. They would be better off just going FTTH, at least in most medium to large cities.

anon4234

@mich.net
It's not exactly that simple just yet. Even if they wanted to replace their coax for fiber, they would still need coax for all of the STBs and possibly EMTAs. So they would basically need to duplicate their entire network with fiber which would cost a fortune, and they would still need to support both networks.

PGHammer

join:2003-06-09
Accokeek, MD

Re: Move to PON already...

STB/EMTA-deployment could be done the same way VZ does FTTH - literally. (The interior of a FIOS home is a microscale cable plant - the NID is the headend, and each device is a node. Other than using MoCA to communicate, VZ's equipment in the home is no different from that of any cable company - including that of Comcast; in fact, they use the same major supplier - Motorola/Google.) However, they would face the same issue that VZ *still* faces -some folks just won't leave copper (or cable) for fiber - for any reason.