The fiber-optic revolution is at the door. Two decades of cable-running have laid the bones of a national high-speed data network. Now, an explosive drive is under way to bring the long-awaited, last-mile fiber connections to millions of businesses and homes.

Capacity Bottlenecks in the national network of optical-fiber are falling away. (Photo courtesy of Corning Optical Fiber)

Analysts with network consulting engineers Telcordia Technologies Inc., Piscataway, N.J., expect the build-out to connect at least 33 million homes and cost $45 billion to $50 billion over the next 10 to 15 years. Already the campaign has spawned its own lingo. It is variously termed Fiber To The Premises (FTTP), Fiber To The Community (FTTC) and Fiber To The Home (FTTH). The prize is the "Triple Crown"–the consolidation of voice, high-speed data and video delivery into the business of a single provider.

Established telephone companies, the "incumbents," as they are called, are in the lead, but they are not alone. Proponents of alternate broadband delivery technologies, such as cable, city-wide wireless networks and Broadband Over Power Lines (BPL), also are battling for market share.

In a significant number of locales, the municipal governments and regional authorities such as water and sewer boards and electric and gas utilities are designing networks and running their own fiber from node to door. They want to see that their towns don’t get left behind, and they also want to capture revenue by wholeselling access to their conduit and strategically placed fiber.

The political combatants say they are building infrastructure for economic development, just as they build roads and bridges and water systems to entice business their way. They also say they are doing it because their constituents are impatient for high-speed connections.

"We’re fed up with waiting," says Roger Black, deputy director and COO of UTOPIA, the Utah Telecommunications Open Infrastructure Agency, a 14-municipality consortium that’s now in the first phase of construction of a $300-million FTTP rollout.

Utopia Consortium of Utah cities is building its own network. (Photos courtesy of Utopia Consortium)

Turning the national backbone into an FTTP system involves two steps. Fiber is extended from the local communications centers down every street, past every home. Then subscribers are solicited and linked up, one by one. Verizon Communications, the largest incumbent with operations in 29 states, launched its drive in earnest last summer in targeted markets, beginning with Keller, Texas, near Dallas and Fort Worth. In 2004 it "passed" 1 million potential subscribers. In 2005 it plans to pass two million more scattered over 12 states. The "take rate," or how fast subscriptions come in, will govern the pace of investment. One analyst, KMI Research, forecasts that the rate will accelerate and the FTTP market for equipment, cable and apparatus will reach $3.2 billion in 2009.

Verizon plans to hire 3,000 to 5,000 new employees for the build-out by the end of 2005, but it declines to say how much it is spending.

Telecom analysts say that an agreement, about a year ago, among the biggest incumbents–Verizon, Bell South and SBC Communications–set the standards for last-mile connections and triggered the expansion.

The selection of technology winners is driving costs down and leading to standardized installation practices. Verizon runs fiber to a splitter box on the outside wall of homes and buildings and bridges to circuits of coaxial cable, copper wire and ethernet inside. Other incumbents are not going quite as far. They run fiber to neighborhood nodes and conventional lines or wireless from there. That still brings fiber close and significantly increases data speed.

Copper Versus Fiber

For the telecoms, there are several drivers, including lower maintenance costs, scalability and margin. Maintaining old copper is labor intensive. Upgrades are difficult, and analysts say the old copper systems are drowning companies in expense. And under the rules of deregulation, access to copper must be shared with the competition. But, by FCC ruling last year, access to fiber does not have to be shared. "We build it; we own it," says Telcordia analyst Ernie Gallo. "If we decide to lease it we can but we don’t have to. That’s why everybody is building."

Gallo says fiber-optic systems are also robust, almost infinitely upgradable and considerably cheaper to maintain. For the telecoms, making the transition to fiber is "a no-brainer," he says.

"The fiber is much more expensive to put in, but it lasts much longer, and there is no corrosion, no problem with moisture or RF (radio frequency) interference." Gallo says. Still, he adds, there are questions to resolve. "They’ve got to place all this cable. How do we build this out from the central office? How do I get it to the house? Directional drilling? Sewer or gas lines? Construction is going to be key to this."

The other powerful driver is demand. Communities all over the country have made it clear, through home-grown efforts to achieve broadband connectivity, that they want it and they want it now.

"Up until this year, when Verizon started its fiber-to-the-home roll-out, most of the development has been in rural areas or brand new developments by small, local carriers, public utilities and municipalities," says Robert Whitman, market development manager for global broadband with Corning Optical Fiber, Corning, N.Y. "For those folks the driver has been more economic development and serving the community," he says.

Wireless networks are one alternative technology attracting attention. Currently, more than 100 cities are planning or deploying them. Distributing data over power lines is another alternative that has many municipally owned power companies and investor-owned utilities trying to work out the case for BPL. Click here to view chart

Other local governments are simply building out the last mile the hard way. They are stringing fiber from trunk-line nodes to businesses and homes any way they can. Often they piggy-back on their existing infrastructure–rural telephone and power distribution networks, highway rights-of-way and utility mains.

Contracts are flying, but cell phone providers, cable companies and telecoms whine that municipalities shouldn’t spend tax revenue to compete. Lawyers and lobbyists are pushing legislative proposals to severely restrain public construction and operation of fiber, BPL or wireless infrastructure. Blocking legislation is under consideration in Colorado, Florida, Illinois, Indiana, Iowa, Nebraska, Ohio, Oregon, Tennessee, Texas and Virginia, according to Washington, D.C.-based American Public Power Association. Lawsuits are also being used in attempts to derail funding.

Despite legal challenges, the momentum is growing. Engineers and contractors are benefitting and getting creative at threading it all together.

Hard Going in Big Easy

In New Orleans, officials are fitting an FTTP project within an ongoing, $600-million overhaul of the city’s sewer collection system. Program manager Montgomery Watson Harza, Broomfield, Colo., is ready to start local Boh Bros Construction Co. LLC on the first phase of a $5.5-million, 26,500-ft sewer main replacement project in the central business district. The job includes laying conduit for fiber-optic cable to businesses at the same time.

The city sewerage and water board will lease the conduit, which will offer broadband service providers dedicated runs to about 80 key buildings. It hopes to gain not only ultra-high-speed connectivity for the heart of its business district, but also a revenue stream where only sewage ran before.

The last hitch in project negotiations has not been between the contractor and client, but between the city council and the sewerage and water board over dividing anticipated revenue.

The installation technique is patented by Renaissance Integrated Solutions, Armonk, N.Y. "It’s a take-off on pipe-bursting technology, which we are using all over the country for rehabbing sanitary sewers," says Marty Dorward, head of MWH’s project in New Orleans. This first full-scale implementation will use a pipe-bursting head to shatter the 50 to 100-year-old, 8-in. vitrified clay mains and pull in a 10-in. replacement line ringed with eight 11Ú4-in. high-density polyethelyne conduits on the outside. Four conduits are reserved for a municipal loop and the rest are for laterals. A junction box beside each sewer manhole gives access to the conduit, keeping the parallel systems segregated. Boxes at the property lines by each lateral are for connections to the buildings.

Dorward says MWH expects to get notice to proceed in April and finish in October. Bids for the second, 18,000-ft phase are to be let in May, but work on the rest of the city’s 7-million-ft system will go on much longer. "They’re studying the entire system," Dorward says. "I think it’s boiling down to rehabbing about 30%. If this works in the central business district there is potential for expanding it."
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Piggy-Back Renaissance pipe-bursting system marries conduit to replacement lines. (Photos courtesy of Renaissance Integrated Solutions)

Earlier approaches that used robots to run and attach fiber inside sewer lines have failed to catch on. "Part of the problem has been to get the sewer utilities to buy in," says Dorward. The co-location of the services, "makes utility operators nervous," he says. Also, in pilots, pipe conditions were often worse than anticipated and difficulties with user-side connections left most trials stuck in the demonstration phase.

If the New Orleans installation succeeds a similar project in San Francisco may follow. Several members of San Francisco’s Board of Supervisors are pushing to include broadband cable in a planned, city-wide water and sewer upgrade. But John Brittona, spokesman for local incumbent SBC, argues that fiber is not needed because there is "already unused fiber capacity." Nevertheless, the city’s budget for the fiscal year beginning July 1 includes $300,000 for a feasibility study. The Public Utilities Commission is expected on March 8 to call for proposals. The study should be finished by year’s end.

One local government advantage over privately funded FTTH is that governments can finance with community development grants and long-term financing and not worry about satisfying investors by showing profits in three to five years. Many of the BPL initiatives being piloted by rural and municipal power utilities are taking advantage of that. Like sewer and water utilities, they are trying to leverage existing infrastructure to create a new revenue stream.

Manassas, Va., is often cited as a BPL success story. It has the country’s only commercial BPL deployment. John Hewa, utilities director for the Manassas Electric Dept., says the city, with a population of 36,000 people and 15,000 electric customers, issued a long-term franchise for BPL Internet services to Communication Technologies Inc., Chantilly, Va. The city installed and maintains the BPL equipment and backhaul with its own forces. COMTek supplies the equipment and receives part of the revenue.

Currently in the middle of a year-long deployment, the Manassas system has 300 customers. "We hope at some point for 10 to 15% market share," or about 1,500 customers, Hewa says. "Deployment will be complete in a couple of months."

COMTek is bearing about 75% of the cost, says Hewa. The city handles marketing, billing, customer support, service and content. He calls the investment worthwhile. One side advantage of BPL is that it enables highly sophisticated system control. "It will be the back plane for any user services," Hewa says.

Others, however, aren’t sold. Tom Asp, a partner with CPA and technology consultant Virchow, Krause & Co., Chicago, dismisses the example of Manassas, pointing out "they have less than 500 customers after two years," and a backlog of more than 2,000 customers. He is also unimpressed with BPL technology. "It hasn’t changed much in the past 30 years," he says. "The physics are the same, but with different frequency. The issues are the same as 20 years ago," costly hardware and equipment to maintain signal strength. "You’re better off looking at a wireless system because BPL is still in pilot," he says. "There are a handful of vendors, no standards and real questions about interference."

Corning Optical’s Whitman also doesn’t see BPL as a major contender. "The capability is, at best, on par with DSL and cable modems," he says. "Because it’s a little behind, the technology is not going to catch up. It kind of missed its calling. If you could pay for it by doing meter readings and system controls it might still develop, but it won’t become a serious challenge in the broadband service provider market."

It is the fiber networks that will dominate and most of what people will do with all the data transmission capacity has yet to be imagined, he predicts. Officials in Fontana, Calif., for instance, have one novel idea. The $100-million FTTC network they hope to start building this fall will not be leased to any one vendor. Rather, it will work as an "open-access system," delivering the signals of competing vendors so Fontana residents can choose between them.