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Deploying Residential Fiber: When Does it Make Sense?

Deploying Residential Fiber: When Does it Make Sense?

Google shook up the telecommunications world in 2011 when it announced that it would be deploying fiber to the home in the Kansas City market. Since then, it has announced that it will expand that fiber footprint to include cities. In part, this move was originally done to influence the regulatory process by demonstrating that it is relatively easy to deploy fiber, especially in an urban setting; but it was also an experiment to determine whether an Internet company could actually make money building residential fiber networks.

The question is far from academic: Verizon, perhaps the most enthusiastic builder of residential fiber in the United States market, has had problems attracting sufficient interest among subscribers to justify new fiber build-outs, and has actually divested itself of some of its fiber holdings. Now, the FCC is beginning to investigate whether it can provide regulatory incentives to encourage more fiber deployment. Yet, the essential question of whether it can make business sense to do so is largely unanswered.

Any investment decision involves complex analysis; and network operator business analysts are experts at factoring in literally hundreds of variables to optimize the outcome. However, in the case of residential fiber, there are several overreaching considerations that deserve more than a passing investigation, especially since the regulators do not appear to be paying much attention to them.

This SPIE looks at the essential considerations associated with the decision to invest in fiber plant, and proposes an approach to making and understanding that decision. The conclusions of the analysis are illuminating and demonstrate that fiber, for all its virtues, is actually a niche solution that may not be optimum in many locations. This analysis will be of interest to operators and to those who make public policy.

  • Introduction1
  • Modeling the Business Decision
  • Risk Analysis
  • Operator Implications
  • Regulatory Factors
  • The Last Word

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