If you've been around the tech world for any length of time, you'll recall earnest discussions of "The Last Mile" dominating conferences for the last ten years or so. Getting large amounts of data from one metropolitan area to another wasn't considered to be a huge issue; getting that same data from a centralized metropolitan location to the home was a big deal.
And still is. For all the talk about broadband in the home and how end users are increasingly paying for cable modems or DSL lines, the fact remains that the last mile is still a bottleneck for high-speed communications. There are some very practical limitations on cable and DSL performance that make them less-than-ideal for robust broadband, and the wireless industry still isn't in position to make a play for last-mile broadband; the technology just isn't there yet.
Fiber Sees the Light of Day
But one technology is: fiber. After years of false starts and empty promises, fiber to the home (FTTH) is now a reality in some large metropolitan areas, as Verizon made a big splash in the tech world this fall by investing $800 million in FTTH and rolling out service in some areas.
Verizon, however, isn't the only telecom vendor to invest in FTTH: According to the Fiber-to-the-Home (FTTH) Council and the Telecommunications Industry Association (TIA), FTTH is available in 217 communities in 37 states, according to an October 2004 tally, with 800,000 homes served. That number is 70 percent larger than a May 2004 survey. Now, we're not necessarily talking huge metro areas here — some of the new communities with FTTH service include Columbus, Kansas; and Tryon, N.C. — but there's clearly a trend toward FTTH as a viable last-mile solution.
On the surface, FTTH as a last-mile technology may seem simple: Send a crew out to lay down a cable, throw some jacks up, and you've got instant broadband. But that's not the way the real world works: It takes some infrastructure to support FTTH on the back end, and it takes some compelling business reasons for a telco to justify FTTH. Add in some regulatory issues, and you can see why a viable last-mile solution has been so hard for the telco and cable industries to nail down over the last 10 years.
It's All About IP
In one important sense, FTTH is merely another step in the transformation of all communications into IP technology. If you've been reading this series of articles, you'll see that almost every new important technology these days — either on the server back end or the end-user front end — has to do with transitioning technology into IP technology. VoIP, the Internet, IM ... all of these technologies are centered around IP.
FTTH is the logical transition into larger-scale IP integration. Everything carried on that fiber line must be IP- based, unlike the cable and telephone lines that mix proprietary technologies with digital technologies on a copper wire. For a telco or cable firm, that total commitment to IP is quite staggering. Billing systems must be upgraded to handle IP technologies, while phone switches must be upgraded to handle the transition from POTS to IP. Crews must be educated in the ins and out of FTTH, and rollouts must be planned on a per-area basis. For a real-estate developer working on a new development, FTTH is pretty much a no-brainer, but transitioning older neighborhoods will be the real challenge.
Can Fiber Turn Triple-Play?
And it also means yet another new manner of selling services for telcos. Verizon must see increased revenues to justify the $800 million in FTTH investments. (In industry parlance, there must be an acceptable "take rate" among households.) In the FTTH world, that means embracing the "triple play" business plan: offering voice, data and video services. Data is relative easy. Voice is less so: Moving voice from POTS to IP presents some quality-of-service challenges, as most consumers won't put up with a lesser quality of service than what they're experienced in the past.
Video is definitely not easy. Quality of service is even more paramount in the video world, as consumers expect near-perfect quality. You don't want to see your screen pixilation at a crucial point in the plot development of your favorite television show (something that still happens with digital cable, by the way). Using fiber ensures that the pipeline for all these services is adequate, but it still takes some back-end expertise to keep the data flowing smoothly.
(There are some in the FTTH world arguing that the "triple play" is an unnecessary distraction, pointing out that vendors in other countries, such as Japan, have achieved success by positioning FTTH purely as an upgrade to high-speed Internet access. But let's be real: Americans like to think big, and big investments require the sizzle of "triple play" services to be viable.)
The ultimate success of fiber to the home is not yet assured. The broadband wireless people think they have a better solution in the wings to bridge that last mile, and they might be right in the long run. But for now, FTTH is the closest thing to a silver bullet we've seen in last-mile technology, and with some significant industry support, it could turn the telecommunications industry on its ear in the next few years.
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