Darryl Ponder, Optical Solutions
Online Exclusive, Jun 15 2001
Designed to resemble a house, the Optical Solutions booth at Supercomm featured phone and Internet service, HDTV and various video applications--all served by the company’s passive optical networking (PON) fiber-to-the-home (FTTH) equipment, which can deliver anywhere from 8.5 Mb/s to 40 Mb/s to each home, depending on how much bandwidth neighboring homes are using. Senior Writer Ed Gubbins spoke with Optical Solutions CEO Darryl Ponder in the midst of it all.
SBC is field testing PON for FTTH applications in Houston. Do you expect RBOCs to move aggressively in the PON space or is this an anomaly?
I think the RBOCs ultimately will be very aggressive, but I think it’s going to be two or three years before the RBOCs really start deploying PON in a big way, and I’ll tell you why. Some people say the RBOCs are stupid. I think the RBOCs are extremely smart. It is in their best interest almost to do nothing because they have that twisted pair in the ground. The competition can file their reports and worry about the regulatory stuff. If you’re an RBOC, the best thing is to do nothing. But that can’t happen for very much longer. [Competitors] are going up the food chain.
What does it cost to deploy FTTH, and what do service providers need to charge customers in order to make money on it?
What you’ll charge the customer is less than what they’re paying today for multiple services. FTTH is a converged bundle. It works great. You take voice, cable TV and data, tie them together and offer a 15% discount and the consumer sees less in the monthly bill than what they were paying. The quality’s better, the data rate’s a heck of a lot faster they’ve got more services and they’re paying less.
I’m not making the claim that FTTH’s going to immediately replace all the twisted pairs and coax that’s already been run. But there are hundreds of thousands of homes on an annual basis that are put in with new service and hundreds of thousands of businesses, so the network service provider has a choice to make: Do I put in a twister pair, copper coax or fiber optics? From a cost standpoint, it’s really on a parity with hybrid/fiber coax. An overbuilder may pay $1000 per home passed for their infrastructure. And they pay $1000 per subscriber served for the rest of the electronics to deliver voice, video and data. FTTH is in that range as well. We’re actually 2% less than hybrid/fiber coax in a like-for-like system in a greenfield application, and no one’s been able to say that before.
What are the barriers to PON’s widespread deployment?
I don’t see any barriers. AT&T’s putting in systems. Cox, Comcast, BellSouth and Qwest are putting in systems every day. The barrier was the old song: “Fiber is absolutely the solution, but it’s not today, it’s tomorrow. It’s too expensive today.” But with this system, fiber is less expensive to put in than copper.
But the copper is already there.
I didn’t say, “for those who are already served.” The three areas that [FTTH] plays well in are greenfield applications, overbuilders and network refurbishment. Our number for the addressable market is about $450 million in 2002. That’s primarily the residential stuff. You won’t see that much deployed in 2002, but the market is there to support it that much, and you’ve probably got another $400 million on top of that from a business standpoint.
There are a couple of macro drivers that are pushing it. [Microsoft] wants to sell Windows XP. The only way [it’s] going to sell Windows XP is to show applications on Windows XP that you need to buy. You can’t do that with DSL and cable modem. So the computer industry--Dell, Compaq, Microsoft, Intel--they need broadband so they can sell more computers and more software. Broadband is video. And you can’t do video with 256 kb/s DSL. I can’t do 20 Mb/s HDTV over 256 kb/s DSL.
The argument has been made that if you give consumers the kind of big bandwidth that FTTH delivers, at this point, they won’t know what to do with it. Are consumers really hungry for this level of capacity yet?
If you’ve got a guy who’s been eating bread and water his entire life and you ask him if he’s hungry for a steak, how would he know? He’s never tasted a steak. Do you have any broadband access at all?
I have DSL.
If I gave you a 56 kb/s dial-up modem and gave it to you for free, would you take me up on it?
Maybe if you threw in a couple steaks. I like steak.
There’s more demand out there for DSL than the telephone companies can supply. There’s more demand for cable Internet service than companies can supply. When you give them access to fiber, DSL’s a bologna sandwich compared to what we’ve got going on here.
I also like bologna. |
