One of the significant challenges facing network operators today is the high capital cost of deploying next generation broadband network to individual homes or schools. Fiber to the home only makes economic sense for a relatively small percentage of homes or schools. One solution is a novel new approach under development in several jurisdictions around the world is to bundle the cost of next generation broadband Internet with the deployment of solar panels on the owners roof or through the sale of renewable energy to the homeowner. Rather than charging customers directly for the costs of deployment of the high speed broadband network theses costs instead are amortized over several years as a small discount on the customer’s Feed in Tariff (FIT) or renewable energy bill. There are many companies such as Solar City that will fund the entire capital cost of deploying solar panels on the roofs of homes or schools, who in turn make their money from the long term sale of the power from the panels to the electrical grid. In addition there are no Energy Service Companies (ESCOs) and Green Bond Funds that will underwrite the cost of larger installations.
Thursday, May 22, 2008
All the presentations of the OECD workshop on FTTH are now available: http://www.oecd.org/document/56/0,3343,en_2649_34225_40460600_1_1_1_1,00.html
Of particular note is the presentation by Herman Wagter of CityNet of Amsterdam which convincingly demonstrates how separating ownership of fiber from companies who deliver services allows for true facilities based competition where competitors can use different layer 0 technologies for delivering services http://www.oecd.org/dataoecd/36/28/40460647.pdf
Benoit Felten also maintains an excellent blog on the various presentations that were given at the OECD workshop: http://www.fiberevolution.com
Hendrik Rood of Stratix Consulting has just released a very interesting report on FTTH developments in The Netherlands who have one of the highest penetration of FTTH in the world. At the end of the 1st quarter in 2008 the Netherlands had 176 thousand FTTH connections.
Direct link to the Stratix paper:
Of particular note the paper goes into considerable detail explaining the arrival of Institutional investors (Pension funds etc.) with a real estate approach in funding open network infrastructure and the recognition by the incumbent operator KPN that this model may suit their business needs as well.
"Market entry by infrastructure facility providers with a Real Estate approach like independent Tower companies for mobile service providers and neutral data centre and telehouse facility owners, the development of FTTH in the Netherlands have shown the arrival of a new kind of market entrant: Real Estate financers investing in local loop networks.
The entry of real estate finance may act as a harbinger of a novel market structure with non-incumbents owning those infrastructure facilities with real estate characteristics. Their market arrival could have lasting consequences for regulatory policy of communications infrastructure.
As the Dutch market is now genuinely warming up to Fiber-to-the-Home, while the new open business models with real estate oriented investors are established, Stratix Consulting expects a new development stage with a run-for-the-market, where the market consists of local FTTH projects. Such a stage has happened before in the 1881-1900 period with telephony roll out and the 1960-1980 period of CATV network deployment.
Local loop economics indicates only one network per area to be feasible, in particular under the open network business models. With financiers stepping in and supply constraints visible in construction, we expect mounting citizenry pressure on municipalities and provinces to lure the projects to their area first, aiding constructors by facilitating community drives.
New ITIF Report: “Explaining International Broadband Leadership”
The executive summary does not do this report justice. There are dozens of hidden gems within the report. I recommend reading the report in its entirety. I was very pleased to see from the report's regression analysis that price has the strongest correlation with broadband penetration. This is something that I have been claiming, based on a paper written for Scientific American way back in 1993!! This paper demonstrated, for a variety of telecommunication technologies – telephone, cable, PC – price was the single biggest determining factor for adoption rates. Most people are surprised that the telephone took over 75 years to reach 50% penetration. But if you measure the price of telephony in terms of per average per capita income, you discover historically it has been a very expensive technology. And what drives price ?----competition!
"In a new report examining in depth broadband policies in 9 nations the Information Technology and Innovation Foundation concludes that while we shouldn’t look to other nations for silver bullets or assume that practices in one nation will automatically work in another, U.S. policymakers can and should look to broadband best practices in other nations. Learning the right lessons and emulating the right policies here will enable the United States to improve our broadband performance faster than in the absence of proactive policies. The report analyzes the extent to which policy and non-policy factors drive broadband performance, and how broadband policies related to national leadership, incentives, competition, rural access, and consumer demand affect national broadband performance. Based on these findings the report makes a number of recommendations to boost U.S. broadband performance.
Also included in the report are the updated 2008 ITIF Broadband Rankings, a composite measure of broadband penetration, speed and price among OECD countries. When these factors are considered together, the United States ranks 15th out of 30 OECD nations in broadband performance.
The executive summary can be accessed at http://www.itif.org/files/2008BBExecutiveSummary.pdf.
The full report can be accessed at http://www.itif.org/files/ExplainingBBLeadership.pdf."
Broadband Enables Wyoming To Teach English to South Korea
I read a tremendous article found in Jim Baller's [http://www.casperstartribune.com/articles/2008/05/09/news/breaking/doc4824787da7b01237580282.txt] regular email newsletter earlier this week that highlights a number of interesting and important points.
It details an initiative where 150 teachers are going to be finding employment in Wyoming teaching South Koreans how to speak English.
Firstly, it's a tremendous example of the use of broadband as the teaching is conducted via videoconferencing.
Secondly, they specifically mention that what makes this possible is the fact that Powell, Wyoming, where the teachers will be located, is deploying a full fiber network with the capacity to enable high quality videoconferencing.
Thirdly, it's another example of how broadband enables the creation of new jobs that allow people to work from home.
Fourthly, it shows how there are businesses to be made catering to educational pursuits and not just entertainment related endeavors.
Fifthly, it shows how far ahead South Korea is in their use of broadband to enable better education.
Lastly, and unfortunately not necessarily a positive, it highlights the fact that South Koreans are aggressively pursuing applications that can not only be a good business but also benefit society as the money behind this comes not from the US but a South Korean venture capitalist.
Whew, that's a lot of points hit in an article that's not much longer than this post, but there's simply no denying how many relevant points it touches upon.
But what I think I like about it most is that even though it's being funded and driven by South Koreans, it's still creating new jobs here in the US. It's jobs like these that will help us reverse the trend of outsourcing so that other countries can come to rely on the expertise, know how, and hard work of the American people.
And it's important to never forget that this is all possible only through the power of broadband.