Fibre To The Home (FTTH)The Holy Grail of Broadband Comes to Canada
Matt Wenger is the Director of Business and Strategic Development for PacketFront a small company making big waves in Europe. Despite its small size, it has been successfully winning business away from industry giants like Nortel and Cisco on the basis of supporting new business models for broadband deployment.
Matt was previously the President of the Columbia Mountain Open Network (CMON) in BC. CMON’s premise of enabling multiple service providers to compete to sell services over one shared infrastructure (Open Access) created a number of significant technical and business challenges. In researching technologies that could help surmount these obstacles, Matt came across PacketFront, a Swedish company that specialized in solutions designed specifically for Open Access networks. After a number of trips to Open Networks in Sweden, Matt was convinced and PacketFront was selected as CMON’s service management platform. Over time he grew so impressed with the philosophy, approach and culture of his technology partner that he joined the company to head up their business development activities in North America.
"Technology aside" says Matt, "the challenge facing North America today is that the telecom market is structured to minimize innovation in services and maximize control in a couple of big companies. The result – the Canadian people are deprived of choice and our communities are unable to maximize the economic development potential that a truly advanced telecommunications network can offer. Nowhere is this impact more apparent than in our rural communities.
The irony is that many people would love to move to smaller communities for the quality of life, but without access to significant and affordable bandwidth open to health providers, educators, and small businesses, the comparable quality of life in rural Canada will actually continue to decrease. This, in turn, creates social and economic imperitives for people to continue to move to the larger centres. Thus the downward spiral of social problems like population congestion, automobile traffic, urban sprawl, green house gas production, destruction of arable land, etc etc. is kept in motion."
"This doesn't have to happen." says Matt.
"Communities in Europe have been experimenting with Open Access technologies and business models since 1995 and we can learn a lot from both their successes and failures. I’ve visited very rural communities, as small as 250 homes, where they have successfully built an open access FTTH network. In fact, I think a case can be made that small communities are ideal candidates for Fibre To The Home (FTTH) deployments because they have less infrastructure to disrupt in order to run the fibre, it is easier to mobilize local volunteerism to minimize costs, and, as the last in line for latest in commercial IP services, they have the most to gain."
If Matt Wenger's message is accurate it could be the best news that rural Canadians have heard in a very long time. However his message flies in the face of conventional wisdom and the objections that most authorities state whenever topic of FTTH is raised. We went on to ask Matt the tough questions and we've provided his answers here.
We'll let you be the judge of whether PacketFront has the solutions that rural Canadians have been searching for.
For more information on PacketFront see: www.packetfront.com
A Canada Connects Interview with:
Matt Wenger, Director of Business and Strategic Development, North America for PacketFront
 CC: The first and foremost objection we hear about FTTH is that it is just too expensive to even consider. Most network builders simply cross it off of their list before they even start their evaluation process.
MW: There are two points I need to make here.
The first is that the most important factor is to consider is value. When we compare a FTTH solution to a wireless solution we should first ask ourselves, "What is the revenue generating potential of this network?" With FTTH you are not only supplying a level of service that far exceeds the capacity of a wireless service but you are also building in the ability to deliver services such as telephone, cable TV, Internet connectivity and video on demand. This combination of services justifies a much higher monthly connection fee than simple wireless broadband which is unable to support mass deployed video to the home and will be unable to do so for some years to come.
The second is that you need to perform your cost calculations based on the cost of ownership over the next ten to twenty years. Wireless radios have a life expectancy of three to four years, after which they either don't function or are obsolete due to their performance level. Fibre strands on the other hand have a life expectancy of 30 plus years and consequently their depreciation rate is much much lower than wireless technologies.
You must also consider maintenance. Wireline will beat wireless on opex per user every time. So if your costs per user per year are similar, and your revenue potential is higher for one option, what’s the better financial decision?
CC: The next most common objection we hear is that there are no applications that require FTTH.
MW: I have just mentioned four applications that people already pay for in today’s market that FTTH can deliver: telephone, cable TV, broadband Internet, and video on demand. A fifth application that will emerge very quickly as the install base increases is two-way videoconferencing. Videoconferencing is at the heart of four of the most important emerging IP applications: Telehealth, Distance Education, Business Communctations, and Security.
Open Networks in Europe, designed specifically to maximize innovation in services, are seeing 10-20 different types of services. Aside from the big five above, some of the more popular of these include gaming, financial applications, and remote IT services. When we hear that there are no services for FTTH, what we are really hearing is that there are no services that ILECs are ready to make money off of yet.
CC: We hear that Telco's have plans for deploy DSL-2 in the next 12 months followed by FTTH within three to five years. Why wouldn't we just wait until the established suppliers get around to delivering the service to our door.
MW: (Laughs) And my ILEC told me in 1997 that my rural region was getting DSL that summer. Heard that every year until 2001 when we started our initiative to do it ourselves. Suddenly in 2002 we started to get services. If UPS owned the roads would you want them to be your sole supplier of
clothing, entertainment, and any other products or services? If UPS owned the roads in your small rural community, do you think there would be a business case for FedEx to overbuild them with a second set of roads?
The only way you can ensure your small rural town gets the competitive access that you will need to achieve your social and economic goals in the 21st century is to include telecommunications in your community planning process and take control. Your kids will thank you.
CC:: Your literature talks about your business model for FTTH networks, can you explain what this model is?
MW: It’s not just FTTH, we support Open Access across most last-mile technologies including xDSL and wireless, however, due to the demands of the market the bulk of our deployments to date have been FTTH. Our model says that there are three major types of business functions within a broadband network that, ideally, in a public deployment, you should keep separate. The first function is ownership of the network. These are the folks who raise the capital and set the goals, objectives and policies that dictate how the network will be operated. The second function is operations. These are the folks who will usually engineer the network and operate it on behalf of the owner. These folks are responsible for ensuring the network gets built, stays up, attracts service providers, and gets paid. The third function is service provision. These are the entrepreneurial folks who provide all the services I outlined earlier. Separation of ownership for each function type guarantees an open network where application providers will be allowed to compete freely and on an equal footing for the consumer's business. If this sounds remarkably like the road network, you’d be right. And look how successful a model for innovation in services that has been. It’s also a model most communities should be fairly comfortable with.
CC: Are there working examples of this model in operation today?
MW: Definitely. Our Open Access solutions have been deployed across Scandinavia, Europe, Asia and we’re now deploying our third pilot in North America. Our largest deployment is 25,000 homes and it’s still growing rapidly. In Canada our equipment is being used within the Columbia Mountain Open Network in British Columbia, specifically for the city of Sparwood’s FTTH project.
CC: If our readers think FTTH or Open Access in general might be right for their community how can they find out more.
MW: They can call our North American office at 603-888-5100 or email us at pfna@packetfront.com. They can also visit our website at http://www.packetfront.com .
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