Thursday, May 01, 2008

Fiber to the Boonies

Rural broadband has been something of an oxymoron ever since dial-up Internet service started to go the way of the buggy whip. Major metropolitan areas were the first to get an entire smorgasbord of connectivity options from DSL to Cable broadband to T1 to SONET fiber optic rings to FTTH to DS3 and Ethernet over Copper to GigE and even point to point Wireless. Out in the sticks it's been dial-up or satellite all along, although T1 line prices have finally become reasonable for business users. Fiber Optic services down country lanes? Not a chance. Everybody knows that it's uneconomical to provide fiber optic connections in rural areas. Or do they?

It seems that conventional wisdom has been turned on its head according to the director of an organization that's actually deploying fiber optic broadband in Vermont's Upper Valley. Dr. Timothy Nulty's ValleyFiber is doing what they said couldn't be done. They're bringing fiber to rural families and businesses. I guess we better add a new acronym to the technology lexicon: FTTB - Fiber to the Boonies.

So what's the magic here? Are these people onto something or are they going to go broke when the great fiber optic buildout bubble bursts in maple syrup country? Looking at the numbers in the story reported by Telephony Online, I think they've discovered a sweet spot in the broadband marketplace. The cost for FTTP connections is said to be $1,600 in Vermont cities and $1,800 in rural areas. That's less than a 15% premium for those farmsteads. What gives?

Ah, it's not the cost of connections that the real killer. It's the cost of passing the homes. The number of houses per mile in rural areas is about 12% of the density in town. That means lots and lots of fiber miles to provide universal service. But there are mitigating circumstances. Ever notice all the telephone poles when you're driving on those country roads? They were put there for universal telephone service, but there's plenty of pole space to carry fiber optic cables as well. That's cheaper than trenching or trying to find some way to pull cables in built-up urban areas.

The other magic is in the subscription rates. When your other choices are dial-up and satellite, fiber broadband looks mighty attractive. In Vermont they're seeing pre-subscription rates of 50% which is expected to go as high as 80% upon deployment. That's so high that ValleyFiber is considering installing drops to every home as they deploy the fiber cables.

Perhaps this is the wake-up call that the age of broadband has finally arrived. Perhaps the light will come on, either over our heads or on the router, that digital connectivity is a utility just like electricity and telephone service. The government got behind rural electrification, but rural broadband access has been largely ignored. If universal electric service makes the country stronger, then it stands to reason that today's crying need for universal broadband service is also a national asset.

Fortunately, it looks like local areas and regions within states can leapfrog most of today's broadband services and get themselves hooked up with something that has enough bandwidth to support what they'll need for the foreseeable future. Triple-play telephone, television and broadband Internet are a nice place to start. Medical imaging, TelePresence, and colocation services could soon follow. Wouldn't it be ironic if entrepreneurs chose their start-up locations in rural Vermont just to get reasonably priced bandwidth. Makes that country air smell all the sweeter, doesn't it?

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