Be Patient: Fiber-to-the-Home Market Shows Promise

We’ve all seen illustrations showing a conventional telecommunications cable — thick as a man’s forearm and containing hundreds of copper wires — displayed next to a fiber-optic cable. The fiber-optic cable, the diameter of a small pencil lead, carries vastly more information many times faster than its bulky counterpart. Transmitting information via light, instead of electricity, allows immense amounts of information to flow at lightning speed, and from the first fiber-optic-cable installations in the 1970s, the goal has been to bring these benefits all the way to the individual user of digital devices — a goal summed up in the phrase “Fiber-to-the-Home” (FTTH).

FTTH, of course, refers to bringing fiber-optic cable from the pole (if aerially deployed) or from the curb (if it’s underground) to individual homes, apartment buildings and office buildings (let’s verify the FTTH terminology, it seems in the industry that FTTx is used when referring to anything other than single family homes). In North America, according to the FTTH Council, deployments are 55 percent aerial, 45 percent underground.
The first FTTH installations were done as early as 1998, and the FTTH market, from its small beginning, has grown tremendously. That said, while the FTTH market today remains relatively strong, market forces have slowed its momentum. But this slackened pace is likely only temporary.

Facts & Figures

The FTTH Council recently commissioned the firm of RVA Market Research & Consulting to survey the North American FTTH market and to prepare a report (released in April 2010) on its findings. The report presents market numbers in terms of “homes-passed,” “homes-marketed” and “homes-connected.”

Homes-passed refers to the “actual number of homes where a fiber connection is available — i.e., a homeowner already has a connection, or could call and order a connection and receive service within a short time.” Homes-marketed means the actual number of homes that the provider has approached and offered a connection. Homes-connected is the “actual number of homes connected via fiber and receiving some kind of service over fiber.”

The number of homes-passed as of March 2010, according to the report, approximates 18.2 million in North America, with 99 percent in the United States. The estimated number of homes-marketed is about 17 million, and the number of homes actually connected has now exceeded 5.8 million.

Of the total number of FTTH installations, says the report, regional Bell operating companies (RBOCs), created by the AT&T breakup in 1983, account for about 4.3 million, the majority by Verizon. RVA identified, however, more than 750 other FTTH providers — including small rural telephone companies, municipalities, even some developers — that represent more than 1.4 million connections, or approaching a third of the total. All told, according to the report, nearly 16 percent of U.S. households have been passed and 5 percent connected.

Based on these numbers, the potential in the FTTH market for trenchless contractors seems strong, considering the FTTH Council’s estimate that 45 percent of installations will be underground. Not only does a large number of homes-marketed remain to be connected, but nearly 85 percent of households remain to be passed.

Slower Growth

At present, however, indications are that the largest FTTH providers are backing away from the market and, as a consequence, FTTH-market growth is slowing.

Among the primary reasons for the situation is the explosion in demand for wireless services. This demand has so taxed the resources of large providers that these companies are pulling back from expanding FTTH networks, thus conserving resources that can be directed to building up wireless networks.

Another apparent reason for slower growth — we mention in passing — is the controversial issue of open-access. Questions surrounding government regulation of broadband networks may be giving pause to providers as they consider further investment. And, too, given the general state of the economy, homeowners considering an FTTH installation may be delaying the decision.

The FTTH report also touches on another cause of slower growth. The American Recovery and Reinvestment Act provided two stimulus packages to encourage, says Vice President Joe Biden, a “21st century communications infrastructure that will enhance America’s global competiveness.” According to the FTTH Council report, however, “most providers and vendors interviewed feel that government economic stimulus programs have actually had the unintended consequence of being negative to growth — to this point — as some projects were put on hold awaiting possible public money.”

Lest we leave a negative impression of the well-intentioned stimulus and a large number of projects go forward as the result of the infused money. The FTTH Council was involved in a program administered by the U.S. Department of Agriculture’s Rural Utilities Service, which provided $3.5 billion in loans and grants through its Broadband Initiatives Program. According to the FTTH Council, FTTH technology figured into more than half of the nearly 300 projects, which were awarded about two-thirds of the money.

Says a FTTH Council spokesperson: “While it’s premature to say what effect stimulus funding has had at the community level or at the end-user level, it’s clear that the funding will extend broadband — largely fiber-based broadband — to millions of Americans who otherwise wouldn’t be served.”

Looking Forward

While the FTTH market is experiencing slower growth at present, the industry generally is convinced that increasing consumer demand for broadband service will be a primary driver for further expansion of fiber-optic networks and FTTH installations. In addition, an expected increase in the number of providers, including municipal-government agencies building their own FTTH networks, may serve to promote growth. At present, nearly 60 public agencies provide FTTH systems, serving an estimated 3.4 percent of FTTH subscribers in North America.

At this point, trenchless contractors might be well-advised to review construction techniques that may help improve their competitive advantage in the inevitable surge in fiber-optic installations. HDD, of course, is a proven tool for all aspects of fiber-optic installations, including FTTH. But don’t overlook other techniques, such as stitch boring (using a pneumatic piercing tool for short cable installations); vibratory plowing; unguided boring (using a host machine to hydraulically power and advance a drill string); soft excavation (using a vacuum-excavating tool); and a relatively new technique, micro-trenching.

The micro-trencher is essentially a relatively small trencher-like machine designed to use special saw blades that are sized for making optimal cuts in asphalt for fiber-optic cable installation, from 0.75 to 1.25 in. in width and 6 to 12 in. deep. Some micro-trenchers also can be fitted with a vacuum system to remove spoil and leave the cut ready for cable.

So, if your fiber-optic work is not keeping you as busy as you’d like at present, be patient. The demand for broadband will work to your advantage.

Jason Proctor is product manager for heavy equipment and vacuum excavation for the Charles Machine Works, the manufacturer of Ditch Witch brand products. 
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