[1st-mile-nm] Rural Fiber-to-the-Premises Makes Economic Sense

[Richard Lowenberg]

>From Telephony Online
http://telephonyonline.com/fttp/news/rural-fttp-economical-0429/

Rural FTTP 'perfectly economical,' says muni fiber veteran

Apr 29, 2008 1:46 PM, By Ed Gubbins

The notion that fiber-to-the-premises is economically prohibitive in rural areas
is a myth, according to Dr. Timothy Nulty, director of ValleyFiber, a nonprofit
organization focused on bringing municipal fiber to towns in Vermont?s Upper
Valley.

?It?s nonsense,? he said, addressing the Broadband Properties Summit
today. ?It?s perfectly economical.?

Nulty helped oversee the municipal FTTP network in Burlington Vermont, which is
on track to become fully cash-flow positive (with revenue exceeding all costs,
including debt service) by January 2009, four years after it secured initial
financing. He left his position as general manager of Burlington Telecom to try
to duplicate its success elsewhere in Vermont, retaining universal access as a
goal, and he says the model is just as viable in rural areas.

Fiber triple-play deployment costs generally come in three categories: the hub,
the hook-up and the pass. Building a hub is actually less expensive in rural
areas because real estate costs are lower there, Nulty said. ?Building a hub
in a cow pasture is cheaper than doing it downtown.? Hooking up rural houses
is more expensive, but not much, he said, partly because fiber costs have come
down considerably. Vermont spends about $1600 per home connecting subscribers
in the city and about $1800 per home in rural areas.

The biggest cost gap is in passing homes, since there?s so much more space
between homes in rural areas (though rural areas have more aerial, pole-based
networks, which are easier and less costly than the underground networks in
cities and suburbs.) Vermont towns contain more than 100 houses per square
mile, but its rural areas can contain about 12 houses per square mile. As a
result, Vermont spends about $250 per home in the city on this part of the
project and $1100 per home in rural areas.

However, passing homes is a small part of the overall cost of fiber deployment,
Nulty said. And rural areas see higher service take rates because there?s
less competition there. In rural towns due to get municipal fiber, Vermont is
seeing 50% of the market presubscribe for its services, and Nulty expects that
rate to reach 75% or 80% by the time funds are secured.

?Is rural fiber deployment more expensive?? he said, ?Yes, but not
dramatically.?

In fact, Nulty said, as Vermont towns roll out fiber in rural areas, they may
deploy fiber drops to every house, even in advance of service orders?a
reversal of the order typical in the private sector. Given the marginal added
cost and the high expected take rate, he said, ?We might as well have the
same crews do it while they?re out there.?



-- 
Richard Lowenberg
1st-Mile Institute
P.O. Box 8001, Santa Fe, NM 87504
505-989-9110;   505-603-5200 cell
rl at 1st-mile.com  www.1st-mile.com

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