Why Fiber To The Home (FTTH) Is Inevitable

by | May 10, 2001

For the past few years, telecom companies have been working diligently to provide us with pseudo-broadband internet connections over copper (DSL) and cable (cable modem). I use the term “pseudo-broadband” because the existing telecom infrastructure can only provide speeds of up to 1.5 megabits per second. ( In theory, cable modem can provide up to […]

For the past few years, telecom companies have been working diligently to provide us with pseudo-broadband internet connections over copper (DSL) and cable (cable modem). I use the term “pseudo-broadband” because the existing telecom infrastructure can only provide speeds of up to 1.5 megabits per second. ( In theory, cable modem can provide up to 2.5 megabits per second, but in reality nobody obtains these speeds because the shared aspects of cable modem results in lower speeds.)

No doubt improvements will be made over the next few years to squeeze more out of copper and cable, but it doesn’t matter, because fiber to the home is coming, and it will be here faster than most people predict. In case you’re wondering, FTTH provides download speeds of up to 155 megabits per second — that’s 100 times faster than the pseudo-broadband DSL and cable modem connections. Can you say, instantaneous data transfer? Can you say, video on demand?

SBC and Bellsouth are two of the telecom giants pioneering FTTH. The initial markets are new residential construction, because you don’t have to dig up streets in an existing neighborhood to lay the fiber optic cable. SBC plans to wire 6,000 homes in a community in San Francisco by late next year. Initial net connections will only be about 5 mb / second — far from the theoretical maximum of 155 mb / second, but still blazingly fast compared to DSL and cable modem.

BellSouth is also pioneering FTTH with a trial project involving more than 400 people in the Atlanta suburb of Dunwoody. These individuals have internet connections of about 10 mb / second!

No doubt there will be stumbles along the way to providing FTTH. No doubt there are challenges to making FTTH cost effective. No doubt it will take years before most residences in America have true broadband internet access.

But FTTH is inevitable, for a number of reasons:

  1. Speed. Nothing else comes close. Not copper, not cable, not wireless. Speed will find a way.

  2. Demand. Once FTTH begins to worm its way into the residential infrastructure, home buyers will seek it out. Years ago, when the cable television infrastructure was being deployed, the availability of cable in a neighborhood became an important purchase consideration for homebuyers. The same thing will happen with FTTH. Homebuyers will seek it out, and within the next few years, FTTH will become the standard for all new construction. This will lay the groundwork for FTTH to spread rapidly via the principle of competitive disadvantage.

  3. The Principle of Competitive Disadvantage. Imagine a country where all buyers of new residential construction have internet connections of 155 megabits per second. People with DSL and cable modem connections to the internet will be at an enormous competitive disadvantage to those that have FTTH connections. Imagine two people working from home, one with a 1.5 mb / second internet connection and another with a 155 mb / second internet connection. Which person do you think will be more productive? Which person has the fundamental competitive advantage in an internet based society? The principle of competitive disadvantage will drive prices to the point where it becomes cost effective to deploy fiber to existing homes. The intrinsic competitive nature of our society and economy will not tolerate a situation very long where the majority is at a huge technology based competitive disadvantage to the minority. Once FTTH has been deployed as the standard for new construction, the principle of competitive disadvantage will cause it to spread rapidly to existing construction.

How fast will it happen? I believe that the majority of homes in this country will have FTTH internet connections within ten years, and I believe that the principle of competitive disadvantage will be the driving force behind such a rapid deployment.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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