This article originally appeared in the Jan. 2011 issue of NGN Magazine.
Regulatory upheaval, an economy in recovery, line erosion and increasing competition – communications service providers have never faced such a tumultuous environment fraught with uncertainty. Yet, at the same time, the importance of and demand for the services that they provide has never been higher.
Broadband services have moved from being a nice to have service to the lifeline service of the 21st century. Video-ready devices like iPads, smartphones, gaming devices that act as home media portals, and Internet-ready 3D-capable TVs are driving broadband demand and bandwidth requirements throughout the network edge at an accelerating pace.
Hence, the CSP (News - Alert) dilemma: Should I invest in my access infrastructure now to keep up with demand, or wait until the market, and my role and position in it, are more clear? This question is polarizing the CSP community today into two camps – those that are aggressively moving fiber forward in their networks and pursuing deep fiber initiatives, and those who are staying put, looking to ride out the storm until the clouds clear.
CSPs can ask themselves three basic questions about the market and macro-economic environment and quickly draw some meaningful conclusions that can help drive their actions:
· Will interest rates ever be lower than they are today?
· Will competition in local markets ever be less intense than it is today?
· Will government subsidy mechanisms for CSPs ever be more favorable than they are today?
As CSPs consider the answers to these questions, they need to reflect on the opportunity that investing in a fiber forward strategy provides them in the future, as well as the potential penalty for standing still in a world where change is accelerating. The recipe for future CSP success is very straight-forward – built around instantiating a business model with lower operational expenditures, higher revenue opportunities, and closer customer relationships. The critical ingredient for this success, however, is an Ethernet and fiber-rich network infrastructure that makes this new business model possible.
Fiber forward is a concept for which CSPs continuously pull fiber as close to customers as possible – often all the way to the premises. In addition to GPON and Active Ethernet, VDSL2 is also a part of the fiber forward vision – a viable and potentially necessary stepping stone to the all-fiber future. Best described as a state of mind, fiber forward allows CSPs to evolve their business models away from multiple dedicated networks determined by service type to a single vehicle for delivering IP services over Ethernet via a wave guide – fiber – that is virtually limitless. This type of fiber-rich network possesses a number of powerful attributes including simplified services provisioning for rapid time-to-market and customer responsiveness; a platform to introduce and deploy rapidly new services and adapt to new service requirements; and value, or a foundation for a more efficient and aggressive business model.
Many argue that the business case for pursuing a fiber forward mentality can be challenging. Although this may vary by situation and company, there are two constants. As challenging as the business case may be for the first CSP that pulls fiber deep into a community, the business case for the second provider is likely untenable. Consumers will require fiber-like bandwidth speeds in the future – many already thirst for it today. It’s just a matter of time to see who provides those speeds to them and reaps the market share rewards.
Thinking about the future may keep you up at night, but it also presents enormous opportunity. CSPs sit squarely in a position to address an enormous upwelling of demand for broadband services that continues to accelerate. For most CSPs, moving fiber forward will allow them to be the preferred and most advantaged service provider in their respective market.
The world is changing too fast to stand still. Make a decision on where you are going to take your network. If you don’t, your current competition, or possibly a competitor that you never anticipated, is likely to make it for you.
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Edited by Stefania Viscusi