Today's Top Stories  The news: Verizon Communications is emphatic that it is not going to expand its FiOS FTTH footprint outside of cities that already have the service, choosing instead to focus on expanding the fiber optic service in its existing markets.
At the same time, the telco is migrating its copper network to fiber in areas that are near a current FiOS deployment. Following Hurricane Sandy, Verizon accelerated its copper-to-fiber migration in the New York metro area due to extensive flooding that rendered its decades-old copper unusable. Lowell McAdam, Verizon's CEO and chairman, said during the 40th Annual Global Media and Communications Conference that the company will "take advantage of this disruption" and proceed with the fiber replacement strategy. Verizon plans to replace copper with fiber in both New York City's Broad Street area, which was damaged by flooding, and areas of New Jersey such as the Barrier Islands. Upgrading these facilities from copper to fiber has a number of benefits. Since there's unlimited bandwidth on a fiber connection, Verizon can upsell customers in those areas a higher bandwidth data connection in addition to video service. McAdam said once the company converts a customer from copper to fiber-based FiOS, "they take either a double play or a triple play right after." Jefferies, a global investment firm, wrote in a research note that it agrees with McAdam, adding that the conversion could help grow future earnings. "We believe an underappreciated opportunity for Verizon's longer-term earnings growth is the potential to accelerate copper plant retirement and convert customers to FiOS," Jefferies wrote. "Given the extensive overlap--16.5 million homes passed by both networks at year-end 2011 within a 26 million home service area--we think there is scope for significant cost savings and upselling opportunities." Besides the upsell opportunities, the other benefit is the cost savings. Unlike the copper network, the fiber network is less prone to issues and requires fewer truck rolls to fix problems and maintain those lines. Fran Shammo, Verizon's CFO, said at an earlier conference that the company will migrate any "chronic customer" on their copper line--meaning a customer that has two truck rolls to service the copper line during a six month period--to FiOS. "If I can take that chronic customer and move them to FiOS, I deplete the amount of operational expense to keep that customer on and they get the benefit of FiOS Digital Voice, which is clearer, and put their DSL service onto a FiOS Internet where they realize the FiOS speeds," he said during the Bank of America/Merrill Lynch 2012 Media, Communications and Entertainment conference. The implications of this transition will have a broad effect on the overall competitive landscape. Jefferies wrote that "we expect the reliability of FiOS demonstrated during Sandy to be a major selling point for regulatory relief of legacy TDM rules." As it moves forward with its copper-to-fiber conversion process, Verizon has gotten relief from its Carrier of Last Resort (COLR) obligations, the legal requirement that every American household should have access to phone service. Why it matters: The wholesale change-out of any legacy ILEC network from copper to fiber, while a process that will arguably take decades, is a major step in a new direction, steering away from infrastructure that was primarily designed for just one purpose: telephone service.
| This week's sponsor is Globalstar. | 
| Webinar: Globalstar's New "Wi-Fi" Super Highway
Tuesday, January 22nd, 11:00 am EST/ 8:00 am PST
This webinar will discuss the innovative technology, public benefits, and regulatory outlook of providing a new 22 MHz channel under the existing 802.11 IEEE standard. Join to learn technical aspects of TLPS deployment and the outlook for near-term relief from the FCC. Register Now! |
The news: The IP environment has often been dominated, for short periods, by the latest industry buzzwords. Two years ago, everyone, it seemed, was talking about the cloud. Last year, data centers and virtualization became familiar terms. And as the second half of 2012 closes, the term "software defined networking" (SDN) is more and more on CIOs' minds. It's not really surprising to see SDN on everyone's radar. With the rise of enterprise-level cloud architecture and the need to allocate resources remotely, SDN--the ability to have control of network traffic without having to physically access a cabinet or other hardware device--makes sense. "By separating the control plane from the data plane, which essentially removes and then centralizes the 'brains' from the 'muscle' of the network, you can quickly make changes to improve the speed, reliability, efficiency and even security of that network," said Sarah Sorensen, senior security analyst at ACG Research, in a May FierceTelecom column. "You control the network's layout and flow, so you can define and distribute loads, optimize and prioritize traffic, and scale services or capacity up or down with just a few clicks--that is, in theory." Big players like VMware-owned Nicira, HP, IBM and NEC have been active in testing and implementing SDN solutions this year. Most follow the OpenFlow standard, as does Big Switch Networks, a smaller vendor providing switches and virtual switches to operators. Why it matters: It's all about having more control over virtualized environments. "SDN addresses the problem that today's applications have little or only fragmented knowledge, control of or visibility of underlying networks and resources," said Michael Kennedy, principal analyst at ACG Research, in a September FierceTelecom column. "An essential element of SDN is that it explicitly links network control to each application's functional requirements." The importance of SDN was recognized by service providers very quickly, but enterprises are rapidly coming to the table as well. A November survey by Infonetics said one-quarter of the enterprises the research firm interviewed said they have already deployed SDN in their data centers, and one-third plan to do so by 2013. Virtualization, security and application performance were the top three reasons for enterprises to adopt SDN. But at the end of the day, it's the effect of SDN on a company's bottom line that will most likely convince decision-makers to adopt it. Kennedy said operating expenses see the most positive effects of SDN implementation, as activities like service order processing are dealt with more quickly and efficiently. As more data comes in from the field, mostly in the form of use cases, it's becoming clear SDN has a big role to play in areas like hyperscale data centers--such as those used by Amazon or Google--in multisite enterprise WANs and in other data center cases. Software defined networking is simplifying many of the tasks needed to keep large operations running, and as the data center segment continues to grow, SDN's role will, too.
The news: In the regulatory world, the rules for special access have taken on new meaning as more and more competitive local exchange carriers (CLECs) take a stake in the high-speed broadband business services market. Many are building their own fiber networks, but more often than not, many of their customers sit outside that network. That's one point where special access comes in. For a price, CLECs can extend Ethernet services to off-net buildings on the last mile by connecting through an incumbent local exchange carrier's (ILEC) network. AT&T and Verizon own most of those networks, making them the biggest providers of special access services, although CenturyLink also plays a role as a special access provider since its purchase of Qwest in 2010. The question being posed to the FCC is how much ILECs can charge for special access. Since 1999, ILECs have been able to seek price deregulation of special access services, which also include dedicated legacy lines from 56K to Ethernet speeds and are used by businesses for everything from credit card processing to wireless backhaul. In August, the FCC voted to temporarily suspend rules which automatically granted requests for price changes. But special access regulation is far from settled. tw telecom, a CLEC spun off by Time Warner Inc. in 1998, is one of the providers advocating for controls on special access pricing. The carrier has about 16,000 buildings on its fiber network, said Larissa Herda, tw telecom's CEO, in a recent interview with FierceTelecom, but many of those customers have branch offices outside its network reach. "So we have to buy services to those locations where you're never going to have competition," Herda said. "We have to be able to get those services at a reasonable price and reasonable service quality." Herda said that while CLECs offer competitive pricing to customers, ILECs hold all the cards in special access and don't have to price competitively. "In fact, one of the biggest problems we run into with the incumbents is what we call the 'heroin drip.' The contract terms that they impose upon us, force us to buy from them and force us to buy more every year. And if you don't, you have these very, very steep penalties." COMPTEL and its members want the FCC to protect the quality of service and help keep prices competitive. On the other side of the argument, ILECs say they can't change or reduce special access conditions. For one thing, they are required to provide special access to competitors. On Dec. 18, the FCC launched a data collection initiative that will pull information from every building, tower and other enterprise facility in the United States. The data will inform a later FCC review to determine if and where there is competition for special access services. Why it matters: Opinions are split on the effect re-regulating special access will have. CLECs feel it's important to keep fees for the service low so they can remain competitive, particularly in markets dominated by incumbents with extensive legacy lines. Broadband advocates feel that artificially lowering special access pricing will hurt expansion of next-generation networks in the long run, as neither ILECs nor CLECs will feel pressured to replace the existing copper networks when costs are low.
The news: Fiber-to-the-home (FTTH) may be the best end-all solution for the last mile network, but the biggest challenge to deploying an all-fiber last mile network is time-to-market for higher speed broadband services.
It seems ironic that at a time when Google and municipal providers like the city of Chattanooga are offering 1 Gbps over fiber, every year FierceTelecom still cites copper as a key technology trend. Putting aside FTTH for a moment, 2012 was the year when VDSL2 and its new partner, vectoring--two technologies that can enhance the rate and reach for broadband--came into greater prominence for traditional telcos. VDSL2 is deployed on short loops via a Fiber-to-the-Curb (FTTC) scenario where a telco will run fiber to a remote terminal cabinet or from a DSLAM device inside a building that uses the remaining copper pairs to deliver services to each home or business. While speeds will vary, VDSL2 can deliver asymmetric and symmetric aggregate data rates up to 200 Mbps downstream and upstream on twisted copper pairs. Many service providers deploying VDSL2 are now augmenting those deployments with both bonding and vectoring. Bonding can be used to either combine multiple wire pairs to increase capacity or extend the copper network's reach. Vectoring focuses on mitigating crosstalk issues that can affect large-scale deployments of DSL lines delivering 15 Mbps and above speeds. With the advent of Dynamic Spectrum Management (DSM) Level 3, a combination of DSM with vectored DSL, proponents claim the technology can not only help service providers enhance their respective DSL speeds, but also provide information on how to isolate faults on the copper plant. "VDSL2 Vectoring alone, or in combination with VDSL2 bonding, provides operators with the opportunity to offer FTTH-like speeds over copper lines," wrote Teresa Mastrangelo, principal analyst for Broadband Trends. "This provides operators with a solution that can address the immediate time-to-market, competitive and regulatory challenges; while operators prepare their networks for the eventual migration to FTTH." In their most recent report on VDSL2 and vectoring, Broadband Trends forecast that 27 percent of all cumulative VDSL2 ports will be vectored by the year 2017. Although EMEA represents the largest opportunity, North America has the highest penetration of VDSL2 vectoring at 42 percent of total VDSL ports. From a vendor perspective, the clear leader in the VDSL2 vectoring race is Alcatel-Lucent. In recent months, a number of EMEA-based telcos including Belgacom, TDC Denmark, Telekom Austria and Türk Telekom have employed Alcatel-Lucent in either trials or deployments of VDSL2 with vectoring. Looking forward to 2013, one of the most highly anticipated deployments of VDSL2 and vectoring will take place at Deutsche Telekom, which announced earlier this month that it would spend €6 billion ($7.9 billion) to build out a FTTC network to expand download speeds on its copper lines from 50 to 100 Mbps. Later, it submitted an application to Germany's Federal Network Agency (FNA) to get permission to use vectoring technology as it gets ready to offer VDSL2 services to consumers and businesses. Why it matters: For traditional telcos that are trying to maintain bottom-line costs yet want to deliver higher speed services to stay on a competitive footing with cable, the combination of VDSL2 and vectoring can provide enhanced bandwidth and services like IPTV today while paving a path to an all fiber-based broadband for tomorrow.
The news: With all of the attention that AT&T puts on advertising how great the coverage of its wireless network is, it's a wonder anyone who covers the telecom industry knows they are still a dominant wireline operator. All that changed this past fall when the service provider announced it would spend $14 billion to make upgrades to move its wireline network to an IP-based infrastructure and migrate some of its harder-to-reach copper customers to 4G LTE wireless services. As expected, the larger $8 billion amount will be spent on wireless, and the remaining $6 billion will be spent on the wireline network. This project takes what the telco says is a four-pronged strategy that will enhance and expand its wireline network to reach 57 million customer (consumer and SMB) locations. The four prongs are U-verse expansion; U-verse IP DSLAM; upgraded broadband speeds; and increased on-net fiber connections into multi-tenant office buildings. AT&T will expand its U-verse coverage to over one-third, or about 8.5 million, additional customer locations, enabling it to potentially serve a total of 33 million customer locations by the end of 2015. Part of this expansion will feature an IP DSLAM-based service, including broadband data and VoIP, to 2 million locations in the company's wireline service area by the end of 2013. Sticking to its hybrid copper/fiber Fiber to the Node (FTTN) plan, AT&T will leverage a mix of VDSL2 with bonding and enable U-verse broadband speeds to up to 75 Mbps, while U-verse IP DSLAM customers will initially get up to 45 Mbps. The upgrades to U-verse come at a time when the service is resonating with customers in areas where it's available and has become a big portion of the company's consumer revenue mix. In Q3 2012, AT&T added almost 200,000 new U-verse TV subscribers and 613,000 new broadband Internet subscribers, while ARPU rose almost 10 percent. Project VIP also provided an answer for AT&T's rural copper wireline assets. Unlike its RBOC brother Verizon, which sold off its rural assets to FairPoint and Frontier, AT&T said that in the 25 percent of the wireline locations where it can't upgrade the wireline facilities to IP, the company will extend its 4G LTE wireless network to offer those customers broadband data and voice services. AT&T said ultimately the 4G LTE network will cover 99 percent of its in-region wireline customer locations. Critics of AT&T's rural plan are quick to point out that even those customers who will be able to get the LTE service will be faced with onerous usage caps and higher prices. One of the concerns pointed out by various critics is that the telco is abandoning a large portion of its customer base that still relies on copper-based DSL and traditional phone service. "I can't blame the company for taking these steps, and it's at least trying to engage the FCC on the regulatory front as opposed to selling off its DSL business as Verizon has done, but as it moves forward we need to look at who is left behind," opined Stacey Higginbotham at GigaOM. While U-verse has certainly been a big revenue driver on the consumer side, AT&T is seeing an equal uptick in the adoption of IP business services, particularly Ethernet and IP VPN. Since AT&T is the dominant U.S. Ethernet and VPN service player, it makes sense that Project VIP includes a Fiber to the Business (FTTB) element that proposes to reach 1 million business customer locations with a focus on serving the 50 percent of multi-tenant business buildings in its wireline serving area. Increasing its on-net fiber building connections comes at a time when AT&T's IP services are continually offsetting losses in legacy Frame Relay and ATM data services. The telco reported that while overall business revenues declined 2.6 percent year-over-year and sequentially in the quarter to $9.1 billion, Q3 strategic business services revenues grew 11.4 percent year-over-year. Why it matters: Project VIP is the biggest capital investment program the telco has proposed in recent years for its wireless and wireline networks. What's also interesting about the project is the timing. AT&T and fellow RBOCs Verizon and CenturyLink have been lobbying the FCC to relax its current special access rules because they are moving to IP-based networks. However, CLECs such as tw telecom that have a sizeable fiber footprint of its own still have to use the ILEC's last mile facilities to serve customers that have locations outside of its footprint. Special access combined with the company's proposals to migrate rural customers off its copper networks will be up for continual debate in 2013 and beyond.
| 
It's a wrap: Counting down the major trends in 2012
No comments:
Post a Comment
Keep a civil tongue.