INDEPENDENT TELCOS Fiber Deployments By Independent Telcos The number of independent telcos deploying fiber continues to rise rapidly, as a result of both stimulus funding and privately funded builds. By Masha Zager ■ Broadband Properties ABOUT THE LIST Since 2005, Broadband Properties has maintained a list of independent telephone companies that are deploying fiber to the premises. We publish the list several times each year. We also maintain the list online at www.bbpmag.com/ search.php to enable you to search, sort and download all this information. The online list includes other types of de- ployers in addition to independent telcos. Although we gather information from as many sources as we can, we know the list is not complete. To add to the list, fill in missing information or correct any errors, please contact [email protected]. he Broadband Properties list of Fiber to the home has become the default choice independent telcos deploying Tfiber has now grown to 475 – for independent telephone companies when they about 10 times the size of the first list we compiled in 2005. Companies have have to build new plant. A few have decided to announced so many new fiber projects replace all their legacy copper plant with fiber. that we’ve had trouble keeping up with them; there are probably another 50 infrastructure with fiber – though cer- • a longstanding commitment to local or more that we haven’t accounted for. tainly, some are doing so. But when they economic development That means about half the independent wire new subdivisions, replace deterio- • a desire to provide advanced services telcos in the United States now have at rated copper p lant or overbuild into ter- to residential customers. least some experience deploying fiber to ritories served by other providers, telcos Many, if not most, of the telcos on the premises. now tend to choose fiber to the home. “I the list are in the midst of long-term One source of this growth is broad- never want to dig up this town again,” fiber upgrades. After starting with trial band stimulus funding from the Rural one general manager told us, explain- deployments, they commit to building Utilities Service, which has awarded ing that the fiber he was putting in the out fiber wherever it makes economic the bulk of its last-mile funds to FTTH ground was likely to outlast his career. sense, including in CLEC territories projects. (See this issue’s Fiber Deploy- Telcos are choosing fiber because of close to their established service areas. ment Roundup for details.) However, • continuing technological develop- Telcos that were early adopters of many of the RUS awards – especially ment that has reduced the cost of FTTH have also continued to upgrade the largest ones – were to companies deploying fiber and made it compa- their fiber electronics. Though our list that have deployed fiber for years, such rable to, or less expensive than, the still shows a number of BPON deploy- as Rural Telephone in Kansas and Xfone cost of deploying new copper plant ers, we suspect that many of them have in Texas. A more significant reason the list is growing is that FTTH has become the About the Author default choice for telcos when they have Masha Zager is the editor of Broadband Properties. You can reach her at masha@ to build new plant. Few telcos have un- broadbandproperties.com. dertaken the replacement of their entire 114 | BROADBAND PROPERTIES | www.broadbandproperties.com | MARCH/APRIL 2010 INDEPENDENT TELCOS in fact upgraded by now. By deploying newer technologies, they demonstrate FTTH Network Builders by Type that they have achieved their original goals of “future proofing” their net- works: They can use the same fiber to ILECs and offer more advanced services. their CLEC WHY BUILD FIBER? subsidiaries Independents told us they decided to build fiber networks in situations such as Pure CLECs these: 14% • Their old copper plant was failing and they didn’t want to replace it Independents usually build in their area of incumbency, but often expand into neighboring towns as CLECs. Pure CLECs may have no geographical bases. with more copper that would soon be obsolete. • In new housing developments, they • They saw opportunities to compete Five of six companies on our list found that FTTH was comparable in underserved areas outside their tra- are ILECs (incumbent carriers dat- to copper in terms of capital cost but ditional service areas where residents ing back before 1996) that are either would be less costly to maintain and were unhappy with the available replacing old copper plant with fiber, have a longer useful life. choices for video or Internet service. building fiber to new developments • They wanted to offer video and Because independent telcos rarely in their service areas, or overbuild- other advanced services and decided compete, they tend to regard one an- ing towns near their service areas that DSL had too many limitations. other as colleagues. They share experi- where they have name recognition Many rural telcos already owned ca- ences and pool information. As infor- – or some combination of the three. ble TV plant (they are exempt from In most states they must form CLEC cable-telephone cross-ownership re- mation spreads, one success gives rise to another. Over the last several years, subsidiaries to move outside their strictions) and wanted to upgrade traditional service areas, but we still their video services without pouring with fiber deployment costs falling and list them as ILECs even if their fiber- money into obsolete cable networks. the cost of copper rising, more and more to-the-home networks are only in • Their service areas were losing jobs independents have been encouraged to and population, and they believed try deploying fiber to the home. their CLEC areas. fiber would attract more economic The remaining companies are opportunity. WHat THE NUMBERS SHOW pure CLECs (competitive carriers) • Their service areas were growing rap- 1. The great majority of independent with no traditional geographic bases. idly, and new residents moving in telcos building fiber networks are in- These companies seek out promising from metropolitan areas considered cumbent providers or subsidiaries of territories to overbuild with fiber. A fiber an amenity. incumbents. few of them build hybrid fiber-coax WHat IS an INDEPENDEnt TELCO? The companies that appear on this list are licensed providers of wireline voice services other than Verizon, AT&T and Qwest. They are regulated in the United States as ILECs (incumbent providers) or CLECs (competitive providers) or both. The majority are rural providers, many of them cooperatives or small family-owned businesses, set up 50 or more years ago to offer telephone service in regions not covered by the Bell system. A smaller number came into existence after the Telecommunications Act of 1996, some specifically to build fiber-to-the-home networks in new housing de- velopments, others to serve businesses or to offer telecommunications alternatives in underserved areas. With each passing year, the telco category becomes more difficult to define. Many companies other than traditional telcos deliver reliable, interconnected voice service, using either wireless or wireline networks. Excluding these compa- nies is somewhat arbitrary, especially because many telephone companies have moved beyond traditional switched telephony to offer wireless service and wireline VoIP. Some nontraditional telephony providers are functionally no different from CLECs. However, telcos still exist as a historical and legal category, and our definition is consistent with industry usage. To the extent possible, we have excluded from the list telcos whose only involvement with FTTH is to deliver ser- vices over fiber access networks that they do not own and were not involved in building – for example, networks owned by municipalities or housing developers. MARCH/APRIL 2010 | www.broadbandproperties.com | BROADBAND PROPERTIES | 115 INDEPENDENT TELCOS 3. Companies are choosing more ad- Services Planned or Delivered vanced FTTP technology options. Our first published list included Voice, Data, Video mainly BPON systems, with a few 60% EPON and one active Ethernet sys- tem. Today, although passive optical Voice, Data networking remains most popular, 14% more than 100 independent telcos use active (point-to-point) Ethernet Triple Play Plus for one or more projects. Although Other Unknown Additional some telcos have made a company- 2% 20% Services wide commitment to active Ethernet, 4% many use it for niche applications, Video is usually necessary to recoup the cost of an FTTH network, especially in residential areas. The such as serving large businesses. triple play continues to be the standard offering. Gigabit passive networks, both GPON and GEPON, have become networks in some areas and FTTH dent telcos also manage cable TV standard. GPON is the PON of networks in others. networks alongside their telephone choice for this group – five of six The proportion of ILECs to networks. Deploying fiber to the companies with passive optical net- CLECs has remained surprisingly home allows them to merge the two, works have adopted GPON. (The constant over the five years we have reducing network management costs actual proportion is probably even tracked telco fiber builds, even as the while adding high-definition TV, higher – chances are that we haven’t number of companies on the list in- heard about all the migrations from DVR, video on demand and a wider creased tenfold. BPON to GPON.) The migration selection of channels. Most of the pure CLECs origi- to GPON was speeded by the avail- Beyond the triple play, the most nally collaborated with housing ability of Calix’s auto-sensing optical common additional service is secu- developers to build networks in network terminal, which allows tel- greenfield developments and master- rity monitoring. Some telcos also of- cos to upgrade central-office equip- planned communities, but given the fer gaming, caller ID on TV and PC ment without having to replace the shortage of new housing in the last (convergent applications) or business customer-premises equipment.