In the 1990s telecommunications firms began laying down a glut of fiber-optic cables in preparation for hyperfast Internet connections and other data-hungry applications. Unfortunately, going the "last mile"--connecting the main optical lines to homes--proved financially burdensome, and companies largely shelved such plans after the technology stock bubble burst in 2000.
In the past year, however, serious efforts have begun to bridge the final gap, but not all of them involve using pure fiber all the way. For carriers insisting on clinging to copper, a compromise solution is taking shape in which the latest DSL (digital subscriber line) technology serves as the last link. Such systems, called active networks because they contain powered electronics, have drawbacks, but they allow carriers who are loathe to abandon their copper network to offer short-term economical answers to fiber.
The turnaround began with two little-noted events in 2003. First, the Federal Communications Commission decided that local phone companies installing modern fiber-optic lines would not have to share them at regulated rates with competitors, a possibility raised by the Telecommunications Act of 1996. The second event was economic--the average cost of installing fiber to the home in new "greenfield" developments fell to nearly the cost of a copper phone line installation (between $1,500 and $2,000 per home), notes Stuart Benington, of Tellabs in Naperville, Ill., a communications tech supplier. Consequently, in 2004, various phone companies, hoping to break out of the slumping voice market, began announcing plans for high-speed fiber-based services.
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The standard-bearer for all-fiber connections, or passive networks (because they need no electronics boost to transfer a signal), appears to be Verizon Communications. It plans to offer fiber to at least three million homes by the end of 2005. Initially its data service involves splitting a signal (with a prism) from a standard 620-megabit-per-second fiber line to 32 subscriber lines, each carrying about 19.38 megabits. Subscribers who want faster connections can get a one-sixth share, or about 100 megabits.
In contrast, SBC Communications and BellSouth have adopted a less expensive solution by leaving the copper line in place as a last-mile DSL connection. The success of active networks depends on getting the fiber close enough for DSL, the speed of which is sensitive to distance. The latest DSL technology can achieve 25 megabits for homes less than 5,000 feet from the network node, making it comparable to Verizon's all-fiber offering. Improvements could boost the rate to 100 megabits for those no more than 500 feet from the node, notes Jay Fausch, a marketing director at Alcatel, the Paris-based telecom giant.
In any case, with proper data compression, a 25-megabit channel should be able to deliver one high-definition television channel along with several standard-definition channels, plus data and phone service, Benington says. (All-fiber systems require no such compression, because TV can simply be added to the same fiber but on another frequency.) SBC envisions offering DSL-based active network service to 17 million subscribers by the end of 2007.
But in the end, the hybrid DSL/fiber approach may just whet consumers' appetites for pure fiber, especially as its upgrade potential is realized--the 100-megabit maximum offered by Verizon is only one millionth the theoretical capacity of fiber. SBC in fact plans to offer full fiber as well but only to subscribers in greenfield areas, which may total one million. Qwest Communications is also considering passive networks for greenfield developments.
Meanwhile about 200 U.S. towns have given up on the private sector and have installed their own fiber networks. Ultimately, fiber appears certain to prevail. Phone companies refurbish their lines at an average annual rate of about 3 percent, observes analyst Michael Howard of Infonetics Research in San Jose, Calif. So fiber should begin replacing copper at that rate at least.
