There was a popular song years back with an annoying disco beat and a pulsing techno-vibe. As is the case with all such similar musical junk food, the tune has burrowed into my head (even if I still can’t admit that I liked it at the time). It went: Now that we’ve found love what are we gonna to do with it?
Substitute `love’ for `broadband’ and that might be a good theme song for the state of affairs for communication service providers today. As operators spend big bucks trying to get fat pipes hooked up to their customers’ neighborhoods, streets and eventually, homes, they have to strategize how to recoup those investments through more lucrative service offerings that help to leverage the build-out.
No doubt fiber to the premise, a means for getting those fat pipes to the suburban households, is gaining global traction. Rather than rely on the antiquated infrastructure installed decades back that comprised copper, providers are digging deep into their pockets—and the streets—to update their networks with optical fiber. Fiber, as it’s known, has been used by telecom carriers for long-haul carrying, but now the material is being used even closer to the home. Its efficiency and capacity make it a better means for delivering bandwidth-draining services that consumers are starting to ask for. Fiber to the home, or FTTH, is the "fastest-growing global broadband technology," with strong presence already in Asia, Europe, and North America, according to the International Engineering Consortium (IEC).
"Although running fiber-optic cables directly to residences is still a very new phenomenon in the United States, which many have not heard of, fiber to the home is growing rapidly," states Michael Render, principal of research firm RVA in a market research statement. Today, some four million North American homes in about 1,000 communities are eligible for FTTH services, and about 3.2 million of those are being actively marketed to, according to RVA. While the latest statistics show 617,000 FTTH-connected homes in North America, the sector saw a 215% jump from 2005 to 2006.
Service providers, most aggressively in the U.S. Verizon Communications, are investing billions of dollars to lay fiber in their markets and compete head to head with cable and satellite companies that have ruled the video markets. Verizon’s deployment of fiber could initially boost its current DSL offerings’ speeds of 1.5Mbps up to 20Mbps to 30Mbps, and up to 100Mbps down the road, say experts. It’s a hefty investment—by some published estimates, the price tag per home has dropped from $1,400 to now a still-eyepopping $850—but one believed to make it the winner in its markets.
While there are many companies—like AT&T—that are motivated to leverage their existing copper infrastructure in markets and squeeze more out of their current lines, the momentum of capacity being pushed to the front door by more innovative companies and all the money being spent to get it there, it’s no surprise the Globalcomm show held in Chicago this June was rife with home gateway and home networking devices and strategies. Since the customer premise can now access the bigger pipe, service providers are dishing up more applications to ride on these higher-speed networks. Not only lightning speed connections to the Internet, but more TV channels and video, and more voice applications. The market opportunity has vendors scrambling to demonstrate equipment that will help providers make customers bite on all the services that are possible through these faster connections. Multiple PCs in the home, high-speed Internet connections, myriad mobile devices, security system concerns, and telecom services are on the minds of customers each month and present opportunities to the operators. The provider that can offer a solution to help that customer organize and streamline content and simplify the access of data inside the home will reap rewards and retain the customer.
Already, DSL and cable services have helped to all but extinguish dial-up services. But faster- speed services are whetting consumers’ appetites for more offerings. These souped-up devices add Ethernet ports, voice ports, and accommodate the increasingly popular services such as IPTV and HDTV that go above and beyond vanilla DSL services.
IPTV, or Internet Protocol Television, which uses the Internet to deliver digital television, can be sent over broadband connections to set-top boxes. The same content that had been sent over coaxial cable can now be delivered over Internet connections and telecom operators are eager to leverage the new revenue stream. By using the same Internet protocol, such services can be packaged with other IP-based offerings, namely voice over IP (VoIP) and Internet access. "IPTV continues to be a major factor," says Frank Galuppo, CEO at Amedia, a service gateway player.
IPTV as a service had a huge representation at the Globalcomm show, with tech behemoths like Ericsson, Alcatel, Siemens, and even Microsoft announcing strategies, trials, and products in the space. Service providers, too, are dabbling in IPTV. AT&T has been testing the IPTV service in San Antonio, TX, using software from Microsoft to support the offering. AT&T, which merged with SBC Communications and is looking to finalize its marriage to BellSouth, plans to broaden the IPTV service offering to some 20 cities by 2007, say reports.
Service revenue, subscribers and capital expenditures for IPTV are increasing so fast that worldwide IPTV service revenue will pass the $44 billion mark by the end of the decade, according to IPTV Equipment and Services Market Outlook, a report produced by market watcher Infonetics Research. If the research is accurate, some 53 million people around the world will be using IPTV and gear makers will be rolling in the dough, in a market valued at $38 billion in 2009.
Part of the appeal for consumers and scare for providers of IPTV is the high-definition aspect of the content. High-definition eats up a lion’s share of bandwidth, meaning providers can’t be caught short, especially as consumers consider buying multiple HDTVs for the home. Analysts say downloading music, home monitoring, gaming between devices, picture sharing, digital video recorders and more interaction with programming are some other applications that service providers see as revenue opportunities and more incentive to get a "home hub" into the house.
Leave It to Your Own Devices
While the merging of the PC and the TV has been forecasted for years—remember Apple’s hybrid TV/PC solution that was as popular as New Coke?—the movement is starting to happen.
Device players like Motorola, Westell, and Tellabs are designing their gear to be sleeker, looking more like a gadget brainstormed by iPod-loving college kids than today’s old blinking black boxes buried under the desk. Motorola’s Home Hub and Westell’s Broadband Media station, for instance, make it easy for the average consumer to switch on security solutions and install the device to communicate with other appliances in the home. Companies like Ericsson, meanwhile, are working on more solutions that enable customers to manage their own content, transferring an image taken on a mobile camera phone to a big-screen TV in the living room for friends to view.
And the burgeoning market for services inside the home has not just the telecom, cable, and satellite providers poised for action, less usual suspects, like utilities, are also increasingly interested in the home space, say experts.
Utilities are perked up because broadband over power line, or BPL, is also gaining traction. Providers like Current Communications are making delivering broadband services over power lines a reality. With marquee investors like Google, General Electric, and EarthLink, Current Communications delivers the BPL equipment to utilities to help them take a shot against incumbent providers in that market. Executives say there is more in store than just broadband services for the provider that can own the home. Network updating and surveillance are two hot revenue opportunities.
"As a service provider, we are interested in offering services that use surveillance. Plug into a wall network and view cameras on the Web or view on cell phones," says Jim Dondero, VP at Current Communications. "There is a lot of interest in that space."
Rooms With a View
The next step for these providers getting the broadband to the home is how to network the information within the home. Device manufacturers have tapped wireless technology for such transmissions. With 802.11 compatibility in many modems, wireless technology is the most popular for transmitting within the residence. But security problems and flakiness with interference and reliability make wireless vulnerable. That’s why networking over electric lines, even with skeptics saying the technology is vulnerable to interference from amateur radio, within the home is also gaining attention. Using the existing electric wiring so prevalent in many homes, device manufacturers are looking to embed chips that communicate to electrical lines.
The problem facing providers such device makers are trying to solve? Providers know how to bring broadband to the home, but they can’t distribute the signals once inside, says Chano Gomez, VP of technology and strategic partnerships at DS2 (Design of Systems on Silicon). So chip makers like DS2 are working with gear makers, like NetGear, to add more possibilities to move content from one device in the home to another.
Now that all these giants are banking on getting the bandwidth to the customer to truly help converge telecom and television, and all the gear makers are betting their devices will be the one that makes it as the home hub, there is still that oft-uttered customer problem that will have to be addressed: "There’s nothing on."
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