Fear and economics fuel CenturyLink’s Omaha FTTH test

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The case for fiber converges on Omaha.

After getting stung by Google in Provo, Utah, CenturyLink will roll out fiber-to-the-home service in Omaha, Nebraska. Two key factors that will drive future FTTH deployments make this announcement more than a marketing stunt.

First, CenturyLink is targeting a particular area served by pre-DOCSIS hybrid fiber and coaxial cable system, according to a story on the Telecompetitor news site. Instead of upgrading it with better coax or trying to refurbish it in place, CenturyLink is replacing it with gigabit passive optical network (GPON) technology. Either way, most of the cost is for work and materials needed regardless of the kind of cables. And with raw copper prices bouncing around historical highs, glass starts looking like the cheaper alternative anyway.

Second, incumbent service providers are scared witless of credible competition. Putting a third, full service wired competitor into a market ignites a competitive storm, and raises the danger that billions of dollars of capital investment will turn to dust. Google’s assault on carrier complacency has only landed in three cities, but it’s already goaded AT&T into the fiber business in Austin and scorched CenturyLink’s tail in Provo.

CenturyLink can simply convert all 48,000 re-passed homes to fiber, a strategy well suited for a GPON architecture. It doesn’t have to wage a costly marketing battle or try to follow Google’s strategy of cherry-picking the most promising “fiberhoods”.

It’s an experiment. The press release said CenturyLink will evaluate market acceptance, competitive positioning and return on investment before committing to additional fiber builds. But over the next few years, the business case for FTTH upgrades could be irresistible.

As copper prices rise, fiber technology costs fall and consumer demand for bandwidth slowly grows, competitive pressure will force incumbents to invest in outside plant upgrades. The CenturyLink project in Omaha may prove that switching to fiber maximises shareholder value. At that point, the rate of FTTH deployment by incumbent service providers will rocket.