CenturyLink stokes fiber demand in Utah

Picking the Utah state fruit.

Salt Lake City businesses will be getting gigabit service from CenturyLink soon, according to a company press release. It’s a follow-on to its fiber-to-the-home experiment in Omaha and its gigabit business service push in Las Vegas. Although CenturyLink doesn’t seem to be running quite as scared as AT&T, which is rushing to roll out FTTH service in Austin, it’s a fair bet that it’s feeling the heat from Google Fiber in Provo and the recently refinanced Utopia system, both just a short drive down Interstate 15. But it’s a smart move, even if it isn’t.

Like AT&T, CenturyLink is pushing a fiber-to-the-basement strategy, that targets relatively densely packed commercial properties. The company says that “more than 2,500 businesses located in multi-tenant unit office buildings” in Salt Lake City and at least six surrounding communities will be offered broadband at gigabit speeds in addition to a long menu of managed IT and telecoms services.

It’s a potentially lucrative and low risk business model. I did an analysis of it for the City of Palo Alto in 2011…

The number of subscribing tenants needed to pay back the initial investment within the average lifespan of a [city] customer, range from four tenants paying $1,000 per month (assuming $5,000 capital expense) to fourteen tenants paying $300 per month (at $20,000 capital expense). Eight scenarios were examined: Monthly tenant costs of $300, $500, $700 and $1,000, at both the $5,000 and $20,000 capital expense level. In all these scenarios, payback would be achieved in less than three years.

It might seem like a short term way to relieve FTTH market pressure – cherry pick lucrative commercial properties that might otherwise attract a competitor – but in the long run the more people who have gigabit service at work, the more demand will build for it at home.