FiOS - Verizon's long-term vision to the 10+ gigabit home

As the computer and Internet revolution blooms, the one thing that is lagging behind is broadband connectivity.  There's no question that the future of long-range high-speed telecommunication is Fiber, but different companies are taking different approaches.  While AT&T is going to try and install fiber to within a mile of your home for their U-Verse service, Verizon is biting the bullet and going the last mile by installing FTTP (Fiber To The Premise) for their FiOS service at huge installation cost per home.

The expense of laying fiber to the home: When Verizon first started laying fiber optic cables to the home in 2004; there was a staggering installation cost of $3000 per home.  The sky-high costs and long wait on ROI sent chills through Verizon's investors but fears have eased as Verizon signed up hundreds of thousands of FiOS Broadband and FiOS TV customers and the installation costs were reduced with improved efficiency.  Verizon is now getting closer to $700 per home and they hope to get the cost to $650 per home by 2010.  Verizon's pure FTTP FiOS service was extremely risky at first but it's clearly the long-term strategic winner.  It can even be argued as a near-term winner since Verizon is winning over so many new triple-play TV/Voice/Internet customers and the costs of laying the fiber to the home has been slashed significantly.

There's just no way Verizon is going to spend a thousand dollars wiring up your home so that you can "sample" their FiOS services for a few monthsNo turning back to copper cabling: The consumer doesn't need to bear these initial costs but Verizon does expect their users to sign a long-term contract and they even cut your existing copper cabling so that future home owners won't have an easy time switching back to regular copper phone service and basic DSL connectivity.  There's just no way Verizon is going to spend a thousand dollars wiring up your home so that you can "sample" their FiOS services for a few months and then decide you want to go back to the copper network.

This has raised some concerns with some customers who are complaining that this isn't obvious from the fine print but Verizon is saying that they warn the customer during the sale, when the cable is cut, and it's in the paperwork given to the customer.  The biggest complaint comes from independent DSL operators who lease the last mile from the local Telco.  Current regulations require Telcos to lease their copper network to independent DSL operators but not such regulation exists for the new Fiber network being built by Verizon.  Since it's extremely expensive for Verizon to operate and maintain a fiber and a copper network, they're arguing that they shouldn't have to maintain a Copper network because consumers now have a choice to get their phone service from their Cable provider.

It probably doesn't make sense to require Telcos to operation two networks but we may eventually need to require the leasing of Fiber cabling to independent Internet Service Providers (though it wouldn't be fair unless we forced Cable companies to do the same with their coax cabling).  The Telco got the right-of-way privileges to install their copper and Fiber cabling through public property so there will ultimately need to be some compromise.  That doesn't mean Verizon let's other operators use their network for free and they will get compensated one way or another, but they become more of a commodity infrastructure provider rather than a complete platform provider offering Voice, Data, and HDTV services if customers go to the independent operators.  This would at least give customers some alternatives other than the cable companies.

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The copper versus fiber approach

AT&T's hybrid fiber/copper approach: AT&T's "U-Verse" service on the other hand doesn't need to worry about running a separate fiber and copper cables to the home because they're not generally deploying FTTP (Fiber To The Premise/Home).  For the most part AT&T is only bring fiber to within 3000 feet of your home to a miniature DSLAM called a 52-B which terminates the existing copper cabling for the final 3000 feet.  There will be a few exceptions where AT&T will deploy fiber to the home in some areas where they feel it makes sense financially.  The plus side to this approach is that AT&T doesn't incur large installation costs of installing fiber to your house and they can maintain compatibility with existing analog phones and devices that rely on analog phone cabling whereas fiber forces you to switch to a VoIP (Voice over IP) telephone or use an ATA (Analog Telephony Adapter).

Copper's Achilles heel is bandwidth: The downside to AT&T's approach is that severely bandwidth constrained with a peak performance of 31 mbps and possibly 58 mbps (with pair bonding) but 25 mbps is probably more realistic for the typical U-Verse deployment.  At 25 mbps, AT&T is setting aside 6 mbps for Internet access and leaving the remaining 19 mbps for Video and VoIP.  VoIP bandwidth is a trivial 0.08 mbps for both up and down stream bandwidth but Video (especially HD quality) is a killer on bandwidth.  Even if we're using degraded over-compressed H.264 1080i video streams of 8 mbps, there's only enough room for two HD streams along with one low-quality SD (Standard Definition) 480i video stream.

To deliver good HD video quality, video should be between 16 to 25 mbps but only a single HDTV stream can be supported on AT&T's copper-based service.  So what the U-Verse customer ends up with is a decent 6 mbps Internet service and two low-quality HDTV channels that can be watched at the same time.  While U-Verse might offer an alternative to the offerings of Cable companies, it simply isn't all that compelling.  Even though standard twisted pair CAT-6 (4 pair) copper cabling might be able to deliver 10 gbps at a range of less than a few hundred feet, a single pair of copper cabling at 3000 feet in length is a dead end from a triple-play perspective.

FiOS in the gigabit era: The most important aspect of FiOS is its massive bandwidth capacity.  The current implementation of FiOS uses a technology called BPON (Broadband Passive Optical Networking) which offers 622 mbps of total down-stream and 155 mbps up-stream bandwidth split amongst 32 homes for Internet access and the current premium FiOS Internet service caps users to 50 mbps down-stream for burst speed.  FiOS TV broadcasts come over a separate wavelength using a technology called GPON (Gigabit Passive Optical Networking) which supports 2.4 gbps down and 1.2 gbps up.  Since it's a broadcast technology, the downstream doesn't have to be split amongst 32 homes so it can offer a massive number of high-quality video broadcasts to every home.  Video-on-demand on the other hand requires a unicast technology and that's delivered using IPTV technology over the BPON data channels.

Currently, every FiOS home has two high-speed streams on two separate wavelengths over a single fiber delivering BPON and GPON which is more than enough for the near-term.  But fiber to the home can just as easily support 10-GPON which is ten times faster than today's gigabit PON technology and the price of 10-GPON transceivers will inevitably come down in the future.  Because FiOS architecture runs a single-mode optical fiber out to the neighborhood and then uses an optical splitter to connect up to 32 homes, bandwidth is divided up 32 ways.  That's fine for today's applications in the near term but it may not be in the future so when more bandwidth to each home is needed, 32 separate wavelengths of light can be used and each home would use its own dedicated wavelength.  That means it would be possible to deliver more than 10 gigabits of dedicated bandwidth to each and every FiOS enabled home making fiber to the home the ultimate long-term investment.