New regulation on broadband and telecommunications providers is at top of mind here at ITEXPO (News - Alert). Jeff Pulver, founder and chief executive of pulver.com and co-founder of Free World Dialup, Vonage and Zula , is one of many voices this week warning of the evils of new regulation stifling innovation. I buy into Pulver’s position that more regulation is NOT A GOOD THING, but nobody’s convinced me that either Comcast or Verizon (News - Alert) have significantly altered their behavior to avoid the “big stick” of Title II regulation. One area where Verizon could make amends is in its public statements and actions to humble copper wire.
For a number of years, Verizon has been overtly pushing subscribers away from copper and onto FiOS (News - Alert) where available, wireless if not. In areas where FiOS is available, Verizon has launched scare tactics campaigns, warning customers that if they have problems with copper dial tone reliability, it would be a wise move to move to FiOS. In public statements, Verizon has said it isn’t investing in copper because it’s too expensive.
Hurricane Sandy demonstrated the weakness of Verizon infrastructure policies. Several outlying towns in New York lost copper facilities. Not having FiOS, Verizon tried to foist off wireless solutions as a sufficient replacement for things such as alarm systems, credit card readers, and fax machines.
It didn’t work. Verizon ended up rebuilding facilities wiped out by Sandy, leading to many forgetting the company’s underlying copper policy of “abandon in place.” IP equipment from GENBAND and other vendors ended up significantly lowering the cost to replace legacy gear trashed by the storm, re-enabling the existing copper for use.
Everywhere around the country, Tier 1 and Tier 2 carriers are pulling fiber. AT&T, CenturyLink, and Frontier are all trenching and digging, due in part to the perceived threat from Google (News - Alert) Fiber, while Google is going to light up Atlanta, Charlotte, Nashville, and Raleigh-Durham and maybe more cities by end of year. All of these firms are going against Verizon’s strategy of sitting pat on its FiOS deployments, dating back to a no-new-cities policy announced in 2010.
The logical end point for not building anymore fiber and letting the copper plant decay is not converting everyone to LTE and hoping plug-and-play wireless replacements for all the legacy stuff needing the legacy PSTN will appear.
With G.fast coming into play, service providers can deliver gigabit services over copper without having to trench. It is a viable alternative to further fiber deployments, enabling a carrier to fully leverage existing copper and core network assets to deliver high-speed broadband and video services.
As AT&T (News - Alert), CenturyLink, and Frontier roll out more fiber to support gigabit services, G.fast becomes another tool in the tool box to extend broadband services over existing copper plant. Ultimately, gigabit copper customers can be upgraded to fiber on an as needed basis.
Verizon’s all-or-nothing attitude to copper doesn’t appear to be a sustainable strategy, either for long-term growth or for keeping it and the rest of the industry out of Title II regulation for broadband services. Company leadership may think it can politically weather the storm until a new presidential administration comes into office in 2016, but the longer-term challenge is loss of revenue and market share to cable and general revenue decline.
Gigabit copper technology can provide a bridge between DSL and the need to deploy fiber, generating additional average revenue per user – yes, the almighty ARPU – to provide cash flow for deeper fiber deployments into neighborhoods and households. I suspect every incumbent carrier other than Verizon has figured this out.
Regardless of the technology, an “abandon in place” strategy for copper is not the way to keep customers or avoid more broadband regulation.