Cable Industry Starts Paving Way for All-Fiber Networks

In North America, large operators like Comcast, Time Warner Cable, Cox, Cablevision, Bright House, Rogers, CableOne, Suddenlink and WideOpenWest are at least exploring fiber extensions to their conventional hybrid fiber-coax networks to improve their competitive positions against Verizon, AT&T and other telco competitors in specific markets. Other big cable providers, including Charter, Shaw and Videotron, are also studying whether fiber links, rather than coaxial cable lines, would be feasible for their last- mile connections to homes and businesses.

“Almost every major cable operator is now trialing it in the field and one routinely deploys it in new construction,” said Dave Pangrac, a consultant to the cable industry on fiber-to-the-premises who used to be a senior engineer for Time Warner. “The volume has been steadily going up.”

In the latest step, Time Warner quietly issued a wide- ranging request for information from equipment suppliers in December about FTTP technologies and their possible application to its residential and business services strategies. Specifically, Time Warner requested information about the possibilities for Radio Frequency over Glass, a new tech standard that the Society of Cable Telecommunications Engineers is drafting for the cable industry. TW also sought information about the use of Ethernet Passive Optical Network technology, by itself or with RFoG.

“We recognize that we need a transition plan over the long term to migrate off the HFC platform,” said Robert Harris, TW vice president of network planning and architecture who’s combing through vendors’ replies. “We believe the HFC [hybrid fiber coax] platform is viable for many years to come. But it makes good prudent sense to plan ahead.”

Time Warner’s action followed a similar RFI by Cox in spring 2008, setting the providers up for likely lab and field trials of equipment this year and possible deployments. Industry experts expect other major U.S. and Canadian cable providers to follow in the next year. “At least half of the top 10 [U.S. operators] seem to have their eye on the ball,” said an equipment supplier studying the RFoG market. “We've had reasonably good conversations with half of them.”

Small and midsized cable operators such as Armstrong Cable, Bend Broadband, Bresnan, Midcontinent, NPG Cable and Sunflower Broadband are already installing FTTP networks for residential and commercial customers. Armstrong is installing fiber extensions in all new-build areas in western Pennsylvania. Working with Aurora Networks and Alloptic as its main vendors, Armstrong has found it more cost-effective to wire new areas with fiber than install coaxial cable links from scratch. The company has more than 3,000 residential subscribers using its all-fiber networks, likely making it the largest cable FTTP provider in North America.

U.S. and Canadian cable operators are showing serious interest in FTTP technologies for the first time because the price of fiber has dropped and they now see promising markets for all-fiber solutions. Operators are particularly interested in niches such as master planned communities, other new single-family housing developments, apartment building complexes, rural areas, and business services. Cable providers are also exploring fiber network builds in response to stiffer competition from telco fiber networks, such as Verizon’s FiOS and AT&T’s U-verse, as well as growing demands from real-estate developers.

“Fiber is a selling point,” said Wilkin Law, Rogers Cable transport technology architect. Speaking at the SCTE Canadian Summit in Toronto last month, Law said developers often tell Rogers that all-fiber links will increase the selling prices of their new homes. Rogers installed a pilot all-fiber network for a new housing development in the Ottawa area last year.

Cable operators are making their moves as more than a dozen equipment manufacturers increasingly push “fiber-deep,” FTTP, and passive optical networking architectures, systems, and devices to the industry. The lineup of vendors promoting fiber access gear includes Arris Group, Cisco Systems, CommScope, Harmonic and Motorola, as well as telecom equipment powerhouses like Calix Networks, Hitachi Telecom (USA), Pacific Broadband Networks and Tellabs. The lineup also includes newer cable players like Alloptic, Aurora Networks and Salira Systems.

In particular, hardware vendors are rallying behind the RFoG standard that SCTE has been crafting for the past year. Scheduled to be completed this fall, the proposed standard would let cable operators add targeted fiber extensions to their HFC networks without switching any current headend and hub equipment or customer premises gear, including cable set- top boxes, cable modems, and voice modems. Cable providers would also be spared the need and expense of switching out their back-office systems.

RFoG has its drawbacks too, though. Perhaps the biggest is that the still-developing standard, unlike the various PON technologies that the phone companies are increasingly deploying, won’t add bandwidth or transmission speed on its own. RFoG systems will be able to support HFC networks with up to 1 GHz capacity, but they won’t provide extra capacity for the industry’s typical 750 MHz system. Cable operators will still have to upgrade the rest of their plant to increase their overall capacity.

“The good thing about RFoG is that it allows you to bring fiber to the home,” said FTTP consultant Victor Blake, who used to work for Bright House. “If the developer requires it, you can say yes to that question. Unfortunately, that’s all it gives you.”

Another important hurdle for RFoG is that FTTP networks still cost more to build than HFC networks in many cases. Though the price gap between all-fiber and HFC construction continues to narrow, especially in low-density rural areas where long lines are needed to cover great distances, industry experts estimate that FTTP systems still cost up to 20 percent more than HFC systems in dense, urban areas. As long as the price gap remains, cable operators may be reluctant to install many fiber extensions.

And operators risk scaring Wall Street with talk of major capital improvements to their plant so soon after they upgraded most of their cable systems to 750-MHz and 860-MHz capacity. If they embrace RFoG and related PON technologies, they could stoke fears that the industry’s capital spending will soar again after years of promised declines. These fears could further depress cable’s slumping stock prices and threaten the industry’s ability to raise funds for maintenance, expansion and growth. “The guys at the top are still freaking,” says Pangrac, who helped develop the original HFC network design two decades ago. “It’s a scary proposition for them.”

So industry forecasters believe 2009 will mainly be a cautious year of RFIs, lab tests, field trials and pilot deployments. In a report issued Friday, Heavy Reading predicted that North American operators will pass no more than 50,000 to 100,000 homes and businesses with RFoG extensions by year-end, up from a few thousand households and commercial buildings a year earlier. Most of the fiber- connected homes and businesses will be in smaller U.S. markets, the report said.

If the economy and the new-housing market start recovering in late 2009 or early 2010, industry experts think the outlook for cable FTTP deployments should begin to brighten. In North America, for instance, Heavy Reading predicts that cable operators will pass several hundreds of thousands of homes and businesses before 2011 as the new RFoG standard takes effect, equipment vendors churn out certified gear, new housing construction picks up again and the large operators complete their equipment trials and pilot deployments. The research group suggests that the number could rise higher if one or more major MSOs make a sizable commitment to FTTP by then.