A recent Render Vanderslice & Associates survey showed a spike in fiber-to-the-premises deployments, jumping from 78,000 homes in the U.S. at the end of March 2004 to 146,500 homes at the end of September. And while the high-profile deployments at Verizon certainly accounted for some of that jump, behind the headlines is the fact that most FTTP deployments are currently being done by independent operating companies, or IOCs.

It's at IOCs Huxley Telephone in Huxley, Iowa; Comporium Communications in Rock Hill, S.C.; and SureWest in Sacramento, Calif., where most of the experience with FTTH lies in the country. Municipally centered carriers such as CC Communications in Churchill County, Nev., and Clark McLeod's Opportunity Iowa also have been becoming more active in the last year.

Unlike many of their larger carrier brethren, which are being shoved into the FTTP market because of competitive threats from cable operators and voice-over-IP providers, independents have been aggressively pursuing FTTP for a half dozen different reasons.

For some, it's the desire to develop a new revenue stream in the face of declining core access line revenue and the uncertain futures of universal service and intercarrier compensation. For others, it's a buffer against potential competition. And still for others, it's community development in areas that have been too dependent on the agriculture industry for too long.

Comporium, for instance, started down the FTTP path several years ago because it wanted to converge its traditional telco and cable plants. And after a couple of hesitations, the company decided last year to convert a portion of its residential subdivisions to a FTTP network using Wave7 Optics' platform.

“[In 2003], we met with every vendor under the sun,” said Dan Smith, Comporium vice president of engineering and planning. “What it always boiled down to in the past was that it was always going to be cheaper to put in copper and coax. Fiber is still marginally higher, but we decided it was the best technology long term.”

That long-term strategic thinking is exactly what has led many IOCs to become more aggressive. While generally not facing the same kind of competitive threat as the largest carriers, independents are looking ahead to the time when they will be able to offer triple-play services and meet any competitive threat.

“It's IPTV that's really driving this with the IOCs,” said Mike Dagenais, CEO of Optical Solutions, which claims to be the supplier of about 58% of the total FTTP connections in the U.S., including early deployments at both Sprint and CenturyTel.

For many IOCs, the first step in that evolution is deploying fiber out to a neighborhood node and using ADSL2+ for the last mile to the home. SBC Communications and BellSouth also have adopted the same architecture. In theory, ADSL2+ gives carriers a 24 Mb/s pipe into the home over which they can run IP-based video, high-speed data and voice. In reality, most carriers are finding they can reliably get between 8 MB/s and 15 Mb/s depending on the length of the copper loop.

Running fiber all the way to the premises, however, gives telcos a colossal jump in bandwidth. SureWest, for instance, is terminating fiber at around 30,000 homes in the Sacramento area and able to get 100 Mb/s. And while typical broadband users would look enviably at such an abundance of bandwidth, the 70 Mb/s difference will be used up quicker than one might think.

Consider that one high-definition video stream, when compressed using current methods, takes up around 10 Mb/s of capacity. Add in the ability to do two or three streams of standard definition video at a time, plus high-speed data (at that point, voice, ironically, becomes inconsequential in the bandwidth budget), and suddenly 15 Mb/s looks positively narrowband.

CC Communications previously was using DSL for broadband connections but opted for FTTP because it wanted to what the company termed “mega-bandwidth services such as HDTV.” The company began connecting its first homes in mid-January and will eventually retrofit all of its DSL connections with fiber.

Just as significant as bandwidth are the economics.“We come in around 10% to 15% higher than a 100-home HFC node buildout,” said Mike Wearsch, vice president of sales, North America for Wave7. “The economics are very close.”

For some carriers, particularly those that are in competitive environments, the capital expense is worth it given the ability to bundle all three services and retain customers. In some cases, FTTP is being used by IOCs to attack neighboring Bell company markets.

Optical Solutions' Gigabit passive optical network platform, launched at the National Telecommunications Cooperative Association show in San Antonio early this month, is targeted at that very business model, Dagenais said.

“We're seeing a lot of applications outside the traditional ILEC territory,” he said. “In many cases, they're CLECing another town and putting in their own facilities.”

Those cases are few and far between, though, and most IOCs that continue following the “edge out” strategy, whereby they extend their existing ILEC turf into neighboring towns, are using more traditional fiber/copper architectures.

For municipalities, the greatest motivation may be community development. McLeod's Opportunity Iowa, which is a grass roots effort to get municipalities to build FTTP networks that would then be open to all service providers, is aimed at just that.

The goal, according to the non-profit, is to give Iowa residents the opportunity to have the same type of services that will be delivered by the largest carriers. Under the program, municipalities would seek voter approval to issue bonds to build a FTTP network. Telcos, cable operators and other service providers then would pay a lease fee to provide service over the connection.

And while it's very early in the market, the message is getting through. As of the end of last year, Opportunity Iowa had signed up leaders of 83 municipalities and 55 counties to promote the effort and put it on the ballot in November.

SMALL TELCOS LEAD CHARGE INTO FTTP, BUT IT'S STILL JUST A DRIBBLE

Results of survey from OPASTCO (Organization for the Promotion and Advancement of Small Telecommunications Companies) survey

Half of the survey respondents provide video over their broadband infrastructure

Of those, 17% are using traditional cable networks, 7% are using FTTP and 7% are delivering via satellite

OVERALL BROADBAND RESULTS:

90+% provide dial-up
85% provide broadband
On average, 88% of customers have broadband available
55% of respondent could get broadband to 95% of their customer base
28% could get broadband to 100% of their customers base
99% are offering DSL
20% are using unlicensed wireless
4% are using licensed wireless