Two Fiber Networks?

Image of Austin, Texas

Image of Austin, Texas (Photo credit: Wikipedia)

The conventional wisdom in the industry is that two companies would never invest in side-by-side fiber networks to serve residential customers. I have had this conversation many times with clients who were planning to build a fiber network and who were worried about the response of the incumbent providers. Everyone has always believed that the first fiber builder wins because there is not enough margin in the residential market to support two fiber networks. AT&T has shown that conventional wisdom to be wrong by announcing that they will build a second fiber network in Austin as a counter to Google’s announcement to do the same.

This is not without precedent, although on a much smaller scale. The City of Monticello, Minnesota built a fiber network to pass every home and business in the City. The municipal fiber build was prompted by the fact that the City had some of the highest telecom rates in the country. Soon after the City built their network, TDS Telecom, the incumbent telephone company built a competing fiber network.

And as expected, both fiber providers are not faring well. After building fiber TDS decided to win back customers with an aggressive price war. Charter, the incumbent cable company also got into the price war fray. And so customers in Monticello are benefitting from a price war while all of the companies are underperforming.

It is fairly easy to understand TDS’s motivation for building the fiber network and for the price war. The company serves numerous other towns like Monticello and I see their response there as a clear warning to anybody else who is planning on overbuilding their serving territory. It is also clear that they are hoping that the City will give up and leave the fiber business.

And now we are going to see this scenario play out in the much bigger market of Austin. Google already overbuilt one AT&T market in Kansas City and one can easily envision Google overbuilding many other large cities. AT&T’s response in Austin is the same as TDS’s response in Monticello. AT&T has made it clear to Google and others that they are not going to side idly by and watch their major markets go to somebody else.

So it will be interesting to see the impact of AT&T’s announcement. It’s possible that the announcement will cause Google to pause and not build in Austin. Certainly they will not do as well as expected if there are two fiber networks. It’s also possible that both companies will build fiber and we will see side-by-side competition with two fiber networks and the cable company – the kind of competition we have never seen in a major city in the US.

But the real impact of AT&T’s announcement is going to be felt everywhere else. One has to wonder what kind of impact AT&T’s announcement will have on any company, Google included, who is contemplating building a fiber network in a large city. Google has very deep pockets and might proceed anyway, but almost any other company would not be able to afford the much lower returns that come with hard competition.

While this announcement might result in real competition for the citizens of Austin, it also might have the effect of stifling anybody else from trying to build fiber in a large City. This announcement could result in killing anybody from building fiber in large cities due to the fear of a similar reaction. While hearing about two companies wanting to provide gigabit fiber sounds like a good thing, the long-term consequence of this might mean less overbuilding, less fiber and less competition.

And I don’t know that AT&T had any choice. Their only other option was to watch their large markets go to an aggressive competitor. Nobody knows what Google plans to do, but some have speculated that they might build in most of the major cities. Now we’ll just have to watch this one play out, so pull up a chair. This should be interesting.

HD Voice

A spectrogram (0-5000 Hz) of the sentence &quo...

A spectrogram (0-5000 Hz) of the sentence “it’s all Greek to me” spoken by a female voice (Image:en-us-it’s_all_Greek_to_me.ogg). (Photo credit: Wikipedia)

HD voice (or wideband audio) is a technology that delivers the full frequency range of the human voice.  Traditional telephony has delivered a narrowband voice transmission and only transmitted sounds between 300 Hz and 3.4 kHz. However, the human voice extends between 80 Hz and 14 kHz, so traditional telephone has chopped off parts of every voice transmission.

The range of frequency was curtailed for traditional telephony based upon the limited bandwidth available for transmitting voice calls over a twisted copper pair. But voice that is sent over an IP path does not have those limitations and can send the full range of the human voice.

There has been an industry standard for wideband voice since 1987. However, until recently the only uses of the standard were in high-end video conferencing systems and for transmitting sports announcers back to the home station for rebroadcast.

But the industry is starting to use the HD voice protocol for calls made over VoIP. For example, Skype and some other PC-to-PC voice providers use the full HD voice bandwidth and the higher quality of the call can be experienced by a caller using a high-quality headset or handset. These same calls don’t sound better when listened to on a standard phone due to limitations in the speakers. There are also a number of vendors offering wideband telephones such as Avaya, Cisco, Grandstream, Gigaset, Polycom and others. These sets are capable of both sending and receiving a wideband voice signal, but the phones at both ends must be wideband capable to engage in an HD quality call.

So what are the business opportunities with HD Voice? Businesses are interested in having high-quality calls, particularly in conference rooms, noisy areas and other places where the quality can make a difference. The business opportunity is to make the phones available to businesses that are served with IP voice paths. HD Voice can then be sold as an add-on feature or as a more expensive voice line. A company that wants the higher quality calling is a great candidate for moving off of traditional TDM services onto VoIP, IP Centrex or other IP voice solution.

Faster Fiber

Exceeding the Speed of Light

Exceeding the Speed of Light (Photo credit: IntelGuy)

Researchers at the University of Southhampton have demonstrated a new fiber technology that allows light to traverse fiber at 99.7 % of the speed of light. This is a vast improvement over current fiber technologies that pass light at about 70% the speed of light.

It has long been understood that the glass in a fiber optics cable slows the light signal and that light can travel much faster through air. The new technology creates hollow fiber-optic cable to create a trapped air-pocket for the transmission media.

An abstract of the research can be viewed in Nature Photonics.

As can be expected, it will be a few years before the faster fiber hits the street. But the market is going to want faster fiber since the primary benefit of the new technology will be the reduction of latency on long-haul fiber routes. Researchers also postulate that the first use for the fiber might be as wiring for supercomputers since electricity ‘crawls’ through wiring at about 2/3 the speed of light.