Fever for the Fiber!

When it comes to broadband access, there is a “fever for fiber” that has been overwhelming all other types of Internet access. Lately it seems that fiber networks make headline news for providing 1 Gigabit or even 10 Gigabit speed services to customers inside of their footprint. Near Ceresco, Nebraska, a farmer paid over $40,000 just to get a fiber connection to his farm – a perceived bargain compared to the $380,000+ that another phone company was going to charge him. What is the drive behind all of this?

There is no doubt that fiber optic networks have a tremendous amount of capacity and are the logical choice when it comes to delivering broadband in densely populated areas. But the story changes considerably when it comes to sparsely populated and rural areas. In a densely populated area, it typically costs $2000 to $3000 per location to install fiber. In rural areas, the average cost jumps to $6000 per location and can even jump into the hundreds of thousands of dollars, as the example near Ceresco illustrates. Even with the fiber installed, the cost of service and speeds offered are comparable to those available through wireless and cable networks that cost as little as $300 per location to bring online. Why spend 20 times as much money on a fiber network when other alternatives can provide the same utility?

Some of the biggest drivers behind fiber networks are companies such as Google, Microsoft and Facebook that sell services that work better with higher speed connections. Many new applications are “moving to the cloud” – which means that your files no longer live on your home computer or devices, they are in data centers and server farms. When your files live in the cloud, the only way to access them is through a high speed connection, and the higher the speed the better. Having high capacity, bidirectional network connectivity is critical for the operation of cloud based computing, and that is part of the motivation Google has for implementing Google Fiber and prodding service providers to deliver more fiber and higher speeds to end users.

Another reason for the focus on fiber is because it plays into the strengths of many of the established network providers, especially in rural areas. Fiber is expensive, so companies that install fiber in rural areas are heavily subsidized through government programs, and those subsidies are designed to only support one recipient in a service area. Subsidization and very high take rates among potential customers are needed to keep rural fiber networks sustainable, and leads to a monopoly on Internet service for the local phone company in many rural areas. Many alternative providers are able to maintain sustainable business models in rural areas without subsidies or high take rates and provide badly needed competition but they are typically not using fiber.

Where fiber really shines is in the delivery of high capacity connections that can be used as the backbone for other networks. A gigabit of Internet connectivity can support hundreds or thousands of end users and tens of thousands of small data collection devices. The proliferation of agricultural devices that will need constant connectivity will grow exponentially over the next few years, but nearly all of these devices will connect wirelessly – not through a fiber network. Right now, the best use of fiber in rural areas is as backbone for wireless networks that deliver the blanket of connectivity needed for remote data collection and delivery to rural homes.

Fiber and wireless networks will provide connectivity for many years to come. The “fever for fiber” is raging hot right now, but the prescription calls for fiber in core areas, and utilization with fixed and mobile wireless networks to deliver the ubiquitous connectivity rural areas need now.

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