High Fiber Diet

Home builders are laying fiber in new developments so they can be marketed as "digital-lifestyle-ready," municipalities are building their own fiber networks to attract new businesses, and telecom carriers are spending billions to get in on the action. As this build-out spurs homeowners to develop a healthy appetite for a high-fiber diet, carriers and network service providers are creating the platforms for future solutions to enable digital integrators to go way beyond the "triple-play" services of voice, video and data that now characterize the current phase of the broadband revolution.

"The convergence of voice, video and data in the home is the first step of a race to provide as many new IP-based services and feature sets as possible that all flow from this convergence," says Alain Fernando-Santana, CEO of Netcentrex, a global VoIP service provider based in San Jose, Calif.

Three years ago, Netcentrex saw this fiber fever coming and created Iplay3, a high-tech consortium to deliver triple-play services to home customers. Now, Netcentrex is looking to join with solution providers and digital integrators via a partner ecosystem to extend IP-based services deeper into the home. "We want to ally ourselves with companies who can hand-hold the home user," says Fernando-Santana. " With the proliferation of new broadband services, there's a need for all kinds of new services in the home and many opportunities for value-added solution providers to differentiate themselves."

The triple-play platform in the home is "just the beginning," he says. "Suddenly, you can begin delivering to homeowners things like e-learning, videoconferencing, security, gaming. And the loyalty factor to the companies providing these services skyrockets."

Fernando-Santana says Netcentrex "wants to make it as easy as possible to develop new IP-based services. That's why we created the ecosystem and why we're looking to partner with value-added solution providers."

Also looking to partner with integrators is HomeNet Communications, a Provo, Utah-based triple-play service provider. HomeNet went live in December with its services over Provo's fiber network, iProvo, and is hunting for partners to extend its offerings. "We're planning on setting up a network of VARs to deliver services in the home," says Bob Murtagh, HomeNet COO. "I can't be all things to all people."

Via a partnership with HomeNet, dixEasyBackup has already piggybacked on the iProvo network to deliver backup solutions to homes and small businesses. "We help small-business owners and home users ensure that their data is backed up," says Chaz Nichols, vice president of dixEasyBackup. "It happens while they work."

Nichols approached HomeNet to provide the service. "It just seemed like a great deal for both of us," he says. And with a fatter pipe into houses and home networking solutions becoming more prevalent, storage and security issues are a hot topic for customers you wouldn't expect at all, says Nichols. "Even little grandmas ask you about security today."

"Fiber networks are changing the way people live," says Max Kipfer, founder and president of Fiber Optic Communities in Focus, or FOCUS, a group of fiber-fed cities that banded together in October to spread the word about the advantages of living and working in their communities. "Telecommuting, distance learning and future in-home medical applications are now a reality in these communities."

Critical Mass Coming
To date, 217 communities in 39 states have gotten fiber-linked, according to market researcher Render, Vanderslice and Associates. The number of actual homes connected is still small—about 150,000 according to Render, Vanderslice—but the growth rate of Fiber To The Premises (FTTP) or Fiber To The Home (FTTH) is increasing much faster than the rates ever did for copper and coaxial cable. It took about 100 years for copper and 50 years for coaxial to reach 90 percent of U.S. homes, says Mike Render, principal of Render, Vanderslice. In contrast, fiber is on track to reach 90 percent of homes in 20 to 25 years. "We'll be hitting critical mass in a fairly short time ... especially in new, planned communities," Render says.

Early fiber-optic networks deployed in the 1980s were mostly small projects undertaken by real estate developers, says Michael Arden, principal analyst at ABI Research. But when cable companies, which have lines into more than 70 million homes nationwide, began offering phone service in addition to video and data, that grabbed the attention of the telecom carriers. Even the slower fiber connections based on Passive Optical Network (PON) technology, at 24 Mbps to 35 Mbps, achieve speeds much faster than the 8 Mbps to 12 Mbps of the old-style DSL the carriers deployed as their broadband alternative. The faster fiber option, Active Ethernet, reaches speeds of 100 Mbps.

So, the RBOCs are ponying up the cash to transform themselves into broadband service providers. Verizon and SBC Communications, both of which have recently made major acquisitions to bolster their positions vis-'-vis the cable companies, are also spending billions to expand their fiber networks. Verizon says it spent $1 billion in 2004 on fiber to the home and plans to have passed 3 million homes by the end of this year. SBC says it will spend $4 billion over the next three years to connect about 18 million customers by the end of 2007, although most of those customers will be served by fiber to the node, SBC says.

High-definition video and in-home interactive gaming are key drivers of the need for higher bandwidth, says Arden. "The revenues for gaming are just exploding," he says. "The carriers see the opportunity to offer new video and gaming services that the cable lines can't, and that will, they hope, differentiate their services offerings."Serious Home Networking
The total market for equipment, cable and apparatus related to connecting homes to fiber networks is increasing at a 54 percent compound annual growth rate and is expected to reach $3.2 billion by 2009, according to KMI Research. Although the slice of that pie now dedicated to in-home IP-based services may be small, smart digital integrators are positioning themselves now to take advantage of the overall trend.

Silicon East, a Manalapan, N.J.-based SMB integrator, had stayed away from the home market, viewing it as merely a commodity space. But now the Microsoft-certified business partner works with builders throughout New Jersey and is big into Windows Media Center. "We see the convergence of Media Center in the home and FTTH as enabling high-bandwidth, [high-definition] content delivery for which there is no other mechanism," says Marc Harrison, president of Silicon East.

And, he says, that's just the start. In the past two years, the "tremendous growth" in telecommuting has given a boost to his home networking security sales. "I'd venture to say we have more SonicWall firewalls in people's homes than at client sites. Fiber enables very serious networking things in the home that your average home theater installer has no clue about. So it's really the SMB reseller that can capitalize on the spread of fiber networks."