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When there is $45.2 Billion on the table, it's amazing how many people show up

by Dan Grossman | Jun 16, 2022

The Fiber Broadband Association held their annual FiberConnect conference in Nashville, TN (USA) on 12-15 June. FiberConnect is the premier annual event for fiber-based service providers in the US and their suppliers. 

This year, 3,300 attendees showed up, a record for this event. Although I saw badges from Verizon, AT&T, Lumen and Frontier, the overwhelming mass was from rural Tier-3, municipal and utility coop providers, especially from the American heartland. There is a reason for this: in November Congress appropriated $42.5 Billion in grants for states to distribute for projects to deploy broadband networks, plus additional funds for middle mile projects, tribal nations, and adoption. In total, the US Government is providing about $120 Billion in funding for closing the digital divide.  All this money will go a long way toward that end.

Broadband is now an essential service like electricity and telephone. Speaker after speaker hammered home variations on this point. People living in unserved and underserved areas are left behind in the 21st century economy. The pandemic highlighted the gap, as workplaces and schools shut down, leaving workers to work and students to study at home -- that is, if they had usable Internet service. Those students who did not fell behind, and stories about kids having to do their homework in the parking lot of a McDonalds to get free WiFi are cliché.

A couple of speakers noted an interesting trend. The pandemic brought a noticeable migration of households from cities and suburbs into rural areas, reversing the trend of the past hundred years. The communities that are benefiting are those with fiber broadband. People who want the rural lifestyle and cost-of-living are no longer tied to a physical office, and can work from where they choose to live -- as long as it has good broadband. 

Incumbent telcos and cable operators have done a pretty good job of serving most of the US population with cable and fiber. Those communities that were too expensive for the incumbents to fully and adequately serve have, for over a decade, been coming together and taking their broadband fate into their own hands. The sudden availability of government funding, as well as private investment, was the catalyst for a lot of these projects to turn from aspirations into actionable plans. The conference sessions were largely about how to execute: finding funding, structuring the business, building partnerships, managing contractors, network planning, customer service, marketing and more. People showed up at the conference to learn from these sessions -- and from  their peers -- how to make it happen.

Some of these local operations have been remarkably successful. I spoke with one small operator in Virginia that, after a bit more than a year of operations, had acquired over 2000 customers. In those neighborhoods that do not have cable, their take rate is over 50 percent, and in those that do, the take rate is over 30 percent. They can't install service fast enough to meet the demand. Incredibly, after only a year, they are cash-flow positive and well ahead of their financial plans! On top of that, they achieved this without any federal money.

On the show floor, two things stood out. First was a proliferation of challenger equipment vendors, showing a new generation of optical line terminal (OLT) equipment. This generation is characterized by disaggregation of hardware and software, open APIs and interfaces, software-defined networking (SDN), control plane/user plane separation, and cloud-native software architectures.  Open-source software and white-box hardware were lesser trends. Strategy Analytics will publish a report on this topic later this quarter.

Also of note, Nokia Bell Labs showed off a prototype of a 100G PON, based on off-the-shelf components. Actually, the system rate adapts from 25 Gbps to 100 Gbps, depending on the quality of the optical distribution network. This was the first public demo of a 100G PON, and evidence that intensity modulation/direct detection (IMDD) optics could continue to be used at this rate, rather than transitioning to far more complex and expensive coherent optics. As I've noted in other blogs and reports, operators are still digesting 10G PON, 25G PON is in various stages of trials by several Nokia customers, and 50G PON will start deploying in 2025 or 2026, so 100G PON will not be a reality until the beginning of the next decade.

Of course, the show also featured the usual displays of cables, connectors, ducts, enclosures, and miscellaneous apparatus, software tools for network planning, design, documentation and operation, and construction machinery. It would have been interesting to learn how innovation in the outside plant can save capex and improve reliability... if only the show were a day longer.
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