Home Spun

New players pull fiber into neighborhoods

With the promise of the high-speed Internet dashed by poky copper wires in most homes, new efforts are being made to lay optical fiber closer to customers.

The regional Bells, which own the copper phone lines, have been slow to push fiber into neighborhoods because its expensive. However, officials in some areas around the nation arent waiting.

This month the Grant County Public Utility District, the local power company serving 40,000 homes in a rural county halfway between Spokane and Seattle, Wash., will announce the start of a fiber-to-the-home deployment, utilizing the poles that carry their own power cables.

In Palo Alto, Calif., officials are creating a public "fiber utility;" a trial of service to 70 homes is scheduled to begin July 1. The groundbreaking effort has at times generated nearly as much heat as light, but participants say they are eager to try the service.

In addition, privately owned wholesaler MissionNetworks is deploying optical fiber throughout suburban and rural markets in Michigan and Ohio. "Bridging the digital divide — thats what its all about," said Dave Easter, president and chief operating officer of Mission. "In most of the communities were going into, well be the first [high-speed] provider there."

To spur the market, Commerce Secretary Donald Evans recently said the Bush administration is prepared to consider tax incentives for companies supplying high-speed access in rural areas. Evans also told high-tech leaders and venture capitalists that they "have a friend" in the nations capital.

Most industry estimates are that high-speed access is available to barely 60 percent of the U.S. population, mostly in metropolitan areas. With telecommuting on the rise and more businesses expecting employees to stay connected on the road, pressure is increasing to do better.

Spurring the interest in moving fiber closer to customers is the rise in virtual private networks (VPNs), which businesses will be deploying in droves, according to International Data Corp. Responding to a recent survey of a cross section of I-managers, more than 30 percent said they have VPNs in place, while another 34 percent planned to deploy them in the next couple of years. Such systems allow employees to stay connected to their work, wherever they are.

Steve Harris, senior research analyst at IDC, said a fiber ring, such as the ones being deployed in some suburban and rural communities, provide the speed and security needed to implement such networks. "VPNs havent become that easy, but we are seeing companies actually deploy it now," Harris said. "Its interesting to do this in rural areas because most of the focus up until now has been metropolitan markets."

In more affluent metro areas, some providers see a lucrative opportunity by starting from scratch in new developments.

In Austin, Texas; Houston; Phoenix; and San Antonio, a fiber-to-the-home provider is getting in on the ground floor as buyers plan new-home construction.

"Were finding that there is a big market for this," said H. Dean Cubley, CEO of Eagle Broadband in League City, Texas. "The average customer is one who works in the city, and when he goes back home doesnt want to have dial-up service."

Eagle Broadband recently acquired ClearWorks.net, a Houston company that specialized in fiber-to-the-home. Eagles Internet appliances and set-top boxes make it a natural partner for the fiber purveyor.

At $143 for a high-end package that includes a security system as well as telephone, TV and Internet service, ClearWorks can undercut the competition by 30 percent, Cubley added.

While new construction lends itself to last-mile fiber connections, hooking up existing neighborhoods is a much more difficult proposition.

Bob Harrington, one of the volunteer coordinators for the Palo Alto trial, said he plans to upgrade his home entertainment system once the fiber service actually arrives. But until then, hes hedging his bets.

"Until final decisions are made by the City Utilities Department, who are underwriting much of the cost for the trial, and the installation lights up, we really dont know what we are getting, what we may try to do [and] therefore what to think," Harrington said.

In Grant County, the fiber deployment will connect to NoahNet, a project announced by Washington Gov. Gary Locke last year to install a fiber ring connecting 18 cities in seven states in the Northwest. The communities hope to welcome businesses looking to locate where they can connect main campuses, branch offices and telecommuters to a gigabit network already in place.

"This is our social agenda here: to bring deployment and brand new jobs and provide people with access to services you never had before in rural areas," said Jonathan Moore, senior telecom engineer for the Grant County Public Utility District.