Policies to Facilitate FTTP Deployment

Abstract

The major technology development for wireline voice, data, and video service is fiber-to-the-premises (FTTP), and telephone and cable television companies as well as governments and industry regulators are all concerned with the speed and extent of deployment of FTTP. This paper analyzes alternative policies that will affect that deployment of FTTP.

FTTP is a technology to deliver voice, data, and video service. FTTP is not a final product or service itself but is a delivery platform that competes with other delivery platforms including copper wires, copper networks with a fiber backbone, fiber-to-the-node (FTTN), cable systems with hybrid fiber-coax networks, wireless (particularly LTE and LTE-A), and other network technologies. This is the case whether FTTP is used by the carrier deploying FTTP or whether the FTTP or space on the FTTP is sold by that carrier in a wholesale transaction to another service provider that uses the FTTP to deploy voice, data, and video services.

At this time, the products and services delivered over FTTP are not materially different from the products and services delivered, or that can be delivered, using other technologies. Even broadband speeds of 100 MBS can typically be provided over copper networks properly configured and by cable companies using their current technology. While FTTP may be required to provide very high speed broadband, such as 1 GB service, these services do not yet have significant demand in the market. Nonetheless, in the future there will most likely be services that can only be provided over FTTP, so the deployment of FTTP is an important policy issue.

There are two competing approaches to FTTP deployment. One approach is to treat FTTP as a monopoly, or to create an FTTP monopoly, selecting one company to construct the FTTP network and mandating that all other service providers have access to this network. The other approach is to encourage or permit multiple FTTP networks and to not mandate access to any of the networks by other service providers. Of course, combinations of these policies are also possible. For example, the FTTP network might be treated as a monopoly with mandated access, but other companies would not be prohibited from constructing their own networks. Alternatively, access to some FTTP networks might be mandated, but the terms of that access might be subject to commercial negotiation. Other policies are also possible.

While arguments for and against any of these policies can be made, and have been made, on a theoretical basis, there is now an increasing amount of actual evidence weighing upon which of these policies are most successful, and are likely to be most successful, in facilitating the deployment of FTTP. It is just this evidence that this paper proposes to consider in order to make recommendations insofar as possible about the expected success or failure of alternative policies.

This evidence comes from two sources. One source is evidence from the wireline industry regarding investment and FTTP deployment. The other source is evidence from the wireless industry where there has also been varying degrees of mandatory access with consequences on the deployment of new technology. Considering the evidence on the effect of alternative policies on the deployment of new technologies should contribute to moving the policy debate beyond the theoretical and hypothetical.

Keywords: FTTP, telecommunications policy, unbundling

JEL Classification: L96