You’ll never get Google Fiber — but you don’t need it anyway

Will Google shame the big carriers into providing amazingly fast fiber-to-the-home Internet service? You bet, at least if you believe the press coverage, including a post here at InfoWorld. After all, who wouldn’t want gigabit Internet at a reasonably affordable price instead of pokey old DSL or shared cable connections? But you won’t get it.

In case you forgot, the big carriers are in the game to make money, and bringing fiber to the home is prohibitively expensive. How much so? According to the FCC, a typical deployment costs the provider a minimum of $2,500 and often as much as $5,000 per subscriber. Those costs are why Verizon quietly backed away from its fiber-to-the-home plans.

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Because we’re getting close to Christmas, I don’t want to play Grinch, so I’ll deliver some good news as well. Although fiber to the home is a nonstarter, an alternative, hybrid technology that delivers speeds much faster than today’s cable and DSL connections at a price the carriers can afford is gaining traction.

Fiber to the node: A cheaper way to increase speed You’ve probably seen ads for AT&T’s U-verse Internet service. Its top-tier package offers speeds of up to 45Mbps, which is roughly 10 times faster than the average DSL service in the United States and twice as fast as the average effective speed of most cable connections (despite what the cable companies claim).

Although AT&T’s marketing folks like to call U-verse fiber to the home, it’s not. Instead, it’s a hybrid technology, called fiber to the node, or FTTN. It features fiber to the cabinet, a kind of a switch box you’ll see in many neighborhoods, coupled with DSL over existing copper wires from the cabinet to the home or office.

Unlike cable connections, which are shared by the subscribers in a neighborhood, FTTN is not shared, so it doesn’t slow down during peak usage hours. FTTN can be boosted, using a technology called vectoring, which optimizes the existing transmission capability of the copper wires that run from the cabinet to the customer by canceling radio noise and other interference. When vectoring is applied to FTTN, speeds can nearly double.

In early November, AT&T announced a $14 billion program to upgrade its wired and wireless network. The project includes plans to add vectoring technology and FTTN to its wired network. When in place, U-verse’s top speeds should increase to about 75Mbps and climb even higher in the future, AT&T claims. The cost per subscriber for the upgrade is about $300 to $500, says Steve Timmerman, senior vice president of ASSIA, a performance management company that holds key patents related to vectoring. That’s a lot cheaper than the $2,500 to $5,000 needed to put in a new fiber-to-the-home network like Google’s deployment in Kansas City.

Here’s more proof that the economics of upgrading an existing network make much more sense than launching an all-new system: In early November, Germany’s Deutsche Telekom also announced plans to upgrade its network with vectoring and FTTN. According to the Wall Street Journal, Japan’s Bank Nomura estimated the cost of vectoring, including the network adjustments required to do it, at about €4 billion. That compares to €80 billion to deploy a glass-fiber network across Germany.

Why is fiber to the home so costly? In a word: shovels. Digging trenches for the new cables in an urban environment is labor-intensive and hugely expensive. Although Google says it was able to use existing telephone poles to carry its fiber in Kansas City, that’s not possible in many cities and affluent suburbs where utilities have long since been moved underground. What’s more, cutting deals to use poles and maybe underground cable ways could be difficult once the companies that own them — that is, the telcos and cable companies delvering DSL and cable TV service — decide Google is a significant competitor.

Google, of course, is very large and can use its scale to buy fiber and equipment at excellent prices. But so can Verizon, which has stopped expanding its fiber-to-the-home efforts. Even with its scale advantage, Verizon still lost about $800 per subscriber on its fiber deployment, says Timmerman.

The cost to customers is also high Less tangible but still significant is the difficulty of running a consumer business, an area in which Google has little experience. Indeed, when it tried to enter the smartphone business directly with the Nexus One two years ago, it failed miserably. Although carriers like Verizon and AT&T aren’t winning many popularity contests these days, they have huge networks of highly experienced technicians and customer service reps who know how to keep a network running and to manage a customer base.

Plus, when fiber to the home is built, it’s very expensive for the consumer. The fiber network in Chattanooga, Tenn., which is owned by the city in partnership with Alcatel Lucent, offers gigabit Internet, but it costs $350 a month. Google’s gigabit Ethernet plan in Kansas City runs just $70 a month, but it’s obviously subsidized very heavily, and it’s hard to imagine it going national at anywhere near that price. The effective speed of Google’s gigabit Internet service is unclear, but it’s likely nowhere near 1Gbps; early reports suggest it’s between 500Mbps and 700Mbps. That’s 10 times or more faster than what FTTN can deliver — but FTTN can actually be delivered to nearly everyone, whereas fiber to the home simply cannot.

The advantage of FTTN plus vectoring is certain: It takes advantage of the existing copper wiring that connects nearly everyone in the country (with the exception of some rural areas) to the Internet, and there’s no digging involved. There are of course adjustments to the network, including the installation of cards equipped with vectoring chips in the cabinet. But the economics are better.

Add all that up, and the idea that Google’s gigabit Internet experiment will shame or terrify the carriers into installing fiber to the home is laughable. If you want gigabit Internet, you’ll have to move to Kansas City or Chattanooga. But with new technologies extending the life of DSL, you’ll get all the speed you need at a price you can afford — and not have to relocate.

I welcome your comments, tips, and suggestions. Post them here (Add a comment) so that all our readers can share them, or reach me at bill@billsnyder.biz. Follow me on Twitter at BSnyderSF.

This article, “You’ll never get Google Fiber — but you don’t need it anyway,” was originally published by InfoWorld.com. Read more of Bill Snyder’s Tech’s Bottom Line blog and follow the latest technology business developments at InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.