Hitachi announced that they will partner with Falcon/IP Complete for a fully integrated MPEG-4 IPTV solution for service providers who are implementing Hitachi's AMN1220 Gigabit Passive Optical Network Fiber to the Premises solution. "We are pleased to partner with Falcon IP/Complete as part of our Source-to-Subscriber initiative," Said Rick Schiavinato, Hitachi Telecom vice president, sales and marketing said in a company statement. Hitachi and Falcon will target municipalities, master planned communities and telcos with the combined offering.

Recent discussion about cable companies beating telcos with new broadband additions has reignited the debate of FTTH and justifying its expense. One argument suggests that cable companies appear to be winning the current broadband battle because their network is superior to a telco’s copper and DSL based network. FTTH would level the playing field, the argument suggests. There is some evidence to support this theory. When you look at Verizon, they did see a big drop in DSL adds last quarter – but they also added new FiOS broadband customers at a much faster rate than DSL customers. But at what cost? In a recent New York Times article, Craig Moffett, an analyst with Sanford C. Bernstein is quoted as saying “… that Verizon would be $6 billion in the hole [as a result of FiOS] when all was said and done.” The New York Times article examines both Verizon’s and AT&T’s strategy for meeting the cable competitive challenge. It’s illustrative of an ongoing debate faced by telcos – should I “bite the bullet” and go with FTTH now, or should I try to extend the life of my copper plant investment for as long as possible. Both sides of the argument have merit.

The extending copper plant argument suggests that you should not strand too much investment in a new wireline network like FTTH, when the technology environment is changing so rapidly. Among other ongoing developments, there is no denying the momentous shift towards wireless for both voice and data. So there is some concern that plowing all this investment into FTTH may not pay off. The New York Times quotes AT&T CTO John Donovan as saying, “The last thing we want to do is overdeploy fixed capacity into the ground where there is no recovery for being wrong by putting in too much.” You certainly can’t disagree with the premise. Of course there is always a flip side to every argument. The competitive race is going on right now. The last thing any telco can do is stand still. FTTH proponents will argue, indecision will just allow cable competitors to pick you off, using a robust triple play bundle, powered by their “superior” network. So while you may not have “over invested” in a FTTH network, you also may not have a stable enough customer base to continue as a going concern over the long term.

What gets lost in this argument, especially when put into the context of Verizon and AT&T, is the impact of wireless. AT&T and Verizon can both afford to somewhat gamble with their wireline network of the future choice. The reality is, both of these companies are now really wireless companies, with wireline assets. Wireline derived revenue is increasingly becoming a minority of their revenue generation. If either of them mis-steps with their wireline strategy, they can afford to adjust accordingly. Other telcos who do not have that luxury are much more at risk with this decision. If you don’t have wireless, then your future obviously rides with broadband. Becoming the best at offering broadband in your given market should be the aim. Deciding on which route to take to achieve that objective will depend on a variety of factors. Factors like consumer preferences, competitor capabilities (present and future), technology innovation implications, and market demographics and firmographics, to name a few. Telcos need a comprehensive understanding of all of these factors before deciding which direction to take. Once these issues are understood, decisions about pulling the trigger on FTTH now, later, or never are much easier to make.

Those of us that follow telecom closely recognize that Iowa is somewhat of a unique telecom situation. For a state that is relatively low in population, Iowa has the most (by # of actual carriers) telecom service providers than any state – somewhere north of 130 carriers. So it’s no surprise that Iowa has been identified by the FTTH Council as the state with the most FTTH carriers. Does that make it the epicenter of FTTH? Joe Savage, the president of the FTTH Council seems to believe so, based on his guest column in the Des Moines Register. “While the number of FTTH subscribers in the state is still relatively low - about 41,000 - this number will grow because there are many small telephone companies in Iowa looking to stay competitive. In fact, the state ranks No. 1 in the country with regard to the number of FTTH service providers it has - nearly 40 in various stages of deployment …” says Savage in his column.

Truth be told, there’s a lot to learn from Iowa. These 40 FTTH carriers don’t get the press coverage of Verizon FiOS, but their operational insight and experience on FTTH is quite valuable. You could easily call them pioneers. There is a popular opinion that suggests all telecom carriers will be compelled to offer FTTH eventually. The competitive reality of the marketplace may dictate it and the falling price per port for FTTH (although the construction costs will still be hard to swallow) will eventually justify it. Telecom carriers that follow in the footsteps of these early adopters of FTTH will have a good base to learn from.

They say imitation is the best form of flattery. Verizon must really be flattered. It seems cable companies can't get enough of suggesting they too have FTTH networks, which are better than FiOS. Of course we all know that assertion is false (them having FTTH networks, that is). But I guess in the world of telecompetition, a little false here, a little false there, who is going to know the difference. I live in the Washington D.C. metro area, and Comcast has been running a series of ads, suggesting their "fiber network" is the biggest and best going, even mocking some poor glowing "FiOS character" as insufficient compared to them. BroadbandReports.com has a post discussing Time Warner Cable's latest efforts at confusing customers about FTTH and FiOS - efforts which have landed them in court after being sued by Verizon for false and misleading advertising. To be fair, telcos have done their fair share of bashing cable's product as inferior. With all this competitor bashing going on, you'd think these folks are running for president, not trying to market triple play bundles.

This can't be good for anyone. Confusing the public will ultimately come back to haunt you. It may get you some short term bounce, but last time I checked, deceiving customers has never resulted in sustainable long term gains. The average consumer is already somewhat distrustful of local cable and telecom providers (with the exception of maybe rural independent telcos). These latest marketing stunts aren't going to help reverse this legacy. All involved should stick to the truth (the speed comparison marketing that positions DSL as slow, compared to cable modem is fair game). Telecom, cable, and DBS all have respectable access platforms, which all contain strengths and weaknesses. They're all strong enough to stand on their own. There shouldn't be a need to mislead.

The idea of local governments and/or utility districts building broadband networks is still very much in play, but evolving. The movement has taken some “black eyes” lately, particularly the wireless focused ones. High profile failures of municipal wireless networks, many of whom were partnered with Earthlink, have seen a lot of press and analyst coverage lately. High profile FTTH municipal networks including, Project Utopia and iProvo, have also seen their fair share of troubles. But that’s not stopping others from moving forward. One example is PowelLink in Powel, Wyoming, a city of 5,500 residents. PowelLink is a partnership between the city of Powel, TCT West, and U.S. MetroNets. TCT West is a local independent telephone company in Wyoming and U.S. MetroNets is a facilitator of municipal telecom network construction and operation. Under this model, the construction of the network is privately financed, which was arranged by U.S. MetroNets, and will be professionally operated by TCT, who has previous experience in managing FTTH networks. On the surface, it looks like a good partnership. But don’t tell that to Qwest and Bresnan Communications, the respective incumbent telecom and cable operators. They’re obviously not happy with the competition such a network will bring and object to the public role in it. This will be one to watch in the coming months and years.

One of the interesting debates among telecom industry analysts is focused on who has the right long term strategy – Verizon or AT&T. Verizon is moving forward with its well publicized FiOS initiative which is a true FTTH architecture. AT&T has decided that taking fiber all the way to the home is not necessary, and they’ve selected a fiber to the node (FTTN) strategy for U-verse. Or have they? Light Reading reports that AT&T is also committing to a GPON based FTTH architecture for many “greenfield” developments. For the time being AT&T’s FTTN deployments will far outnumber their FTTH deployments, with FTTH lines numbering in the “hundreds of thousands” versus millions for FTTN. It begs the question though, what if AT&T finds that their FTTH deployments create better ARPU or compete more effectively with cable? Will they then be forced to roll it out beyond just greenfield developments? And if so, will the current FTTN strategy be a waste of time and money?

Cable competitors will have options to increase their capability and competitive prowess with technologies like DOCSIS 3.0 and tru2way. How well they execute on those opportunities will go a long way in determining which telecom competitive position makes the most sense – FTTH or FTTN. It appears as if AT&T may be hedging their bets somewhat, by deploying technologies like GPON along with their core FTTN architecture. Perhaps we will find that AT&T’s and Verizon’s strategies are more closely aligned than we first thought.

Apparently FTTH is not enough. Verizon wants FTTH on steroids. Hence their announcement today that they are moving to a GPON architecture for future FiOS build outs. All jokes aside, the move is a prudent one. If you’re going to spend billions on a FTTH network, why not utilize the best technology available. GPON expands the capabilities of their previous FiOS technology, BPON, by about fourfold. With GPON, 100 Mbps to the home is achievable. Of course don’t look for it any time soon. Verizon says the typical GPON customer won’t be able to tell the difference from a typical BPON served customer. At least not yet.

Verizon’s strategy is clear. They want to have the biggest, baddest network around. One that won’t be scared by a competing Comcast DOCSIS 3.0 network. Which by the way, Comcast announced today at CES they will begin to roll out in 2008. The ongoing head-to-head battle will only intensify.

Who needs FTTH when DOCSIS 3.0 can deliver 100 Mbps. Maybe those discussions are going on internally to Comcast, who announced they are pulling the trigger on 3.0 in 20% of their markets by the end of 2008. Light Reading’s Cable Digital News is reporting that Comcast’s chief technology officer Tony Werner revealed these DOCSIS 3.0 plans at the CableNEXT conference. DOCSIS 3.0 uses channel bonding to significantly increase bandwidth rates. It also leverages a variety of technologies to broaden the content experience for subscribers. For example, Comcast intends to use 3.0 to blend traditional multi-channel video content with Internet video content through a 3.0 enabled residential gateway. The end result will be a broader content and entertainment experience for customers and “FTTH like” broadband speeds, both of which, may contribute in bringing competitive parity with FTTH competitors.

Verizon announced several upgrades to its FiOS Internet service, increasing downstream and upstream speeds. Verizon now offers symmetrical speeds of 15 Mbps or 20 Mbps (depending on location) to FiOS subscribers in 16 states. The symmetrical service is priced at $64.99/month. Additionally, Verizon is upping asymmetrical speeds in the same footprint of either up to 50 Mbps/20 Mbps or up to 30 Mbps/15 Mbps depending on the state where the service is sold. Pricing for these new asymmetrical services varies by market and ranges from $89.95 to $139.95 a month. Verizon claims that one of these new packages is now available to all FiOS Internet subscribers. Verizon’s intention is quite clear, illustrated by comments made by Michael Cai, director of broadband and gaming research for the market research firm Parks Associates, “The system-wide introduction of symmetric FiOS Internet broadband service is a bold strategic move that Verizon's cable competitors simply cannot match.” Broadband speed inflation continues.

Leichtman Research has released their latest subscriber numbers on broadband which show cable maintains its lead over telco. According to Leichtman’s data, “the top cable broadband providers have a 54% share of the broadband market, with about a 5.1 million subscriber advantage over the telephone companies.” And apparently, cable has caught back up with telcos for new broadband subscriber ads. Telco had been adding more new broadband subs than cable for the past three years. But these latest results show new adds virtually even for cable and telco.

These results also indicate that broadband adoption is slowing. There were 2.1 million new adds last quarter, compared with 2.66 million ads for the same quarter last year. “Through the first three quarters of the year, net broadband additions are down 15 percent from last year’s record setting pace,” said Bruce Leichtman, president and principal analyst for Leichtman.