The economics of fiber to the home revisited

In this paper, we examine broadband access networks based on very high bandwidth digital subscriber line (VDSL), passive optical network (PON), and active optical network (AON) technologies, and discuss the cost and performance tradeoffs of these technologies as a function of the critical network parameters (e.g., dedicated user bandwidth, population density, and subscription rate). We estimate the potential bandwidth needs, both current and future, and detail the critical costs involved in constructing an access network to serve those needs, using a simple generic model of the relative economics of the different broadband access technologies. We explicitly include trenching, cabling, equipment, and housing costs at all points in the network, from the customer premises to the metropolitan area network (MAN) node. We show that there is a critical downstream bandwidth of approximately 26 Mb/s per subscriber, above which the limited reach of digital subscriber line (xDSL) makes it less cost-effective to deploy than fiber to the home (FTTH), when all network costs are explicitly accounted for. We also show that, when near-symmetric upstream bandwidth is required, the argument for deploying FTTH networks (either active or passive) becomes compelling. © 2003 Lucent Technologies Inc.