G.fast and Sckipio Win Big In Net Neutrality Deal - SCKIPIO - The Leader in G.fast Ultrafast Broadband Modems
single,single-post,postid-16349,single-format-standard,ajax_fade,page_not_loaded,,qode-theme-ver-9.2,wpb-js-composer js-comp-ver-,vc_responsive

G.fast and Sckipio Win Big In Net Neutrality Deal

G.fast logo

G.fast and Sckipio Win Big In Net Neutrality Deal

G.fast, the new ultra broadband standard created by the ITU was a big, but hidden winner in the FCC Net Neutrality deal announced yesterday. The FCC is now stating that broadband means Internet access at above 25Mbps over the final connection to the consumer. In most cases, telcos selling DSL can’t call their DSL service broadband anymore – it isn’t fast enough. This puts enormous pressure on telcos to quickly up their data rates or lose the marketing war with cable companies. The DSL technology they have today won’t deliver higher performance and fiber to the home (FTTH) is prohibitively expensive as the Australians and others have learned.

According to the U.S. government, 75% of subscribers only have one choice of providers who offer over 25Mbps. Most of those subscribers are cable subscribers. Therefore, as the market moves to two-company competition, the second competitor is likely to be a telco and is likely to be competing with a G.fast-based solution. As Sckipio is the leader in G.fast, the FCC news is great for our business.


How does the FCC’s Net Neutrality Rulings Affect G.fast?

There were two main issues: net neutrality and last mile competition. They are mostly separate issues.

Net Neutrality Versus the Last Mile

For the first time, the FCC will regulate “the exchange of traffic between mass market broadband service providers and other networks and service providers.” Last summer’s shake down by Comcast against Netflix terrified Silicon Valley into pushing for action. Without changes in the regulations, web start-ups would potentially have to pay a toll for the broadband roads they leverage but don’t currently pay for.

At the same time, the FCC wants us to believe that through this regulatory imposition, consumers will now get more affordable high speed broadband through increased last mile competitive offerings. According to Chairman Wheeler, “Increasing the standard for broadband to 25 Mbps also clarifies one of the biggest challenges facing our broadband future: the lack of meaningful competition. It’s bad enough that 17 percent of Americans have no access to 25-megabit service. But at those speeds, about 75 percent of U.S. households can choose from only one provider.”

Chairman Wheeler is right about the monopolies, but, to be clear, there is nothing in the interconnection regulations that will improve the competition in the last mile.

Last Mile Competition

In order to provide meaningful competition in the last mile, the FCC removed some restrictions on municipalities providing their own broadband and improving access to poles and conduits. Essentially, though, as it relates to the last mile, the FCC hasn’t really changed any fundamentals in the business. Here’s why. The essence of competition in the last mile is about two fundamental principles: who owns the wiring and who controls the right of way.

Who Owns the Wires?

The main asset of broadband service providers is the physical plant – the wiring that transports the Internet along the last mile between the central office and the consumer’s broadband device. This is much more critical than the interconnections with the core network. The method of communications for that last mile is 100% based upon the existing infrastructure (usually wires) available to deliver traffic. The FCC is not requiring the unbundling of last mile services, which would separate the company providing the services running over the wire from the company who owns the wire. This is critical.

Telcos have mostly copper telephone wiring and cable companies have mostly coax wiring (each also have some fiber). Each wire type has unique capabilities and limitations and therefore uses different broadband technologies. Telcos mostly use ADSL and VDSL technologies for copper; and cable companies use DOCSIS for broadband over coax.

There are four main methods for broadband service providers to deliver services:

  1. Use cable lines. Cable companies own coax wiring. Due to local government regulations, virtually all cable wiring infrastructure is owned by a locally-granted monopolies like Comcast. Comcast and Time Warner didn’t secretly carve up the country as John Oliver suggests – local regulators did. So, who owns those wires? The individual cable companies. Therefore, since there is no unbundling, there is no affordable way for a second vendor to enter the local market without stringing new coax all the way into people’s homes. As a result, there will be no increased local competition within the cable industry
  2. Use phone lines. Again, for all practical purposes all broadband service running over existing telephone wires is a telco monopoly at the local level. It is rare for multiple service providers to operate in the same territory over copper. Why? Because each telephone company owns it’s own copper wiring. No other company can use that copper wiring. Any phone company wanting to enter the market must install new copper or fiber. As a result, there will be little competition from new phone companies using phone lines.
  3. Use fiber optics to the home. Stringing new fiber to the home will work. However, it is prohibitively expensive. It takes as much as 20 years to break even on FTTH deployments. Just look at places like Australia. They mandated FTTP by nationalizing broadband (NBN) in 2009 and claimed the average Australian consumer would achieve 100Mbps by now. Instead, the government of Australia is now claiming the average Australian only needs 25Mbps, tops. Why are they backpedaling? Because it’s simply too expensive – especially in cities where trenching is necessary and in-building right of way is problematic.
  4. Use wireless. One myth is wireless will act as a competitive threat to wire line communications. This isn’t true, either. Wireless systems lean extensively on wires. Marcus Weldon, CTO of Alcatel Lucent and President, Bell Labs put it best, “the more wireless you build, the more wired it is. Realistically, people will require a wireline network within 30 metres of them.” Why is that? Because the antenna needs to backhaul the traffic to the core network. That’s why you have coverage, but no capacity. There is limited backhaul for cellular backhaul. With the exception of technologies such as millimeter wave for backhaul, very little of the broadband traffic consumers need will be replaced by affordable wireless technology.


The main point here is where will the competition come from? It is highly unlikely to come from new entrepreneurs who want to create new services since they need to build new infrastructure – which is expensive. Municipalities can now enter the market and install new fiber infrastructure. However, they can only install wireless or fiber because they don’t own other lines. Therefore, they are relegated to the most expensive technical options – which is fiber to the home.
The only competition that will take place to reduce the monopolies will occur between telcos and cable companies. That’s basically it.

What’s Broadband?

According the FCC, broadband is now 25Mbps or above. Why did Wheeler choose 25Mbps? Because it accomplishes important goals:

  1. Defines the Minimum. The Telecommunications Act of 1996 mandates that telecommunications companies provide universal broadband service for “all consumers at just, reasonable and affordable rates.” The new threshold established 25Mbps as the bare minimum performance for service providers – for all customers in the US – no matter what it costs to provision them.
  2. Prods Telcos. Only 7.2% of DSL subscribers get 25Mbps today. This means that over 92% of DSL subscriptions as not broadband anymore and telcos need to reach that threshold. This strategy is no surprise since Wheeler was a former top lobbyist for the cable industry. The cable companies are far less impacted by the regulation shift (24% versus 92%).
  3. Forced Investment. DSL cannot achieve over 25Mbps in most real-world settings. Therefore, the government is forcing telcos to upgrade their infrastructure. This will force telcos to move first and fast.


Right of Way

The right of way issue is another thorny issue. Why don’t we have real competition in big cities? Because of right of way issues. Trenching fiber down the street in cities is very expensive. According to this very compelling article in Wired, local municipalities actually manufacture monopolies and make revenues on right of way rights. Want to install new infrastructure? You need to pay. This is no less relevant once the broadband gets to the multi-dwelling unit (MDU) apartment or condo buildings. The building owner controls what gets installed in the building. This is a huge problem for telcos since DSL technology performs very poorly in MDUs and building owners rarely let FTTH be deployed. That’s why companies like Verizon (that aimed to deploy FTTH everywhere) never delivered into apartments in big cities like NYC. It wasn’t possible – due to right of way issues. In Australia, they eliminated the MDU residents from the original NBN plan because they knew that FTTH inside apartment buildings was impractical.

Implications for G.fast

Here’s what’s clear.

  1. Telcos will be forced to upgrade to ultra broadband. Telcos are stuck between DSL – which is insufficient to meet the minimums and fiber, which has a 20-year ROI and very slow deployment models. Therefore, G.fast just became mission critical. It’s the only viable option for telcos.
  2. Urgency for G.fast just went up. Now, most telcos aren’t broadband providers. They are just access providers. They won’t be able to market broadband at all. Not until G.fast. FTTH is so time consuming to install. Even if telcos wanted to accelerate their FTTH deployments – they can’t deploy much faster than they are right now
  3. The G.fast market expanded. The market size and speed of market adoption for G.fast just grew dramatically. As the only affordable alternative for telcos, adoption of G.fast is going to accelerate. G.fast is quick to install, will save up to $1,500 per subscriber in CapEx and OpEx and will give telcos are competitive, high performance solution that complies with the 25Mbps minimum.
  4. Cities will become competitive. By providing an economical alternative to cable inside MDU environments, G.fast will allow telcos to successfully compete on price and speed. The market will stay between cable and telcos in most markets as fiber players will be less competitive.
  5. Telcos will have a cost advantage over municipalities. Since they don’t own any wires today, Municipalities will have much higher costs since they will be required to deploy expensive FTTH. Telcos that deploy G.fast will get a competitive edge on the new entrants in terms of price.
  6. Distance Matters. The further G.fast can go, the better the hope for all citizens. By pushing the distances of G.fast from the original target of 250 meters out to targets that exceed 500 meters, many more citizens can be reach via hybrid fiber/copper networks.