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June 12, 2014

AT&T to Build Gigabit Network in Winston-Salem



By Gary Kim
Contributing Editor



AT&T (News - Alert) and municipal officials in Winston-Salem, N.C. have agreed to terms upon which AT&T will build 1-Gbps access networks in portions of the city, and likely reflects both the market opportunity, availability of backhaul facilities and regulatory flexibility.

As pioneered first by Google (News - Alert) Fiber, municipal authorities have allowed Internet service providers to build gigabit access facilities only in neighborhoods where there is customer demand, instead of requiring uniform levels of access speed across an entire network.

That is a big change from traditional thinking about voice and video entertainment services, for example, traditionally franchised under rules mandating 100-percent coverage.

That approach allows ISPs to build first in areas where the possibility of recovering the investment is best.

Also, the North Carolina Next Generation Network (NCNGN) initiative played a role as well. The initiative, supported by six cities and four universities, provided AT&T with access to existing cables, conduits and data centers operated and owned by the sponsors. That arguably will help reduce the cost of the planned investment by AT&T.

The AT&T gigabit service, branded as “GigaPower,” is also being considered for approval by authorities in five other North Carolina areas, including Carrboro, Cary, Chapel Hill, Durham, and Raleigh.

Predictably, some think the showcase builds are not consequential, arguing that AT&T capital investment plans do not seem to have been expanded markedly to support widespread 1-Gbps builds. That misses the point.

Telcos and cable companies do not tend to vary their capital investment much, from year to year, especially when revenue is rather flat. Instead, they target different uses for the available capital.

What AT&T undoubtedly is choosing to do is shift planned capital expenditure from other areas and projects to the 1-Gbps upgrade in some neighborhoods and cities where the payback seems viable.

Some of the conduit, duct access and backhaul cables might help with investment requirements as well.

And the incremental cost of upgrading to gigabit speeds arguably is less than it once was. As the actual cabling and construction cost of installing fiber to the premises dominates total cost, the additional cost of opto-electronics, in a spot build, arguably now supports the business case.

The incremental cost of offering 1 Gbps as opposed to 100 Mbps “comes down to slightly more expensive ports, slightly more expensive routers or CPEs and bandwidth provisioning,” argues Benoît Felten. co-founder of Diffraction Analysis.




Edited by Maurice Nagle
 
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