TIlE COST CONVERTING - Michigan State University

106
TIlE COST CONVERTING UTILITY NETWORK INTO A NETWORK BROADBAND AND CABLE TELEVISION TO SUBSCRIBERS October 18, 1990 Report to The National Regulatory Research Institute Prepared by Julia A Miezejeski Michael Miller Bruce L. Egan Northern Business Information!Datapro a Division of Hill, Inc. 157 Chambers Street New York, N.Y. 10007-1015 This report was prepared by Northern Business Information/Datapro for The N adonal Regulatory Research Institute through funding provided bl fllember commissions the National Association of Regulatory Utility CommiSSIoners (NARUC) and a grant from The Center for Advanced Study in Telecommunications (CAST) at The Ohio State University. The views, opinions, and costing models of the authors do not necessarily state or reflect the views, opinions, or policies of the NRRI, NARUC, or NARUC nlember commissions, or CAST.

Transcript of TIlE COST CONVERTING - Michigan State University

Page 1: TIlE COST CONVERTING - Michigan State University

TIlE COST CONVERTING UTILITY NETWORK INTO A NETWORK

BROADBAND AND CABLE TELEVISION TO SUBSCRIBERS

October 18, 1990

Report to The National Regulatory Research Institute

Prepared by

Julia A Miezejeski Michael Miller Bruce L. Egan

Northern Business Information!Datapro a Division of McGraw~ Hill, Inc.

157 Chambers Street New York, N.Y. 10007-1015

This report was prepared by Northern Business Information/Datapro for The N adonal Regulatory Research Institute through funding provided bl participatin~ fllember commissions the National Association of Regulatory Utility CommiSSIoners (NARUC) and a grant from The Center for Advanced Study in Telecommunications (CAST) at The Ohio State University. The views, opinions, and costing models of the authors do not necessarily state or reflect the views, opinions, or policies of the NRRI, NARUC, or NARUC nlember commissions, or CAST.

Page 2: TIlE COST CONVERTING - Michigan State University
Page 3: TIlE COST CONVERTING - Michigan State University

3

· . 1

3 1

Page 4: TIlE COST CONVERTING - Michigan State University

4

5

6

7

. 81

Page 5: TIlE COST CONVERTING - Michigan State University

L

1.11

1

to

7

6.1

7

v

4

5

, ... 6

8

9

. 11

... 49

.51

Page 6: TIlE COST CONVERTING - Michigan State University
Page 7: TIlE COST CONVERTING - Michigan State University

public policy over whether should allowed to provide cable television services has largely centered on cross ownership and dominance issues. However, another important issue, the cost converting a public switched telecommunications netw'ork one of delivering the full

of broadband and cable television services, has less attention. Because of the variety of the broadband network design options available to

telephone utilities, state commissions have a need for a reliable framework that can to identify the broadband deployment option being implemented by a utility

and the cost of the o:ption. This report by Northern Business InformationjDatapro will allow a cOITnmSSl0n to identify options and costs.

Of course, the NRRI, NARUC, or NARUC member states do not necessarily endorse the particular costing method employed in the course of this study. The NRRI feels, however, that the simple engIneering cost model used is a reasonable model and provides a benchmark that can be used by other cost studies. Further, the analysis herein does not necessarily assume or favor any particular ratemakin~ method. We appreciate the supplementary financial support for this project proVIded by the Center for Advanced Study in Telecommunications of'Ine OhlO State University.

vii

Douglas N e Jones Director NRRI Columbus, Ohio October 1990

Page 8: TIlE COST CONVERTING - Michigan State University
Page 9: TIlE COST CONVERTING - Michigan State University

cllstonlers on

new

or

high-speed

Page 10: TIlE COST CONVERTING - Michigan State University

are

costs are

Page 11: TIlE COST CONVERTING - Michigan State University

costs shared and switching plant traditional and nontraditional

services. Nevertheless, this is the challenge, and some

identifying classifying costs are contained in Chapter L

xi

Page 12: TIlE COST CONVERTING - Michigan State University
Page 13: TIlE COST CONVERTING - Michigan State University

1

;'1L(I>l"~<;Il~~n ........... 1!"""' ....... ~:!o·W'~1r·1"'n urith';·" traditional lines of business has the

exchange telephone companies to diversify seek new sources of revenue.

area draws considerable interest is the cable industrye However~ the

telcos face legal restrictions barring them from. operating cable TV networks.

Prohibitions the 1984 Cable Communications Policy Act prevented the

regional bell operating companies (RBOCs) from operating cable TV networks.

Recently, both federal and state regulators have begun to reconsider these

restrictions. The costs of new fiber~based networks capable of providing cable TV

services will playa vital role in the debate. Equally important are the costs

associated with other broadband services, apart from cable TV. Telcos are eager to

exploit opportunities selling other broadband servi.ces such as video-on-demand,

home banking, and home shopping. From an operations standpoint, once a

broadband network is in place, telcos would then package existing narrowband

services*-plain old telephone service (POTS) and low-speed data--together with the

broadband delivery to customers.

Traditionally, investment detisions by telecos and cable TV operators alike

were made in a monopoly environment dominated by issues of service quality, cost

savings, and capital recovery. Unlike investment decisions of the past, future

investment decisions will be made in an increasingly competitive environment.

No doubt, both LEes and large cable TV operators view aggressive deployment

of fiber as a strategic advantage. tlWhoever gets more fiber in the ground first,

wins!" seems to be the prevalent thought process in the telecom conununity.

Despite current regulatory and legal restrictions, telephone companies see that

installing high quality, high capacity fiber in the network will position them to meet

the future needs large customers and third-party vendors whose services

currently cannot be provided by telephone companies directly. What's more,

telephone companies believe that in the near future, fiber lines will be cheaper to

install and maintain, and will provide clearer connections for voice conversations.

Underlying these plans for generating new revenues and cutting operating costs is

1

Page 14: TIlE COST CONVERTING - Michigan State University

dollars V'>.P9IiI"';.ft..:::. "'''fI:'1-iO.1i''n into a full

spent today's

Clearly, this

largest cou*;truction ever undertaken by the telco community.

telephone companies as a serious competitive Cable

cable television business. face a

local television monopolies. some telcos, cable

operators are on expanding and envision intercity video distribution using

fiber optics to provide the programming requirements for several local systems.1

TItis could enable cable television's penetration in the telecom business for

internode transport and ultimately to connect end-users. Cable TV firms also have

growth strategies that call for diversification through new service applications.

They are upgrading their networks with fiber in anticipation of this growth. If

cable television is first with ubiquitous fiber installations, widespread bypass of

telephone company local facilities will be likely.

A clear cost structure, segmented by service offerings and by network

configurations is needed to formulate responsible public policy for the telephone and

cable TV industries. For policy makers, the need for a generic costing mechanism

is urgent. Telcos and cable TV operators are now considering several strategic

plans for building broadband networks. These service providers have remained

flexible in their network planning. Recently, the RBOCs chief network planners at

Bell Communications Research (Bellcore) endorsed a residential broadband

architecture that is a radical departure from the architecture that BeHeore endorsed

previollsly.2 In this fluid environment, the purpose of this report is to develop a

framework to identify and analyze costs associated with the specific construction

alternatives that a LEe could pursue to provide cable TV services and other

broadband services.

The remainder of this chapter win provide an overvie\v of subscriber loop

architectures, network evolution and telephone company fiber loop trials.

1 "Kahn Plans All-Fiber Overbuild in N.J.," Cablevision, October 12, 1987.

2 Special Report SR-TSY-001681, Issue 1, June 1980.

2

Page 15: TIlE COST CONVERTING - Michigan State University

Currently o;:I.LI'lb.""'''''.!UI. different subscriber loop architectures being

n.o."M"","",,,,varchitecture

will limit our descriptions to the

category.

' ........ "" ......... ..., a U ........... A ............

dominant architectures

Fiber-to-the~·home is characterized by use fiber-optic facilities (shared

and dedicated) in construction of the loop portion of the network to the

subscriber's home. The first FITH installations were deployed in traditionalltstarj,

architectures whereby service is provided on equipment dedicated to a single

customer. Telcos began using the star technology because it allowed them to use

the existing distribution equipment offered by suppliers and was consistent with

their installed base and operating and engineering expertise. For exanlple, AT&T's

switched*star architecture fits well with its SLC Series 5 subscriber loop carrier

system, which has been installed widely by all RBOCs since the early 1980s.

The single·star architecture uses dedicated fiber-optic facilities from the

central office all the way to the subscriber's home. The only resource that is

shared is the central office. Figure 1.3 shows the network components utilized in

a single star architecture.

!lQilhle-Star Ar~hitectu.re

When multiplexing equipment is introduced to the system at remote terminal

sites, the architecture becomes a double star. Some resource sharing is provided at

the remote terminal (the serving area jnterface or where optical signals are

3

Page 16: TIlE COST CONVERTING - Michigan State University

~ Fiber

Feeder

I

Serving Area Interface

Remote Terminal

To CATV Provider

Fiber

Distribution

Optical Network Interface

Drop

cr (D ., i

-i a 9F-1 4~ =r\-l ro

9 :t: o 3 ro

Optical NAI'Ulftlrlif

Interface

Page 17: TIlE COST CONVERTING - Michigan State University

(JI

Central Office

Fiber

Feeder

I

Serving Area Interface

Remote Terminal

LTO CATV Provider

Fiber

Distribution

COAX

Optical Network Interface

COAX

'" Copper Twisted Pair

~I':J 0" \-I­ml.Q ...,~ II;

-1(1) o I -1~ ::r O

(1)1\.)

I n IC ..., C"

Page 18: TIlE COST CONVERTING - Michigan State University

U)~ :;'/-1-

(OI...O --r:;: rot-; 1(1)

U)

(;1-' ,e III

I J;>w

In ito"t,. , 0 =r

s Optical Network Interface

Fiber 0"1

Features: All resources dedicated Optical NAtwnrill' ll!nt'ftlri'~iJ"I>_

Optical Network Interface s

Page 19: TIlE COST CONVERTING - Michigan State University

I' 1 d mu. .. t1p exe

multiplexing

home.3 loop ...... #"iI·u'l-·""' ... ~·~~ ... ,""'''

usually "",VA..M.:IA";''',",

digital ""~"'_JI,.L""'A systems. Figure provides a simple of the double-star

(switched) Passive

a nevv technology currently being studied several

telephone of resource sharing a cost-effective

m.eans upgrading to broadband services. l-Iigher levels of resource sharing are

achieved when one channel becomes multiple shared channels lightwave

signal splitting. Additionalchannels can be allocated among subscribers as needed.4

This technique uses fiber splitters, optical couplers, and/or wave division

multiplexing (WDM). An example of passive optical networking is illustrated in

figure 1.5, which shows BeHeorc's passive photonic loop architecture. This

arrangement is capable of POTS and cable television-type service on a single fiber

optic access line. Wave division multiplexing techniques may be used to provide an

analog broadband service capability while at the same time providing narrowband

digital or analog POTS. WDM uses electronics to "channelize" a single fiber loop,

allocating bandwidth withinthe same physical facility to each type of customer

service as required. This architecture is also referred to a,s, a passive (nonswitched)

double star .

. Fiber to the Curb

Fiber-to=the-curb architectures are characterized by the presence of fiber

facilities from the central office to the pedestal. With F1TC, the pedestal is the

point at which the fiber is terminated and the copper or coaxial cable begins

distribu tion.

The "last mile" (slang for the last segment or dedicated subscriber loop

portion) of distribution cable, opto~electrorJc conversion 'and subscriber electronics

represent the major costs associated with FITH. By contrast, with F1TC, opto­

electronics are shared at the pedestal by at least four homes (rather than

dedicated to each individual subscriber as in FITH). In addition, F1TC drop cables

3 Mary Henry and Daniel F. Zinsser, liThe Telescope: Telecommunications Equipment Trends and Directions," Goldman Sachs Research (March 1990)~ 9.

4 Ibid.,17~19.

7

Page 20: TIlE COST CONVERTING - Michigan State University

00

le ... Star

Serving Area Interface

Remote Terminal

II ~

Serving Area Interface

Remote Terminal __

Features: Some sharing of facilites occurs

remote terminal

Fiber

Or:.:! 01-'-CI.Q

~~ Wr; am

tn """'"j--l (» • .,~

II rc I r+ m n r+ c: ., CD

~

Optical Network

Fiber

Fiber

Optical Network

1I_\li'1_~1I Network Illn1'Qn:::r.ra

Page 21: TIlE COST CONVERTING - Michigan State University

1..0

Ii

I ,.

Serving Area Interface

D

Remote Terminal

Assumptions 16 Subscribers per remote node Services include:: POTS, 2-WclY data and

video conference, i-way 4 channel video and video database

* SeUcors Passive Photonic loop

Cost (per Subscriber) Serving Electronics OlE, E/O WDM Drop and Distribution Feeder Other Total

-

$2,000 700 250 400 200 300

$3,850

Page 22: TIlE COST CONVERTING - Michigan State University

the pedestal to the home are copper or coaxial

most popular

UI1JU}-Snu and bus.

Triple-Star Architecture

architectures in """A.''''V~ .. '''V'''''C'''' company

1l"<IJIT,n,Q1l" than fiber.

today are the

This FITC system employs a triple h stal' architecture where fiber runs to the

pedestal and standard twisted pair copper cable runs from the pedestal to as mfu"1Y

as four homes.5 Certain phone companies view architecture as most beneficial

for rehabilitation projects and short loop constructions. The increase in resource

sharing in triple~star installations will drive the cost per subscriber down closer to

today's copper based installations. The t.riple-star architecture is depicted in

figure 1.6.

Bus Architecture

The bus architecture is the most popular (and economical) FITC system for

narrowband applications. The Raynet loop optical carrier (LOC) system is being

trialed by Ameritech, BellSouth, and NYNEX. One bus will support as many as 192

subscribers. However, original telephone company construction will support a lower

number to provide for growth and additions. Skepticism prevails in the industry

over whether this design can be easily upgraded to FITH or to two-way broadband

cap ability. 6 Figure 1.7 displays the bus architecture. The bus design was

originally developed for multimode fiber but Raynet's new LOC2 system. win accommodate single mode fiber, the current industry standard~ Raynet claims that

through passive optical networking, this new system will support up to 384

telephone subscribers and offers upgrade ability to broadband services.

Fiber BackbQn~N~twQrk] 'The hybrid fiber/copper or fiber/coax network generally implies a fiber~optic

backbone, or trunk, interconnected to either telephone company twisted pair or

cable company coaxial cable for the last network segment. The fiber backbone

topology will likely become the new cable TV industry's standard for implementing

5 Ibid., 9.

6 Ibid., 13-17.

10

Page 23: TIlE COST CONVERTING - Michigan State University

· O"l

IilI

I II

I rc I Serving Area Interface

Remote Terminal

Serving Area Interface

r-a I Remote I Fiber /--l Fiber Terminal

Fiber

Optical Network Interface F· "

Pedestal

Page 24: TIlE COST CONVERTING - Michigan State University

\.....I N

HemOte Terminal

Pedestal Optical Net""ork Interface

Serving Area Interface

Features: ] Up to 8 homes/pedestal

to 24 pedestalslbus .

Copper

r it t

~ ........... :£ ==(

Pedestal Optical Network Interface

Pedestal Optical Network Interface

Copper

Pedestal Optical Network Interface

Pedestal Optical Network Interface

.. ~~ \..;>!OIt)r~'!V" ~<.<>

Page 25: TIlE COST CONVERTING - Michigan State University

eJlisting cable feature tree-and-branch, one­

for bi­

directional amplifiers. However, the tree-and-branch architecture's many coaxial

amplifiers cause system problems as signal errors cascade

through amplifiers. By using fiber instead the

the with are

""'A .................... ."."'."'~9 enhancing signal quality and service reliability.

fiber optic points interconnected thereby allowing for signal

redundancy or alternate routing possibilities in the event of node failure.

addition, a fiber backbone can enhance picture quality, expand overall system

bandwidth, and allow for two-way narrowband service possibilities at minimum

additional cost.

Telephone company fiber backbones (fiber feeder plant) are less interesting

from a customer's perspective since the service capabilities of copper loops are not

significantly enhanced for residential customers. The primary motivation for

telephone company fiber backbone deployment is the cost efficiency of high density,

shared plant. Basically, the telephone company fiber backbones are deployed to

replace nonfiber trunk and feeder plant. The cost justification logic for telco fiber

backbones is identical to that which justifies use of any replacement of copper

pairs: to expand capacity and narrowband signal quality and save on maintenance

costs.

Perhaps the most significant result of telephone company deployment of fiber

backbones is that cable companies or others may be able to efficiently interconnect

to it from headend or fiber-hub points in order to achieve intercity two~way

switched and point-to-point service. This situation is intuitively appealing to

industrial logicians since the relative strengths both of telephone companies (with

high bandwidth interoffice and intercity facilities) and cable companies (with high

bandwidth local distribution facilities) may be combined for the benefit of

residential subscribers. Figure 1.8 provides a basic view of the fiber backbone

architecture.

Loop Network Evolution

Now that we have provided general descriptions of the basic fiber loop

architectures, it is important understand these network architectures may be

13

Page 26: TIlE COST CONVERTING - Michigan State University

Figure 1 .. 8 Fiber Bockbone Net work

14

Page 27: TIlE COST CONVERTING - Michigan State University

evolve to a today's telephone

........ ""',' ............ , ... ..., of telephone

""'V .... .w.f-' .. ~ ...... ~"''''' and other communications providers are generally specific the

particular type These configurations are

digital

simultaneously a services. With broadband network technology, such as

transmission are commodityqlike, and customers win be able to use capabilities

for wbatever final services they demand. Ultimately, customers may be able

obtain a host of basic network functions over a single access facility.

The first stage of the network evolution, (assuming interexchange trunks are

already converted to fiber) begins with integrated services digital networks (ISDN).

ISDNs feature a single integrated access link including access to a host ISDN

network switch, and intelligent signaling network. Basic components of the

signaling network include ISDN switches, digital transport facilities and signaling

systems, including si~altrans~er points (STPs) and network control points;(NCPs)

for database services~,~;:

At this stage the copper feeder cable is the next logical segment to be

replaced by fiber, thereby creating a "fiber backbone" system that may evolve to

FITH and FITC systems~ using star, bus, or star-bus configurations. Remote nodes

(remote terminals) located on the customer side of the host ISDN processor (serving

area interface or SAl) may be used to provide;,~ert.ain features and functions. The

serving area interface becomes fiber-c~mpatible :ih~ough the placement of

appropriate digital loop carrier technology. The use of sophisticated equiplnent or

"intelligent" remote nodes may provide customers with "smart" access. The features

and functions which "smart" access provides will likely be in the category of

enhanced services, not POTS.

In stage 2, copper loop distribution cable may be replaced with fiber. Next, at

an interim stage 3, the costly opto-electronic (O/E) conversion function may be

installed at a pedestal and shared by many customers through FITC installations.

These installations require the placement of fiber~compatible pedestals, point

which optical-to-electrical and electrical-to~optical conversions take place.

The final migration is to stage 4 (FITH) as the subscriber

replaced with fiber the primary optical network interface may be TTln'u.o.n to the

subscriber's home. This last network segment (drop) may becorne longer than the

15

Page 28: TIlE COST CONVERTING - Michigan State University

j-I 0')

Digital or Analog alOffice

,- -10 hn

f-! ~

1..0

__ Copper or Inter Exchange Trunks

".----- Copper t-eeaer t;CiI:Ues

Serving Interface

Page 29: TIlE COST CONVERTING - Michigan State University

to ornl1nil"ll"'ll&l>'I"Ilt

pedestal Traditional

timing of this

technology and economics.

evolution.

depicts

customers from

loop network

In this C'A§'· ... ~n.n we will present brief descriptions of selected telephone

company fiber For a complete list trials, see figure 1.11.

Contel

Conters trial in Ridgecrest, California uses AT&T's FITH double-star

architecture. The rerrlote terminal (two SLC Series 5s) is located about three miles

from the Ridgecrest central office and provides 192 houses with two voice lines

each. At the central office an AT&T 5 ESS provides the switching for POTS

brought in to each home on fiber at a 1.544 Megabits per second (Mb / s) rate.

Since the goal of this trial \vas to make it as cost effective as possible, only a

single fiber is deployed to each house. A distant terminal (AT&T's name for its

optical network interface) is flush-mounted on the side of each house. Th~ distant

terminal is powered off the IOO-volt AC source provided to the home. Eight-hour

battery backup is provided. We esthnate that the customer's power bin would be

increased at most by $0.18 per month. Fiber cables with a maximum of ninety-six

fibers are used for the distribution loops.

Conters Sydney, New York FITH trial win be a rehabilitation job that will use

fiber cable strung from poles. Construction for this trial began in July 1989. One

hundred sixty-six residential customers, thirteen small businesses, and five major

businesses were scheduled for hookup by March 30th of 1990. This trial is one of

the first fiber optic aerial trials ever to be conducted. Initially only POTS will be

provided, but delivery of data and video will be considered later. In all, the

Sydney Lightwave Project construction costs are estimated at $1.2 million. This

trial utilizes the AT&T SLC series 5 system over single mode fiber. The

optical/ electrical unit in the distant terminal will use approximately 2.5 kilowatts,

costing ratepayers roughly $0.23 per month in extra power charges.

Page 30: TIlE COST CONVERTING - Michigan State University

j-J 00

feeder

Stage 1

Serving Area Interface

Remote l'erminal

Replace with fiber 'Fiber Backbone"

r

Distribution

Stage 2 ace with

fiber

Stage

I iii

I

"New" pedestal (fiber to share or

o :l

Page 31: TIlE COST CONVERTING - Michigan State University

FIGURE 1.11

TELEPHOl'i"E COMPANY F1BER LOOP TIUALS

Number

Start of of

Telco Location Date Homes Se:n.vice

AUtel Glen,NC 1989 50 POTS R-Tech FITC Ameritech Jefferoon Maws, OH 1990 100 POTS FITC Centel Tallahassee, FL 1989 100 POTS AT&T FlTH Contel CA 1989 100 POTS AT&T FTfH Conte! Sidney, NY 1989 600 POTS

Conte! Rancho Las Flores, CA 1991 350 POTS, video, other AT&T, R-TECH

CA enhanced services FITC Contel Wyoming,MN 1989 240 POTS AT&T FITH Bell Atlantic Loudon County, VA 1989 126 ]'OTS, digital video BBT

Bell Atlantic South Brunswick, NJ 1988 104 POTS and data AT&T FITH Bell Atlantic Perryopolis, PA 1989 100 POTS, CATV, switched PM ftJcatel FITH

video, multimode fiber

BeIiSouth. The Landings, GA 1989 192 POTS AT&T FITH BeHSouth Lakeview Terrace, SC 1990 100 POTS AT&T FITH BellSouth NOfC1'Q6S, GA 1990 N/A POTS Raynet FITC BeUSouth Sawgmss, FL 1990 N/A POTS Nfl FrTH BeUSouth Memphis, TN 1988 100 POTS AT&T FTTH BellSouth Coco Plum, FL 1989 200 POTS AT&T

:seUSouth. Governors Island, NC 1989 49 POTS AT&T

BellSouth Heathrow, FL 1988 4000 POTS, ISDN, digital CATV, Nl1 1'"TIH transport (data security,

meter reading, energy mgmt)

BeUSouth Hunter's Creek 2, FL 1989 117 POTS AT&T FITH BeUSouth Hunter's Creek 1, FL 1986 251 Digital CATV AT&T FITH BeUSouth Morrocroft, NC 1990 126 POTS AT&T FTI11 Cincinnati Bell Cincinnati,OH 1989 100 POTS AT&T Frn-I GTE . Cerritos, CA 1989 SOOO POTS, digital CATV, AT&T FITH

advanced broadband GTE GTE

(video on demand, home Amer.LW

banking, Arner. Lightwave

shopping, security,

utility meter reading)

:NYNEX Lynnfield, MA 1990 100 POTS FITC Southwestern Bell Mira Vista, TX 1989 100 POTS and CATV Amcr.LW FITH Southwestern Ben Leawood, KS 1988 134 POTS AT&T FITH Southwestern Ben Olathe, KS 1989 260 POTS AT&T FTTC US West Mendota Hghts, MN 1989 100 POTS AT&T FITH US West Scottsdale, AZ 1989 % POTS AT&T FTTH

Page 32: TIlE COST CONVERTING - Michigan State University

.1lU'''''.luu. .... v'M-I,. ..... is deploying AT&T's SLC Series 5 Feature Package

as if Project Phoenix") for POTS only in FITH configurations ! ....... "",.. ......... locations:

> Hunter's Creek Orlando, Florida serving 117 homes

> Coco Plum, Miami, Florida serving 119 homes

> Landings, Savannah, Georgia serving 192 homes

> Governor's Island, North Carolina serving homes

> Morrocroft, North Carolina serving 96 homes

> Lakeview Terrace, Charleston, South Carolina serving 100 ..... v .... .!!..!!....,'"

> The Grove of Riveredge, Memphis, Tennessee serving 75 homes

Standard POTS channei units will be housed

channel unit provides two voice frequency channels per fiber.

the central office, RT, and the distant terminal (optical network interface) 9

VI.J ..... .a. u,'i."-' at a rate of 1.5 Mb / s. Bi-directional optical transmission is

accomplished at 1,300 nrn. The distant terminal which is a weather-proof

on the wall customer location, has of

The DT will run on ",u.,;:c;t·~"JA"'!'\\.ltf,'.l.'" ..... ~ ... A",.. .rio,

20

Page 33: TIlE COST CONVERTING - Michigan State University

same

fl1?T""'lI"n Telecom's

Mb I s are to each subscriber to

video chamlels, one basic 144 Kb/s ISDN channel,

channels.

1I"Il1" .... u..::., ... v was initiated June 1988 with the installation of a single-mode

POTS service. In November, ISDN was added .

. ~"1II1!1"1't""'~·H::.d1! video was Service was initialized originally to 256

..... ""' .... ~.u ............... of 4,000 homes will eventually receive service.

'I.<I. ... ~ .... "'(!,I!, ... set-top-converter and wireless remote control unit. The

V1p.lJilP·r~ to can pay for video~on~demand by pressing a button.

system's upstrearrl signaling capability over

signal downstream the home. is

this corrrrnunity. l'he project cost is $3,001,245.

uses

an existing neighborhood.

"-".ll. " .... ' ...... ,"" ... covers an area length is 13,900 remote

to

environmental vault, J;..lt'U'I.<l-L:7""'.:7I

Raynet's

.... "'4Ibll-JlV.!LlLJI.""' .......... N\'NEX win most """ ......... C>.'il"~ ..... "''''' in 1991.

for ........... · .......... uh .. ' .....

production w VlL'~.l."'j\'"".:JI

21

costs

Page 34: TIlE COST CONVERTING - Michigan State University

assume it

are 2

for categorization

""',; ......... ""', .... "' .... .., ... hroadband systems. The their

.. :U.JI. ..... ...,. ........ enough that any regulator or

the fundamental netw'ork architectures

to be general enough in specification that any into the generic rnodel.

illustrations the report show variations

differences in architecture and -n ..... 'i-;O'1i"'IIi-1

prospective loops.

architectures which occurred in

.I..3..I.'W.au.uJLI. ... .F. some which are only on the drawing board. it plant how the evolution of "H1I .... '~.,".

"::»UJm~""".:Jll. a logical n1l"£\Or.t.!!>CC'1inn

is obvious that digital

""' ............. """'c ........ ,""' ... subscriber ...."...,"" ......... ,"''''''"

all the way

a near-term one. ""' .. "' ... ~-"'I"M'''·.''..:'lIn1i4lC' will be concerned

......... "' ................. Jl.Jl..F! current l1ra.T~""'i".:.i"·.r'n

a pressing one

it next ... ""'· .. ·, ....... ·"'-'~'E~·n

22

Page 35: TIlE COST CONVERTING - Michigan State University

is not a

Page 36: TIlE COST CONVERTING - Michigan State University

hinges on subscriber ""''''''''~JL''

",V",''''='llA-A'\,,> """""#-",,, .. "" ...... """ assumptions; it a who will have

Page 37: TIlE COST CONVERTING - Michigan State University

are

Page 38: TIlE COST CONVERTING - Michigan State University

cases current SIa.le~UI-

costs are

are

Page 39: TIlE COST CONVERTING - Michigan State University

>

>

Page 40: TIlE COST CONVERTING - Michigan State University

to Iueasure

sources a.re

Page 41: TIlE COST CONVERTING - Michigan State University

2

Page 42: TIlE COST CONVERTING - Michigan State University
Page 43: TIlE COST CONVERTING - Michigan State University

on

1.

3

customers are !f;';::"~Rr""',fl

are:

!>:"" •..• ", • ..", over is

as are

Page 44: TIlE COST CONVERTING - Michigan State University

a

Page 45: TIlE COST CONVERTING - Michigan State University

II

HOV

Voice & ;;;:~flll"ih1:.1lI'ff'M"il .& Overhead Bits

DS1 Voice Circuits

~---,."""""""'~

KF Bdstioo Fiber

~

I

Piaca 1.0KF of Fiber Cable

Page 46: TIlE COST CONVERTING - Michigan State University
Page 47: TIlE COST CONVERTING - Michigan State University
Page 48: TIlE COST CONVERTING - Michigan State University

so in mass

2 1 1 1

costs

Page 49: TIlE COST CONVERTING - Michigan State University

4

Page 50: TIlE COST CONVERTING - Michigan State University

$

costs

> serves

3

Page 51: TIlE COST CONVERTING - Michigan State University

:>

Page 52: TIlE COST CONVERTING - Michigan State University
Page 53: TIlE COST CONVERTING - Michigan State University

5

or

some

can

Page 54: TIlE COST CONVERTING - Michigan State University
Page 55: TIlE COST CONVERTING - Michigan State University
Page 56: TIlE COST CONVERTING - Michigan State University

L

Page 57: TIlE COST CONVERTING - Michigan State University

w III

I

#!i'mlll1l1Jl!ll)'i!I~~~'#.AA:w:x.~~ ~~~~~~~~

;::

Page 58: TIlE COST CONVERTING - Michigan State University
Page 59: TIlE COST CONVERTING - Michigan State University

~ ...J

Hvbrid Co

Assumptions 10,000 Subs 375 total miles of plant 51 miles of fiber backbone The fiber backbone is the

only part of the plant being replaced

* Based on ATe

Supertrunk (Fiber)

IFiber ystem*

Cost (per Sub):

-nt-:j C=l-Io co 1.0 ..,~ (Dr; oro o "U"I C" • o~ :J co :z co ,.... ~ o -, "

Electronics $17.9 Fiber Trunk 18.1 Total $36

Percent of total cost Electronics 49.6% Fiber Trunk 50.3%

Page 60: TIlE COST CONVERTING - Michigan State University

sources

"""""u, .... ,,·.""" ""t/""""""'ii"'l>nif\"\(l !:'~·~Mli",""h.o,rl w"'L.:.h'1A1P'V ""~"-'L<~"''' ... " to ·,,,,,..,,, .. H7<:;1;

more,

4

cost data available .. _ ... -,~A{,;"wn1T,.a,,,.,. ... costs could

which was .".a. .... ""'''"',1I"h.1>"'>"<'''r ......... .n. ... .:.ri or. ...... """''''''''

see an

Page 61: TIlE COST CONVERTING - Michigan State University

~ 1..0

Lt-:j m f-'o '1..0 'c ~t1 0.(0 r CJ)U1 CT • (J)U1

Jerrold Labs "Svstem " (f)

u:: fI) ,­CD

Heaet Enel

Fiber Super Trunk

Approximate cost/sub $1000

Assumptions: Hub serves < "1000 subs. 128 total TV channels . 4 TV channels per home 20 digital audio channels Upstream data link 10 kbs 2-way voice and data

capable, up to T1 rate

Switch Site

(Hub)

Distribution Fibers

Each Fiber Serves 4 Homes

TAP Fiber/Coax

3 A

:

Tap Serves 4 Homes

Coaxiai Cable Drop

Page 62: TIlE COST CONVERTING - Michigan State University

categories of generic model "."",,,,...,,,, .. ,,y some !troles that the Q"7~;1l"4J!(1,,;;l';

(";08t

> usually represent subscriber loop plant.

total cost

'\J"".lUi:lHl ....... Jl~ M. Jacobs Designers, tI

ff'>_.g.~'Jt~.""a IEEE; 1978, 387~390.

(channel selectors)5 mUJU[)le}j~ers optical receivers~ power, ,j,""-_ ....... '"

"'In·'I'<::>~'f'lI"""'" line cards, circuit packs, "'~:.r.·,-e ... 'ttre"i"' .. lC'

Page 63: TIlE COST CONVERTING - Michigan State University

charger

conVf',rter 5.0

5.0

18.7

51

Page 64: TIlE COST CONVERTING - Michigan State University

INVESTMENT COST PER HOME OF WITH ALTERNATIVE NETWORK ARCHITECTURES

(In

Network

loop c&rrier Nl.nowbMd on fi~r Voice and diatribu ted video IBN

IBN

IBN

Coaxial cable Fi~r backbone

Narrow. bemd

<It

..

Diltrih-uted Switched

Video

Activ~ Double Star

PaHive Double Star

Switched Star

Cable Networks

'" t1

52

Cent"'! OfficI!

~ .l

1 2

10

40

ONI

6

&moUl Ov~nUl Nooe ONI To~l

~t

---.~

36 37 45 150 196 60 250 3n 75 300 3""'" I I

300 :310

----.-----~. ------300 340

Trunk & FefKil!!'

17 17 is 21 ----------

Page 65: TIlE COST CONVERTING - Michigan State University

cost.

> cost

costs is rIl'''·,...n:.:1>.r'I

Page 66: TIlE COST CONVERTING - Michigan State University

>

>

>

>

>

*

*

*

>

>

6we

for

on

Page 67: TIlE COST CONVERTING - Michigan State University

some our are

>

>

>

>

to

Page 68: TIlE COST CONVERTING - Michigan State University

!.l..Ujt4lUJlUW,VJ.UI. costs n<:1i.<m"'ur.l!~lI" 6 d'''r>o",,,d',,,,,,,-.,..

> selector)

>

>

>

>

> wave

>

>

>

>

>

>

>

> i;)vJtll.~i:j.~ connectors

>

>

Page 69: TIlE COST CONVERTING - Michigan State University

>

>

>

>

>-

>

>

>

>

>

>

>

>

>

>

>

>

>

EfO

Page 70: TIlE COST CONVERTING - Michigan State University

costs are ... ·./Ui.CI'"".L~V'WI-

costs, W"IA . .el!1I· ..... 0~ .. i' or a year. 13

on

a

v,;:ll,..!UJUtiL,ll,lI;.V no """' .... """L .. Ji>., .....

........ ""l' ....... \'1·4?1l"l1l"'>' .. .:. cost n.a",~,,,'lF".""'<:'

a

Page 71: TIlE COST CONVERTING - Michigan State University

6

cover installation,

to is as

>

>

>

> serves as an

>

>

>

Page 72: TIlE COST CONVERTING - Michigan State University

assumes a rate

>

>

>

>

> a..~SUlnes a

>

>

>

> asslUlles n.o

:>

rate

Y"~'IC'''·'''''.n is $167

v ... """"" ........ at

parrs

at

Page 73: TIlE COST CONVERTING - Michigan State University

>

>

>

> a

>

> assumes an on

> same as

>

> no

> can

> costs

> relnote

> consumes one watt a

Page 74: TIlE COST CONVERTING - Michigan State University

2/Uleter 12/meter 1,15/meter

25

1 2

6

3 4

11

7

Page 75: TIlE COST CONVERTING - Michigan State University

167

7 35

(79

16

30

Page 76: TIlE COST CONVERTING - Michigan State University

3

9

7

Page 77: TIlE COST CONVERTING - Michigan State University
Page 78: TIlE COST CONVERTING - Michigan State University

~fibe:r

cable $hewitb

O!bk':~~tioo

h'm~rdud:

~Qr

LillMi. mwtf~ iawt

~f~~

WDM P~r

Con,~ ~meliltwiallt

T~.

mode f'ibet,

!lY\~th

C05ib~ iM.t.~tioo

l.noor duct

Comt~lt'

FIGUR.E63 INVESTMBNT COST

FTrH g N~ Ne~rlr

150,lOO 11,000

193,000 1,010

100

60,000

75

100

6Of 40 1,000

83,600 110

35

60,000

25

100

0.10,0.&5

1 1S 1

17

1 15

l65

1,498

140

1

1

1

3

1

Page 79: TIlE COST CONVERTING - Michigan State University

Network

Component

Subscriber Premises

ePE (voice only)

Optical transmitter, optical receiver

ISDN chip

Digital - Analog converter

WDM

Cabinet

Hookup and installation

AC power outiet, battery backup

Total

Source: RAND Corp.

FIGURE 6.3 (Continued)

INVESTMENT COST

f<TfH - Narrowband Network

(In dollars)

CUlTcnt

Cost

60,40

15 7

35 10 SO/home

SO/watt

67

Future

Cost

167

SO/home

SO/watt

Current

1,182

50

150 1,382

3,900

Future

167

50

150

361

1.126

Page 80: TIlE COST CONVERTING - Michigan State University

Network

Component

Optical source; optical receiver

Multiplexer

Power

Total

Feeder

Single mode fiber

Cable sheath

Cable installation

Inner duct

Splice, connector

Total

Optical source, optical receiver

Multiplexer

Line interface unit

Subscriber line card

Power

second drops)

C,ontroUed environment vault

Total

Distribution

Copper and cable

Cable installation

Inner duct

cable

Cable installation (buried)

connector

FlGURE6.4

lNVF..:srME"Nl COST

FITC - Loop Carrier

Current

Cost

750,300

11,000

IO/watt

l/meter

40,75

750,300

11,000

193,600

67

60,000

variable

50

0.50

(In dollars)

Future

Cost

60.40

1,000

2/meter

15,25

60,40

1,0(,'0

83,600

28 1S/watt

60,000

variable

50

0 .. 50

\...ost per Home Passed

Current

1

15 1

17

5

3

36

3

2

49

15 265

89 36

59

465

29 42

7

2

6

86

28

24 2

54

Future

1

1

1

3

2

3

36

3

45

1

114

37 36

59 248

29 42

7

2

6

86

28

24

2

Page 81: TIlE COST CONVERTING - Michigan State University

Netwnrk

Component

FIGURE 6.4 (Continued)

INVE',,;;TMENT COST

FT1'C - Digital

(In doHars)

Current

Cost

F\lture

Cost

System

Current Future

--~---. ---.•.. ---.. --~--~--.-.-.---------.-------~.--.-.---.-. -------------

Protective block

Hookup and installation

'IOta}

36

96 132

36

%

ill

-------,--------_._-----------_. __ . -------,---~----. -------_._---

--._--------,--------------

Page 82: TIlE COST CONVERTING - Michigan State University

Multiplexer

Power

Total

Feeder

Network

Single mode fiber

Cable sheath

Cable in.stallation

Inner duct

Splice, connector

Total

receiver

Optical transmitter, optical receiver

M uitiplexer

Line interface (framer)

Subscriber line card

Power - 8-hour backup supply

lbtal

Distribution

Single mode fiber

Cable sheath

Cable installation

Inner duct and connectors

Pedestal/manhole terminal

Total

Drop

Drop cable

Cable installation

Splice, connector

TOOll

FITC-

FIGURE 6.5

INVESTMENT COST

Narrmvband Network

(In dollars)

Current

('.-Ost

750,300

5,000

2/meter

12/meter

40, 75

750,300

5,000

20

50

O.20/meter

300

0.50

Ijmett:r

1.67/splice

75

Future

Cost

60,40

500

15,25

60,40

500

10

22

l/metcr

300

0.50

75

Co,;;t ner Home J:assed

Current

23

109 10

142

30

6

36 4

8

84

368

875

14

70 150

1,477

14

14

39

45

37

149

28

24

2

54

Future

2

11

10

23

15

6

36

4

3

64

84

88 7

31 150

311

7

14 39

20

37

n1

28

24

2

54

Page 83: TIlE COST CONVERTING - Michigan State University

Network

FIGURE 6.5 (Continued)

INVESTMENT COST

l'"TfC - Fiber/Copper Narrowband Network

(In doBars)

Current

O)st

Future

Cost

Cost per Home Passed

Current Future

-----.---------~, ~~,,-----,-----------------.----------,~---

Protective block

Hookup and installation

Total

---------------------

Source: RAND Corp.

3D

80/home

30 30

80

110

2,017

30

80 110

619

Page 84: TIlE COST CONVERTING - Michigan State University

-_._--,---

Headend Equiplnent Distributed video channels

transmitter Power

mode fiber sheath

Cable installation Inner duct Splice, connector Total

Optical Network Interface Optical receiver Amplifier, accessories housing Power 'row Distribution Cable plant Field electronics

components

O.lO/meter 2/meter 6/meter 1.5/meter

25

10/connector SO/splitter 4/meter 0.75/meter 1,000 3.2 km

10 3 1

1 6

3 28

1 2 5 8

36

19

68

l' ~,J

5 11

Page 85: TIlE COST CONVERTING - Michigan State University

-------- -------- "'--

converter I-Iookup and installation Second converter

~--.--.----

100 SO/home 100

'"_.--------------

"" ....... "" .. Total

60 30 18

108

368

Page 86: TIlE COST CONVERTING - Michigan State University

Cornponent

Video jukebox

Central Office Equipment Video switching, and control Broadband multiplexer, optical transmitter Voice multiplexer, trans., opt. Power Total

Feeder Single mode fiber Cable sheath Cable installation IImer duct Splice, connector Total

Remote Terminal (Serving,Area Interface) Broadband multiplexer, detector Remote video sWltching SLIC (4 subscriber/card) andWDM Voice multiplexer, opt. trans. receiver Power Controlled environment vault Total

Totals

Total distribution, loop, CPE Total electronics

nonelectronics

74

""""'.,. ... -......-.-------.-~

9 68 77

101 40

1 2

144

15 6

36 3 4

38 11

235

105 75 59

952 1,311

449

9

9

20 13

1 1

35

3 6

36 3 1

13 5

105 60 59

454

1,015 434

Page 87: TIlE COST CONVERTING - Michigan State University

supplier to

Raynet has perforrned studies to

and architectures. A J"rvnnrr'l1

telephone lines.

such study ",.,.'-J A.U '-"i..!..'

.:u"-'" ... ,.....,..., was ...... HJu"""L'

were

bus

study with 160 active

of two fibers

were required. ilstar-to-the-curb" were required

fiber for each pedestal). the distribution portion network, costs and

prices appropriate to 1993 volumes were projected in 1989 dollars. Raynet estimated

the "star-to-the-curb" first cost for the portion the

network at $1,243 a line, and $885 the san1e portion of the bus

architecture. Raynet claims the lower cost bus system requires a smaller number of

fibers, consequently reducing the cost of splicing. Other fibers are not terminated

until required for additional services such as video; the noninvasive coupler

does a\vay with the need for splicing at the access point.1

New Construction

The majority of the subscriber loop " ...... .a .. ." ..... 'v .... u involve new

construction and the double star is the most

deployed. Most industry experts

only in new construction scenarios the 1993 to

architecture being

economical for POTS

frame. for

POTS plus video for existing networks will not be effective until much later,

estimation is based on the

video over a separate

LJAp;;".,.A.LA.'."" ..... ~.i., demand for other

sometime between 1995 2000, The reason

that it will be cheaper to provide POTS over fiber

frame.

TV must broadband services

network for both

1 Ibid.

"' ....... 1..L..J"-'."'" before a single fiber

'U'''-'', .. v<.J .... ll'\,.L and narrowband "'''''THIS"''-'''' viable.

75

Page 88: TIlE COST CONVERTING - Michigan State University
Page 89: TIlE COST CONVERTING - Michigan State University

7

AND OTHER PROCEEDINGS

The questions contained in the. three following sections are intended

function as guides the types of data a commission may need in assessing the

broadband deployment plans of jurisdictional utilities and are not necessarily formal

discovery questions.

Questions for Telephone Companies

1. Have you or do you plan to deploy coaxial cable or fiber-optic cable in

the loop plant for provision of broadband services? A) If so, how much of new

construction spending will be for fiber cable in feeder loop plant and how much for

subscriber distribution and drop portions of loop plant (annually for the next five­

ten years)? B) Is the plan to use fiber-optic cable for feeder and some portion of

distribution cable (for example, between the SAl and RT or pedestal) and coaxial

cable for the last segment to the subscriber premises? C) If not, what is the

relative use of fiber-optic and coaxial cable that is contemplated? D) How much

would be spent on associated electronics for central office equipment, remote

terminals, pedestals, and subscriber premises equipment owned by the telco? E)

What new telco broadband service are contemplated? F) What is the time frame for

construction oisuch facilities? G) How many CUstomers per year do you plan to

provide broadband service to for the next five to ten years?

2. Is the primary motivation for your deployment of broadband loop plant

for provision of entertainment video services or other broadband services? What

are the other broadband services and what are your delnand estimates in terms of

new revenues per household· from broadband services five years into the future?

3. How much do you estimate that the perDsubscriber deployment costs of

broadband "capable" loops will be (regardless of whether they are actually used for

broadband services)? A) What do you forecast the trend in these costs will be

(separate by EF&I and OAM)? B) How do these costs with copper?

77

Page 90: TIlE COST CONVERTING - Michigan State University

4. following provides demarcation points residential subscriber

loop plant between feeder (CO to SAl) and distribution (SAI/RT /pedestal) and

portions of subscriber loop plant Assuming a network configuration this type,

and assuming as well that a digital CO and digital SLC are in place, for the

following categories of loop plant, please classify those which are necessary

provision of broadband services (such as cable television), and not for other

narrowband services (that is, traditional or new narrowband services): A) For

equipment and devices located at CO, RT, pedestal and subscriber premises: WDM,

channel selectors, lasers, OlE and E, i 0 conversion devices, optical bridgers, optical

connectors, optical mix, channel banks, signal transmitters, receivers, detectors,

codees, line cards, and so on. For transmission facilities in feeder, distribution

(shared vs. dedicated) and drop: coaxial cable and fiber-optic cable.

5. Would there ever be a need for using coaxial cable in subscriber loop

plant unless broadband services to residential customers are contemplated? Is

coaxial cable deployment contemplated for anything other than video services?

6. Under what conditions would you deploy fiber-optic cable in dedicated

portions of subscriber loop plant? A) Why? B) At what point in the future would

fiber optics for dedicated subscriber loop plant prove to be cost justified over

copper? 1) For new construction? 2) For rehabilitation? 3) For growth? C) What

is the contemplated useful seIVice life of broadband loop plant for feeder and

distribution portions? D) How does this compare to new narrowband facilities lives

(book and tax lives)?

7. How do you classify fiber-optic and coaxial cable costs when they are

used in subscriber loop plant? A) What would it take to separate them into shared

feeder, shared/dedicated distribution, and drop categories for tracking purposes? B)

How about electronics and equipment and devices used for broadband services like

cable television? C) Do you plan to alter your system of bookkeeping to be able to

track such costs between those required for narrowband services and those required

for broadband service capability?

8. What are the per-subscriber costs for each residential broadband service

trial currently underway? A) What are such costs forecasted to be as deployment

continues? B) What demand and revenue forecasts have you made for broadband

services? C) What is the source of funds for construction and how are they

accounted for?

78

Page 91: TIlE COST CONVERTING - Michigan State University

1. already done so? yes, in what part of your

or network is fiber-optic cable

being installed or planned? Why?

2. your system fully addressable so that may identify bill specific

households for premium services? Is it two way-addressable so that

customers may enjoy payaper-view- type services? B) not, when you eXlJect

to upgrade to two-way addressability? 3. Do you plan further network upgrades for some type of two-way signaling

and services(s) such as videotex (for example, shopping-at-home), distance learning,

data, audiotex or voice? When do you expect to be able to perform such upgrades

to offer such services? (Please be as specific as possible)

4. Are you involved in any field trials of new two-way services? A) Do you

have any planned? B) Hyes, is the local telephone company involved also? C)

How are you interconnected with one another? D) Do you have any network

schematic diagrams or illustrations of two-way service configurations? E) What type of equipment is required for two-way services on your cable system? F) How

much does it cost per subscriber? G) What are your estimates of such costs (or

even the trend) over the next five years?

5. Do you believe cable systems will ever evolve to the point of providing

some types of two-way services for telecommunications, beyond that which will

likely occur for pay-per-view video? A) Do you believe that on-demand video (for

example, electronic video Hbrary instead of the local video tape store) is a viable

service offering? B) If yes, when do you think it would be available to your

customers? C) Is there a big future market for these types of services? D) How

about two-way voice and data services?

Questions for Equipment Vendor:i

1. What systems and equipment do you have available for purchase by

telephone companies provide broadband telecomnlllllcations services, including

traditional cable television-type service? A) Are your systems/equipment complete

or must they be used in conjunction with another vendor? B) If so, what part do

79

Page 92: TIlE COST CONVERTING - Michigan State University

to

equipment

future n·rl .... 'O'·!i:'

systems/equipment over the next

acceptable )?

5.

or

expect to

6.

these

is the

current or estimated

'-'v ........... v' ...... and esthnates are

lllany orders

you

telephone companies to

'"''-'"JU ... ''-' ... ''3 ..... .<...,''' to two-

for business or

Page 93: TIlE COST CONVERTING - Michigan State University

still

degree as

to saIne

Page 94: TIlE COST CONVERTING - Michigan State University
Page 95: TIlE COST CONVERTING - Michigan State University

¥ll"1:li~t~ P'!1f' }\OWl\$'I'I(ll.d ~!bl!rj'" Cost'l\, ~iS;'(",\\"\L'I, 19157'·,000

(C~Ui1t Ool

CMti"'!Ii!. Off i e~

$\!ii ten

1i<l!!OOl;l1l fi!lMllil'IkBUC!V

:)~·l'1li'ClIiIiv.,r

OLe ~~. Tr~c~iv~r3

Con'r$ '/01" YOM$ EnclOIMJrlt

DistJ"ib.rtion

F i blitr

;!~'i!!!!!'eat

CIrCle

'foul C':)lH~

Total ~OOQ Costs

199'5

$1,7['0

S1,~

Prej~~~ Fiber Ca~t3, POiS'~\U$,vld~, 1987·2000

(C~t~ne OQlt~r~J

CM'!ti"lIl OH iC:1t

$wi tl:;;f1

'ilfiffll:ttfi hf'l'lllNl1UaY

O~·;tJ!I;Ctli"'~r

CrO$$'e~~

Vl~ O;":t. Swi ten

~~~. irana~~jv~i"$

eM; f'S &/or Y:JI>l!ll

Erclowrlll

()1 lltril::~.rti on )I1~l'"

jl~u!'

Orem

!<:tul. COIlU

\"000 CQ.:I!.U

$ns ~1S0

SS25

$1,000

~O

~O

12,100

$1,rM

$7,~05

8

:'1.:2,670

~.,J70

2000

2000

$10

$55

$.2 .. OSO

Sl,e10

Page 96: TIlE COST CONVERTING - Michigan State University

~f'oj~t~ Fi~r Sa(;i(~ Cost!!,

Ov~r\'<llY C~st$

"irart$.l'l'lii tti!11'"

F lo.r

tMt:H lc@t!on

Recllii"'~f'

ioUi. Ov\lJit!"t:II'(

tmullation ~~it e!"':!

C.Ollilts

'foul, SJlIvinqs lne~~tal i~f' C03tS

1988

119.33

S1.n

SJ.08

~"41..

130.57

ilCt!l>!i Pt'lI3Sed,

i'XiO

::;'5.

S'Ln

:tJ.08

.22 s1.31

Cabll!!! Telev"isicn Flbet· ':0 ;:hl!l KO'I'Iat, Cost: P-er

(Constant Oottars)

riber a~cxbone T ran$m1 e--::!ill"

fbltf'

(i'l31!a llat:; 0fI

~K.1Vl!»f"

rOU\ aK~

Distf"iwtion if1f'1smittftf'

Fl~f"

KJte.i".r SUr' Cougtlif'

TQUlO htl"ii::a.nd on

65~

$163.64

i:305 $763.64 .$J!~ is

~1,a1O.9t

:$10(LOO

,m.os

84

1968-2.000

i995

'S:Z~5a

$1.72

'U.oa $1.53

$3.92

2000

$1.93

S1.n

13.03 $1,.2.9

$8.02

~5.U

1~.80

~f", 1990-2000

2000

SJ.7Q Sl.~

:t2;47 $2.21

$4,t..2 $3.94

$:2.22 $1.65 $12.81 110.26

~.59 $19'2.25

$23 1.21 S192.25

$466.53 3256.34 Su,.n $19,2,3

,193.25 ~.O7

$10CLOO S100.00

,3Q6"Q,6 $rnl.3S

Page 97: TIlE COST CONVERTING - Michigan State University

Cacle rel~~i ion Fi~r to ,n~ ~~,

(CQn$t~~t Oo~iar~)

19&3 19',10

Cable P~~tration 65'X

Fiber B,3t':~

ir<ll!"l$l'llitt!t" $5.15 F ibttr $1.72

instaLlHion S3.oa ;:{l!teeiv'I!Jf' 12.58

Toul a.u;;x~ 112.53

J1sttlbJt:ion

Transmit'!:!!" $500.0,0

Fiber $200.00

~eceiv~l" :5500.00

Sur C~lef" ~.

iout 01stribution $1,7.1S.00

Ca.IlIlt 01"00 $100.00

iotal C,:J:St 51,Yo57.53

85

199'5 2000

'fin:; 7S%

~.5a $1,93

S1.n Sl.n

s3~Oa $3.07 $1.55 $1.29 s.a.n $8.02

$312.50 S150.00 $.175.00 S1S0.CQ s3Z:S .00 $<'00.00

S1S.7'S $15.00 1-831.25 S515.00

1100.00 S100.00

S'94C.17 $.623.::l2

Page 98: TIlE COST CONVERTING - Michigan State University

To investigate the potential evolutionary terns for combined t ansport systems o a s Ie cost projection model wa,"~ develc us of experience curves.

that over t costs decline

bed as vo it is empi

and

Using experience curves r 1 requires qualifiers. Fir t when app1i ca does not 81 for rovements ionali is of part ar importance in the case f fiber ics*

have many t s the functionali 0 past terns, as as ower costs. Also, the effect on costs is caused not increased volume, but tment in technol which leads to lower costs. c asses have ~ tten 0 m

learning curve fail to up n manufactur ng and product technology. Fina ly, since the Ining curve relies on accumulated experience, the of 1 application declines when the rate of accumulation dec il1e5.

In this tigation, of several kinds of resi ial fiber ic systems have been priced out based on projected price levels for 1988 at hi levels of aggregation. Major sections of the ana is were:

needed to support the tems l exclusive of local access

other common items. Va f Ii

86

and site costs red" Site costs

on ,000 per

needed for system: cou.p I etc#

aced spl , spl

onooxes, etc~

Page 99: TIlE COST CONVERTING - Michigan State University

Hardware costs associated with the home Includes drop cable. ellS r

in-heme distribu ien cable. etc

A series of assumptions was made eg rd n9 projected ration 0 these ear hi t systems Re og on

predictive appl tieD e experience cu hniques and on the assumed volume projected costs were es abli hed for units at the end of the forecast periods.

In order to investigate the i luence of changing assumptions three variations of the basic model were completed. We rounded to the nearest full percent.

In first case, the Dfluence of ear techno was simul ted increasing 10\ to 2 of the new construction over This had the result of lowering the ear

ance of the penetration from

per od 1990-1995. em casts by 13\.

Next the act roved later acceptance was evaluated ch ng the later ration from 2\ to 5\. This had no on ear costs but resul n an rovement to the base case of 14\ in later casts.

Next. the potent a1 t of roved technology as reflected in a better experience curve rate was simula ed lowering the rate about 6\. This esulted in an rovement in the early costs of 9\ relative to the base case and of 14\ n the later cost.

Final I we did a simulation in whi all three factors were assumed: increased ear penetration, increa ed late ration, and oved technology, Th s produced uns antial gains: a 24% reduction in average per-subsc iber cos s n 1995 to $1,700, and a 23\ drop in 2000 to $1000 c~mpared to the base case. Cost r of this magnitude illus rate the potential beneficial

a regulatory policy framework that is especial in allowing the pro life ation of combined transport

8

Page 100: TIlE COST CONVERTING - Michigan State University

Base case Ie star J' 00 , 0 $1,,200

5i Ie star 5,100 .2,500 1#300 Bus

r 0 ,300 $1,400

tration star $400 $1,900 $1,200

5,,100 20100 1,300

Aver ,600 ,000 $1,400

tet penetration Double star ",400 $2,100 $1~200 Single star 5 p 100 2,50'0 1#100 Bus 2,2QQ

:r $4 600 $2,300 $1, 0

st reduction rate Double star ,400 $1,900 $1, 0 Sing Ie star 5,100 2 / 200 1,100 Bus 2/1QQ _ 1 . 30Q

Aver e .. 600 $2;100 $1,200

Combined f Double star $1,600 Sing star 1,800 Bus 1 c6.QJl

1'a I 00 $1 700 .. 000

( to nearest $1(0)

88

Page 101: TIlE COST CONVERTING - Michigan State University

60 117 246

30 47 470

10 6 21

4 2 1

33 SO

Mult:i:oiaa 117 70 LED. PIN RCVR WDM 105 -VideoCoder,~ .... ~ 138 83 Rcinforced T erm.i.nal 7 4-

Tota) 367 220

219 131 1139

125 125 H ()()l( -lID and I.n.s:t3..llari 50 50

Total Overall Total 88

89

Page 102: TIlE COST CONVERTING - Michigan State University

11

310 262

g 35 4

20. 27..5 10

Totlll 32

191 3

122 7

313

1558

12.5 125 75 50 50

Tota f 115 lOS Total

Backbone ::::

90

Page 103: TIlE COST CONVERTING - Michigan State University

w

o

91

Page 104: TIlE COST CONVERTING - Michigan State University

. j

j J

j

j j

j j j

j j j j j j j j

j j j j j j j j j j j j j j j j

j j j j j j j j j j j j j j j j

j j j j j j j j

j j j j

j j

j

j

j j j

Page 105: TIlE COST CONVERTING - Michigan State University

"Jones System Its 1989.

Projects.'l Fiber

12,1987.

Bell

Loop." Proceedings) Fiber 1990.

Say is Only 1990.

III, "A High Video 1980.

Page 106: TIlE COST CONVERTING - Michigan State University