Fiber Optics’ Future Is Focus of SBC Test Project

The future of telecommunications lies at the end of a strand of glass, like the one in a closet in Ross Greenman’s apartment.

The first-year student at UC Hastings College of Law lives in one of about 15,000 California homes connected directly to fiber-optic cables that supply super-fast access to everything digital -- from online movies and music to Web pages and videoconferencing.

For about the same price as more common and less reliable digital subscriber lines and cable modem service, Greenman and other residents of the 303-acre Mission Bay apartment and condominium development being built here can plug into a sturdy fiber-optic network that is impervious to weather and hardly ever goes down.

“I’m definitely pleased with it,” said Greenman, who gets phone and Internet service over fiber.

So, too, is SBC Communications Inc., California’s dominant local phone service provider. SBC installed the network at Mission Bay to test the feasibility of using fiber-optic technology on a mass scale. So far, it’s found, the lines are easier and cheaper to maintain than traditional copper and give the company more flexibility to roll out cutting-edge services.

One of those services, for instance, could be cable-like television programming with video-on-demand. It is testing such a service with a handful of Mission Bay residents.

Most significant for SBC, it doesn’t have to share its fiber with competitors, which it must do with its basic telephone network. That exclusivity for those installing fiber came last year when the Federal Communications Commission carved out a broadband exception to the phone competition rules it created under the Telecommunications Act of 1996.

Competition has pushed retail prices down, saving customers across the country an estimated $10 billion a year. Last month, a federal appeals court threw out the FCC’s phone competition rules, giving regulators until June 15 to take the case to the U.S. Supreme Court. But the court upheld the FCC’s broadband rules, giving SBC and other Baby Bells carte blanche control over new fiber-optic networks.

Fiber holds the promise of the high-speed future, a nearly unlimited bandwidth for video, voice and data on networks that are easy to repair in rare cases of breaks or outages. At Mission Bay, fiber connections run up to four times faster than DSL and cable modems, and could one day support speeds 13 times faster without any upgrades.

Even with wireless broadband and higher DSL and cable modem speeds available, industry analysts and adherents say fiber is the ultimate broadband technology and will rule communications for at least 40 years.

“There’s no reason to believe that anything is going to replace fiber itself,” said Eugene Edmon, director of broadband access for SBC Laboratories in Pleasanton, Calif.

SBC wants to experiment to see how cost-effective and practical fiber will be -- and who will be willing to buy the service. At Mission Bay, prices range from $26.95 for download speeds of up to 1.5 megabits per second to $139.95 for 6 Mbps.

In January, the company said it would install fiber at five test sites around the country, including the 1,500-acre Pabst Farms residential and business community 40 minutes west of Milwaukee.

“The idea is to get operational, marketing and technology experiences,” said Ernest Carey, SBC vice president of advanced network technologies. “We’re learning the differences, for instance, in how to construct it and frame it when we build in the deep South where it’s hot and in the Upper Peninsula of Michigan in winter.”

Fiber optics are thin filaments of glass through which light beams transmit huge amounts of data over vast distances. Modulating light on those thin glass strands provides high bandwidth in a small space at relatively low cost and low power consumption. Insensitive to electromagnetic interference, fiber produces clean, clear transmissions of voice and data.

Fiber has been used in long-distance lines for several decades. Though expensive to install, it is more efficient and economical to operate than are copper lines. Sprint Corp. built a long-distance fiber network from the ground up, advertising that the sound quality was so good, you could hear a pin drop.

With installation costs dropping and regulations favoring network builders, fiber is looking more attractive to the Bells -- particularly as cable companies start using their networks to offer higher-speed Internet access, movies on demand, telephone and other services.

Last spring, Verizon Communications Inc., California’s second-largest local phone company, climbed boldly onto the fiber bandwagon, betting that the technology would attract the mass market. The nation’s largest phone company expects to put fiber through to 1 million new and existing homes in California and eight other states by the end of the year.

But Verizon is building cautiously, concentrating on areas where it knows it can sell the service.

Less aggressively, SBC dipped its toe in the fiber-to-the-home pool in 2001 when it won the bid to provide telecommunications services in the Catellus Development Corp. project at Mission Bay. One of the five experimental sites SBC is starting this year will be an existing community, typically an area where installation costs are higher and a customer base less assured.

“It really comes down to this: The Bells will unleash the purse strings when they are confident they won’t have to share their fiber with competitors,” said industry analyst F. Drake Johnstone of Davenport & Co. in Richmond, Va. “They want to know that they have a competitive advantage.”

Even with a clear signal from regulators, the Bells will take four to 10 years to start rolling out fiber to the mass market, Johnstone said. “I don’t see any sea change.”

For the last four years, SBC has been pushing fiber into remote terminals in residential neighborhoods for an entirely different reason -- to provide digital-subscriber-line service. DSL is typically available only when a home is within three miles of a phone company’s central office -- or of a fiber line coming from that main equipment center.

With much fanfare, SBC rolled out its $6-billion Project Pronto in 1999 to take fiber to within two miles of 80% of its customers. The company now can provide DSL to 75% of its customers in its 13-state region and expects to hit its goal late this year.

The effort has helped make SBC the leading DSL provider, but the concept already seems ancient compared with the fiber going directly into each of the 6,000 apartments and condominiums being built in Mission Bay, just south of San Francisco’s financial district.

Consider that most DSL and cable modem customers can download information at speeds of up to 1.5 megabits a second, depending on factors such as distance and other users that could diminish speeds.

Each fiber line going into Mission Bay generates 622 Mbps, and each line is split into 32 strands, one per unit. That gives residents the potential for more than 19 Mbps of speed each, enough for movies and two-way videoconferencing.

“Ultimately,” SBC’s Edmon said, “we think the demands for data are going to grow and put extreme pressure on what cable companies can do on a coaxial network and will certainly put pressure on what we can do on a copper network.”

Fiber is expensive to deploy in existing communities because of the labor costs to install it. But after that, it’s a cakewalk.

“Once I’ve got it in, my operational costs are much lower,” SBC’s Carey said. “There’s less failure, fewer trucks rolling out and fewer workers needed to test and fix the system.”

In his apartment, Greenman loves being part of SBC’s experiment. The cable that runs directly from the wall into his computer, eliminating modem boxes, hasn’t gone down once -- unlike the DSL and cable modem service he previously has used.

“The reliability is so much better,” he said.

For a few Mission Bay residents, but not Greenman, SBC is providing the equivalent of cable television and movies at no cost for one year. The company wants to learn whether it can make money delivering that service over fiber.

SBC also will be running fiber lines to Mission Bay’s future office, commercial and retail businesses that will occupy 5.8 million square feet of space and to a 43-acre UC San Francisco medical research complex, which is expected to make heavy use of fiber’s capabilities.

SBC also built a copper network alongside the fiber-optic lines, partly as a backup and partly because of the uncertainty over the legal status of the FCC rules. Mission Bay residents who don’t want SBC service can buy local phone service from rivals, which can use SBC’s copper lines or, if SBC agrees, the fiber.

But SBC doesn’t see other land-line phone companies as its main threat. It worries about wireless carriers, the biggest of which are Bell-owned, and cable companies, which control two-thirds of the high-speed Internet market and are preparing to roll out telecom services nationwide.

For cable companies, especially, it’s easier and less expensive to upgrade to fiber, analyst Johnstone said. They already have their networks in place.

“Every day the Bells wait, every year they postpone investment, the cable companies are getting stronger,” he said. “Comcast [Corp.] has doubled speed to three megabits already. You can rest assured that if they see the Bells putting fiber to the home, they will improve. And they have the advantage with their own network infrastructure.”

The Bells will need to target highly populated areas to keep their costs down, Johnstone said.

“If they get enough households with fiber connections ... then they would be more competitive.”