The U.S. Fiber Gap
October 1, 2013
by Hunter Newby
There seems to be little to no argument left around the need for fiber-based networking around the world. Even mobile network operators prefer fiber for wireless backhaul. Beyond awareness of that need, there is still lingering haze around the state of dark fiber availability throughout the United States.
To be clear, not all fiber is, or was, created equal in this country. Much of the fiber outside a few major metros and lower-tier cities is carrier-owned and therefore not readily available for lease or IRU on reasonable terms. Carriers often do not wish to enable competitors with the same benefit of controlling fiber from their own inventory.
Aside from acquiring a fiber-based network operator, when leasing or buying dark fiber pairs is not possible, the alternative is building a new route. That includes rights-of-way procurement, construction labor, conduit and cable costs, and for long-haul routes, conditioned space for optical amplification equipment.
This effort and expense logically compels planners to oversize fiber cables because labor and rights-of-way are essentially fixed while incremental fiber pair cost is comparatively low. Finance departments, however, often prefer leasing only what is immediately needed rather than funding a full build. They also do not want to overbuild and retain excess capacity they are unwilling to sell to competitors.
Years of dark fiber M&A, consolidation, and inventory sales have left many U.S. markets in a state of fiber exhaust. In other markets, dark fiber has not been built yet despite new demand (such as wireless towers). At the same time, many operators prefer not to spend their own capital on new construction and instead lease from a third party. The result is the fiber gap.
The U.S. lags behind many developed countries in internet speed. Optical fiber facilities currently reach only 36.1% of U.S. commercial buildings, leaving the remaining 63.9% in the fiber gap.
Stat Flash: Penetration of optical fiber facilities in the U.S. business market rose to 36.1% in 2012, up from 10.9% in 2004 (Vertical Systems Group - ENS).
Looking at Vertical Systems Group data, fiber penetration for commercial office buildings closed only 25.2 percentage points since 2004. At a 16.1% compound annual growth rate, it would take roughly another 18 years for the U.S. to reach 95%+ fiber penetration to commercial office buildings.
"Direct fiber is clearly the preferred access technology for carrier Ethernet services, as well as for higher speed connectivity to IP VPNs, cloud-based applications and the Internet. Enterprise customers prefer direct fiber due to the benefits of scalability to multi-gigabit speeds plus lower bandwidth costs as compared to other access options," says Rosemary Cochran of Vertical Systems Group.
Fiber penetration to wireless towers and tower sites is similarly constrained, with roughly 30% of approximately 300,000 U.S. towers and tower sites having fiber access. Without additional investment in new dark fiber, U.S. network growth cannot keep pace with other developed markets. The need for increased fiber availability is clear.
Hunter Newby was CEO of Allied Fiber at the time of this publishing.
Originally published in Internet Telephony magazine, October 2013 issue.
