Broadband wagon: greater connectivity is coming to a neighborhood near you. What will it mean for businesses?

Entrepreneur, Nov, 2004 by Mike Hogan

IT'S ABOUT AS EXCITING AS THE WIRING IN your walls. Actually, Fiber to the Premises (FTTP) is wiring in your walls--specifically, a new blend of fiberoptic and Ethernet cable.

Still not that exciting, huh? But what you do with it could be, and it may already be headed for your neighborhood. FTTP is one way broadband providers plan to extend the benefits of the superwide national fiberoptic backbone the "last mile" to your wall outlets. Unlike today's aging copper phone lines, it promises virtually unlimited bandwidth.

Verizon figures that, by year-end, it will be able to offer 1 million Americans in a handful of Southern cities either 5Mbps downloads over fiber for less than $40 per month, a 15Mbps pipe for less than $50, or a 30Mbps connection not yet priced. BellSouth has quietly pulled fiber past 1 million homes and is using it for some of its "DSL" services. SBC will spend up to $6 billion on it over the next several years.

For obvious reasons, the best time to add fiber is during construction--and it's happening nationwide at new developments such as The Pinehills in Massachusetts (more on that later). But it's no more complicated to add later than cable TV, and the BelLs are by no means the only ones doing it. According to the Fiber to the Home (FTTH) Council (www. ftthcouncil.org), partnerships between local ISPs, utilities, builders and city governments have already brought fiber to neighborhoods in more than 128 communities in 32 states.

Fiber already handles the largest file downloads, voice calls, videoconferenchag or streams of anything from music to movies to high-definition CSI: Crime Scene Investigation episodes. Early providers, like Bristol Virginia Utilities (www.bvub.com), say they could easily increase that to gigabit speeds if and when anyone needs that much bandwidth.

Eating Each Other's Lunch

Even if your area never gets upgraded, you'll still benefit because this technology is one of the set pieces in an epic competitive struggle between phone, cable and other companies that currently own the wires to our homes and businesses. Basically, the days of those voice or data monopolies are numbered. They may never be dismantled. But their influence over how you communicate and what you pay is waning in the face of alternatives like cellular, voice over broadband, 802.1xx and soon, FTTP.

Yes, the Bells have finally beat back competitive provisions in the 1996 Telecommunications Act to become undisputed masters of the traditional telephone network. But victory comes just as nontraditional phone companies are turning wireline phone services into a low-margin commodity. Among them, you'll find the cable companies--which enjoy one of America's most lucrative monopolies. But that won't protect them. DSL providers made huge strides this year signing up broadband customers by undercutting cable prices, while satellite companies have had similar success with TV service.

But you don't even have to choose DSL, satellite or VoIP to benefit from heightened price competition--a fight that's just starting. Next year, Verizon (for one) plans to sell a triple play brindle of voice, broadband and TV, just like cable companies do, but over an FTTP pipe with much more potential. Some communities are already trying out highly interactive applications like distance learning and even online medical diagnosis.

Change of this magnitude takes time. But the days of buying phone, internet and TV services separately seem to be fading. Coincidentally, so are the days when you lived in one place and worked in another, and the two trends support one another.

Surveys by distal communications market research firm In-Stat/MDR reveal that nearly one-third of American employees work from home on at least some days. Of those who do show up at the office, more than half spend 20 percent of the workday outside it, adds The Yankee Group, a communications and networking research and consulting firm. A highly mobile work force drives demand for faster internet connections, and wider availability of broadband connections permits still-greater mobility.

Future Focus

You could say Erin Lootz, founder of The Office Extension (www.officeext.com), has the right business for the 21st century. As one of the first business tenants at The Pinehills (www.pinehills.com), a master-planned community south of Plymouth in Massachusetts, she provides an office away from the office for other entrepreneurs moving into the development.

"Get up in the morning, and e-mail us what you need done," says Lootz, 41. "Whether you re on the road or playing golf, we'll type up your documents, print your brochures, bill your customers, and set up dinner with a client. If you get a call, we'll page you."

Hidden amid 3,060 acres of pine trees, homes in The Pinehills have that desirable combination of modern convenience inside and rustic exteriors. E-mail, web pages and bulletin board listings zip between them over fiber, as does programming from the development's TV station. One day, it may carry phone calls, too.