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Introduction
Residential connectivity over optical fiber is becoming ubiquitous. Record numbers of large and small network providers have deployed fiber-to-the-home (FTTH) systems, delivering voice, video and data to living rooms and home offices all over the country. In new construction, or greenfield deployments, real estate developers can choose between traditional twisted-pair copper/coax-based network infrastructures or a futureproofed, fiber-based network. When starting from scratch, optical fiber has become the clear choice over copper, given its lower installation costs and superior capacity. Homes in FTTH-connected communities command a price premium over homes in communities without optical connectivity. For a typical investment of about $1,200 per home passed for FTTH, developers can expect to realize a premium between $4,000 and $15,000 per home sale. In short, FTTH offers the developer/builder the opportunity to make more money per home, while offering the home buyer an improved lifestyle. This article will provide insight into the necessary requirements to integrate FTTH design into the real estate developers process for maximum effect. Despite optical fiber deployment becoming commonplace, designing the neighborhood fiber network often comes late in the design process. Integrating the FTTH network planning into the utilities construction plan, and allowing for minor modifications to lots and streets, will lower cost, increase operating efficiency and simplify long-term maintenance. Many of the current neighborhood design trends are aimed at minimizing paved roads in developments. Since 98 percent of all developer-driven FTTH systems are placed in conduit and primary conduit routes typically follow alongside the main roads minimizing road lengths results in cost savings on all utilities infrastructures. Understanding the basics of FTTH networks, both as a business case and as a design process, will ensure successful FTTH network deployment.
Figure 1 Annual Cash Flow without Lot Values Figure 1 illustrates cash flow on an annual basis for both FTTH and HFC networks. Each illustrate a classic business model, starting out in negative cash flow and becoming profitable after about three to four years. However, the cash flow picture changes significantly when factoring in the FTTH home price premium that HFC lacks as shown in Figure 2.
Figure 2 Annual Cash Flow with Lot Values Figure 2 illustrates cash flow on an annual basis, including the home price premium that the developer-builder can realize in the first five years (assuming that a $7,000 home sale price premium is utilized). The premium offsets the initial negative cash flow, producing, in this example, a cumulative additional cash flow of about $2 million. In networks where both HFC and twisted-pair copper (for voice) are deployed, the initial costs are even higher, creating a more costly scenario than for the HFC-only approach. By evaluating the revenue and content costs, the infrastructure deployment costs and the FTTH home price premium, a clear advantage can be demonstrated for those who choose FTTH.
Figure 3 In the local convergence model, the LCP contains a switch or all-passive splitting, in or near the neighborhood.
Figures 4 and 5 illustrate a non-optimized and an optimized lot layout for a given land area.
Non-optimized layout (Figure 4) showing groups that require drop street crossings (red border) and underutilized group (solid red). Terminals are black dots. The same neighborhood (Figure 5) with minor modifications: (1) No drop cables cross streets, (2) all groupings are 4 or 6 homes, (3) the design uses one less terminal and (4) moving the street creates two additional lots.
Real estate developers and network designers share an important common goal: design the neighborhood and the network for the most efficient use of capital to offer the greatest value and highest quality living experience possible at a given price point. By integrating neighborhood and network design into a parallel, rather than serial process, developers can maximize property values, profit margins and quality of life. Developers must realize the opportunity cost if FTTH is not part of the overall project plans. Not only does FTTH create demand and higher selling prices but over time, it is a clear differentiator that moves innovative developers to the front of the pack.
Corning Cable Systems LLC PO Box 489 Hickory, NC 28603-0489 USA 800-743-2675 FAX: 828-901-5973 International: +1-828-901-5000 www.corning.com/cablesystems
Corning Cable Systems reserves the right to improve, enhance and modify the features and specifications of Corning Cable Systems products without prior notification. Evolant is a registered trademark of Corning Cable Systems Brands, Inc. All other trademarks are the properties of their respective owners. Corning Cable Systems is ISO 9001 certified. 2006, 2008 Corning Cable Systems. All rights reserved. Published in the USA. EVO-687-EN / December 2008