The debate rages. Which is the better technology to deliver broadband services to the home or a small business – fiber or fixed wireless – especially in underserved or unserved rural areas?
Certainly, there are merits, and drawbacks, with each technology, depending on the application. So, let’s break it down from several aspects – technical, economic and time to market.
Broadband Defined
Broadband service is defined as a high-speed, two-way connection to the internet for data downloads from the internet to a computing device (desktop, laptop, tablet, gaming console), and for data uploads from the device to the internet.
The current FCC standard for broadband in the U.S. that was adopted in 2015, is a minimum of 25 Mbps download and 3 Mbps upload (25/3). Consideration is being given to upgrade that standard to 100 Mbps download and 20 Mbps upload (100/20).
Broadband service can be delivered using a range of wireline and wireless technologies. Wireline technologies can range from legacy copper-based (read, telephone lines) digital subscriber line in several versions (referred to as, xDSL), coaxial cable, and fiber to the home/premise (FTTH/FTTP). Wireless technologies encompass fixed wireless access (FWA), mobile cellular (4G & 5G) and satellite communications.
Broadband Funding Programs
The bipartisan Infrastructure Investment and Jobs Act (IIJA) or simply, the Infrastructure Law, includes $65 billion to help close the digital divide by making broadband affordable and available to every household, similar to the rural electrification program of the 1930s. The Rural Electrification Act of 1936 was enacted to bring electricity to farms.
Under the IIJA’s BEAD program, funding of $42.5 billion will help underwrite broadband projects directed at unserved and underserved locations. The Infrastructure Law defines unserved locations as those areas that do not have internet access with at least 25/3 Mbps. Underserved locations are locations that have access to at least 25/3 broadband service but less than 100/20 services. The pandemic amplified the need for high-speed, reliable broadband connections that support remote work, education, and healthcare.
But deploying affordable broadband to unserved and underserved locations is often challenging for internet service providers. For funding to be disbursed equitably and efficiently, it is critical to understand the unique challenges of deploying broadband in these targeted areas, both from a network design aspect, and associated capex and opex.
The National Telecommunications and Information Administration (NTIA) has been designated to manage the BEAD fund allocations and disbursements. Under BEAD, internet service providers in each state must apply for funding by presenting their network design showing which technology is best suited to a particular application.
In this regard, NTIA is to award money impartially based on broadband coverage and operational goals for each of the projects being proposed, regardless of the technology selected and how these projects are subcontracted to complete the work.
Technical Considerations
Achieving BEAD goals likely will be accomplished with either FTTH or FWA.
FTTH is a passive optical network technology that allows for a fiber cable connection from the internet service provider central office or head end to each customer home or premise.
An optical line terminal in the CO is connected to an optical network unit installed at the customer premise over an all-fiber cable connection. The OLT connects on one side to the internet via a switch or router and on the other side, to ONTs over a local fiber network.
Customer premise equipment including WiFi routers, set-top boxes or voice-over-IP telephones plug into the ONT to access the broadband connection. The term passive optical network or PON means that there are no active electronics required for transmitting signals along the fiber route between the OLT and ONTs.
The OLT can support hundreds of ONTs over the fiber network. An optical fiber backbone “passes” a number of homes. Optical splitters separate the optical signals on the fiber backbone into a different wavelength for each customer. From the splitter, a fiber cable drop connects the individual homes to the backbone. Thus, the two key terms: homes passed or, simply, passings; and, homes connected.
FTTH with PON technology can deliver two-way, symmetrical signals of several hundred Mbps up to 1 Gbps or more. Verizon’s Fiber Optic System, branded FiOS, is an example of a FTTH network that is widely deployed in Verizon’s primary markets in the northeast states. Other ISPs offering FTTH include AT&T, Lumen Technologies, Frontier Communications and Consolidated Communications. FTTH equipment vendors include Adtran, Cisco, CommScope and Nokia.
Fixed wireless access can be provisioned from a base station on a tower serving a number of homes over a wide area, or from a small cell that serves a limited number of homes a short distance away. The base stations operated by wireless internet service providers (WISPs) typically operate on unlicensed bands such as 5 GHz. New 5G small cells are using licensed mid-band frequencies (C-band, 3.45 GHz) or millimeter wave (26 GHz and above) signals.
At each home, a wireless router is the device that connects over the air with the base station or small cell. This wireless router may be installed with an outdoor antenna pointing towards the base station or may be placed in a window that faces the base station or small cell.
On one side, the wireless router has an RF interface to receive/transmit signals from/to the base station. On the other side, it broadcasts a WiFi signal inside the premises to connect to any CPE.
FWA systems on the market today deliver asymmetrical signals that meet the 25/3 minimum standard. In fact, most FWA systems can meet or exceed the 100/20 objective and can actually operate with several hundred Mbps or higher download speeds and upload speeds in the tens of Mbps, depending on the number of sites connected to the base station.
WISPs operate FWA systems mainly with unlicensed spectrum to serve homes and businesses. The Big 3 MNOs are already rolling out FWA, under different brand names, using 5G small cells for home broadband service using both licensed mid-band spectrum and mmW frequencies. FWA equipment vendors include companies such as Airspan, Tarana, RADwin, Ericsson, Nokia, and Fujitsu.
Economic Factors
FTTH capex consists of two elements: cost per home passed (CHP), sometimes referred to as cost per fiber passing, and cost per home connected (CHC).
CHP includes the cost of the OLT located in a CO, a backbone fiber optic cable along residential streets and optical splitters in a street-side outside plant cabinet along with the labor to install the system. CHP can run $800-1,000 per subscriber depending on distance from the CO, whether the cable is buried or aerial, and the number of homes passed.
When a customer signs up for, or “takes”, the service, then the ISP incurs the added cost to connect the home to the fiber backbone. CHC includes a dedicated fiber drop that runs from the optical splitter to the home, along with the ONT that is installed at the home, the customer premise equipment that enables triple-play services (WiFi, telephone, TV) and the associated labor. CHC costs can add $900-1,200 to the per subscriber cost.
Recognizing variables for each application, total capex to deploy FTTH ranges $1,700-2,200 per subscriber. Some ISPs claim they can deploy FTTH even less expensively. For instance, Consolidated Communications (NASDAQ: CNSL) says that its average cost per fiber passing is $550-600 including edge access equipment, fiber components (OLT, splitters, fiber cable) and labor, while its average cost to connect is $700 including the fiber drop (ONT, fiber cable), CPE and labor. Certainly, FTTH capex will come down as the ISPs deploy more homes-passed.
FWA, by contrast, eliminates some of the physical infrastructure and reduces overall deployment costs. FWA using unlicensed spectrum can transmit around 100 Mbps or more over distances of several kilometers in both line-of-sight (LOS) and non-line-of-sight (NLOS) transmission. By contrast, FWA small cells using mmW frequencies cover a relatively small area with a radius of only several hundreds of feet but can deliver average download speeds of several hundred Mbps and peak Gbps connections for internet access and streaming video.
CHP involves a switch/router in a central location to connect to the internet. A fiber cable backhaul connection is needed to each small cell or cluster of small cells but that backhaul is often leased. The base station/small cell radio and antennas can cost $15,000-25,000 with capacity to serve several dozen subscribers simultaneously over LOS or NLOS connections. CHP drops below $1,000.
At the same time, CHC drops significantly with the over-the-air connection with only the cost of the wireless router which is typically $100-200. Total FWA capex is in the order of $1,000-1,200 per subscriber, or roughly 50-60 percent of FTTH capex.
The caveat is that despite the lower cost, FWA is an asymmetrical service. Download and upload speeds will be less than those achievable with symmetrical FTTH. Nonetheless, FWA is a viable, cost-effective alternative for delivering 100/20-capable service in a much shorter timeframe than FTTH.
Time-to-Market
Planning and deploying a fiber optic system like FTTH involves a number of steps.
First, the system must be configured and designed. This involves site acquisition and engineering activities, often using both inside staff and outside contractors. Here are some questions typically raised in the design stage: What are the target neighborhoods? How many homes will be passed? Which streets will the fiber cable follow? Where are the rights-of-way in which to install the fiber cable along those streets? Do we go aerial or buried? What should the optical splitters be situated?
This design activity allows for creation of a bill of materials and a construction timeline.
Then the system design must be submitted to the municipalities or local jurisdictions to have the design approved and to obtain construction permits and licenses to operate in the rights-of-way.
Once the necessary permits and licenses are obtained, the equipment listed on the BOM can be procured, and installation contractors engaged to install and verify the system is working as designed.
This process can take 12-24 months depending on the location and the number of homes passed. About half the time is required for the design and approval process, and the balance to install the system.
For a FWA system, the engineering and design phase, and permitting and licensing phase can take a similar amount of time, measured in months. But once approvals are obtained, the FWA installation phase can be completed in a matter of days to install base stations and small cell versus weeks or even months to complete the fiber cable installation. And since a physical connection is not required to each home, setting up each FWA link to the home can be done in 1-2 hours compared to several hours to install a fiber drop, ONT and CPE for fiber to the home.
Conclusion
The case for FWA is compelling especially with 5G becoming more widely available. Relatively lower cost and faster time to market are attractive attributes. But FWA has its limits. Asymmetrical operation and lower download and upload speeds compared to symmetrical, gigabit operation of FTTH can limit FWA applications.
Nonetheless, FWA versus FTTH is not a zero-sum game. Each architecture has its place, with performance, cost and time-to-market tradeoffs. In the end, market conditions will dictate the appropriate broadband solution for a given application.
For more articles like this, subscribe to Intelligence.
Reader Interactions