[UFO Chicago] might be a bit late to tonight's meeting

[Neil R. Ormos]

Larry Garfield wrote:
> Richard Lynch wrote:

>> [...] I don't even understand why you wouldn't
>> just run fiber to the house, and sell enough
>> fiber-RJ45 devices to make it financially
>> viable.

>> Seems to me that the gear price has almost
>> nothing to do with raw materials, and
>> everything to do with number of units moving.
>> So make enough of the dang things and the price
>> will be in reach of most households and it's
>> problem solved. [...]

> Last I checked, fiber optic cable cost LESS per
> mile than copper wire.  Fiber optic cable
> terminators, however, cost dramatically more
> than RJ-45 terminators.  That's why you don't
> run fiber in your house.  The cable could cost
> less, but the NIC would be 10x as
> expensive. [...]

Lynch is correct.  There's nothing magic about
fiber terminations that makes them particularly
expensive; it's just a matter of volume.  Older,
lower performance fibre channel Host Bus Adapters
(HBAs) are now available for under $50 (although
newer, high-performance adapters are still quite
expensive).  I understand that an HBA is different
from the multiservice residential gateway (fiber
CPE) that would be needed for fiber-to-the-home
service; I provide this datapoint just to show
that a connection to fiber does not have to be
expensive.

Cellular phones used to cost thousands of dollars
apiece; high volume and silicon IP have driven the
prices down to under $100 (excluding carrier
subsidies) for low-end phones.  Ethernet
connections used to be well over $1000 per port,
and that was in late 1970's dollars, equivalent to
over $3000 today.  Ethernet NICs are now under
$10.  If the dominant telephone carrier (AT&T/SBC)
were ordering enough fiber residential gateways to
connect all of their current subscribers within
the next five to six years (say, 2 million units a
month), the price of the fiber gateways would
quickly drop to the range of digital cable
converters, cable modems, DSL modems, and the
like.

Unfortunately, AT&T is choosing to run fiber to a
pedestal, with a copper connection from the
pedestal to the home.  Verizon, on the other hand,
is using fiber-to-the-home for their FiOS service.
I don't know whether Verizon will order enough
fiber CPE units to get the price down to DSL modem
range in the short term, but in the long run I
believe the cost difference between FTTH and
copper will turn out to be insignificant, and the
copper approach will ultimately fail to meet
customer bandwidth requirements.

--Neil Ormos