Why Enterprises Aren't Signing Up For Fiber Access

Less than 12% of enterprises have fiber access to their offices. With bandwidth at such a premium, what's keeping them away?

March 23, 2006

3 Min Read

Conventional wisdom says that with converged networks spanning branch offices or divisional headquarters, enterprises are signing up for broadband fiber optic access in droves.

But the conventional wisdom is thoroughly wrong, according to a new survey from the research firm Vertical Systems Group. The group found that only 11.7 percent of medium-to-large U.S. business sites (those with 20 or more employees) are connected to a service provider's network via optical fiber.

And that access is growing at a snail's pace. Erin Dunne, director of Research Services for the Vertical Systems Group, says that 10.2 percent of medium-to-large U.S. businesses were connected by fiber two years ago, which translates into growth of only 15% over two years.

If broadband has become a must-have for enterprises, especially those building converged networks, why isn't fiber access growing more quickly?

What's Holding Back Fiber

According to Dunne, four things are holding back fiber access: economics, local politics, the growth of alternatives to fiber, and business inertia.

She says that it can cost $250,000 to run fiber to an existing building, and many building owners simply aren't willing to pay the costs. New buildings, especially in booming locations across the Sun Belt, include fiber access, because it's relatively inexpensive to provide it in new construction. But for existing offices, the $250,000 is often more than owners are willing to pay.

Politics, especially in older, congested cities in U.S. Northeast, plays a role as well, she says. Running fiber to a building in a city requires that the fiber be buried in trenches --- and that means digging up city streets, often causing serious traffic delays and disruption. Because of that, many cities make it difficult to get permits to do the required work, she says.

"With all the digging and problems they've had in Boston over the last several years because of the Big Dig (a multi-billion-dollar public works project), do you really think the politicians want to have the streets dug up again?" she asks rhetorically. New technologies are giving businesses less-expensive alternatives to fiber. Low-cost wireless mesh networks are being built in cities across the country, such as Philadelphia, for example. Big service providers are also looking at providing broadband wireless access via Wi-Max. BellSouth recently announced it will be testing a large-scale Wi-Max rollout.

Finally, business inertia plays a role as well, she says. Most companies already have T-1 lines running over TDM offering 1.5-megabit access. For their current uses, she says, that bandwidth is adequate, and so many companies simply don't want to have to deal with the cost and headaches associated with running fiber.

What The Future Holds

But the lack of fiber access may come back to haunt companies in the future, and may be harming the networking industry as well. Emerging network services such as IP VPNs, VoIP and IP video require connectivity at up to gigabit speeds, and purchasing decisions for these services are being put off because so few enterprises have fiber connections. Faster fiber deployment, and new developments in Ethernet over copper, will be required to overcome the obstacles to growth.

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