In-built failure

Before the FTTH Council Europe Annual Conference in Milan last week I was invited to speak at a private workshop organised by a vendor. Amongst the speakers were three incumbents. All three made presentations on the techniques they were using to reduce cost of deployment. They all had slightly different approaches of course, but by and large, these techniques were of two natures:

  • degrade the quality of service offered for the time being (splitting PON beyond 32 or even beyond 64 customers for example)
  • make as much as possible of the infrastructure deployment success dependent (only deploy drops once a customer signs up for service for example)
  • extreme cherry-picking (this wasn't presented but discussed afterwards) which results in a leopard skin deployment

It struck me that all of these strategies assume take-up won't be good. In fact, they even assume that the ultimate take-up won't be good: in the example of success-dependant drops, your overall cost of deployment per home is higher than if you deployed all the way from the start, so it only makes sense if you're assuming your take-up rate won't go beyond a certain percentage.

It was easy for me coming last to highlight the fact that there's an alternative way to be successful which is to actually sell the fiber access lines. I don't think I realised until that moment quite how bad the failure was built into their business models… I'm also struck by the imbalance between the (considerable) effort that goes into reducing cost vs. the 'quasi non-existent) effort that goes into devising a sound go-to-market. Have these guys modeled the negative impact of a 3 week (at best) time to connect on sales ?

I didn't think so…