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Broadband Infrastructure Cost Comparisons

As U.S. telcos embark on infrastructure upgrades, they face a delicate balancing act -- weighing the benefits of new technology vs. costs. Kagan Research estimates that installing fiber-to-the-home in 2006 costs $1,650 per household connected.

Among the telcos, Verizon is plunging into FTTH, planning to invest $20 billion in capital expenditures to rewire 16 million households by the end of the decade. In comparison, upgrading MSO cable's hybrid fiber coaxial (HFC) networks costs just $470 per household connected in 2006. An in-between infrastructure of fiber-to-the-node costs about $600 per connected household and is used by other telcos, such as AT&T.

On the same network HFC mixes fiber optics for main lines emanating from the cable system's headend and coaxial cable for the numerous final connections to consumer homes. FTTN mixes fiber trunk lines to collection nodes from which copper wires emanate to connect to homes.

Telcos are currently engaged in the labor-intensive process of replacing existing copper with fiber. FTTH wins bragging rights for top data delivery speeds, currently advertising download speeds of 30Mbps and more. Cable systems that rely on HFC can match the throughput -- but more commonly offer between 3Mbps-10Mbps.

Still, Kagan Research senior analyst Ian Olgeirson believes the cable MSO less expensive HFC upgrades are sufficient to satisfy needs for most consumers in the foreseeable future. Kagan estimates 88 percent of cable TV homes passed at end of this year will be upgraded to greater than 750 MHz to provide cable's best performance.

Note, both the fiber and HFC estimates cover equipment and installation expenses to deliver broadband wireline telecommunications, including the "drop cable" that is the final connection to the consumer's home.

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