«
»

Marketing FFTH

In my last Cool Stuff post, I wrote about FFTH (or fiber from the house).  In the past week, I have had the chance to refine my idea, and I even had a chance to read the very good paper by Slater and Wu, Homes with Tails.  The more I think about the subject, the more I come to the conclusion that main issue is syndication of the risk of stranded investment.  The strategies which deal directly with spreading this risk have the greatest chance of succeeding.

Just to review FFTH, is where the homeowner buys his own Internet connection.  Under the simple scenario, Joe the Fiber Layer comes to Joe the Homeowner and offers to build him his own fiber optic Internet connection.  The cost of this construction is highly sensitive to the number of homes which take the offer in a given area.  Using Slater and Wu’s numbers regarding the Verzion FiOS roll out, the capital cost for a fiber to the home connection is about $7,000 if 20% of homes passed take the service and on the order of $3,000 to $4,000 at a 40% take-up rate.

Insight:  There is a marketing strategy which plays perfectly to this problem.  Suppose Joe the Fiber Layer comes to Joe the homeowner and makes the following offer, “I will build you your own fiber Internet connection for $5,500.  However, if 5 other homes on your line buy FFTH, I will send you a check for $500; if 10 more take it, I will send you a check for $800; 20, $1,500; etc.” I can imagine that in everywhere in America there would be neighbors leaning across the hedges saying, “Dude, we just got our FFTH connection.  It is AAAAAWSOME! You totally have to get one of these!”  Word-of-mouth is the best marketing, but peer pressure is better.

Tags: , , , ,

This entry was posted on Wednesday, November 26th, 2008 at 1:31 pm and is filed under Broadband, Cool Stuff. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

  • http://internetthought.blogspot.com Rudolf

    How do you think Nuenen got 95% penetration for FTTH? ;-)
    And why do you think Reggefiber has an FTTH shop in every town they start a project? ;-)

    Nuenen was really cool, every home that signed up got a small sign that they could put in the front yard to show that they had signed up. The streets filled up with signs :-) Better still marketing was done by working with the local amateur football club etc.

    BTW money might actually spoil the success. If your neighbor says its good and there is no financial benefit for him you might trust him more than if there is a financial reward.

  • http://www.knowkidding.net Jeff Goldthorp

    Ken – read ur ffth post. I dunno. Seems to me that joe the homeowner might be squeamish about backlash from neighbors if joe the fiber layer turns out to be a little shady. I’m picturing joe the plumber showing up with pipe wrench in hand swinging for joe the homeowners head over a damaged septic system. But maybe I just don’t have enough faith in my fellows. Cool idea though.

  • http://kennethrcarter.com kennethrcarter

    Rudolf, Jeff,

    Thanks for your helpful comments. You both make the salient point that the marketing of FFTH has to be handled delicately in order demonstrate its value and get home owners to buy-in. Perhaps, Joe the Fiber Layer is not the best term of art. The point is to demonstrate the the FFTH provider is not Verizon, Comcast, or other network provider.

    BTW, Rudolf, you in the Netherlands cheat. You use submarine cables for local loops! ;- )

  • Ted S.

    There are several “planned communities” out here in Colorado that have done what Ken is suggesting. The developers have contracted with third party providers (San Isabel Telecom is one that I know of) to bring fiber from the home to their node. If the homeowner wants it, they can receive services from San Isabel over the fiber connection, otherwise Qwest, Comcast, and CenturyTel are able to provide service over copper.

    Qwest, Comcast, and CenturyTel are making great strides in certain areas to bring fiber closer to the home but it is still “a mile away”. In more remote areas like Steamboat Springs, the situation is even worse – if you live just outside the town limits, the chances are very good that you don’t even have copper cable service run to your street (never mind your house). Several wireless broadband ISPs have capitalized on this but some people still would like the option of receiving Cable TV – and over the air isn’t an option we are way over the “cliff” here. In fact it’s more of a Continental Divide.