[ordering online? -- please see our return/refund policy]

The Impacts of Competition and Technology on Local Exchange Outside Plant Assets Lawrence K. Vanston, Ph.D. Description Key findings Who should read this report? Table of contents Exhibits Pricing/Ordering information Sponsored by TTFG

Description  [back to top]

This study presents our most recent forecasts of the impact of new technology and competition on local exchange outside plant assets. Specifically, we forecast the substitution of fiber for copper in the local loop, the adoption of broadband Internet access as a driver for fiber adoption, and the impact of competition from wireless, cable, and other services on ILEC revenues. The study provides reasoned, quantitative information about the likely pace of change. Although these forecasts have implications for many types of decisions -- ranging from R&D to market strategy to pricing -- the primary focus is on the management of capital, especially as it relates to depreciation and valuation. The result is a projection of the economic obsolescence of the ILECs' metallic outside plant.

Key Findings From This Latest TFI Report  [back to top]

• By year-end 2004, over 25% of households will have adopted broadband services, up from about 5% at the end of 2000. By 2010, we expect that the percentage will exceed 60%.
• Due to competition from wireless, cable modems, and DSL services, the number of ILEC-provisioned narrowband access lines will begin to decline sharply in about 2003.
• The need for ILECs to provide broadband services with data rates above 1.5 Mb/s will drive the adoption of fiber-in-the-loop. Our forecasts indicate that 1.5 Mb/s will meet the typical user's expectations until about 2005, that 6 Mb/s will do so until about 2010, then 24 Mb/s until 2015, and finally 100 Mb/s thereafter.
• When competitive and technology impacts are considered, existing metallic cable has an average remaining life of between 5.2 and 9.0 years, with 7.0 years most likely.

Who should read this report?  [back to top]

• Local Exchange Carriers
• Competitive LECs
• Cellular Carriers
• PCS Carriers
• Wireless Suppliers
• Interexchange Carriers
• Cable MSOs
• Internet Service Providers
• Telecom Equipment Manufacturers
• Regulators
• Depreciation Experts
• Property Tax Experts

Table of Contents  [back to top]

Chapter One

Introduction

• Forecasting Approach
• Summary of Depreciation Recommendations for Metallic Loop Cable
• An Industry Forecast

Chapter Two

Forecasts for Fiber in the Feeder Network

• Feeder Technology Basics
• Feeder Forecast
• Feeder Forecast Derivation
• Comparison to 1997 TFI Forecast
• Remaining Lives for Existing Metallic Feeder Facilities

Chapter Three

Forecasts for Distribution Fiber

• Distribution Technology Basics
• Choosing an FITL Architecture
• High-Speed Internet Access: The Driver for our FITL Forecast
• Relationship of Availability and Adoption of High-Speed Internet Access
• Forecast of the Adoption of Fiber-in-the-Loop
• Forecasts of the Adoption of Fiber-in-the-Loop (Total Loop Perspective)
• Forecasts for the Life Cycle of Standard DSL
• Comparison to 1997 FITL Forecasts

Chapter Four

Depreciation of Metallic Cable

• Depreciation Factors
• Computation of Survivor Curves and Depreciation Lives (Technology Substitution Only)
• Accounting for Competitive Impacts
• Forecast of Revenue-Generating Utility of ILEC Access Facilities
• Computation of Survivor Curves and Depreciation Lives (Technology Substitution and Competitive Impacts)
• Relationship to Cash Flow Modeling
• Depreciation Recommendations for Metallic Loop Cable

Chapter Five

Forecasts for Internet Access

• Key Assumptions
• Forecast of Online Services
• Forecast for High-Speed Services
• High Forecast
• Derivation of Base and High Forecasts
• Availability of Service
• Forecasts of High-Speed Data Rates
• Derivation of Data Rate Forecasts

Chapter Six

Forecasts for Local Competition

• Access Alternatives
• Study Scope
• ILEC Data Issues
• ILEC Voice Issues
• Outline of Forecasting Logic
• Forecasts for Voice Access Competition
• Forecasts for Data Access Competition
• Forecasts of Usage Per Access Line
• Combined Access and Usage Forecasts

Appendix A

Tabular Data

List of Exhibits  [back to top]

1.1	Forecasting Approach
1.2	Depreciation Recommendations for Metallic Loop Cable
1.3	Local Exchange Network Architecture
2.1	Percentage of Working Feeder Lines
2.2	Feeder Forecast, Percentage of Total Lines, with Substitution Universes
2.3	Fiber Feeder Forecast, Percentage of Working Feeder Lines
2.4	Comparison of 1997 Fiber Carrier Forecast with Actual Data and 2000 Forecast
2.5	Metallic Feeder Survivors
3.1	Households with High-Speed Access -- Maximum Assured Data Rates
3.2	Minimum Availability & Adoption of High-Speed Access
3.3	Average Percentage Distribution Distance of Fiber
3.4	Distance Assumptions for Fiber-in-the-Loop Forecasts (Applied to Distribution Only)
3.5	Average Percentage Loop Distance on Fiber
3.6	Distance Assumptions for 2000 TFI Fiber-in-the-Loop Forecasts (Applied to Entire Loop)
3.7	ADSL Households -- Middle Scenario
3.8	Average Percentage Loop Distance on Fiber -- Comparison of 1997 and 2000 Forecasts
4.1	Metallic Loop Carrier Survivors and Depreciation Lives (Technology Substitution Only)
4.2	Combining Feeder and Distribution Metallic Survivors Forecasts -- Early Distribution Scenario (Technology Substitution Only)
4.3	Combining Feeder and Distribution Metallic Survivors Forecasts -- Middle Distribution Scenario (Technology Substitution Only)
4.4	Combining Feeder and Distribution Metallic Survivors Forecasts -- Late Distribution Scenario (Technology Substitution Only)
4.5	Combined Loop Metallic Survivors Forecasts (Technology Substitution Only)
4.6	ILEC-Provisioned Access Lines
4.7	Indexed Utility Remaining per Existing ILEC-Provisioned Access Line
4.8	Loop Copper Survivor Forecasts (Technology Substitution and Competitive Impacts) -- Middle Scenario
4.9	Loop Copper Survivor Forecasts (Technology Substitution and Competitive Impacts)
4.10	Metallic Cable -- Estimated ARLs (1/1/2001)
4.11	Indexed Utility Remaining per Existing ILEC-Provisioned Metallic Access Line
5.1	U.S. Adoption of Home PCs and Online Services -- TFI Base Forecast
5.2	U.S. Adoption of High-Speed Access -- TFI Base Forecast
5.3	U.S. Adoption of High-Speed Access -- TFI Forecasts
5.4	U.S. Adoption of High-Speed Access - Percentage of Online Households
5.5	Examples of Consumer Adoptions (Gompertz Model)
5.6	Historical Comparisons for Home High-Speed Access Adoption
5.7	Minimum Availability & Adoption of High-Speed Access
5.8	Minimum Availability & Adoption of High-Speed Access
5.9	Modem and DSL Speeds
5.10	Performance Improvement Rates
5.11	Households with High-Speed Access -- Maximum Assured Data Rates
5.12	Households with High-Speed Access -- Maximum Assured Data Rates
5.13	Households with High-Speed Access - Average Available Bandwidth
6.1	Logic for Voice Access Lines
6.2	Forecast of Wireless for Wireline Access
6.3	Market Penetration of New Telecom Competitors
6.4	Wireline Primary Voice Households by Provider
6.5	ILEC-Provisioned Voice Access Lines -- Percentage of Wireline Households
6.6	ILEC-Switched Voice Access Lines -- Percentage of Wireline Households
6.7	Primary Voice Access Market Shares -- Percentage of Households
6.8	ILEC Voice Access Lines to Households
6.9	Logic for Data Access Line Forecasts
6.10	U.S. Adoption of High-Speed Access -- TFI Base Forecast
6.11	Online Households by Primary Data Access Type
6.12	Market Shares for Low-Speed, Dedicated Data Lines
6.13	ILEC-Switched Narrowband Access Lines
6.14	Households with High-Speed Access -- Maximum Assured Data Rates
6.15	Market Shares for High-Speed Access Lines, 10 Mb/s & Below
6.16	Market Share Assumptions for High-Speed Access Lines, 10 Mb/s & Below
6.17	ILEC-Provisioned Access Lines
6.18	Logic for Voice Usage per Active Wireline Access Line
6.19	Wireless for Wireline Forecast
6.20	Households by Wireline/Wireless Type
6.21	Base Wireline Voice Usage Left after Impact of Wireless
6.22	Voice Usage Displaced by e-communications (Among Online Users)
6.23	Base Wireline Voice Usage Impacts of e-communications
6.24	Base Wireline Voice Usage Left After Combined Impacts
6.25	Logic for Combining Access & Usage Forecasts
6.26	ILEC-Switched Narrowband Access Lines
6.27	Usage Remaining per Narrowband Access Line (No Revenue for High-Speed Data)
6.28	Usage Remaining per ILEC-Switched Narrowband Access Line (No Revenue for High-Speed Data)
6.29	Indexed Utility Remaining per ILEC-Switched Narrowband Access Line
6.30	Indexed Utility Remaining per ILEC-Provisioned Access Line
6.31	Indexed Utility Remaining per ILEC-Provisioned Metallic Access Line

Pricing Information  [back to top]

May 2001, 154 pages, ISBN 1-884154-16-6

Sponsored by the TTFG

US $95 Electronic Delivery

US $95 Hard Copy Mail Delivery

US $95 Hard Copy Mail Delivery Outside US, Canada

Texas residents add 7.25% (Austin, Texas 8.25%) sales tax.
All orders are shipped via UPS ground
Call for TTFG member prices and volume discounts.