Rights of way: Financial issues for Utility Companies

Golden ducts and silver conduits - Unlocking the value of utility company assets

There is little doubt that the average business or residential network user would rather have Metro Ethernet service over any other alternative. The demand is there but the economics of meeting the demand are greatly affected by the costs of pulling fibre optic cable into customer premises. For the most desirable customers - high income residences and high-tech businesses - it is possible to justify the digging of new cable paths to each building in certain high density metro areas. But this business model is applicable to only a minority of the large potential universe of Metro Ethernet customers.

Case point
CityNet provides building connections through the sewer system in London, Madrid and Seville. Lyse Energy provides fibre through gas pipes and ducting as well as through electricity and heating ducts in Stavanger, Norway.

Given the economic realities, utility company rights of way (ROW) can greatly expand the feasible customer base for Metro Ethernet in a given city. If cables can be pulled through existing utility ducts, conduits and service areas, then it becomes economically feasible to address a much larger percentage of the metropolitan area. Utility company assets that are of direct value to Metro Ethernet projects, fall into at least four categories: 1) long haul fibre runs, 2) cable runs under and over streets that pass by customer buildings, 3) cables from street service points into building basements, 4) vertical cabling inside multi-tenant buildings.

1. Long haul cable runs.  Many utility companies have fibre optic cables installed in their long haul metro and inter/intra-city right of ways. Wide area fibre runs are needed to form the backbone of Metro Ethernet transport networks. It’s well understood that running long haul fibre along existing power lines, waterworks, gas pipes and canals costs a fraction of the cost of underground burial.
   
2. Last mile cable runs.  These fibre cables extend from telecoms 'points of presence" (ie, central switching offices) along the streets where multi-tenant buildings are located. Points of presence are typically located within a kilometre or two of every major building in a metro area. Last mile cables can run in service ways under streets or on telephone and lighting poles over the streets. In the worst case scenario, last mile cables are placed in specially dug trenches under street pavements.
   
3. Last metre cable runs.  So called 'last metre" runs get from the street into the building. Utility company rights of way for gas, electric and water lines into customer offices and homes can often support an additional fibre optic line, which is a very small diameter, low-impact addition to the service infrastructure. Fibre optic cables can often be 'blown" with compressed air through existing raceways, conduits and ducts at a fraction of the cost of digging and new construction.
   
4. Vertical building cable runs.  Vertical runs connect Metro Ethernet switches in basement or equipment room to each customer home or office. In the current environment where customer telephone connections are still controlled largely by incumbent telecoms provider, utility company access rights inside buildings are very valuable indeed. So are the relationships that utility companies have with building owners and managers. In many cases building owners may be more comfortable working with an established utility company than an unproved telecoms upstart.

Beyond physical infrastructure assets and rights of ways, utility companies have much internal knowledge and expertise that can be valuable to Metro Ethernet projects. For instance, utility company billing and customer support knowledge is directly applicable to Metro Ethernet customer bases. The same goes for utility company knowledge of government regulations, building codes, licensing, and the direct relationships the utility companies often have with local municipalities.

Case point
In Norway, Lyse Tele has access to various rights of way to end customers through parent Lyse Energy's distribution network. Lyse is laying fibre through a variety of gas, electricity and even direct heating ducts in order to provide fibre connections directly into subscribers" homes.

Whether a utility company decides to add Metro Ethernet to its existing service portfolio, or spin-off a specialised company, the physical assets and expertise of utility companies can make a big difference in the feasibility, footprint and eventual success of Metro Ethernet deployments. For this reason, utility companies are considered very valuable partners by service providers and other network technology companies in this fast growing industry.