Of Martha Stewart and FTTP

Is there an insider game with fiber to the premise?

Are the regional Bell operating companies backing the Fiber to the Premise (FTTP) specification engaging in an inside game?

Martha Stewart was indicted last week for profiting from insider trading. That means she knew something the rest of the investors did not and sold her shares just before the stock tanked based on this information.

Are the regional Bell operating companies backing the Fiber to the Premise (FTTP) specification engaging in an inside game?

FTTP is designed to lower the cost of deploying fiber to businesses and residences for high-speed broadband services. The RBOCs are expected to issue the FTTP RFP next week.

While on face value, the intent of FTTP seems genuine - low cost of deployment translating to competitive pricing for new services - some skeptics say FTTP, especially its fiber to the home proposal, is a smokescreen or a Trojan horse.

They say the real intent of the RBOCs is to gain continued leverage with the FCC in broadband deployments. The FCC’s Triennial Review “handed the RBOCs the store” in broadband, some analysts say, and the RBOCs are now dangling the potential of equipping homes with fiber as a signal to the FCC that it should continue to relax facility unbundling policy with regard to broadband buildouts.

"We've seen this [tactic] before," says Tom Nolle, president of consultancy CIMI. “There’s a large element of misdirection with this.”

Also, the RFP is intended to distract cable companies by taking them off the scent of the real broadband development plans of the RBOCs. FTTP is intended to persuade cable companies to invest heavily in defending their broadcast TV turf while the RBOCs invest incrementally in pumping ADSL to 20M bit/sec, enter into marketing arrangements with satellite companies for video delivery and avoid the expense of running fiber everywhere, Nolle says.

Other analysts don't buy it.

"I don't hear the RBOCs say their 10-year-plan is to do a pump fake with fiber and end run with DSL," says Danny Briere, CEO of TeleChoice. "DSL can't compete with fiber or cable. There's enough demand in new [home and office] builds alone" for FTTP. "The RFP is just based on common sense."

So is the decision to sell your stock before the value drops. But if you know before anyone else - like allegedly Martha did - that the price will drop after you sell, that's disingenuous. It’s deceitful. It’s a violation of trust.

It’s indictable.

 “The RBOCs will go through the RFP exercise even when they know [fiber to the home] is not practical,” Nolle says.

Kind of like Martha Stewart’s method of investing. Kind of like insider trading.

Learn more about this topic

RBOCs jointly push fiber closer

The Edge, 05/29/03

FTTH (fiber to the home)

PON (passive optical network)

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