Cost analysis of rural roll-out using a long-reach passive optical network: trading off the upfront cost under uncertainty of the user take-up rate

Abstract

High deployment cost with respect to expected revenue is the main barrier to fiber-to-the-home (FTTH) roll-out in rural areas. This problem, as shown in this paper, is exacerbated by the uncertainty associated with the end-user take-up rate. The randomness associated with subscribers’ service take-up yields considerable fluctuation and escalation in the total cost of deployment. This adverse and varying environment makes it difficult to produce firm business cases and can increase the reluctance of potential investors and incumbent operators to deploy FTTH access networks. In this paper, we develop a holistic framework for examining real-world FTTH deployment scenarios, taking as a case study one of the most rural counties in Ireland. Further, we carry out an in-depth techno-economic analysis identifying the methods more applicable in the rural scenario. We analyze the cost effectiveness of FTTH deployment, also proposing solutions that provide different levels of upfront investment risk, relating it to uncertainty in customers’ take-up rates. For example, we show how a lower take-up rate can be made profitable by adopting a strategy that favors lower upfront costs at the expense of higher connectivity costs.