The Institutional Conditions for Technological Change: Fiber to the Home

Abstract

For the first time in nearly one hundred years, telephone companies are attempting to upgrade the umbilical cord that ties each household to the public switched network. This cord is currently a twisted pair of copper wires. The new cord could be a fiber optic cable. The number and complexity of fiber optic experimental distribution systems is growing every year.' The telephone companies allege they are introducing fiber because it has the potential to carry not only voice and data communications but also video programs and services. In order to bring the alleged benefits of this new technology to the public, the telephone companies are attempting to a secure a release from the legal restrictions that limit their involvement in the video industry. The release will enable the telephone industry to secure the additional revenues that are needed to support the introduction of the new technology. Cable television, the alternative video carriage industry, is also evolving towards a fiber environment. Cable television companies are reinforcing coaxial systems with fiber backbones. This innovation will not only improve the quality of cable television services, but will also enhance the two-way communications abilities of the cable systems. The author is a senior telecommunications economist with the Public Service Commission of the District of Columbia. The views expressed in this article are those of the author and do not necessarily represent the views of the Public Service Commission of the District of Columbia or its Staff