Electrosmart.Net

Cabinetization

Rolling out fibre optic cable and installing Internet access equipment in roadside cabinets, rather than in exchanges, improves the performance of the broadband network. This is because DSL connection speeds tail off dramatically when customers are connected to Internet access equipment over long copper phone lines.

This strategy is referred to as Cabinetization. Roadside cabinets are the first point at which phone lines are aggregated, typically connecting 200 to 300 homes.

Cabinetising a network is a process known as fibre-to-the-node [FTTN] has inherent commercial difficulties:

The provider who owns the incumbent network is not thrilled at opening up their network to competition [Local Loop Unbundling]
Competitor equipment installed in unbundled exchanges might have to be moved or written off.
It might be difficult for rival telcos to win enough customers to make installing equipment in them worthwhile.

These concerns are causing tension between rolling out FTTN and local loop unbundling in most telecommunications markets.

Regulators are looking at models of how competitors might survive the FTTN process comparied to how competition might persist in the investment pattern.

Local loop unbundling is seen as a major initiative to drive competition in communications markets.

Commercial Models

One proposal is that competitiors pay say $15 a month more for access to its cabinets than for access to its exchanges, providing the incentive required for the incumbent to fully cabinetise its network quickly.

Others suggest that such a simplistic model is myopic and could entrench the incumbents monopoly.

Allowing an incumbent to charge more for sub-loop backhaul – carrying Internet traffic to and from roadside cabinets and its trunk network – than it could charge for carrying traffic to and from its exchanges would have the same effect as charging a premium for sub-loop unbundling over local loop unbundling.