CIR dispels myth of 5% penetration of Fiber-to-the-Building

April 22, 2004
April 22, 2004 Charlottesville, VA -- While many hold the common belief that 5% of commercial buildings have access to fiber, rarely does anyone identify the actual number of buildings or where they are located. After three years of researching the relation between real estate and telecommunications, CIR Inc. has concluded that "5%" is a meaningless figure and that it makes more sense to examine fiber penetration by building type, office submarket, and tenant industry.

While downtown/Central Business District office buildings account for just 6% of America's total commercial locations, they represent nearly a quarter of all business facilities with fiber laterals. Collectively, these 8,000 buildings have a fiber penetration of 37%. Manhattan itself has 3,200 office buildings, of which 55%--or just over 1,700--have some kind of fiber entry. Other major downtowns such as Chicago, Boston, Washington, D.C., and San Francisco have optical penetration rates over 35%. Clearly, the last mile is not much of a problem in large urban areas.

Three industries--finance, consulting/professional services, and law firms--account for 80% of leased floor space in optics-rich downtowns, which debunks another myth--that fiber is most common at Fortune 500 companies. Most large industrial and technology companies are headquartered in suburbs, where fiber is much harder to find.

CIR's research also indicates that over 30% of all buildings (excluding homes) that have access to fiber are not even office buildings; they are university dorms, classrooms, and inpatient hospitals. Yet many vendors overlook these facilities, zealously focusing on "Tall Shiny Buildings."

Even the term "lateral" can be misleading, because fiber-between-buildings is more important for many companies than fiber-to-the-building. This is particularly true in the case of Ethernet services, where much of the hype has surrounded using the LAN protocol as a substitute for T-1s. Yet the majority of carrier-provisioned Ethernet links support Transparent LANs, not Internet access as some have claimed. In fact, the RBOC tariffs for Ethernet contain mileage surcharges for interoffice traffic, making a WAN service uneconomical.

The data cited in this release is drawn from CIR's "Communications Networking and Infrastructure Service," a program that provides market forecasting and industry analysis of wireline transmission, routing, switching, and access broken out across the network segments of enterprise, access, metro, and long-haul. Deliverables include reports, subscription programs, and custom client engagements. For more information, visit www.cir-inc.com.

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