Monday, November 27, 2006

Competing in a new world the Internet, the home and the automobile provide three new opportunities for copper and copper alloy products

The Internet Age is upon us. We live in a time when we expect communications to be instantaneous. Response times are measured in seconds, Faster, cheaper, bigger, better is society's mantra. We want the ability to download video streams On our PCs that are of the highest quality. The infrastructure necessary to make this possible is just now being put into place.

It is estimated that 117 million people have access to the Internet and that the vast majority of people do so through their telephone service provider. The speed of the connection is directly related to the system used, Telephone and cable companies are battling it out to be the provider of choice.

Telephone companies are working to increase speeds by adding digital subscriber line technology, which increases the speed of data transmission utilizing the current infrastructure. Cable companies are using cable modem technology, with coaxial cable, to bring high-speed Internet access. But no matter how fast data can be transmitted to one's house, the real bottleneck may be the telephone wiring inside the house.

This brings us to residential communications wiring, an exciting new market for the copper industry, whose potential is just beginning to be tapped.

Today the vast majority of people use conventional telephone wiring to access the Internet. Consisting typically of two pairs of wires, it is adequate for voice, fax and some data communications. Structured wiring, using Category 5 cables or better, can transmit more information faster.

Two markets drive residential communications wiring: new construction and remodeling of existing homes. This year approximately 1.5 million new homes will be built, of which approximately 1.2 million will be single family and 300,000 multi-family homes. New construction represents the "low-hanging fruit" for the structured wiring business. With open walls, these homes are easy to wire properly for a trained installer. And structured wiring is already beginning to penetrate this market.

Parks Associates of Dallas, one of the best-known sources of forecasts for residential technology, estimates that this year about 12 percent of new homes are being wired for the future. By 2004, Parks' mid-line forecast is for 42% of new homes to be wired to accept more information. This market is now in the early-adopter phase, but competitive pressures on builders, driven primarily by consumer demand, should bring structured wiring into the mainstream shortly.

The existing home market represents the greatest potential but it also has the largest obstacles. The nation's housing stock is composed of approximately 106 million single- and multi-family homes. This number has grown almost two-and-a-half times since 1950, when it totaled 43 million homes. If Parks' forecast that 42 percent of new homes will have structured wiring installed in 2004, or about 600,000 homes at today's construction rate, it would take only .6 percent of the existing homes to be wired in that year to match this. number. However, many people would say that retrofitting is difficult or impossible. The U.S. Copper Development Association does not believe that is the case.

A well-wired house, wired according to standards, should:

* use Category 5 or better wiring for voice and data;

* wire virtually every room of the house

* the kitchen, every bedroom, the home office, den, family room, everywhere the need might arise to get connected;

* be wired in a star, or home run, configuration;

* use eight-pin modular connectors, referred to as RJ-45s. These take advantage of all eight wires in the Category 5 cable.

Wiring of RG-6 coaxial cable is usually installed for distributing TV signals throughout the home.

To estimate the potential market for copper wire and cable one must examine structured wiring and coaxial cable. Category 5 cables use 24-gauge wire. Each wire has 1.22 pounds of copper per 1,000 feet. The cable is composed of eight such wires, totaling 9.76 pounds. Adding the twist in the cable results in approximately 10 pounds of copper per 1,000 feet of cable. A reel of 1,000 feet is sufficient to wire all rooms in a typical house, with star wiring from a central distribution device to each major room. It is generally recommended that two runs go to each location.

Similarly for RG-6 coaxial cable, the key point for copper is whether the center conductor is solid copper or copper-clad steel. There is a trend toward solid copper. Copper-clad has the advantage of somewhat greater stiffness to withstand repeated insertion forces, while solid copper has the advantage of being better able to carry a low-frequency current to power a remote-control device, such as a camera in the baby's room. Since a cable installed for TV distribution might later need to be switched to another use requiring power, it's arguably better to use solid copper. An 18-gauge solid-copper-center-conductor wire contains 4.92 pounds per 1,000 feet.

If each run has an upstream and a downstream coax, and one Category 5, which is fairly common, about 2,000 feet of coax might be used per house, or about another 10 pounds of copper, making a total of 20 pounds per house. If a second Category 5 is run to each location, as is recommended, the total becomes about 30 pounds per dwelling. Comparing 20 to 30 pounds of copper in a properly wired house to one or two pounds of station wire (also referred to as quad wire) in a typical house with only basic telephone service, results in an additional 20 pounds per house or more. A recent ruling by the FCC requires only category-type cable be used in certain applications.