Fiber in the Last Mile - Best Practices, Adoption Trends and the Impact of the Economic Downturn
Pyramid Research, Inc, December 2008, Pages: 101
For most wireline network operators, migrating to a next-generation infrastructure is no longer a matter of if, but when. This involves rolling out fiber to the curb (FTTC/VDSL), building (FTTB) or home (FTTH). ADSL and HFC networks, over which most broadband services are delivered today, are becoming obsolete, especially in developed markets: Demand for higher throughput is on the rise, competition is fierce, and more bandwidth is needed to support simultaneous delivery of such applications as video, peer-to-peer content exchange and high-definition television (HDTV). There is more leeway for the timing of upgrades in emerging markets, but growing competition from mobile broadband operators is also prompting wireline carriers to consider migrating to fiber.
A flurry of FTTH and VDSL network rollouts were announced in 2007, and only in the past quarter in Europe, Telefónica launched its pre-commercial fiber network in Spain, BT made a commitment to investing £1.5bn in fiber infrastructure in the UK by 2012, and Magyar Telekom made public its plans to roll out GPON and EuroDOCSIS 3.0 networks over the next five years in Hungary. In the US, Comcast announced its introduction of 50Mbps high-speed offerings, and in Asia new 1Gbps services have been launched.
At the same time, there is still plenty of uncertainty around the deployment of fiber. Regulatory issues around competitive access to fiber networks remain in many markets, holding back further deployments. The slow-to-materialize returns have raised questions on whether the heavy up-front investments in FTTH are warranted, while doubts around VDSL’s ability to support currently demanded applications have been heightened. Most urgently, with several carriers reporting capex cuts of as much as 15-20%, will the global economic recession put a damper on ambitious investment plans for fiber access networks? Some operators have already revised the scale of their FTTx deployments in the medium term; The leading FTTH carrier in Russia, VimpelCom, for example, plans to focus on boosting the uptake rates of its existing fiber networks instead of expanding their geographic coverage.
This report examines the deployments of FTTx networks in Asia-Pacific, North America and Western Europe, which have now passed the stage of early adopters and are led by both telecom incumbents and competitive broadband network operators. It uncovers operators; broadband strategies, current and planned services, operational and financial performance, and best practices with fiber in the last mile. Built around extensive case studies, our analysis uncovers operators’ broadband strategies, current and planned services, operational and financial performance, and best practices with fiber in the last mile. This report revisits the economic and technological comparison between FTTC/VDSL2 networks, gigabit passive optical networks (GPONs) and P2P fiber networks, providing an update on the development of upcoming fiber technologies such as WDM-PON and 10G PON. It provides a five-year outlook on fiber adoption trends, from FTTH subscribers to a breakdown of homes passed by the different flavors of fiber. This is all done in light of the ongoing global economic contraction, which calls for rethinking the established positions of all participants in the value chain — operators and vendors alike.
Case studies:
- NTT, Japan
- Korea Telecom, South Korea
- Verizon Communications, USA
- AT&T, USA
- Telefónica, Spain
- The French market: France Telecom, Iliad, SFR and Numericable
- The case for fiber in emerging markets
Key questions answered
- Is the economic downturn reducing the urgency to upgrade access networks to fiber?
- Who is deploying FTTx, and what drove the migration decisions?
- How big is the FTTx opportunity in emerging markets? What are the key differences in the FTTx business models of developed and emerging markets?
- For the FTTx pioneers, what have been the main economic implications of launching commercial services? Have costs or benefits been greater? What is the impact on subscriptions, ARPS, churn and costs?
- How do network investments vary between the different flavors of fiber?
- How long does it take to break even on fiber investments?
- What has been the impact of fiber network deployments on the adoption and marketing of ADSL?
- Is VDSL sufficient to support currently demanded applications? What will it take to upgrade a VDSL-based network to one of the faster FTTH technologies?
- Is it worth squeezing more value out of copper networks and waiting for the next generation of optical technologies, such as WDM-PON?
Target audience
Operators
This report provides forecasts for operator adoption of FTTx technologies, quantifies market demand for FTTH services over the next five years and identifies successful strategies for positioning, pricing and promoting FTTx-based offerings, giving you the fundamental tools to develop long-range plans and winning strategies.
Equipment and application providers
Using our assessment of the largest FTTx markets, determine where your opportunities are. This report includes insights into the top operators’ plans for network upgrades, new services and investments — the information you need to formulate informed go-to-market strategies and creative solutions to win a larger share of operator spending, particularly in the middle of a worldwide economic downturn.
Financial services, investment firms
This report provides a thorough grounding in the salient issues facing commercial FTTx networks today, offering current and projected adoption rates for FTTx technologies and FTTH services. Use this analysis to determine which players are best positioned to succeed and to assess upcoming opportunities in the FTTx market.
Table of exhibits
Acronyms and abbreviations
Companies mentioned in this report
Executive summary
Introduction
Section 1: Choosing the best next-generation access technology
1.1 The business case for fiber: Why now?
Maturing broadband markets
With broadband service commoditized, broadband ARPS declines
1.2 Fiber and service differentiation
Competition from mobile broadband starts to squeeze low-end DSL plans
MSOs raise competitive bar with DOCSIS 3.0
Video, TV, peer-to-peer: The applications behind fiber upgrades
VDSL can deliver HD, but no more than two streams
New fiber-based applications
1.3 Fiber technologies and deployment scenarios
1.4 The next generation of fiber access technologies
1.5 The cost equation
FTTx rollouts: Capex implications in uncertain economic times
1.6 A comparative analysis of FTTH and VDSL roadmaps
Key considerations for selecting a fiber technology
FTTC/VDSL: Cheaper technology boosted by latest advances
Long-term considerations: Migration paths to next generation of broadband access
Section 2: Performance and lessons learned from first commercial FTTH services
2.1 Fiber access adoption trends and the impact on ADSL and operator market shares
The speeds: From 50Mbps on VDSL to 1Gbps on P2P
2.2 FTTx revenue and capex trends, profitability outlook
FTTx pricing: Encourage adoption or accelerate the payback?
FTTx ARPS: Triple plays and value-added services are a must
FTTx revenue and its contribution to the top line
FTTx capex: Expensive for FTTH P2P and GPON
Breaking even: The function of cost and ARPS
CASE STUDY: NTT — the grandparent of FTTH services
FTTx strategy: Driven by competition and aging ADSL infrastructure
Network investment: NTT selects EPON technology — future-proof and cheaper to run
Services and pricing
Operational and financial performance
Market impact
Lessons learned
CASE STUDY: KT moving from VDSL to EPON
FTTx strategy: KT’s migration to FTTH is accelerating
Network investment: VDSL and FTTH costs lowered by high population density
Services and pricing
Operational and financial performance
Market impact
Lessons learned
CASE STUDY: Hong Kong Broadband Network’s ambition is to have the largest NGN in HK
FTTx strategy: Centered around FTTB and triple play
Network investment: Building FTTB from scratch
Services and pricing
Operational and financial performance
Market impact
Lessons learned
CASE STUDY: Verizon Communications — the leading FTTH provider in the US
FTTx strategy: Competing with cable
Network investment: Verizon’s FTTH GPON deployment is aggressive and expensive
Services and pricing
Operational and financial performance
Market impact
Lessons learned
CASE STUDY: AT&T choosing VDSL to deal with high cost
FTTx strategy: AT&T chooses VDSL to compete with cable
Network investment: AT&T upgrades to VDSL for reasons of cost and time to market
Services and pricing
Operational and financial performance
Lessons learned
CASE STUDY: Telefónica España mixes and matches GPON and VDSL
FTTx strategy: More bandwidth for IPTV and competitive triple play
Network investment: Telefónica shifts focus from VDSL2 to GPON
Services and pricing
Operational and financial performance
Market impact
Lessons learned
CASE STUDY: FTTH from the Big Three operators in France
Broadband market overview
FTTH network rollouts: FTTH P2P and GPON
FTTx network investment
Legislation on FTTH is in place, but details will take a while to be ironed out
Services and pricing
Lessons learned
CASE STUDY: The business case for fiber deployments in emerging markets
Network investment: Different flavor of fiber for different market landscapes
Deployment timeframes and impact of economic slowdown
Section 3: Global FTTH adoption forecasts
3.1 Fiber access uptake: Asia-Pacific leads in a big way
FTTB and FTTH in Asia-Pacific: National policies bring high penetration
FTTx in Europe: Playing catch-up
Global FTTB/FTTH homes passed and subscriptions
3.2 Fiber’s market share and the outlook for copper
3.3 FTTx standards: FTTB dominates, but GPON and E-FTTH are growing fast
Related resources
Table of exhibits
Exhibit 1: Wireline broadband penetration of households
Exhibit 2: Monthly broadband ARPS (US$) by region, 2006-2012
Exhibit 3: Global fixed-line revenue (US$ billions), 2006-2013
Exhibit 4: Broadband cable as a percentage of all broadband households, Q1 2008
Exhibit 5: Ten markets with highest proportions of 5Mbps or faster broadband, Q2 2008
Exhibit 6: Multiservice household penetration
Exhibit 7: Applications and bandwidth requirements of multiplay households
Exhibit 8: FTTx deployment scenarios
Exhibit 9: Comparison of P2P, GPON and FTTC/VDSL2 technologies
Exhibit 10: Cost structure of a new fiber-optic network
Exhibit 11: VDSL2 download speeds at various distances
Exhibit 12: Tier 1 incumbent operator capex, 2004-2007
Exhibit 13: VDSL2/FTTH technology migration paths
Exhibit 14: FTTH/FTTB deployment timeline
Exhibit 15: FTTH/VDSL subscribers — totals and percentage of total broadband lines, 2008
Exhibit 16: ADSL subscriber totals for NTT, KT and Verizon, 2002-2008
Exhibit 17: Broadband market shares prior to FTTx launches and today
Exhibit 18: Churn rates of single-service and bundle subscriptions in France, 2007
Exhibit 19: FTTH prices per Mbps
Exhibit 20: FTTH ARPS vs. overall broadband ARPS in 2008
Exhibit 21: NTT revenue breakdown, H1 2007 to H1 2008
Exhibit 22: Capex committed to FTTx
Exhibit 23: NTT fiber investment and network coverage
Exhibit 24: Price comparison of NTT’s FLET’S service plans
Exhibit 25: NTT ADSL and FTTH price comparison
Exhibit 26: Comparison of NTT’s prices for FTTH and ADSL
Exhibit 27: NTT fiber subscribers and market share
Exhibit 28: KT’s FTTH roadmap (2004-2015)
Exhibit 29: KT Megapass service prices in 2007 and 2008
Exhibit 30: KT’s share of wireline broadband market in South Korea, mid-2008
Exhibit 31: Market shares of wireline broadband technologies in South Korea (mid-2008)
Exhibit 32: HKBN capex, August 2008
Exhibit 33: HKBN’s and PCCW’s monthly fees for FTTH compared
Exhibit 34: HKBN subscriptions, August 2008
Exhibit 35: HKBN’s ARPS from H2 2005 to H2 2008
Exhibit 36: Verizon’s FiOS Internet service plans compared with new Comcast plans
Exhibit 37: Verizon’s FiOS TV prices
Exhibit 38: Verizon’s FiOS subscriber base
Exhibit 39: Breaking down Verizon’s FiOS TV customers by service package, Q3 2008
Exhibit 40: Verizon access line decline, 2005 to Q3 2008
Exhibit 41: FiOS broadband and video revenue — total and as a percentage of consumer revenue
Exhibit 42: AT&T’s U-verse Internet service plans
Exhibit 43: AT&T’s U-verse bundles prices
Exhibit 44: AT&T’s U-verse subscriber total, and U-verse TV subscribers as percentage of all AT&T TV subscribers, Q4 2006 to Q3 2008
Exhibit 45: AT&T regional consumer revenue per households served
Exhibit 46: Telefónica España: Imagenio prices
Exhibit 47: France broadband market shares, year-end 2007
Exhibit 48: FTTH homes passed in France, year-end 2007
Exhibit 49: France: FTTH capex plans, 2007-2012
Exhibit 50: Prices of 100Mbps fiber service in France
Exhibit 51: Largest cities in emerging economies, with population density and GDP
Exhibit 52: Markets with the highest estimated FTTH/FTTB penetration of households, year-end 2008
Exhibit 53: FTTH/FTTB homes passed in Asia-Pacific, 2007-2013
Exhibit 54: FTTH and FTTB subscriptions in Asia-Pacific, 2007-2013
Exhibit 55: FTTH and VDSL homes passed in North America
Exhibit 56: North America: FTTH, xDSL and cable subscribers
Exhibit 57: FTTH and VDSL homes passed in Western Europe, 2007-2013
Exhibit 58: FTTH homes passed and subscriber totals in Central and Eastern Europe, 2007-2013
Exhibit 59: FTTH/FTTB subscriptions in Western Europe, 2007-2013
Exhibit 60: Forecast of homes passed by FTTH globally, 2007-2013
Exhibit 61: Forecast of global FTTB/FTTH subscriptions, 2007-2013
Exhibit 62: FTTH’s, ADSL’s and cable’s shares of total broadband accounts, 2007-2013
Exhibit 63: FTTH subscriptions by standard, 2007-2013
Exhibit 64: FTTx rollouts by technology in Europe
- Akamai
- Athens Information Technology (AIT)
- Akado
- Alcatel-Lucent
- AT&T
- Belgacom
- Bell Canada
- Bharti Airtel
- Bouygues Telecom
- Bredbandsbolaget
- BSNL
- BT
- Charter Communications
- China Telecom
- Chungcheong Media Broadcasting
- Circuit City
- Cisco Systems
- City Telecom
- Comcast
- Completel
- Dansk Energi
- Deutsche Telekom
- DirecTV
- Discovery Networks International
- Dom.ru
- EchoStar
- Eircom Ireland
- Electronics and Communications Research Institute
- EnergiMidt
- Ericsson
- Etisalat
- Fastweb
- France Telecom
- Free
- FTTH Council
- Golden Telecom
- Hanaro Telecom
- HanseNet
- HKBN (Hong Kong Broadband Network)
- Hong Kong Broadband Network (HKBN)
- Iliad
- Infineon
- Jazztel
- Kabel BW
- Kabel Deutschland
- KPN
- KT
- LG-Nortel
- Magyar Telekom
- MTV Networks
- NetCologne
- Neuf Cegetel
- Nintendo
- Nokia Siemens Networks
- Noos
- Nortel
- Novera Optics
- NTT
- Numericable
- Ono
- Orange
- Orange España
- Orange Slovensko
- Pirelli
- Qwerty
- Reggefiber
- Research Academic Computer Technology Institute
- SFR
- SingTel
- SK Broadband
- StarHub
- Swisscom
- T-Com
- TDC
- Tele2 España
- Telecom Italia
- Telefónica
- Telefónica España
- Telekom Slovenije
- Telenor
- TeliaSonera
- Time Warner Cable
- Unet BV
- Unitymedia
- Verizon Communications
- Verizon Wireless
- VimpelCom
- Virgin Media
- Vivendi
- Vodafone
- Wal-Mart
- Wilhelm.tel
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