Point Topic estimates the total cost at €80bn

Providing super-fast broadband to the whole of the European Union could be much less expensive than previously thought, according to UK research firm Point Topic, which estimates that the whole economic area could be served for €80bn – less than a third of the €270bn estimated by the European Commission in its Digital Agenda.

Defined as delivering at least 30Mbps of data downstream, super-fast broadband services have long been championed by EC Commissioner Neelie Kroes, who has taken on the mission of ensuring that all EU households can access these speeds by 2020.

However, both operators and national governments have balked at the cost, so it will come as welcome news to many that the cost may be much lower.

The main reason for Point Topic’s reduced estimate is that super-fast networks have already covered about half of European homes, using a variety of technologies in addition to expensive fibre-to-the-home (FTTH), such as cable and copper-based VDSL, which Point Topic has used as the main connection method in urban areas in its models.

Of the €80bn total, around two-thirds (or €52bn) will be needed to hook up the areas of lowest population density, defined as having less than 100 people per square kilometre.

Tim Johnson, lead author of the report, said: “Most of that amount will have to be funded by the taxpayer in one way or another,” says Johnson, “and we think that’s about as much as they will stand for. But we think that a large proportion of rural Europe will get wired up on that basis.”

Maen Haddad, Director/Product Marketing, Etisalat

Ahead of the Broadband MEA 2013 conference, taking place on the 19th-20^th March 2013 at the JW Marriott Marquis Hotel, Dubai, UAE, Dubai, UAE, we speak to Maen Haddad, Director/Product Marketing, Etisalat on the latest broadband developments in the region and his views on issues such as piracy and FTTH deployment.

What major developments have there been for the broadband industry in your region over the past year?

Etisalat has played a key role in Broadband growth in the UAE with the latest fibre optic technology being implemented across the country. This major initiative involved rolling out a fibre network throughout the UAE, providing customers with high-speed internet of up to 300Mbps.

As demand from consumers and businesses for broadband in the MENA region increases, the number of broadband lines is expected to increase exponentially. The UAE has reached a broadband penetration level that is on par with many advanced nations. This is a key indicator for national competitiveness and economic development.

Which would you choose? Investing in coverage or investing in increasing speeds to existing customers?

To be able to provide maximum value to its customer base, Etisalat has adopted a two-pronged approach where both coverage and speed are improved. Conducted in phases, the initial focus was on covering the UAE with a fibre network and later, offering variety of high speeds and bundled services that are designed to suit all customer needs.

To what extent does wifi offload come into your thinking?

As mobile broadband adoption increases rapidly, demand for data traffic has also simultaneously gone up. Therefore, wifi offload is a solution for the industry today not only for data offload but also for voice and messaging, offering a wider opportunity for the usage of wifi within our service portfolio.

Wifi services today are a value-add in our broadband product portfolio. This enables customers to connect to the Internet anywhere and at anytime. Customers choose to use the wifi instead of 3G due to different price structures.

Are curated, operator-managed OTT/IPTV services the best way of reducing piracy?

OTT and IPTV demand will trigger increasing pressure on broadband access to providers to increase delivery speeds and the permissible download volume. Content providers and distributors will have to make major decisions about how consumers will access content to reduce piracy.

In the best case scenario, content providers enjoy greater audience aggregation opportunities, while consumers benefit from more flexible and possibly more diversified access.

Piracy rates can come down when consumers perceive that they can benefit from new options, including the ability to select and pay for specific content rather than having to pay for tiered service containing plenty of undesired content.

Telecom operators in the region face credible threats to core revenue streams and piracy is indeed one growing threat. They have responded by reducing availability of “free” content and enhancing availability of content to paying subscribers. Some incumbents also have resorted to strategies including caps on monthly downloads and new service tiers based on download volume.

OTT and IPTV alone, however, cannot successfully compete and defeat piracy unless more aggressive enforcement tactics are carried out, e.g., suspension and termination of end user subscriptions and blocking access to specific sites.

Is FTTH really necessary for businesses and consumers and what are the stumbling blocks to rolling it out?

FTTH is necessary and very important for businesses and consumers in the UAE, especially since the country ranks the highest in terms of internet penetration in the region. At the same time, the stumbling blocks to FTTH blocks have been:

• The customer’s availability and willingness to install Optical Network Terminal (ONT) in his/her home.
• Putting fibre in the relevant areas where it is needed.
• The ability to monetise from an early stage.

Are there enough services out there to drive adoption of faster speeds and is it up to the operators to get involved?

Yes there are enough services, and there are always more bandwidth-hungry services in the pipeline. Operators have a critical role to get involved. Etisalat is a regional player and based in a country with a high subscriber base so it clearly understands that there is limited opportunity for growth of revenue by only adding new subscribers. The focus is now expected to shift to other areas such as higher mobile data services adoption and value-added services. Mobile data services adoption will be driven by the availability of compatible mobile devices, affordable data plans and the rapidly rising mobile internet user.

Today a high number of ecommerce transactions taking place in the UAE are through mobile devices. With an increasing penetration of OTT-delivered services and multiscreen access to TV and other video, marketing innovation to drive revenues through these growing use models is the winning strategy.

Etisalat has taken a lead in investing in futuristic technologies especially LTE, to meet these increasing demands in the market. With this investment, Etisalat has also continuously launched a great value added services meeting the requirements of consumers as well as enterprises.

Where does fixed wireless come into your planning and if so what technologies will you be using?

Currently Etisalat is using WiMax and is trialling LTE for triple-play services. Due to the portability of the WiMax technology, it has seen high adoption among enterprises in the region. It can be quickly deployed to remote locations. In terms of costs it cuts down investments on the network, when compared to GSM and 3G, enhancing speeds and operability at greater distances.

The commercial offering of Etisalat’s LTE service began in December 2011 with the launch of LTE USB modems that enabled customers to access LTE (4G) super-speeds of up to 150Mbps. To date, Etisalat has integrated hundreds of base stations with complete mobility to the 3G network, covering 80 per cent of the populated area of UAE. In 2012, Etisalat successfully tested the world’s highest 4G LTE speeds of 300 Mbps.

Do you see customer resistance to bandwidth caps, line throttling and traffic management?

Currently Etisalat doesn’t have bandwidth caps on fixed services and at the same time have a fair-usage policy to ensure high quality of service to all customers.

What are the biggest challenges you expect to be facing over the next 12 months?

With the upcoming Bitstream project, we expect the competition to increase leading us to bring to market solutions satisfying the needs and requirements of customers.

Yousef Abu Mutawe, CTO, Zain, Jordan

Yousef Abu Mutawe, CTO, Zain, is delivering the opening keynote on Day Two of the Broadband MEA 2013 conference, taking place on the 19th-20th March 2013 at the JW Marriott Marquis Hotel, Dubai, UAE, Dubai, UAE. Ahead of the show we learn about Zain’s activities in the past year, why wifi offload is crucial for it and of which technologies it is making use.

What major developments have there been for the broadband industry in your region over the past year?

In the past year the major step for Zain was the introduction of HSPA+, which delivered a significant speed boost for customers with compatible devices. With an eye on continuing evolution we have also begun some LTE trials. On the fixed line side we have started rolling out Ethernet-to-the-Home (ETTH) and Fibre-to-the-Home (FTTH).

Is FTTH really necessary for businesses and consumers, and what are the stumbling blocks to rolling it out?

From our findings there is a lot of demand for FTTH. However, the high cost of constructing an FTTH network is really a major obstacle. Having to lay down fresh cable is costly, but the use of overhead cables and partnerships with utility companies may significantly reduce TCO. In addition, micro trenching is making it a more feasible option.

How important is wifi offload to your rollout plans?

Wireless broadband delivered through HSPA is reaching the congestion stage, so wifi offload is an important part of our strategy. More of our customers are beginning to rely on wireless broadband as a replacement or an alternative for fixed broadband and this extra demand is creating an additional challenge for us. At the moment the adoption of LTE is too high due to prohibitive spectrum costs. Wifi has therefore become the most viable option for offloading part of our traffic given that the TCO of wifi is low and that it can serve localised areas more efficiently.

In areas of high demand high contention ratios can affect performance. What steps have you put in to ensure that you have enough capacity to deal with this?

Using compression tools for data is useful on the access part, while caching engines help save on international bandwidth. We also have policies in place to throttle the connection of customers that might be abusing the service.

Where does fixed wireless come into your planning and if so what technologies will you be using?

This year, we have started deploying FTTH using the micro-trenching excavation method. In addition, we have started the ETTH using and we have a smart buildings solution, which the DSLAM cabinet is located near to the building. We are also working with regulators on opening up the local loop, which will help to give customers more choice.

What are the biggest challenges you expect to be facing over the next 12 months?

Data growth is clearly the biggest challenge in today’s telecom market and as an operator we have to invest heavily in order to keep up and to grow the data network. The real balancing act is that operators have to manage investors’ expectations in the short term while building to generate a ROI for the long term.

Deployment of FTTH networks is expected to continue over the next five years despite the conclusion of the ARRA broadband stimulus programme, evolution of the FCC’s Universal Service programme to the Connect America Fund, and continuing economic difficulties.

This expansion is expected to come from a diverse group of telecom providers, ranging from small to large, while the deployment focus will shift from overbuilds to greenfield applications over the five-year forecast period, RVA says.

Perhaps even more significantly, revenues from applications and services directed specifically at high bandwidth users are expected to reach $4bn by 2017, or $9bn cumulatively over the next five years.

RVA also predicts that the number of high-bandwidth users (on 50Mbps, 100Mbps, or even 1Gbps plans) will soon grow rapidly and represent a market niche worthy of “serious attention”.

Spanish appetite for broadband remains undimmed

Spain’s appetite for fibre-to-the-home (FTTH) lines remains undimmed, with the number of FTTH connections doubling over the past year to reach 288,012 by the end of 2012, according to a report published by Telefónica.

The total number of fixed broadband lines grew three per cent last year, the report adds, with FTTH lines accounting for an estimated 2.5 per cent of all fixed broadband connections in the country, driving a shift in consumer behaviour from content ownership to content streaming.

The overall number of high-speed lines (including cable, VDSL and FTTC) has also increased markedly: the number of lines delivering speeds of 20Mbps to 50Mbps has grown 111 per cent, while the number of lines capable of more than 50Mbps grew 60 per ent, with both reaching one million.

Telefónica found that six million Spaniards are now “permanent digital communicators” and remain connected to the internet 24/7, with mobile broadband being a key driver, as 43 per cent of mobile owners now use their devices to connect to the web.

Fixed broadband penetration increased by five percentage points last year to reach 67 per cent of all Spanish homes, despite the country’s ongoing economic difficulties.

Applications continue to grow exponentially in the Spanish market, with 2.7 million apps currently downloaded each day by Spanish consumers.

Alexander Bard, international speaker and co-author of the globally successful Futurica Trilogy, claims that the current global Internet revolution is arguably the most profound and radical of all historical technology revolutions.

“This completely transforms society, politics, economy, culture, social power structures and our collective world view. We need fundamentally new models to understand what is happening to us, to adjust ourselves properly.”
“We are only at the beginning of this ongoing revolution, but we understand enough to know we must act now to prepare for the future. Countries and regions that prioritise broadband expansion and future economic growth over the next 20-30 years will enjoy payoffs like those Europe and North America enjoyed from 19th and 20th century railroad and highway investments. The more you invest, the bigger the pay-off. The most important underlying factor for the future in Europe is who invests the most in its own youth; investing in your children equals investing in broadband, media, and creative arts education.” An interview with Alexander Bard, complete with profile and photo, is available at:

http://www.ftthcouncil.eu/ftth-conference/programme/keynote-20-february

The theme for the 2013 edition of the FTTH Conference is ‘FTTH – Celebrating a brighter future’. A wide variety of topics will be discussed, including the Film and Entertainment Industry in the FTTH Era, Financing of FTTH Networks, and FTTH-enabled Content, Services and Applications. “This year’s FTTH Conference in Munich attracted over 3,300 attendees, and we expect an even bigger turnout in 2013”, says Hartwig Tauber, Director General of the FTTH Council Europe. “We’re proud to be the world’s largest FTTH-focused event for several consecutive years already and look forward to celebrate the 10th anniversary in London. We also hope our event can make a contribution to stimulating broadband rollout in the UK.” A video of the conference can be found here: www.ftthconference.eu.

This year, 3 euro will be donated to The Carbon Trust for every paying visitor to the conference. The Carbon Trust is an independent company with a mission to accelerate the move to a low carbon economy. It is a world-leading organisation helping businesses, governments and the public sector to accelerate the move to a low carbon economy through carbon reduction, energy-saving strategies and commercialising low carbon technologies. www.carbontrust.com

Registration is now open for the FTTH Conference 2013. Sponsorship response to this year’s event has been unprecedented, 90% of exhibition booths have been sold out, with 92 sponsors already signed up. For further information and registration, please go to www.ftthconference.eu.

-ends-

About the FTTH Council Europe:

The FTTH Council Europe is an industry organisation with a mission to accelerate the availability of fibre-based, ultra-high-speed access networks to consumers and businesses. The Council promotes this technology because it will deliver a flow of new services that enhance the quality of life, contribute to a better environment and increase economic competitiveness. The FTTH Council Europe consists of more than 150 member companies. www.ftthcouncil.eu
FTTH Conference 2013, ExCeL London, 19-21 February 2013, www.ftthconference.eu
Tired of your Internet connection? Join “I want Fibre” page on Facebook:

JT has chosen Genexis’s FiberXport product family, capable of delivering broadband speeds up to 1Gbps, and equipped with four Ethernet ports and integrated Voice-over-IP.

Last year the States of Jersey endorsed JT’s plan to build an ubiquitous FTTH infrastructure, with a targeted switch off of the copper network by 2015 – which would position JT as one of the first Tier 1 operators to achieve such a feat.

So far, JT Group has passed over half of the premises on the island and fibre connected more than five per cent of the households. Genexis is working alongside technology partners Cisco, NetAdmin and Dimension Data on the project.

The current migration to fibre-to-the-home (FTTH) networks in Europe is described as happening at a “snail’s pace”, and the report warns that this could seriously hinder economic growth across the continent for a long time to come.

“Every technical expert will agree that fibre is the only real technological option capable of meeting the demand for broadband in the long run,” said Stefan Stanislawski, co-author of the study and partner of Ventura Team.

“But in Europe we are still not investing enough money into fibre, and this is not for lack of capital. The industry could fund the switchover itself over a period of 25 years with the right regulations.”

According to the study – which has been funded by the Fibre to the Home (FTTH) Council Europe – a full switchover resulting in fibre cables laid out to every home in the EU would cost an estimated €261bn in CAPEX. The current rate of telecoms investment into fibre is a “mere” €3 billion a year and that is simply not fast enough, say the authors.

“In our view the telecoms industry must uphold what we call their ‘social contract for timely renewal of assets’,” adds Stanislawski. “In fact, regular telecoms consumers all over Europe are already paying for the switchover to happen over the next 25 years through tariff regulations – except it won’t, unless new regulatory schemes are adopted and enforced.”

To implement the complete switchover to FTTH in a maximum of 25 years, the study advocates a seven-point action plan which includes changing certain regulations, enforcing the existing social contract, changing strategic pricing, updating the concept of universal service, and more.

To download the complete report, click here.

Neelie Kroes, European Commissioner for the Digital Agenda

Over half of EU citizens can now access super-fast broadband services, while basic broadband speeds are nearly ubiquitous, according to a study produced by UK firm Point Topic.

Almost 96 per cent of EU homes can now access speeds of at least 144Kbps, and more than half can receive speeds of over 30Mbps – an important (and ambitious) target for 2020 set by the European Commission.

The study was produced for DG Connect, the department of the European Commission which is responsible for its “Digital Agenda” strategy. The purpose of the Digital Agenda is to harness the internet and other digital technologies to drive sustainable economic growth.

Neelie Kroes, vice-president of the EC, wants to see €7bn earmarked for EU investments in broadband to help reach Digital Agenda targets, which in turn is meant to draw in private funds of many times that amount.

“This study gives us the best view so far of where action is needed on broadband coverage,” says Neelie Kroes.  “It will help to guide decisions on where EU and private money can be invested to provide the best long-term return for taxpayers and investors such as pension funds.”

There are reported to be huge variations in availability of super-fast broadband: three EU countries (the Netherlands, Belgium and Malta) have over 98 per cent coverage; and three others (Italy, Greece and Cyprus) have under 11 per cent.

All the rest are in the range between 35 per cent and 75 per cent. There are also big variations within countries – for example, rural areas across Europe are estimated to have only 12% super-fast broadband coverage as a whole.

In terms of access technology, fibre-to-the-premises (FTTP) is still only available to 12 per cent of EU homes. Super-fast cable networks are the most common platform, with 37 per cent of EU homes now within reach of DOCSIS 3.0 networks.

VDSL (Very-fast DSL) was available to 21 per cent of EU homes by the end of 2011.  The three technologies together add up to only 50 per cent total super-fast coverage because they overlap a lot, competing to serve the richer and more densely-populated areas, leaving others underserved.

While this is all very heartening for the EC’s 2020 goals, a separate study issued recently by UK consultancy Ventura Partners predicts that at current rates, it will take 92 years to cover the EU with ubiquitous fibre-to-the-home (FTTH) networks.

Neelie Kroes spoke recently at the Broadband World Forum 2012 event in Amsterdam. To watch her presentation, please click here

As an analyst one of the most frequently asked questions I have received from mainstream journalists during the NBN debate is, “Why do we need the NBN anyway, why can’t we just do it with wireless?”

Indeed, I once appeared on a Melbourne AM radio station with a well-known conservative-leaning host to answer this very question, this required a lengthy explanation that going all-wireless would not be possible because of spectrum constraints and that fixed-broadband networks were irreplaceable. I haven’t been invited back.

Nonetheless, the suspicion still lingers in conservative circles that something is not quite kosher, the booming device eco-system of smart-phones and tablets convincing many of them that “wireless is the future” and that the boring, expensive fixed-broadband NBN was a scandalous waste of money from a profligate, socialist (if not downright communist) government.

That’s Tokyo calling….
Although the fact remains that wireless networks – even the greatly hyped newcomer LTE – can’t carry the weight of demand for bandwidth from subscribers, there is now serious evidence emerging that the arrival of high-speed LTE networks coupled with the smartphone and tablet boom is creating serious problems for FTTH operators in some markets.

The best example of this is coming from Japan where fixed-broadband giants NTT East and NTT West have been forced to slash their FTTH prices for new subscribers by an eye-watering 34 per cent from ¥5,460 (US$66.70) to ¥3,600 per month to try and re-ignite their subscriber growth and stop the outflow of subscribers to cheaper LTE mobile broadband services.

Sister-company NTT DoCoMo launched its initial LTE services back in December 2010, with rivals KDDI, Softbank and eAccess launching only this year, with DoCoMo’s LTE subscribers growing rapidly to hit 6.2 million at end-September – despite the embryonic nature of the LTE device eco-system and the fact that LTE has only recently reached mature network coverage.

At the same time though NTT East and NTT West’s FTTH subscriber growth has significantly slowed down – despite the fact that overall national FTTH household penetration was still just 46 per cent at 2Q12 – with the firms’ combined net subscriber adds for the year to end-June 2012 falling to 1.2 million, down from 1.7 million in the year to end-June 2011 and from 2 million in the year to June 2010.

Those figures tell a worrying story for NTT, which has spent a huge amount on deploying its nationwide FTTH infrastructure but now sees FTTH subscriber growth slowing markedly across the board, with rival FTTH firms also seeing similar slowdowns in their own FTTH subscriber take-up – hence the whopping 34 per cent price cut.

A changing landscape
The irony of slowing FTTH subscriber growth in Japan and the rise of LTE is that it comes at a time when DoCoMo has actually significantly rationalised its mobile broadband pricing, sweeping away the old all-you-can-eat era with a cheapest price of ¥4,935 ($60) per month for just 3GB of data – albeit at potential super-fast LTE download speeds of 75Mbps.

Sources at NTT East and NTT West are unequivocal in their views that the biggest, single reason for the slowdown in FTTH subscriber growth is the fact that many young subscribers now prefer to have their own ‘personalised’ LTE broadband services rather than paying for a household-based FTTH service – in addition to which they would be paying for a Smartphone LTE data plan anyway.

Initially, many at NTT East and NTT West were convinced that fixed-mobile broadband replacement in the LTE era would be relatively limited because of the fact that mobile broadband would not provide a sufficient data allowance for subscribers to watch movies, download music etc. – but that assumption is proving somewhat flawed.

Sources at NTT East say that LTE subscribers seem to be adjusting their behaviour to fit with the realities of mobile broadband and that they are ‘snacking’ on video-clips and music on their Smartphones and Tablets rather than downloading multiple HD movies and engaging in the sort of behaviour they would on an FTTH connection.

Of course, operators would ideally like subscribers to take both mobile and fixed-broadband and although NTT East and NTT West are not allowed to bundle their FTTH services alongside DoCoMo’s mobile services, second-ranked player KDDI is aggressively bundling its Smartphone plans with its FTTH services.

A rational conclusion
None of this evidence from Japan means that fixed-broadband is dead and we can all live in an LTE utopia – although some partisans might decide to make that their main conclusion – but it does show that once LTE becomes available on a national scale then it has the ability to make a significant impression in the broadband marketplace.

Moreover, although more hard evidence is required on this issue, we can also start to see that LTE subscribers – aware of the limited data allowance they have available – actually use LTE very differently to how they use a FTTH connection with its unlimited data allowance.

From what we can see Japan’s LTE subscribers are becoming more sophisticated in their understanding of the value of mobile data and are increasingly prepared to trade the unlimited data allowances available on FTTH for the mobility and cheaper price of LTE – despite much smaller data allowances.

Of course, when Japan’s LTE networks start getting more congested we might see some of the FTTH ‘refuseniks’ come back to the fold and FTTH take-up might begin to rise again – but that is no sure bet, especially if operators manage to make wifi offloading seamless and therefore reduce LTE traffic congestion in high demand network areas.

Clearly, fixed-broadband networks aren’t going anywhere but if the Japanese experience is anything to go by LTE could take a much larger seat at the broadband table than we had first imagined.

The impact of LTE on fibre will be discussed further at the LTE World Summit, taking place on the 24^th – 26^th June 2013, at the Amsterdam RAI, Netherlands. Click here to pre-register for the event.