January 16, 2009
By the end of 2008, Fibre-to-the-x (FTTx) had firmly established itself as a viable and scalable global fixed broadband technology alongside DSL and cable. Despite the economic crisis, operators are expected to keep investing in fibre, with the number of global FTTx subscriptions set to almost triple between now and the end of 2013.
This forecast comes from industry analyst and telecoms.com parent Informa Telecoms & Media, which warns that the path to growth is not without challenges.
Against the background of the credit crunch, many consumers are unwilling to pay an excess for new FTTx services. In addition, most operators do not know if, how and when they will make a return on their fibre investments.
Informa estimates there were 49 million global Fibre-to-the-home (FTTH), Fibre-to-the-building (FTTB) and Very high speed DSL (VDSL) subscriptions worldwide in 2008, representing 11.6 per cent of all fixed line subscriptions.
Impressive figures maybe, but the subscriptions are clustered in only a few countries and fibre is still not a reality for consumers in most countries.
The majority of FTTx subscriptions, unsurprisingly, are in Asia Pacific, with pioneering fibre nations Japan and Korea boasting 13.4 million and 7 million FTTx subscriptions respectively. But it is China, where the operators have been aggressively upgrading their legacy networks to fibre, giving rise to 16.6 million FTTx subscriptions in the country.
By 2013, Informa predicts there will be 145 million FTTx subscriptions worldwide, accounting for 20 per cent of all global broadband subscriptions. Much of this growth will be fuelled by Europe and North America. Growth in Western Europe has been sluggish to date, but greater regulatory certainty and wider acceptance of the benefits of fibre mean that by 2013, there will be 21.6 million FTTx subscriptions, representing total household penetration of 10.5 per cent in the region.
Central and Eastern Europe, which is not currently thought of as an advanced broadband region, will have a FTTx penetration rate comparable to Western Europe by 2013, with 10.6 million subscriptions.
North America, too, will see significant growth as a result of aggressive rollouts from both AT&T and Verizon. By 2013, North America will boast 24 million FTTx subscriptions, making up 22 per cent of the total market.
Conversely, some of today’s lead fibre markets will see some slowdown in growth towards the end of the forecast period as they approach saturation. Growth of FTTH and FTTB in Japan, for example, will have a compound annual growth rate of only 7.9 per cent over the forecast period.
Meanwhile, the analyst predicts a limited lifespan for VDSL among some cost-conscious European incumbents. “All operators, even those in Europe that are refusing to countenance FTTH beyond limited trials, know that they will eventually have to move to VDSL”, said Giles Cottle, analyst at Informa. “And globally, most operators will not even countenance VDSL, due to factors including competitor activity and the absence of adequate copper networks”. Informa predicts that VDSL will make up only 8.6 per cent of all FTTx subscriptions in 2013.
The big concern for most operators is how they will profit from their rollouts. With a few exceptions, most operators with advanced FTTx rollout plans have not made money from their new networks. Some will try and charge more for FTTx but others, including alternative operators Fastweb of Italy, France’s Free and Sweden’s Bredbandsbolaget are charging the same or even less for their premium services as their legacy services. There are also few value-added services or applications that rely on the extra bandwidth of FTTx. But this should not stop operators from rolling out. The challenge for operators is to avoid the mistake they made with the first generation of broadband by letting others develop services while they provided only connectivity. They must play to their strengths as operators to make sure that, where they are in the position to do so, they are the ones providing services for their subscribers.
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