Strategy and management consulting in Telecom and Media

FTTH

Glossary

ADSL :
Asymmetric Digital Subscriber Line (ADSL) is a data communications technology that enables faster data transmission, voice over IP and TV-cast over copper telephone lines.

FTTH :
Fiber To The Home (FTTH) is a form of fiber optic communication delivery in which the optical signal reaches the end user's living or office space. This still expensive technology will compete with xDSL / Cable on dense area offering much higher data transfer rates (1 Gbit/s) and reliability.

VOD :
Video on Demand (VoD) covers the distribution of video content available for download to end-users through high-bandwidth fixed-line (ex. : ADSL) or wireless network (ex. : 3G).

VOIP :
Voice over Internet Protocol, (VoIP) is the routing of voice conversations over the Internet or through any other IP-based network.

In Europe, Internet access has becomes more and more convenient to the extent that it is now often seen by customers as a “utility”, in other words, a relatively undifferentiated but key service. In response to this trend, operators in recent years have developed more and more services requiring higher bandwidth. Without fibre, operators face a bottleneck on service development and therefore on the ability to develop new services and revenues.

FTTH (using fiber optic cables) offers a way to eliminate this bottleneck, with speeds 100 times higher than copper and also enables new applications and services within the digital home.

The deployment of FTTH has been ongoing for several years, but at varying rates of progress, meaning uneven availability today:

  • It is estimated that in 2012 the FTTH will have 108 million subscribers worldwide.
  • Asia-Pacific has been a pioneer in terms of FTTH deployment in the late 90s and today accounts for 84% of FTTH subscribers in the world.
  • In the U.S. deployment of FTTH has been relatively limited to date and is led mainly by Verizon. It is expected that the US should catch up with Asia in the next five years
  • Despite good progress in Scandinavia, deployments in Europe are overall lagging behind (4% of global FTTH users today) mainly due to high costs for deployment, but also due to the absence of regulatory models shared by all players on a country by country basis.

Various factors underline the demand for high speed, and indeed the need for development of FTTH :

  • Changes in customer usage (frequency, volume and type of usage)
  • Expectations for substantial improvement in quality of service for existing products(P2P networks, VOIP, VOD, ...)
  • Development of new services requiring high speed
  • Business Applications: telecommuting, videoconferencing, IP VPN, cloud computing, VOIP ...
  • Emergence of new equipment which requires the optimal use of bandwidth: HDTV, mobile TV, wireless sound system ...

Despite these factors driving adoption, deployment of FTTH is hampered by many constraints :

  • Cost of deployment: the significant installation costs including engineering work often required to deploy fiber (~ 120 € per meter of fiber deployed) require operators to invest heavily
  • Techno-economic constraints: several technologies enabling provision of very high speed services(with data rates and cost of deployment variables)coexist complicating the sharing of initiatives between operators
    • FTTH (Fiber To The Home): ISPs deploy fiber networks direct to the subscriber's home. This solution is more expensive, but in return can ensure the highest speeds for subscribers
    • FTTB (Fiber To The Building): ISPs deploy the fiber network to the base of the building of the subscriber(s) and the termination is performed on paired copper wires or the existing cable network. This interim solution is likely to be widely used (IDATE predicts that users enabled this way will double in number by 2010 in Europe)
    • FTTLA (Fiber To the Last Amplifier): the street-network ISP deploys fiber to the last repeater, then the termination is performed on existing paired copper wires or the cable network. This solution is the least expensive, with an offsetting lower throughput due to limitations in the copper wires
  • Regulatory constraints: In many countries fuzzy regulatory frameworks slowed the deployment of FTTH operators wishing to be assured of a satisfactory shared network and limited access to maps of Civil Engineering structures did not empower regulators who wished to avoid development of a monopoly
  • Legal constraints: in many countries the connection to housing is subject to approval by all owners and this can be difficult and time consuming to obtain

Nevertheless, very high speed networks provide an opportunity for telecom players and should be developed as a priority in the coming years, allowing operators to:

  • Generate additional revenue associated with the new service that fibre makes technically possible
  • Improve customer satisfaction due to ease of usage
  • Improve operational efficiency due to better system stability, reduced operating costs and energy consumption compared to ADSL networks