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Altice Plans FTTH for Entire US Footprint

Iain Morris
11/30/2016
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Altice appears to be turning its Gallic nose up at DOCSIS 3.1 in the US market, saying it will now plow funds into a fiber-to-the-home (FTTH) network capable of supporting 10Gbit/s connection speeds across its entire footprint.

The plans, confirmed in an official statement earlier today, will see Altice -- controlled by French billionaire Patrick Drahi -- use proprietary technologies developed by its own R&D unit to roll out high-speed connections over the 2017-22 timeframe.

In the US, Altice's Suddenlink Communications and Optimum subsidiaries, both of which it acquired in the past year, have previously relied on cable-based DOCSIS 3.0 technology to offer broadband services.

While most cable operators see DOCSIS 3.1 as the next logical upgrade, Altice's announcement suggests it has doubts about the return on investment potential of that technology, which uses the HFC (hybrid fiber coax) plant deployed by cable operators.

In pursuing a fiber-to-the-home deployment, Altice might have been expected to use either XGS-PON or NG-PON2 -- emerging standards that are in the crosshairs of major telcos such as AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) and should be able to support multi-gigabit-speed connections -- or Radio Frequency over Glass (RFoG), a technology option developed for cable operators seeking to upgrade to "deep fiber" deployments. (See Service Provider Split Emerges Over NG-PON2 Upgrade.)

However, the company's insistence that it will use proprietary technologies developed by Altice Labs suggests these technologies might not figure in its plans.

A big question is how much all of this will cost. Altice says it expects to cover the entire Optimum footprint and most of the Suddenlink footprint by the end of 2022, and that it will announce "initial rollout markets" in the coming months.

According to Altice's last earnings update, Optimum's network passed 5.075 million homes in September, while Suddenlink's passed 2.91 million.


The rollout of gigabit broadband access networks is spreading. Find out what's happening where in our dedicated Gigabit Cities content channel here on Light Reading.


Elsewhere, operators have balked at the cost of extending fiber networks all the way to customer premises, and Altice is already one of the most heavily indebted operators on the planet. In September, its overall net debts stood at an eye-watering $49.3 billion ($52.5 billion), or roughly 5.7 times its annual earnings (before interest, taxation, depreciation and amortization).

Most of Europe's biggest telcos report net-debt-to-EBITDA ratios of between 2 and 3.

Altice, however, reckons it can pursue its FTTH plans without having to significantly increase the budget for capital expenditure, which hit €1,356.8 million ($1,442 million) across the Group in the July-to-September quarter, or about 22.9% of revenues on a pro forma basis.

How? By "[reinvesting] efficiency savings to support the buildout," it says in its statement on the plans.

Given its balance-sheet position, Altice is obviously keen to play down any concern about future spending needs, but this ambition seems optimistic -- notwithstanding the company's reputation as a ruthless cost cutter.

For more on Altice's plans, see this story from our sister publication UBB2020.com: Altice Favors Fiber Over D3.1 for Its US Upgrade

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

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brooks7
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brooks7,
User Rank: Light Sabre
12/1/2016 | 2:27:45 PM
Re: Future-Proofing=FTTH
Imagine Docsis when they eliminate linear TV and do OTT streaming only.  Then dedicate all the QAM groups to DOCSIS.  Does that change your view?

seven

 
johnestock
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johnestock,
User Rank: Lightning
12/1/2016 | 11:36:24 AM
Re: Future-Proofing=FTTH
Fair point on the Hummer analogy but I guess I would put it more like Docsis gives you a two-wheel drive F150 for life (analogous to Docsis and the Capex decision associated tree associated with that) when you know, or can be reasonably certain, that you will need at least a four-wheel drive F350 (analogous to FTTx) over the medium and long term.  I am lucky enough to have FiOS and I would not say that it is a Hummer H3 as it is actually CHEAPER and FASTER than the awful, rusty Coax pipes that Time Warner Cable used to give me here in Manhattan.  
jbtombes
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jbtombes,
User Rank: Light Sabre
12/1/2016 | 10:26:29 AM
Re: Future-Proofing=FTTH
These cap ex decisions are made more on basis of financial analysis (yes, including time horizons, good point) than clever rhetoric, but while we're talking analogies here's one for consideration that's perhaps more realistic than horse-and-buggies or turbo-charged Vegas: Do you really need a brand-new Hummer H3 if your typical tasks involve grocery shopping or soccer-momming? Or the latest F-150 if you're only hauling mulch or going hunting one weekend a year? Maybe a used minivan or pickup would do the trick in either case, at a fraction of the cost. 
johnestock
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johnestock,
User Rank: Lightning
11/30/2016 | 3:04:53 PM
Future-Proofing=FTTH
We all know that an optical fiber pathway to the end user is the best solution--it future proofs the connection as better lasers, compressions algos, and electronics on the ends of that fiber mean that the physical link to the customer will never have to be replaced.  An optical fiber the width of a human hair will carry bi-directional 8K video under the current state of the art.  Enough said.

We also know that Docsis anything is the equivalent of putting a turbo charger on a Chevy Vega, or worse getting faster horses when the world is moving to cars.  Electrons (heavy and slow) are dead, photons (weightless and fast) are the way forward.  We know that symmetric bandwidth at worst is either a better solution now or a necessary one in the future, as it allows full cloudification for the end user (music, photos, files, etc) and 4K and 8K video conferencing.

Altice is perhaps recognizing this and actually doing actual LONG RANGE planning, something that is lost in the quarter-to-quarter dixie cup throwaway culture of U.S. corporations...  save money now to either lose or spend waaaaay more in the future.

My 2c...
jbtombes
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50%
jbtombes,
User Rank: Light Sabre
11/30/2016 | 10:09:35 AM
Re: THis could blow FTTH economics apart
They must be some cooking up some really disruptive technologies in the Altice R&D lab. Otherwise, I suspect this will push up there cap ex in a noticeable way.
Ray@LR
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Ray@LR,
User Rank: Blogger
11/30/2016 | 8:04:29 AM
THis could blow FTTH economics apart
If Altice is able to do what it claims, what does this mean for FTTH deployment cost models around the world?

Or is this smoke and mirrors?
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