September 20, 2011
As the cream of the EMEA region's broadband fraternity head to Paris for the annual Broadband World Forum event (Sept. 27-29), one industry analyst is posing a highly pertinent question: Do the telcos need FTTH?
The provocateur is Heavy Reading chief analyst and broadband market guru Graham Finnie, who notes that, despite the excitement around mobile technologies, applications and devices, fixed broadband issues are still as important as ever to the world's telecom operators.
"Mobile issues have practically taken over the industry, but there's still a fixed broadband network to think about and it's not going away," notes Finnie, who has written a number of reports about FTTH technology and market developments. (See Where's PON Going Next? and Coming Soon: NG-PONs.)
"I'm going to be looking at FTTH, DSL developments and the impact of Docsis 3.0 rollouts by European cable operators," he notes. "There's a whole new DSL acceleration drive, with G.vector and bonding and all that good stuff that's giving copper another lease of life. Those sorts of developments give carriers that don't currently want to build fiber all the way out to the home something to work with, and currently that's a big issue in Europe where FTTH rollouts have been slow," states Finnie. (See Brakes Stuck on Europe's FTTH Ride and Copper: Still a Precious Metal?.)
Describing the growth of European FTTH as "slow" is generous: According to the FTTH Council Europe , at the end of 2010 there were just 3.9 million homes in Western and Eastern Europe (not including Russia) hooked up with fiber (either direct or through a fiber-to-the-building connection). The number looks slightly better when Russia is included, as that single market boasted 4.2 million FTTH connections at the end of last year.
Digging into FTTH rollouts
So what's holding things up? "I'm interested in all the issues that are impacting the FTTH rollout strategies of the telecom operators, including the impact of cable. Docsis 3.0 has led to a big revival in the fortunes of the cable operators, which are giving the DSL telcos a real run for their money. The key question is -- what is the right strategy for the DSL telcos to deal with the threat of the cable broadband players? (See Virgin Taps Cisco for D3 Speed Trial, Virgin Widens 100-Meg Footprint, Tests 1.5-Gig , Liberty Global Canvassing Europe With Docsis 3.0 and Liberty Exec Details D3's 'Sweet' Economics.)
"In terms of FTTH, there's no doubt that it is operationally cheaper for the carriers and, in the long term, it provides assurance that they will never run out of capacity. And there's no doubt that, at some point, DSL will need to be replaced. But if there is no urgency, whether for financial, competitive or regulatory reasons, and the telcos can match what the cable operators are offering, then a lot of operators will probably decide that DSL is good enough for now. There is absolutely no evidence that European operators are falling over themselves to deploy FTTH," notes the Heavy Reading man.
"Maybe the big question just now is: Do we really need FTTH?" he adds, echoing the thoughts of at least one Asia/Pacific operator CEO. (See CommunicAsia 2010: What the FTTH?.)
All quiet on the next-gen PON front
So has the FTTH sector hit the proverbial brick wall? Not really, as there's plenty of action elsewhere in the world, particularly in Asia/Pacific. But for the time being the current flavors of PON technology (GPON and EPON) are meeting operators' needs, with little call just yet (beyond tests and trials) for next-generation PON technologies, says the analyst. (See No Sure Bets in NG PONs.)
"In terms of next-gen PON, I don't think we'll see much in the way of news or major developments. There just isn't enough demand out there to justify next-gen PON deployments," says Finnie. "The main reason vendors have been developing their next-gen PON products is so that they can convince the operators there is a development path, a next step from the current technology [GPON and EPON]. But I don't expect to see anything in the way of sales this year or much next year," adds the analyst.
Of course the big questions surrounding FTTH are not just about technology, budgets (the up-front costs of rolling out FTTH are eye-watering) and commercial applications.
"There are still a lot of unanswered questions around the regulation of fixed broadband. The deployment of technologies such as VDSL and PON raise questions around how and when countries regulate the unbundling of and competitive access to new broadband networks," states Finnie.
But Finnie isn't just heading to Paris looking for answers -- he's due to be fielding some questions too, as he's chairing a conference stream, "Enhanced Application Support," on Day 2 (Wednesday Sept. 28).
Catch up with all the news leading up to and during the event by checking out our dedicated BBWF show site.
— Ray Le Maistre, International Managing Editor, Light Reading
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