Fujitsu Unveils UK FTTH Plan

Fujitsu Ltd. (Tokyo: 6702; London: FUJ; OTC: FJTSY) has unveiled an audacious plan that could cost up to $3.3 billion to build an alternative fiber access infrastructure in the U.K. that could connect up to five million homes and businesses with broadband speeds of up to 1 Gbit/s. (See Fujitsu Plans FTTH in UK.)

The IT giant doesn't intend to be a retail service provider itself, though: The aim is to build an 'open access' network that could be used by numerous service providers that would pay to run their services and applications over the physical network. The open access model has been adopted in Singapore and Australia. (See Australia Unveils $31B FTTP Plan and BBWF 2010: Running Singapore's NBN.)

The plan, if put into action, would pit Fujitsu's U.K. operation directly against Openreach , the access network division of BT Group plc (NYSE: BT; London: BTA).

Ironically, Openreach offers wholesale broadband access capacity to U.K. service providers using MSAN (multiservice access node) equipment sourced from Fujitsu.

Fujitsu's plan involves building out a network that would provide point-to-point fiber connections to 5 million premises (residential and business) in "remote" areas -- in small towns and villages that are harder to reach with traditional fixed broadband.

The IT firm believes it would cost between £1.5 billion and £2 billion (US$2.45 billion and $3.27 billion) to reach those premises. To achieve its aims, Fujitsu says it would seek up to £500 million ($817.5 million) in support from the U.K. government's broadband fund toward that total. (See British Broadband Cash Survives Cuts.)

But despite enthusiastic noises from the U.K. government, nothing's underway yet. Fujitsu says its business plan doesn't stack up if BT doesn't reduce the wholesale prices for access to its ducts and telegraph poles, which Fujitsu would need to access to roll out the fiber. BT made proposals on such wholesale costs earlier this year, but Fujitsu is looking for lower prices. (See BT Tables Duct & Pole Proposals.)

In the meantime, Fujitsu has the support of U.K. cable operator Virgin Media Inc. (Nasdaq: VMED) and broadband service provider TalkTalk , both of which are eager to be anchor tenant wholesale customers for the network.

Fujitsu has also named Cisco Systems Inc. (Nasdaq: CSCO) as a technology collaborator on the project, but a Fujitsu spokesman told Light Reading that it was undecided exactly what sort of role Cisco might play or what technology Cisco, a leader in point-to-point fiber access platforms, might supply for the planned network. (See Cisco Wins Swedish FTTH Gig.)

Why this matters
An alternative next-generation broadband access plan for the U.K.'s remote areas is a positive development, especially as Fujitsu is taking a long-term, practical approach to its return on investment. And it's proper super-fast broadband too, based on a dedicated fiber connection that could enable up to 1 Gbit/s in the uplink as well as downlink, and even faster speeds in the future -– a far more compelling proposition than the copper plant-based, fiber-to-the-cabinet (FTTC) broadband offer that comprises much, though not all, of BT's current efforts. (See BT Preps 'Landmark' FTTC Investment, BT Ramps FTTx Plans, Turns a Profit and BT's Fiber to the Hype.)

But Fujitsu's plan will only benefit the country if it gets off the ground, and there are a number of hurdles in Fujitsu's way.

The plan relies on BT's reducing the price of access to its passive infrastructure, a process that could take years.

And building such a network is not something that can be done overnight, so any potential benefits from such a plan won't be realized for a while yet, by which time the regulatory and political landscape of the U.K. may have changed.

In addition, Fujitsu's business plan has some challenges. The government's broadband fund is set at £530 million ($866.5 million) for the duration of this parliament (up to 2014 or 2015) and £300 million ($490.5 million) during the next (up to circa 2019), so Fujitsu is looking for its plans to sweep up a large percentage of the overall funds available.

And even at the higher end of its costing, £2 billion for 5 million premises is an average of £400 ($654) per connection, which seems ambitious for remote areas.

The initiative is to be welcomed, especially as it targets the areas that often aren't reached by top-end fixed broadband connections, but Fujitsu will do well to get its plan off the ground and completed.

For more
Britain is becoming famous for talking about next-generation broadband while many other European countries deploy it:

— Ray Le Maistre, International Managing Editor, Light Reading

Hassene Akkeri 12/5/2012 | 5:07:24 PM
re: Fujitsu Unveils UK FTTH Plan

Two things can be learned from this plan:

1- Vendor/Buyer model is out of date

The traditional vendor/buyer business model is becoming unsuitable in the telecom market. Fujitsu's initiative comes as an alternative model where the technology developer (vendor) goes himself into network operation and infrastructure provision. Such a project breaks the historical thick line that has separated the two players' roles for over a centuary. And after all it's all about business, and technology suppliers enjoy rich experiences and know-how in different markets and different contexts, so they have the ability to run a network/infrastructure operator business efficiently.

In fact, the very fast evolution in technologies is making network operators hesitate before engaging themselves in infrastructure investments. If we look to the past decade we find that loudy announcements such as ATM, CDMA2000 Evdo rev something, WiMAX (to a certain degree), among others have falled apart very quickly taking down with them some C officers and pushed some suppliers to bankrupcy or going in a fusion. Now we're living an extra-ordinary boom in the mobile broadband traffic that few operators had seen it coming. The ones who had invested earlier in 3G (2006, 2007) missed the SDR evolutivity and are using quasi-obsolete gears that cannot provide the necessary two-decimals bitrates requested now. Should they do a massive network investment again? Go directly to LTE? Or wait for cloud computed solutions such as lightradio and c-ran?

Technology suppliers are paying cash the scepticism and fear of the operators. Nortel got bankrupted, Nokia and Siemens jointed as did Alcatel and Lucent and technology convergence is bringing tought data players to the telecom arena (cisco, juniper, etc). When we talk about cloud computing and softwarizing whole network functions, we see also HP, IBM, Google and even more joining in.

So, considering the whole picture, Fujitsu's plan looks smart and right. Other suppliers are surviving using other models: strategic partnership with operators, financing, revenue share and co-operation, and services are becoming a much more healthy business than the equipments.

2/ FTTH is the right choice. FTTC is greedy economy back-puller

Going for FTTH is the right choice. I have always considered the FTTC approach as a greedy one. If BT accepts to invest in hauling fiber optics for several miles from CO to the curb, why not to continue fibering the several tens of meters that separate it from customers? Putting MSAN at 300m from the far subscriber has many weaknesses:

- it's difficult to maintain: putting a big number of active equipments outdoor is always complex to deal with, even with very professional teams

- requires the deployment of different skills for field operation and troubleshooting: power, transmission, cabling and switching

- whatever is the X in xDSL, the majority of the subscribers will not get more than 100Mbps in the best scenarios and most of them are much lower than that and even much lower for upstream. Considering the current trends of video publishing, HDTV, and among others the cloud computing revolution, such an FTTC approach pulls back the economy rather than opening horizons to it

- Evolutivity in terms of capacity and bandwidth is very questionable

In the opposite side comes the GPON and FTTH technologies where the area between CO and clients is totally passive, requires one kind of operation skills and is much simplier (no active equipment, no power, no mixed cabling, etc). It is also much more evolutive: applying WDM on the GPON (WDM-PON) or even on P2P FTTH can raise the per-user capacity to multi-Gbps and much more in future. Not to mention the QoS and guaranteed bandwidth abilities.

Investing in FTTH is the right courageous choice that can drive the economy and open wide business horizons by providing very high speed access. Yet, some operators consider too much carefully the CPE's cost (GPON's ONU costs about 120 £) and have considerations to some dear old mates copper suppliers.

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