FTTx: Cheap Enough for Mass Rollout?

FTTx costs near critical point for deployment on a wide scale, according to a report by the Confluence Research Group

February 3, 2003

2 Min Read

LAUREL, Md. -- While 2002 proved to be a watershed year for FTTx deployment announcements, equipment costs have confined the scope of those deployments to limited rollouts in rural towns and smaller markets. In its latest report, FTTx – The Costs, Demand and Market Development of PONs, FTTH and VDSL, The Confluence Research Group points out that current equipment costs are roughly 10-20% away from the target per unit costs that will entice volume commitments from companies seriously considering FTTx build-out.“The magic number to get the big carriers on board with deploying FTTx equipment is about $1200 per home/business passed,” said Jason Marcheck, Principal Analyst of The Confluence Research Group. “Right now, the industry is only a few hundred dollars away from reaching that milestone, and I expect vendors will be able to achieve that number within the next year to 18 months.”Despite being a bit soon for mass deployment, the new report provides ample reason to be bullish on the short-term prospects for FTTx. With rural telephone companies, municipalities and utility companies deploying FTTx, revenues from equipment sales in the U.S. market are expected to increase from $79 million (USD) in 2002 to almost $300 million by 2004. The report further predicts that once mass deployment begins equipment revenues will climb to over $2 billion by 2007.“Rural companies are carrying the flag for FTTx right now,” Marcheck pointed out, “As these companies continue to face tough decisions regarding the best way to compete with local CATV and other providers, expect to hear many new announcements from rural service providers in 2003.” In the long-term, FTTx – The Costs, Demand and Market Development of PONs, FTTH and VDSL claims that the pressure exerted by cable companies will stir RBOCs to action on the FTTx front. The report states that by 2007 RBOCs will be responsible for approximately 80% of the U.S. FTTx deployments, in terms of homes/businesses passed. Confluence Research Group LLC

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