Mr Montagne IDATE FTTH Global Perspective DigiWorld Summit 2011

FTTx Markets: Global perspectiveDrivers & Challenges for FTTH

FTTx Global Figures

FTTH/B Global Picture: APAC Strong leadership  FTTx means FTTH/FTTB, FTTN+VDSL, FTTLA, FTTx+LAN  Global FTTx market: 112.7 M subscribers at June 2011, 61% being FTTH/B … to June 2011 Asia is still the leading market (73% of worldwide FTTH/B subscribers at June 2011) 7.3 M 10.2 M Europe, including Russia, is progressing, in 0.4 M 49.5 M particular thanks to Eastern countries (15% of worldwide FTTH/B subscribers at June 2011) <0.3 M USA: a little slow down in deployment from telcos in 1H11, but acceleration from local authorities due to the Stimulus BB program awards LATAM & Middle East potential Source: IDATE 3

FTTH/B Global Picture: APAC Strong leadership 7 Asian telcos among the 10 leading players worldwide 2 Chinese operators leading the ranking! 1 Operator from Russia 4

USA: FTTx is the unique solution for RBOC’sFTTH & FTTN RBOC’s rollouts Power of Cable operators: Time Warner, Comcast, launching 30 or 50 Mbps offers CableVision proposing a 101 Mbps offer … more than twice what Verizons much-touted FiOS offers (50/20 Mbps) At June 2011, Verizon has nearly signed 4.5 Million FiOS FTTH subscribers and has about 3.8 Million FiOS TV subscribers In June 2010, Verizon changed its strategy regarding the fibre optic deployment. It prefers now to focus on the penetration rate rather than in its roll out. At June 2011, the FiOS network counts 15.7 million homes passed or approximately 60% of total households in areas currently covered by Verizon’s wireline network Initial Target: 18 million homes passed by 2010, has not been reached … Now LTE is being deployed and next objective announced in December 2010 is to cover 18 million homes in the next three years. AT&T (FTTN oriented) and Verizon launched Fibre access for delivering HDTV & Triple Play Churn is very low for FiOS TV Subscribers: around 1% 2Q11: FiOS ARPU ~ $150 6

TV financing FTTx in the USUSA: FiOS TV Packaging & Pricing – Example FiOS TV plans (April 2011) Verizon claims now to be the 6th largest cable operator in the USA 7

FTTx vs MSO’s Docsis 3.0 8

Europe FTTH picture

Background of the Study IDATE has been commissioned by the FTTH Council Europe to provide a comprehensive overview of FTTH/B deployments in 39 countries in Europe (1) (9th edition) Methodology used  Desk research  Direct contacts with FTTH players (questionnaires, phone interviews)  Information exchange with FTTH Council Europe members  Direct contacts with IDATE’s partners in several European countries Objectives: to provide a complete summary of the status of FTTH/B in Europe, twice a year  Identification of new projects  Characterization of each project: organization initiating the project, Key parameters& Figures (Homes and Buildings passed), Technical parameters, Financing & Business model  We distinguished FTTH/FTTB and FTTN (FTTN/C+VDSL, FTTLA, FTTx+LAN) 10

Available results for EU39 Around 300 FTTx projects listed in EU39Quantitative Qualitative TEO Identification Operator/Organisation TEO is the Lithuanian incumbent, leader in the national broadband market. The FTTH Project launched by TEO is one of its most important network modernisation projects. From 2007 to 2010 , the company planned to invest more than LTL 100 million (38.9 million USD) in the new optical access network in the context of an Internet plan called "Zebra". Key parameters June 2011 TEO first planned to connect the residents of the 5 biggest cities of Lithuania with FTTH, beginning with the provision of fiber-optic Internet services in Vilnius. FTTH/B subscribers (*) FTTH/B Homes/Buidings At the end of 2010, TEO provides FTTH services to 86 percent residents of Vilnius, 95 per cent residents of Klaipėda, 75 passed percent residents of Kaunas, and more than half of Panevėžys and Šiauliai residents. It expects to expand this FTTH Asturias 11 000 51 000 network to fifty lithuanian cities which should represent an investment of more than LTL 70 million. Telefonica 83 000 500 000 The total investment in the next-generation network should exceed LTL 325 million by the end of 2011. At end 2010, there are 90,120 FTTH customers and 13,640 FTTB subscribers including 200 office buildings. Orange na 10 000 In a long term perspective, TEO expects to be able to provide services at the speed of several Gbps. In this line, from May Others (1) 7 130 na 2011, it increased speeds of its FTTH services ranging from 40 to 300 Mbps without additional cost for residential Total FTTH/B 101 130 561 000 subscribers. FTTN Homes/Buidings FTTN subscribers (**) Figures covered Ono 270 000 7 000 000 Number of Households/Business Units passed 340,000 FTTH/B homes passed at December 2009 Telefonica na na 355,000 FTTH/B homes passed at June 2010 (IDATE Others (2) estimates) Total FTTN 270 000 7 000 000 570,000 FTTH/B homes passed at December 2010 700,000 FTTH/B homes passed at June 2011 (IDATE Total Spain (***) 371 130 7 561 000 estimates) FTTx subscriber base 11,600 FTTB and 51,000 FTTH subscribers at December 2009 84,500 FTTH/B subscribers at June 2010 103,760 FTTH/B subscribers at December 2010 120,000 FTTH/B subscribers at June 2011 (IDATE estimates) Technical parameters Source: IDATE for FTTH Council Europe MDU 60% / SDU 40% 11

Overview: Projects FTTH/B Countries Players Homes/Buildings passed (June 2011)Around 260 FTTH/B Bulgaria Blizoo Cable operator 1 100 000European projects at Denmark Estonia TDC Elion Incumbent Incumbent 250 210 000 000mid-2011 Finland France Telia Sonera SFR Incumbent Alternative operator 600 550 000 000 France Telecom Incumbent 819 403 Free Alternative operator 450 000 Numericable Cable operator 4 500 000 Germany Net Cologne Power utility 240 000 Wilhelm Tel Power utility 200 000 Hungary Magyar Telecom Incumbent 290 000 Italy Some significant Fastweb Telecom Italia Alternative operator Incumbent 2 000 550 000 000 FTTH/B deployments at Latvia Lattelecom Incumbent 357 485 Lithuania TEO Incumbent 700 000 June 2011 Netherlands KPN/Reggefiber Incumbent 768 000 Norway Altibox Power utility 350 000 Portugal Portugal Telecom Incumbent 1 279 000 (> 200,000 Homes Passed) Sonaecom Alternative operator 300 000 Vodafone Alternative operator 200 000 Russia Beeline/VimpelCom Alternative operator 8 900 000 Comstar UTS Alternative operator 2 000 000 ER Telecom Alternative operator 5 000 000 Slovakia Orange Slovensko Alternative opertaor 320 000 T-COM/Slovak Telecom Incumbent 360 000 Slovenia T2 Alternative operator 310 000 Spain Telefonica Incumbent 500 000 Sweden Telenor Alternative operator 500 000 Telia Sonera Incumbent 320 000 Switzerland Swisscom Incumbent 275 000 Turkey SuperOnline Alternative operator 718 000 UK BT Incumbent 250 000 Source: IDATE for FTTH Council Europe Ukraine Beeline/VimpelCom Alternative operator 3 000 000 12

FTTH in Europe – Overall FiguresAt end of June 2011 EU35: 4.6 million FTTH/B subscribers  EU27: 4.1 million FTTH/B subscribers  CIS (Russia, Ukraine, Belarus, Kazakhstan): 5.6 million FTTH/B subscribers EU35: 25.1 million FTTH/B Homes Passed  EU27: 23.4 million FTTH/B HP  CIS (Russia, Ukraine, Belarus, Kazakhstan): 14.7 million FTTH/B HP Average Take Rate EU35: 18.3% in June 2011 13

FTTH/B subscribers evolution►Countries > 200,000 FTTH/B subscribers at mid-2011 14

New FTTH/B subscribers 1H11►Top 5 countries ► France +87,300 ► Portugal +71,000 ► Bulgaria +69,000 ► Netherlands +43,000 (Russia: + 964,000) ► Spain +41,149 15

FTTH/B Homes Passed evolution►Countries > 1 million FTTH/B Homes Passed at mid-2011 16

FTTH/B Homes Passed in total HH Number of Homes Passed not representative of effective coverage (HP in total households)  Only 2 countries > 50% Top 6 countries in terms of HP in total households 17

FTTH/B leading countries But number of subscribers less relevant than Take Rates (1)From the highest… In Scandinavian countries : 62% in Norway, 39% in Sweden In Hungary (37%), Slovakia (32%) or Netherlands (32%) In the Baltics : 27% in Lithuania …to the lowest In France (10%), Switzerland (5%), UK (<1%) Source: IDATE for FTTH Council Europe (1) Number of subscribers in total Homes Passed 18

APAC FTTH picture

Background of the Study IDATE has been commissioned by the FTTH Council APAC to provide a comprehensive overview of FTTH/B deployments in 14 countries in the Asia Pacific region Methodology used  Desk research  Direct contacts with FTTH players (questionnaires, phone interviews)  Information exchange with FTTH Council APAC members  Direct contacts with IDATE’s partners in several countries in APAC region Objectives: to provide a complete summary of the status of FTTH/B in APAC, twice a year  Identification of new projects  Characterization of each project: organization initiating the project, Key parameters& Figures (Homes and Buildings passed), Technical parameters, Financing & Business model  We distinguished FTTH/FTTB and FTTN (FTTN/C+VDSL, FTTLA, FTTx+LAN) 20

Available results for APAC About 70 projects listed in APAC at mid-2011 Quantitative Qualitative China Mobile June 2011 Identification Operator/Organisation FTTH/B subscribers (*) FTTH/B Homes/Buidings China Mobile was created in 1997. It merged with China TieTong in 2009 in the context of the national restructuration of passed the telecom market.BSNL 550 000 1 200 000Radius & Ericsson na 680 000 Key parametersHayai Broadband 5 000 500 000 China Mobile first get involved in the FTTH market by launching trials in 20 provinces in 2009, representing aroundMTNL 500 5 000 100,000 connections.ACT Broadband na 21 000 Then, to enhance its coverage, China Mobile, as its main competitors in the FTTx market, is also deploying FTTx+LAN.Beam Telecom 120 000 naTotal FTTH/B 675 500 2 406 000 FTTN Homes/Buidings Figures FTTN subscribers (**) covered Number of Households/Business Units passed 2.5 million FTTH/B homes passed at December 2010Barthi Airtel na 30 000 3 million FTTH/B homes passed at June 2011 (IDATEMTNL 41 000 na estimates)Tata TeleServices na 1 000 000 FTTx subscriber base 0.5 million FTTH/B subscribers at December 2010Total FTTN 41 000 1 030 000 5.5 million FTTN subscribers at December 2010 0.8 million FTTH/B and 6 million FTTN subscribers at JuneTotal India (***) 716 500 3 436 000 2011 (IDATE estimates) Technical parameters Since first FTTH/B deployments, China Mobile is clearly oriented on GPON (very few EPON lines have been deployed up to now). ZTE, Huawei, FiberHome, Alcatel-Lucent, Ericsson are all partners of China Mobile. Source: IDATE for FTTH Council APAC 21

Overview: Projects About 70 FTTx projects in Asia at mid-2011 …and new entering players on the market India, Thailand, Malaysi …to national programs a, Vietnam… Australia, NZ, Singapor eFrom significant FTTH/Bdeployments byincumbentsJapan, South Korea 22

FTTH in Asia – Overall FiguresIn June 2011 49.5 million FTTH/B subscribers 112.3 million Homes Passed (1) Average penetration rate: 44% 23

FTTH/B subscribers evolution►Only 5 countries > 1 M FTTH/B subscribers at mid-2011 24

FTTH/B Homes Passed evolution►6 Countries > 2 M FTTH/B Homes Passed at mid-2011 25

FTTH/B Homes Passed in total HH Number of Homes Passed not representative of effective coverage (HP in total households)  3 countries > 90%  Huge gaps in the region from less than 3% to 95% Top 7 countries in terms of HP in total households 26

FTTH/B APAC Markets evolution 27

Drivers & Challenges for FTTH

Drivers for FTTH A market driven by competition … as it is the case in the US and Europe, and in several APAC countries, Cable operators could be in the driving seat Quality of Copper Local Loop influencing migration of Residential customers to Fiber – The case of Eastern Europe, LATAM, Middle East ….. and price of Local Loop Unbundling? Mobile backhaul and LTE …  Mobile operators are densifying their backhaul with the explosion of Mobile Broadband and Smartphones  LTE base stations will need fiber and Femtocells at home also! Cloud Computing for SMEs  At the difference of the US, SMEs can be close to the residential areas  Short latency of Fiber will allow Cloud Computing to target SMEs 29

Challenges for FTTH Business Model approach: same prices than ADSL for high penetration rate or tiered pricing to leverage ARPU ? Will new progress on copper technologies (VDSL2 Vectoring, Bonding) delay FTTH rollouts for a while ? Innovation on Services linked to FTTH in order to perceive consumers of the benefits of Ultra Fast Broadband FTTH as a risk to accelerate Telcos disintermediation or Open innovation approach with OTT player (2 sided model) ? Which Regulatory approach: infrastructures competition or Open Access Model ? Public funding (National & Local) in the current recession context ? 30

Thank you!

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Mr Montagne IDATE FTTH Global Perspective DigiWorld Summit 2011

by DigiWorld by IDATE on Nov 21, 2011

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Mr Montagne IDATE FTTH Global Perspective DigiWorld Summit 2011 — Presentation Transcript