FTTH: the European update Introduction


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FTTH: the European update Introduction

  1. 1. FTTH: the European update Introduction ONE 2006 – Session 2 Cannes, 24 September 2006 Roland MONTAGNE Head of Broadband Practice [email_address]
  2. 2. Agenda <ul><li>FTTH: Worldwide Status </li></ul><ul><li>FTTH: Why? </li></ul><ul><ul><li>Rami Houbby, FTTH Council Europe, Allied Telesis </li></ul></ul><ul><li>FTTH: Technology choice? </li></ul><ul><ul><li>David Payne, BT </li></ul></ul><ul><li>FTTH: Costs? </li></ul><ul><ul><li>Roy Rubenstein, FibreSystems/Lightwave Europe </li></ul></ul><ul><li>FTTH recent developments in Europe </li></ul><ul><li>FTTH: Forecasts for Europe in 2015 </li></ul>
  3. 3. FTTH: Worldwide Status
  4. 4. FTTH worldwide status: Japan & the US <ul><li>Japan: the FTTH leader </li></ul><ul><ul><li>More new FTTx subscribers than new DSL subscribers since April 2005 (+100 K a month) </li></ul></ul><ul><ul><li>Since June 2005, with over 3.2 million subscribers, FTTH has overtaken cable and is now Japan’s number two broadband access mode </li></ul></ul><ul><ul><li>5.6 million FTTx subscribers at 2Q06 : 55% FTTB & 45% FTTH </li></ul></ul><ul><ul><li>Very attractive prices, closing the gap with ADSL tariffs, with virtually no difference for apartment dwellers (but still around 40% higher for individual dwellings) </li></ul></ul><ul><ul><li>Regulation: both copper pair and fibre optic unbundling – Aerial deployments </li></ul></ul><ul><ul><li>Government’s proactive approach to FTTx deployment: 30 M FTTH subscribers in 2010 </li></ul></ul><ul><ul><li>Very few IPTV subscribers in Japan but a lower churn observed for FTTH subscribers </li></ul></ul><ul><li>USA: FTTH is the unique solution for RBOC’s </li></ul><ul><ul><li>Length of the local loop and domination of Cable Modem on broadband access </li></ul></ul><ul><ul><li>Power of Cable operators: Time Warner, Comcast, CableVision launching 30 or 50 Mbps offers </li></ul></ul><ul><ul><li>By 1Q2006 Verizon had passed around 4M homes for fibre and counted 350 to 400 000 FTTx subscribers. Expected for end 2006: 6M Homes passed and 900 000 FTTx subscribers </li></ul></ul><ul><ul><li>Regulation: no unbundling for RBOC’s deploying Fibre in the access </li></ul></ul><ul><ul><li>Less than 0.5 million FTTx subscribers at 2Q2006 (estimation) </li></ul></ul><ul><ul><li>AT&T (more FTTN oriented) and Verizon launched Fibre access for doing HDTV </li></ul></ul>
  5. 5. FTTH worldwide status: Europe <ul><li>Mid of 2006, less than 800 000 FTTx subscribers in the EU 18 (+23% vs June 2005) </li></ul><ul><li>Mid of 2006, around 2.7 millions Homes passed in the EU 18 (+10% vs June 2005) </li></ul><ul><li>  A global penetration rate of more than 28% </li></ul><ul><li>Mid of 2006, Deutsche Telekom covers 2.9 millions homes in 10 major cities in Germany with FTTN + VDSL2 </li></ul>Source: IDATE
  6. 6. FTTH: Why?
  7. 7. Services need for very high Broadband ? <ul><li>Residential market </li></ul><ul><ul><li>A demand today quite well satisfied by download rate proposed ADSL2+ but … </li></ul></ul><ul><ul><li>A few specific applications needing more Bandwidth : HDTV , video services, blogs, personal content exchanges ,… </li></ul></ul><ul><ul><li>A growth of the needs concerning Bandwidth but also Symmetry … this will be driven by simultaneous usages in the home that have already started with Triple Play </li></ul></ul>Source: IDATE Minimum bandwidth requirements
  8. 8. FTTH: Technology choice?
  9. 9. Status of FTTx technologies <ul><li>Two distinct solutions possible for expanding fibre optic coverage </li></ul>Passive network Source: IDATE/Lucent Source : IDATE/Lucent <ul><ul><li>Fibre To The Node (FTTN) </li></ul></ul><ul><ul><li>An installation whereby fibre is brought to the distribution point – which can be the DSLAM switch. Last mile connection is supplied by VDSL on the copper network. This is also referred to as FTTC (Curb or Cabinet) </li></ul></ul>DSLAM ATM/ Ethernet Switch WiMAX VDSL FTTN <ul><ul><li>Fibre To The Home (FTTH) </li></ul></ul><ul><ul><li>A solution whereby fibre runs from the CO right up to end users’ premises (home, apartment or office building, or a university campus, etc.). This type of solution is also known as FTTP (Premise) and FTTB (Business) </li></ul></ul>FTTH Splitter ATM/ Ethernet Switch PON Active Ethernet switch Ethernet Switch Ethernet P2P Passive network Active network
  10. 10. FTTN solutions: identified risks <ul><li>Risks of interference between ADSL2+ and VDSL/VDSL2 </li></ul><ul><ul><li>ADSL2+ => up to 2.2 MHz </li></ul></ul><ul><ul><li>VDSL/VDSL2 => from 1.1 to 30 MHz </li></ul></ul><ul><ul><li>Several solutions can be implemented to remedy the situation: </li></ul></ul><ul><ul><li>Frequency separation: use of VDSL2 at frequencies above 2.2 MHz, albeit delivering lesser performances </li></ul></ul><ul><ul><li>Balancing traffic on frequencies below 2.2 MHz to limit performance loss (under consideration for the VDSL2 standard) </li></ul></ul><ul><li>Asymmetry of VDSL/VDSL2 solutions </li></ul><ul><li>VDSL DSLAM localisation </li></ul><ul><ul><li>local exchange? </li></ul></ul><ul><ul><li>switch, premises…? </li></ul></ul><ul><li>Future-proof architecture? </li></ul><ul><ul><li>FTTN then FTTH, or FTTH at the outset? A difficult choice… </li></ul></ul><ul><li>Equipment </li></ul><ul><ul><li>Upgrading the required DSLAM, depending on their location, to be able to deliver value-added services such as 2-3 TV channels per user. </li></ul></ul><ul><li>Operating costs </li></ul><ul><ul><li>Active equipment </li></ul></ul>
  11. 11. Study case: Local copper loop in France <ul><li>Subscribers’ (d’) average distance from SC: 700 to 800 m; 300 m in Germany </li></ul><ul><li>Subscribers’ (d+d’) average distance from the local exchange: </li></ul><ul><ul><li>29% of lines at less than 1 Km </li></ul></ul><ul><ul><li>39% of lines at less than 1.5 Km </li></ul></ul><ul><ul><li>52% of lines at less than 2 Km </li></ul></ul>Source: IDATE LE Street cabinet CP (7 to 14 pairs) PSTN subscribers d d’ 12,500 in France 120,000 in France
  12. 12. Study Case: Performance of French copper network <ul><li>If all the CO are equipped with ADSL2+: 50% of the population eligible at 10 Mbps </li></ul><ul><li>If all the CO are equipped with VDSL2 : less than 10% of the population eligible at 50 Mbps </li></ul><ul><li>If all the SC are equipped with VDSL2 : less than 20% of the population eligible at 50 Mbps </li></ul><ul><li>The SC is not the right place of arrival for Fibre in a VDSL approach; the « Curb » or the « Building » is better </li></ul>
  13. 13. Ethernet P2 vs PON in Europe <ul><li>Technical architecture of European FTTx deployments: Ethernet still outnumbering PON </li></ul><ul><li>But PON selected for several major projects since 2005: </li></ul><ul><ul><li>in Spain, the government of Asturias has chosen an Open Access Network GPON for its infrastructure </li></ul></ul><ul><ul><li>Among the latest deployment, EnergiMidt, a Danish power utility has also selected a BPON technology – 18 000 home passed mid 2006 </li></ul></ul><ul><ul><li>Also in Denmark, SEAS-NVE is deploying BPON while SEF is deploying EPON </li></ul></ul><ul><ul><li>France Telecom is testing FTTH / GPON since several months </li></ul></ul>
  14. 14. FTTH: costs?
  15. 15. Study case: Cost Model for FTTx in France (1/2) <ul><li>Base option : Greenfield deployments main cities then residential areas </li></ul><ul><li>Technologies : GPON and Ethernet P2P </li></ul><ul><li>Deployment : 2006 to 2015 for a coverage of 40% of the population </li></ul><ul><li>In 2015 : 11.9 million homes passed and 5.3 subscribers </li></ul><ul><li>Results : total investments between 10.4 and 11.3 billions euros over 10 years </li></ul><ul><li>Civil Engineering represents 70% of the costs </li></ul><ul><li>EBIT positive in 2012 </li></ul><ul><li>Entering in residential areas in 2010 with individual homes has a strong impact in deployment costs </li></ul>Investments per year (in million EUR)
  16. 16. Study case: Cost Model for FTTx in France (2/2) <ul><li>Option 1 : Paris with usage of passive existing infrastructure (Paris sewer) </li></ul><ul><li>At 1€/m/year it allows an economy of 30% compared to the Greenfield case </li></ul><ul><li>In 2015 : 1.1 million homes passed and 0.5 million subscribers </li></ul><ul><li>Option 2 : France with usage of ducts already existing </li></ul><ul><li>At 2€/m/year it allows an economy of 50% compared to the Greenfield case </li></ul><ul><li>In 2015 : 9.1 million homes passed and 2.6 million subscribers </li></ul><ul><li>Mutualisation is the key: access at existing passive infrastructure </li></ul>
  17. 17. FTTH recent developments in Europe
  18. 18. FTTH recent developments in Europe <ul><li>The regional government of the Asturias project, Spain </li></ul><ul><ul><li>Based on an open GPON access network </li></ul></ul><ul><ul><li>Fibre deployment begun in June 2006, the target for the Government of to Asturias is to cover over 30,000 homes by the end of 2008. </li></ul></ul><ul><li>France Telecom pilot project announced </li></ul><ul><ul><li>FTTH pilot in the Hauts-de-Seine department and in Paris region, covering several thousand households </li></ul></ul><ul><ul><li>According to France Telecom, FTTH is a matter of strategic investment… its future depending on upcoming regulatory decisions </li></ul></ul><ul><li>The Amsterdam Municipality CityNet </li></ul><ul><ul><li>Based on an Ethernet access network </li></ul></ul><ul><ul><li>25,000 homes connected by the end of 2007 </li></ul></ul>
  19. 19. FTTH recent developments in Europe <ul><li>The Vienna city Council’s FTTH project </li></ul><ul><ul><li>Based on an open Ethernet access network </li></ul></ul><ul><ul><li>FTTH pilot begun in 2006, the Vienna city Council’s FTTH network will cover over 50,000 homes by the end of 2006. </li></ul></ul><ul><li>Erenis, in Paris (France) </li></ul><ul><ul><li>Based on an Ethernet access network: FTTB+VDSL </li></ul></ul><ul><ul><li>85,000 homes connected at the end of 2006 </li></ul></ul><ul><li>CiteFibre, in Paris (France) </li></ul><ul><ul><li>Based on a FTTH access network </li></ul></ul><ul><ul><li>100,000 homes connected at the end of 2007 </li></ul></ul>
  20. 20. Free FTTH announcement for France <ul><li>4 M home passed through 2012 for a total investment of 1 billion euros </li></ul><ul><ul><li>FTTH architecture: Ethernet P2P </li></ul></ul><ul><ul><li>Deployment limited to Paris and suburbs and some main cities boroughs – Paris recently announced that renting prices will be reduced for usage of Public Domain (25% to 90%) </li></ul></ul><ul><ul><li>No civil engineering but usage of Paris sewer system in accordance with Paris policy </li></ul></ul><ul><ul><li>Opening of FTTH services at the beginning of 2007 </li></ul></ul><ul><ul><li>One condition: Local Exchanges will be equipped if at least 15% of the lines are Free subscribers </li></ul></ul><ul><ul><li>FTTH network will be open (parts or total network) to other operators – “Ethernet architecture will facilitate this” </li></ul></ul><ul><li>Same monthly price: 29,99 euros ! </li></ul><ul><ul><li>50 Mbps Internet access </li></ul></ul><ul><ul><li>Unlimited telephony to fixed phones and some international destinations </li></ul></ul><ul><ul><li>New optical Freebox </li></ul></ul><ul><li>To attract building owners: a free offer for every home passed </li></ul><ul><ul><li>Digital Terrestrial TV </li></ul></ul><ul><ul><li>Narrowband Internet access </li></ul></ul><ul><ul><li>Phone lines </li></ul></ul><ul><ul><li>Optical Freebox (deposit needed) </li></ul></ul>
  21. 21. Free FTTH announcement’ reactions <ul><li>France Telecom: it’s too soon </li></ul><ul><ul><li>ADLS2+ is sufficient for today Triple Play services </li></ul></ul><ul><ul><li>HD TV, main driver for FTTH, is not already available in France </li></ul></ul><ul><li>Economy of the project </li></ul><ul><ul><li>Free will be 100% independent ; no more LLU renting fees </li></ul></ul><ul><ul><li>Free will propose new value added services </li></ul></ul><ul><ul><li>Free will target not only Residential but also Business Units </li></ul></ul><ul><ul><li>IDATE cost model for France: </li></ul></ul><ul><ul><ul><li>- 2010: 3.5 M homes passed and 1.1 subs for an invest/Home passed of 260 € (1087 € for connected subs) </li></ul></ul></ul><ul><ul><ul><li>- 2011: 5.3 M homes passed and 1.8 subs for an invest/Home passed of 260 € (1018 € for connected subs) </li></ul></ul></ul><ul><ul><ul><li>So this is not very far from Free calculation !!   250 eur / Home passed (1300 €/connected subs.) </li></ul></ul></ul><ul><ul><li>FT raised the negotiations difficulties when entering MDU, furthermore 4 hours of technician needed in average for connecting a home </li></ul></ul>
  22. 22. FTTx Forecast for Europe
  23. 23. Country potential for VHS <ul><li>VHS rollout estimates: </li></ul><ul><ul><li>Level of concentration: </li></ul></ul><ul><ul><ul><li>Number of nuts5 in a urban area means the number of cities where pop density > 500 inhabitants per km² </li></ul></ul></ul><ul><ul><ul><li>Suburban (Pop. density between 100 and 500 inhabitants per km²) </li></ul></ul></ul><ul><ul><li>Potential coverage </li></ul></ul><ul><ul><ul><li>Number of inhabitants living in a urban/suburban area </li></ul></ul></ul><ul><li>Government support for VHS </li></ul><ul><ul><li>State and local authorities’ involvement in VHS (e.g. leasing dark fibre from municipalities, or government incentives for VHS) </li></ul></ul><ul><li>Consumer demand for VHS </li></ul><ul><ul><li>Population’s potential willingness to subscribe to VHS broadband </li></ul></ul>
  24. 24. Country potential for VHS <ul><li>Country rating </li></ul><ul><li>Overview of potential VHS coverage in the countries being examined </li></ul><ul><li>Coverage expected to be high in Finland, Denmark, Norway & Sweden (mark > 7 points) </li></ul>
  25. 25. When are players likely to invest in VHS broadband? <ul><li>Current level of national penetration </li></ul><ul><ul><li>Assumption: high level of BB penetration likely to fuel a VHS broadband battle </li></ul></ul><ul><li>Incumbent’s strategy: </li></ul><ul><ul><li>Assumption: incumbent’s involvement is key for VHS take-up. Incumbent likely to adopt VHS broadband if: </li></ul></ul><ul><ul><ul><li>Market share on broadband market is low and/or (BT) </li></ul></ul></ul><ul><ul><ul><li>Share of net adds is low (DT) </li></ul></ul></ul><ul><li>LLU and alternative operators strategies: </li></ul><ul><ul><li>Assumption: we believe that incumbent will more likely invest in VHS in countries where LLU take-up is strong (% of DSL lines) </li></ul></ul><ul><ul><ul><li>LLU is strong in France, the Netherlands and Sweden </li></ul></ul></ul><ul><li>Competition with cablecos: </li></ul><ul><ul><li>Assumption: a high degree of competition between telcos and cablecos is likely to drive adoption of VHS broadband </li></ul></ul><ul><ul><ul><li>Strong competition from cablecos in Austria, Belgium and the Netherlands </li></ul></ul></ul><ul><ul><ul><li>Little competition in France and Germany </li></ul></ul></ul><ul><ul><ul><li>No competition in Italy and Greece </li></ul></ul></ul>
  26. 26. When are players likely to invest in VHS broadband? <ul><li>Country rating </li></ul><ul><li>This gives us an idea of when players will implement VHS </li></ul><ul><li>First expected to rollout VHS are: the Netherlands, Sweden and Finland (mark > 12 points) </li></ul>
  27. 27. Abandoning xDSL for FTTH? <ul><li>Local loop length breakdown: </li></ul><ul><ul><li>Assumption: incumbent more likely to choose FTTH (PON + E P2P) than upgrading xDSL if their local loops are long </li></ul></ul><ul><ul><ul><li>Short loops: xDSL will be upgraded progressively to FTTx+VDSL </li></ul></ul></ul><ul><ul><ul><li>Long loops: more favourable to FTTH rollout </li></ul></ul></ul><ul><ul><li>Short loops (estimated 70% of lines < 3km): Spain, Italy </li></ul></ul><ul><ul><li>Long loops (estimated less than 50%-55% of lines <3km): France, Germany, UK </li></ul></ul><ul><li>Average number of lines per MDF </li></ul><ul><ul><li>Assumption: a high score means that an average MDF covers a large number of line and is thus favourable to an xDSL rollout </li></ul></ul><ul><ul><ul><li>Average number of lines per MDF is high in Belgium and the Netherlands </li></ul></ul></ul><ul><ul><ul><li>Average number of lines per MDF is low in Finland and Sweden </li></ul></ul></ul>
  28. 28. Abandoning xDSL for FTTH? <ul><li>Country rating </li></ul><ul><li>This gives us an idea of operators’ likelihood of switching to FTTH, or of keeping DSL as their main VHS technology </li></ul><ul><li>Rating: more VDSL oriented <3< more FTTH oriented </li></ul>
  29. 29. VHS BB market overview <ul><li>VHS potential take-up across Europe </li></ul><ul><li>Classic broadband, led by ADSL, will remain by far the leading means of access </li></ul><ul><li>In Europe, replacing classic BB with VHS will begin in earnest in 2010/2012 </li></ul><ul><li>VHS will represent around 19% of Western Europe’s total BB base by 2015. </li></ul><ul><ul><li>FTTH will be the first VHS broadband technology, with on average 11% of Europe’s total BB base by 2015. </li></ul></ul><ul><ul><li>VDSL will represent 8% of Europe’s total BB base by 2015. </li></ul></ul>
  30. 30. Key points Europe & Key Questions <ul><li>As of mid-2006, the VHS market is gaining momentum in Europe, with less than 800,000 FTTx subscribers and 2.7 million homes passed… concentrated for the moment primarily in Northern Europe and Italy. </li></ul><ul><li>Including VDSL Europe counts 5.6 million homes passed mid 2006 </li></ul><ul><ul><li>Rami: What will be the drivers to see FTTH explosion in Europe? </li></ul></ul><ul><li>If Ethernet is currently the most widely-used technology, several recent major deployments have opted for PON (Denmark, France Telecom test in France). </li></ul><ul><li>Leading incumbents starting to deploy FTTN+VDSL2 solutions on a large scale (Deutsche Telecom, KPN, Swisscom, Belgacom, TDC) … others like France Telecom look at FTTH/PON architectures </li></ul><ul><ul><li>Dave: What’s the better option for FTTH deployments? </li></ul></ul><ul><li>In Europe, 2007 will be the year of regulatory adjustments to take account of FTTx and for testing the different technologies… leading to a series of major rollouts in 2008… but cost remains an issue </li></ul><ul><ul><li>Roy: Is economics still the sticking point to roll out Fibre in Europe? </li></ul></ul>
  31. 31. Thank you… … visit us online at... … www.IDATE.org a
  32. 32. Round Table: Key Questions <ul><li>What will be the role of content providers in FTTH? Do they have interests in delivering HDTV on Fibre? </li></ul><ul><li>Regulatory issues: what is the good position? Regulatory holiday? Sharing of passive infrastructure (ducts, Fibre)? </li></ul><ul><li>Who will lead FTTH developments in Europe? The role of Municipalities and Local Bodies will be essential? </li></ul><ul><li>Maturity of the FTTH technologies? What are the reasons for choosing Ethernet P2P or PON architectures for an operator? </li></ul><ul><li>Wireless technologies will play a role in VHS deployments? </li></ul><ul><li>Access to the Buildings could be a major barrier in Europe: solutions? </li></ul>