FTTx COVERAGE, CONVERSION AND CAPEX: WORLDWIDE TRENDS …

FTTx coverage, conversion and capex: worldwide trends and forecasts 2016–2021

© Analysys Mason Limited 2016

RESEARCH FORECAST REPORT

analysysmason.com

FTTx COVERAGE, CONVERSION AND CAPEX: WORLDWIDE

TRENDS AND FORECASTS 2016–2021

RUPERT WOOD



WHO SHOULD READ THIS REPORT

GEOGRAPHICAL COVERAGE KEY METRICS

Eight regions

Western Europe (WE)

Central and Eastern Europe

(CEE)

Middle East and North Africa

(MENA)

Sub-Saharan Africa (SSA)

China

Rest of emerging Asia–Pacific

(EMAP)

Developed Asia–Pacific (DVAP)

North America (NA)

Latin America (LATAM)

64 individual countries

• see the ‘Forecast methodology

and assumptions’ slide for a full

list).

Coverage (premises passed)

Conversion (premises with active

connections as a percentage

of premises passed)

Capex (split into network and

connection)

Split by architecture/technology:

FTTC/VDSL or G.fast

FTTB/VDSL or G.fast

FTTB/LAN

FTTP (split by incumbent and

alternative operator)

Cable DOCSIS3.0 or 3.1

Note: capex is not provided for

cable DOCSIS3.0 or 3.1.

2

This report analyses and forecasts coverage (premises passed),

conversion (active connections as a percentage of premises

passed) and capex for FTTx architecture and technologies during

2012–2021. It is based on several sources, including:

Analysys Mason’s internal research, including our core

telecoms forecasts, our quarterly NGA tracker, our fixed data

traffic forecasts, and our detailed modelling of the costs of

technologies and deployment. Our modelling and assumptions

are informed by professionals in our 12 offices worldwide.

ongoing engagement with stakeholders in the FTTx market,

including operators and vendors.

About this report

This report provides strategic planners with detailed and comprehensive

insight into the development of FTTx in comparable markets, allowing

them to understand what level and type of investment is appropriate,

and where opportunities lie.

For equipment vendors, construction businesses and component

suppliers, it shows the scale of opportunity in FTTx.

The model can also serve several other functions beyond the immediate

scope of this report. It can be used to provide the costs of alternative

scenarios, including different mixes of technologies, different demand

profiles in different geotypes, and different completion dates. If you wish

to explore these options, please contact the author.


© Analysys Mason Limited 2016 3

7. Worldwide trends

8. Worldwide: Coverage growth will slow by 2021, but conversion will continue

to grow steadily

9. NGA will be available to 1.3 billion premises worldwide by 2021

10. FTTP availability is increasingly dominated by emerging markets

11. Global capex will start to shift to second infrastructures and to upgrades

12. The availability of an NGA connection is fast approaching the number of

households that could afford such a connection

13. The cost:value metrics of FTTP for mid-income countries are generally

better than for richer countries

14. FTTC incumbents facing a new phase of investment have to balance short-

term tactics and long-term

15. There is interest, particularly in North America, in ‘5G’ fixed wireless access

as an alternative to wireline NGA

16. Western Europe

17. Western Europe: Coverage will fall 12% short of the 100% target set by the

European Digital Agenda by the end of 2021

18. Western Europe: Over 50% of Western European premises will have an NGA

connection by 2020, but not all will be 100Mbps

19. Central and Eastern Europe

20. Central and Eastern Europe: CEE has good, inexpensive broadband, but

rural areas are generally underserved

21. Central and Eastern Europe: Fixed–mobile convergence

may stimulate take-up

22. Middle East and North Africa

23. Middle East and North Africa: There is little incentive to invest outside the

GCC markets

24. Middle East and North Africa: Lack of competition keeps fibre broadband

prices high

25. Sub-Saharan Africa

26. Sub-Saharan Africa: The costs of fibre-based broadband are

disproportionately high for a low-income region

27. Sub-Saharan Africa: Services are too embryonic for conversion rates to be

meaningful

28. China

29. China: The focus of investment has switched to network upgrades and

additional competitive infrastructures

30. China: Multi-infrastructure competition and FMC is driving prices down and

take-up has boomed

31. Rest of emerging Asia–Pacific

32. Rest of emerging Asia-Pacific: Where it exists, state-managed roll-out of

fixed broadband has led to impressive results

33. Rest of emerging Asia-Pacific: Where investment has occurred, take-up

rates have the potential to be very good

34. Developed Asia–Pacific

35. Developed Asia-Pacific: Investment is now focused on new and upgraded

fibre infrastructures

36. Developed Asia-Pacific: Strong traffic growth and continued take-up spur

the case for further investment

Contents [1]



37. North America

38. North America: Investment levels are weak in North America

39. North America: Unless prices fall, US conversion rates for FTTx will stagnate;

in Canada, the regulator has intervened

40. Latin America

41. Latin America: Cable operators are already well entrenched in the main

addressable markets

42. Latin America: Conversion rates remain rather subdued

43. Forecast methodology and assumptions

44. Geographical scope: Forecasts are provided for 64 countries in 8 regions

45. Definitions

46. We take baseline costs for each technology and then apply several context-

specific variables to determine total capex

47. Top-level breakdown of the relative costs of FTTx technologies: basic

topologies

48. Baseline unit cost assumptions for FTTC/VDSL and FTTB/dp/VDSL

49. Baseline unit cost assumptions for FTTP/GPON

50. About the authors and Analysys Mason

51. About the authors

52. About Analysys Mason

53. Research from Analysys Mason

54. Consulting from Analysys Mason

Contents [2]



Figure 1: NGA coverage by technology, worldwide, 2011–2021

Figure 2: Fixed broadband active connections, by technology, and NGA share of

connections worldwide, 2011–2021

Figure 3: Conversion rates for NGA overall, and FTTP and FTTX, worldwide,

2011–2021

Figure 4: NGA coverage by region, 2013–2021

Figure 5: NGA subscriptions by region, 2013–2021

Figure 6: NGA subscriptions as a proportion of premises passed, by region,

2013–2021

Figure 7: FTTP coverage by region, 2013–2021

Figure 8: FTTP subscriptions by region, 2013–2021

Figure 9: FTTP subscriptions as a proportion of premises passed, by region,

2013–2021

Figure 10: FTTx capex, by worldwide region, 2013–2021

Figure 11: NGA affordability, availability and adoption, worldwide, 2013–2021

Figure 12: Benchmark cost per premises passed, FTTP deployments worldwide

Figure 13: NGA coverage by technology, Western Europe, 2014–2021

Figure 14: FTTx capex by technology, Western Europe, 2014–2021

Figure 15: Conversion rates for NGA overall, and FTTP and FTTx , Western Europe,

2014–2021

Figure 16: Active connections per premises, by technology, Western Europe,

2014–2021

Figure 17: NGA coverage by technology, Central and Eastern Europe, 2014–

2021

Figure 18: FTTx capex by technology, Central and Eastern Europe, 2014–2021

Figure 19: Conversion rates for NGA overall, and FTTP and FTTx , Central and

Eastern Europe, 2014–2021

Figure 20: Active connections per premises, by technology, Central and Eastern

Europe, 2014–2021

Figure 21: NGA coverage by technology, Middle East and North Africa, 2014–

2021

Figure 22: FTTx capex by technology, Middle East and North Africa, 2014–2021

Figure 23: Conversion rates for NGA overall, and FTTP and FTTx , Middle East and

North Africa, 2014–2021

Figure 24: Active connections per premises, by technology, Middle East and


Figure 25: NGA coverage by technology, Sub-Saharan Africa, 2014–2021

Figure 26: FTTx capex by technology, Sub-Saharan Africa, 2014–2021

Figure 27: Conversion rates for NGA overall, and FTTP and FTTx , Middle East and


Figure 28: Active connections per premises, by technology, Middle East and


Figure 29: NGA coverage by technology, China, 2014–2021

Figure 30: FTTx capex by technology, China, 2014–2021

Figure 31: Conversion rates for NGA overall, and FTTP and FTTx, China, 2014–

2021

List of figures [1]



Figure 32: Active connections per premises, by technology, China, 2014–2021

Figure 33: NGA coverage by technology, rest of emerging Asia–Pacific, 2014–

2021

Figure 34: FTTx capex by technology, rest of emerging Asia–Pacific, 2014–2021

Figure 35: Conversion rates for NGA overall, and FTTP and FTTx, rest of emerging

Asia–Pacific, 2014–2021

Figure 36: Active connections per premises, by technology, rest of emerging

Asia–Pacific, 2014–2021

Figure 37: NGA coverage by technology, developed Asia-Pacific, 2014–2021

Figure 38: FTTx capex by technology, developed Asia-Pacific, 2014–2021

Figure 39: Conversion rates for NGA overall, and FTTP and FTTx, developed Asia-

Pacific, 2014–2021

Figure 40: Active connections per premises, by technology, developed Asia-

Pacific, 2014–2021

Figure 41: NGA coverage by technology, North America, 2014–2021

Figure 42: FTTx capex by technology, North America, 2014–2021

Figure 43: Conversion rates for NGA overall, and FTTP and FTTx, North America,

2014–2021

Figure 44: Active connections per premises, by technology, North America,

2014–2021

Figure 45: NGA coverage by technology, Latin America, 2014–2021

Figure 46: FTTx capex by technology, Latin America, 2014–2021

Figure 47: Conversion rates for NGA overall, and FTTP and FTTx, Latin America,

2014–2021

Figure 48: Active connections per premises, by technology, Latin America,

2014–2021

Figure 49: Countries covered in this report, by region

Figure 50: Definitions used in this report

Figure 51: capex model outline

Figure 52: Basic overview of FTTx network topologies and elements

Figure 53: Baseline capital unit cost assumptions, FTTC/VDSL and FTTB/VDSL

Figure 54: Baseline capital unit cost assumptions, FTTH/GPON

List of figures [2]



Figure 4: NGA coverage by region, 2013–2021

At 2016, emerging economies account for 72% of the world’s

premises; developed economies account for 28%. The burden of

legacy and the disproportionately higher cost of replacement

mean that developed economies have a greater mix of NGA

technologies than emerging economies. Cable represents a

significant part, as do copper-based access technologies.

Therefore, developed economy regions occupy a higher proportion

of premises passed by NGA than they do by pure fibre approaches.

By the end of 2016, 58% of premises passed by NGA technologies

will be in emerging markets, rising to 60% by 2021. The proportion

of connections in emerging is about two percentage points lower,

but rising at a similar rate.

Figure 6: NGA subscriptions as a proportion of premises passed, by region, 2013–2021

Figure 5: NGA subscriptions by region, 2013–20211

NGA will be available to 1.3 billion premises worldwide by 2021

1 Developed countries appear in shades of blue; emerging countries appear in shades of pink.



Figure 12: Benchmark cost per premises passed, FTTP deployments worldwide

13

See the second sheet in the data annex for the named list of benchmarks

Analysys Mason has collected operators’ estimates of cost per

premises passed (CPPP) for FTTP projects worldwide. The ability to

offer fibre connections for less than USD15 is dependent on this

measure.

Labour costs vary with income levels. However, given that for any

given roll-out, there will be a significantly less-variable cost for

equipment than for labour, it is striking that the cost of roll-out in

low- to middle-income markets is often as low as it is. Economies

of scale in some large roll-outs help to explain this (the lowest

data point in Figure 12 is China Telecom), as does premises

density in many cities. However, a further factor is that in lower-

income markets, planning laws can be looser, which reduces costs

to overheads and also facilitates cheaper, though more visually

intrusive, modes of deployment. In addition to stricter planning

regulations, dispersed larger premises in affluent markets tend to

be more expensive to cover, even if these properties may appear

attractive from a demand side.

A number of factors can explain the reasons for low CPPP in

higher-income markets, but by far the most-significant of these is

access to physical infrastructure: our benchmarks are capex, and

the cost of shared infrastructure becomes an opex charge.

Furthermore, cost per premises connected (CPPC) is variable, but

does not vary exactly with premises density. Tiny rural clusters

can, in this respect, be inexpensive, whereas once again suburban

plots, with yards, can be expensive to connect.

The cost:value metrics of FTTP for mid-income countries are generally

better than for richer countries

High-income,

excess capex

High-income,

discount capex Low-income,

discount capex



CONTENTSCONTENTS

50

WORLDWIDE TRENDS

REGIONAL TRENDS

WESTERN EUROPE

CENTRAL AND EASTERN EUROPE

MIDDLE EAST AND NORTH AFRICA

SUB-SAHARAN AFRICA

EMERGING ASIA–PACIFIC

DEVELOPED ASIA–PACIFIC

NORTH AMERICA

LATIN AMERICA

FORECAST METHODOLOGY AND ASSUMPTIONS

ABOUT THE AUTHOR AND ANALYSYS MASON



About the author

Rupert Wood (Research Director) is the lead analyst for Analysys Mason’s Network Investment Strategies and Traffic Forecasts research

programmes. His primary areas of specialisation include next-generation networks, long-term industry strategy and forecasting the dynamics of

convergence and substitution across fixed and mobile platforms. Rupert regularly contributes to the international press on a wide range of

telecoms subjects and has been quoted by The Times, The Economist, Business Week, Telecommunications Online and La Tribune. Rupert has

a PhD from the University of Cambridge, where he was a Lecturer before joining Analysys Mason.



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FTTx COVERAGE, CONVERSION AND CAPEX: WORLDWIDE TRENDS …