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KATP–CITIInternationalJointSymposium Seoul,24 th June2011 Buildingnetworkandservicesalongcustomerdemandandcompetition
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Fiber Networks in EuropeBuilding network and services along customer demand and competition
KATP – CITI International Joint Symposium
Seoul, 24th June 2011
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Western andCentral EuropePortugal 40%France 21%Italy 10%Netherlands 10%Switzerland 7%Austria 4%Spain 3%Germany 2%UK 1%Belgium 0%
Northern andEastern EuropeLithuania 76%Latvia 43%Sweden 36%Slovakia 35%Estonia 21%Norway 18%
Asian Pacificand AustraliaSouth Korea 96%Japan 94%Hong Kong 93%Taiwan 77%Australia 3%
NorthernAmericaUSA 19%Canada 2%
Snapshot FTTH/FTTB deployments EOY 2010Fiber deployments vary significantly world wide – Asia and NorthernEuropean countries are ahead, while Western Europe is “lagging” behind
Is demand for FTTH / high bandwidth (services) so different from countryto country or are other factors driving NGA roll-out strategies?
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Source coverage: based on IDATE FTTx Watch Service 2011, Mai 2011 and public available household figures
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No differences in customer demand todayAverage download speeds do not differ substantially world wide andshow little correlation with FTTH/B coverage – reflecting similar demand
It makes perfect sense – HDTV and OTT (video) service such as Youtube,iTunes etc. are used world wide and do not necessarily need fiber yet
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5
10
15
20
25
30
35
Avg. download speed in Mbps
FTTH/B coverage100%90%
SE
SP
KR
SK
PTNO
NL
LT
LV
JP
IT
DEFR
EE
DK
CA
BE
AT
AU
80%70%60%50%40%30%20%10%0%
USAUK
CH
TW
R2=0.34
55% of broadbandcustomers on FTTH/B
62% of broadbandcustomers on FTTH/B
20% of broadbandcustomers on FTTH/B
8% of broadbandcustomers on FTTH/B
Source FTTH/B penetration: IDATE FTTx Watch Service 2011, Mai 2011Source download speeds: Net Index by Ookla, www.netindex.com, June 2011
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No doubt on future demand for FTTHBut there is no doubt – fiber will be needed in the long run and operatorsare pressured to invest early since roll-out may take substantial time
This would imply that all roll-outs should be similarly advanced or arethere other factors than demand driving NGA roll-out strategies?
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100 Mbps
10 Mbps
1’000 Mbps(1 Gbps)
InternetVoice 1.x TV sets
From… today limitedconcurrent broadband usage …
… to heavy concurrent usageof new high bandwidth services
Multi-room3D/HD TV
Videoconferencing
Low latency foronline gaming
Home office
Multi-room4k/8k TV
Point-to-MPtelepresence
All data/contenton online storage
Remotecomputing
Surveillance
“Killerapplication”
~2010 ~2015 ~2020
Nielsen’s law+650%
in 5 years
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Competitive/political landscape driving decision on FTTxLocal FTTH competition and public initiatives/incentives have induced earlyinvestments in FTTH and lead to high penetrations in Asia / North. Europe
Incumbents facing strong cable competition had to move quickly tohigher bandwidths – choosing FTTC/VDSL over FTTH/B in the midterm
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Cablecompetition
DOCSIS 3.0competition
USO
Altnetslocal initiatives
Broadband programs(incentives / subsidies)
Local FTTHcompetitionand publicinitiatives
Strong cablecompetition
ADSL FTTC/VDSL FTTH/B DOCSIS 1.x/2.x DOCSIS 3.0
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2015e2014e2013e2012e2011e20102009
Example: NGA roll-out in SwitzerlandSwisscom started FTTV/VDSL roll-out in 2006 to cope with strong cablecompetition, that exists in 80% of Switzerland – even low dense areas
Fast progressing FTTH roll-out initiated in 2009 to cope with DOCSIS 3.0and meet long term demand for ultra high bandwidth services
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VDSL>8 Mbps
ADSLup to 5 Mbps
FTTHToday: 100 Mbps
Future: 1 Gbps and more
FTTC/VDSLToday: 20-30 Mbps
Vectoring tests promisespeeds beyond 50 Mbps
ADSL2+up to 8 Mbps
& wireless(e.g. HSPA+/LTE)
Top cities andagglomerations
~35% of HH
Cable/DOCSIScompetition
~80% of HH
Rural areasw/o DOCSIS
Medium termdemand (3D/HDTV)
Competitive on BB
Long term demandand replacement ofcopper network
Beyond universalservice obligation
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Intermediate step FTTC benefitting all customersMoving directly to FTTH unleashes speeds beyond 100 Mbps, but only for afraction of customers – bandwidths in areas without FTTH often insufficient
Intermediate FTTC allows to cover larger areas with necessary bandwidth,benefitting all customers and leaving enough time to roll-out FTTH
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2010 2015e
100% 100% 100% 100%
2015e2010
ADSL2+< 20 Mbps< 2 HDTV streams
From ADSL2+ to FTTH Switzerland
FTTH> 100 Mbps> 10 HDTV streams
FTTH> 100 Mbps> 10 HDTV streams
FTTC/VDSL20-30 Mbps2-3 HDTV streams+ vectoring40-100 Mbps4-10 HDTV streams
ADSL2+/VDSL<20 Mbps<2 HDTV streams
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Example: NGA Go-to-MarketNation wide availability of high bandwidths (FTTH, FTTC/VDSL)allows an almost technology agnostic go-to-market
Swisscom is offering a single bundle portfolio on FTTH/VDSL, puttingservices rather than download speeds in focus, ultimately meetingcustomer’s demand – also in terms of simplicity
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10/1 Mbps and HDTVboth on FTTH and VDSL
20/2 Mbps and HDTVboth on FTTH and VDSL
HDTV and multi-roomboth on FTTH and VDSL
30/3 Mbps on VDSL50/5 Mbps on FTTH
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Summary and conclusionWestern Europe is building networks and services along customer demandand competition – there is no need for acceleration or even intervention
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1. Europe is not lagging behind in terms of bandwidth availabilityMixed FTTH/FTTC is as well suited to meet current and growingbandwidth demand as FTTH/B, which often comes
i. with heavy overbooking
ii. and/or limited reach, increasing digital divide
2. FTTH roll-outs are well under way – no need for accelerationFTTH roll-outs are progressing and well under way to catch up with theleading countries and will sure meet long term customer demand
3. FTTH roll-outs are financed by private sector – no need for interventionCountries with strong infrastructure competition have seen substantialinvestments from the private sector in FTTC and now FTTH, whereas inother countries public money was needed from the beginning