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FTTH: the European updateIntroduction
ONE 2006 – Session 2Cannes, 24 September 2006
Roland MONTAGNEHead of Broadband Practice
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Agenda
FTTH: Worldwide Status
FTTH: Why?Rami Houbby, FTTH Council Europe, Allied Telesis
FTTH: Technology choice? David Payne, BT
FTTH: Costs? Roy Rubenstein, FibreSystems/Lightwave Europe
FTTH recent developments in Europe
FTTH: Forecasts for Europe in 2015
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FTTH: Worldwide Status
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FTTH worldwide status: Japan & the US
Japan: the FTTH leader More new FTTx subscribers than new DSL subscribers since April 2005 (+100 K a month) Since June 2005, with over 3.2 million subscribers, FTTH has overtaken cable and is now Japan’s number two broadband access mode 5.6 million FTTx subscribers at 2Q06: 55% FTTB & 45% FTTH Very attractive prices, closing the gap with ADSL tariffs, with virtually no difference for apartment dwellers (but still around 40% higher for individual dwellings) Regulation: both copper pair and fibre optic unbundling – Aerial deployments Government’s proactive approach to FTTx deployment: 30 M FTTH subscribers in 2010 Very few IPTV subscribers in Japan but a lower churn observed for FTTH subscribers
USA: FTTH is the unique solution for RBOC’s Length of the local loop and domination of Cable Modem on broadband access Power of Cable operators: Time Warner, Comcast, CableVision launching 30 or 50 Mbps offers 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 Regulation: no unbundling for RBOC’s deploying Fibre in the access Less than 0.5 million FTTx subscribers at 2Q2006 (estimation) AT&T (more FTTN oriented) and Verizon launched Fibre access for doing HDTV
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FTTH worldwide status: Europe
Mid of 2006, less than 800 000 FTTx subscribers in the EU 18 (+23% vs June 2005)
Mid of 2006, around 2.7 millions Homes passed in the EU 18 (+10% vs June 2005)
A global penetration rate of more than 28%
Mid of 2006, Deutsche Telekom covers 2.9 millions homes in 10 major cities in Germany with FTTN + VDSL2
mid-2005 mid-2006growth
2006/2005Total without VDSL, FTTN/C/LA 616 070 756 579 23%Total FTTx + VDSL / VDSL2 616 120 756 629 23%
EuropeSubscribers
mid-2005 mid-2006growth
2006/2005Total without VDSL, FTTN/C/LA 2 413 823 2 662 646 10%Total FTTx +VDSL / VDSL2 2 413 873 5 562 696 130%
EuropeHomes/Buildings passed
Source: IDATE
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FTTH: Why?
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Services need for very high Broadband ?
Residential market A demand today quite well satisfied by download rate proposed ADSL2+ but … A few specific applications needing more Bandwidth: HDTV, video services, blogs,
personal content exchanges,… 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
Source: IDATE
Downstream speedUpstream speed
Video Phones
Online games
Music, blogs, e-commerce, e-learning
VoIP
TVSD in MPEG 4
VOD
TVHD in MPEG 4
10Mbps
5Mbps
5Mbps
10Mbps
Downstream speedUpstream speed
Video Phones
Online games
Music, blogs, e-commerce, e-learning
VoIP
TVSD in MPEG 4
VOD
TVHD in MPEG 4
10Mbps
5Mbps
5Mbps
10Mbps
Minimum bandwidth requirements
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FTTH: Technology choice?
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Status of FTTx technologies
Two distinct solutions possible for expanding fibre optic coverage
- Fibre To The Node (FTTN)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)
DSLAM
ATM/Ethernet Switch
WiMAX
VDSL
FTTN
- Fibre To The Home (FTTH)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)
FTTH
SplitterATM/Ethernet Switch
PON
Active Ethernet switch
Ethernet Switch
EthernetP2P
Passive network
Active network
Passive network
Source: IDATE/LucentSource : IDATE/Lucent
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FTTN solutions: identified risks
Risks of interference between ADSL2+ and VDSL/VDSL2
ADSL2+ => up to 2.2 MHzVDSL/VDSL2 => from 1.1 to 30 MHz
Several solutions can be implemented to remedy the situation:
Frequency separation: use of VDSL2 at frequencies above 2.2 MHz, albeit delivering lesser performances
Balancing traffic on frequencies below 2.2 MHz to limit performance loss (under consideration for the VDSL2 standard)
Asymmetry of VDSL/VDSL2 solutions
VDSL DSLAM localisation local exchange? switch, premises…?
Future-proof architecture? FTTN then FTTH, or FTTH at the outset? A difficult choice…
Equipment Upgrading the required DSLAM, depending on their location, to be able to deliver value-added services such as 2-3 TV channels per user.
Operating costs Active equipment
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Study case: Local copper loop in France
LE Street cabinet
CP
(7 to 14 pairs)
PSTN subscribers
d
d’
12,500 in France 120,000 in France
Subscribers’ (d’) average distance from SC: 700 to 800 m; 300 m in Germany
Subscribers’ (d+d’) average distance from the local exchange: 29% of lines at less than 1 Km
39% of lines at less than 1.5 Km
52% of lines at less than 2 Km
Source: IDATE
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The SC is not the right place of arrival for Fibre in a VDSL approach; the « Curb » or the « Building » is better
Study Case: Performance of French copper network
If all the CO are equipped with ADSL2+: 50% of the population eligible at 10 Mbps
If all the CO are equipped with VDSL2 : less than 10% of the population eligible at 50 Mbps
If all the SC are equipped with VDSL2 : less than 20% of the population eligible at 50 Mbps
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Ethernet P2 vs PON in Europe
►Technical architecture of European FTTx deployments: Ethernet still outnumbering PON
►But PON selected for several major projects since 2005:
in Spain, the government of Asturias has chosen an Open Access Network GPON for its infrastructure
Among the latest deployment, EnergiMidt, a Danish power utility has also selected a BPON technology – 18 000 home passed mid 2006
Also in Denmark, SEAS-NVE is deploying BPON while SEF is deploying EPON
France Telecom is testing FTTH / GPON since several months
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FTTH: costs?
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Study case: Cost Model for FTTx in France (1/2)
Base option : Greenfield deployments main cities then residential areas
Technologies : GPON and Ethernet P2P
Deployment : 2006 to 2015 for a coverage of 40% of the population
In 2015 : 11.9 million homes passed and 5.3 subscribers
Results : total investments between 10.4 and 11.3 billions euros over 10 years
Civil Engineering represents 70% of the costs
EBIT positive in 2012
Entering in residential areas in 2010 with individual homes has a strong impact in deployment costs
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entrée en zones pavillonnaires
Investments per year (in million EUR)
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Study case: Cost Model for FTTx in France (2/2)
Option 1 : Paris with usage of passive existing infrastructure (Paris sewer)
At 1€/m/year it allows an economy of 30% compared to the Greenfield case
In 2015 : 1.1 million homes passed and 0.5 million subscribers
Option 2 : France with usage of ducts already existing
At 2€/m/year it allows an economy of 50% compared to the Greenfield case
In 2015 : 9.1 million homes passed and 2.6 million subscribers
Mutualisation is the key: access at existing passive infrastructure
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FTTH recent developments in Europe
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FTTH recent developments in Europe
► The regional government of the Asturias project, SpainBased on an open GPON access networkFibre 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.
► France Telecom pilot project announcedFTTH pilot in the Hauts-de-Seine department and in Paris region, covering several
thousand householdsAccording to France Telecom, FTTH is a matter of strategic investment… its future
depending on upcoming regulatory decisions
► The Amsterdam Municipality CityNetBased on an Ethernet access network25,000 homes connected by the end of 2007
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FTTH recent developments in Europe
► The Vienna city Council’s FTTH projectBased on an open Ethernet access network
FTTH pilot begun in 2006, the Vienna city Council’s FTTH network will cover over 50,000 homes by the end of 2006.
► Erenis, in Paris (France)Based on an Ethernet access network: FTTB+VDSL
85,000 homes connected at the end of 2006
► CiteFibre, in Paris (France)Based on a FTTH access network
100,000 homes connected at the end of 2007
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Free FTTH announcement for France
► 4 M home passed through 2012 for a total investment of 1 billion euros► FTTH architecture: Ethernet P2P► 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%)► No civil engineering but usage of Paris sewer system in accordance with Paris policy► Opening of FTTH services at the beginning of 2007► One condition: Local Exchanges will be equipped if at least 15% of the lines are Free
subscribers► FTTH network will be open (parts or total network) to other operators – “Ethernet architecture will
facilitate this”
► Same monthly price: 29,99 euros !► 50 Mbps Internet access► Unlimited telephony to fixed phones and some international destinations► New optical Freebox
► To attract building owners: a free offer for every home passed► Digital Terrestrial TV► Narrowband Internet access► Phone lines► Optical Freebox (deposit needed)
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Free FTTH announcement’ reactions
► France Telecom: it’s too soon► ADLS2+ is sufficient for today Triple Play services► HD TV, main driver for FTTH, is not already available in France
► Economy of the project► Free will be 100% independent ; no more LLU renting fees► Free will propose new value added services► Free will target not only Residential but also Business Units► IDATE cost model for France:
- 2010: 3.5 M homes passed and 1.1 subs for an invest/Home passed of 260 € (1087 € for connected subs)
- 2011: 5.3 M homes passed and 1.8 subs for an invest/Home passed of 260 € (1018 € for connected subs)
So this is not very far from Free calculation !! 250 eur / Home passed (1300 €/connected subs.)
► FT raised the negotiations difficulties when entering MDU, furthermore 4 hours of technician needed in average for connecting a home
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FTTx Forecast for Europe
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Country potential for VHS
VHS rollout estimates: Level of concentration:
Number of nuts5 in a urban area means the number of cities where pop density > 500 inhabitants per km² Suburban (Pop. density between 100 and 500 inhabitants per km²)
Potential coverage Number of inhabitants living in a urban/suburban area
Government support for VHS State and local authorities’ involvement in VHS (e.g. leasing dark fibre from municipalities, or government incentives for VHS)
Consumer demand for VHS Population’s potential willingness to subscribe to VHS broadband
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Country potential for VHS
Country rating
Overview of potential VHS coverage in the countries being examined
Coverage expected to be high in Finland, Denmark, Norway & Sweden (mark > 7 points)
Country Potential coverage State and local bodies involvement IT friendly consumers Country ratingAustria ++ + + 4Belgium - - + 1Denmark + +++ +++ 7Finland +++ ++ +++ 8France ++ ++ ++ 6Germany ++ + + 4Greece ++ + - 3Iceland - ++ +++ 5Italy + + + 3Ireland + + - 2Luxembourg + - + 2Netherlands - ++ ++ 4Norway +++ ++ +++ 8Portugal + + + 3Spain +++ + + 5Sweden ++ +++ +++ 8Switzerland ++ - + 3UK ++ - ++ 4
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When are players likely to invest in VHS broadband?
Current level of national penetration Assumption: high level of BB penetration likely to fuel a VHS broadband battle
Incumbent’s strategy: Assumption: incumbent’s involvement is key for VHS take-up. Incumbent likely to adopt VHS broadband if:
Market share on broadband market is low and/or (BT) Share of net adds is low (DT)
LLU and alternative operators strategies: Assumption: we believe that incumbent will more likely invest in VHS in countries where LLU take-up is strong (% of DSL lines)
LLU is strong in France, the Netherlands and Sweden
Competition with cablecos: Assumption: a high degree of competition between telcos and cablecos is likely to drive adoption of VHS broadband
Strong competition from cablecos in Austria, Belgium and the Netherlands Little competition in France and Germany No competition in Italy and Greece
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When are players likely to invest in VHS broadband?
Country rating
This gives us an idea of when players will implement VHS
First expected to rollout VHS are: the Netherlands, Sweden and Finland (mark > 12 points)
OLO Cablecos New player Competition ratingCountry BB level of penetration Market share share of net adds LLU take-up (% DSL) Market share InvolvementAustria + ++ - + +++ - 7Belgium ++ + ++ - +++ - 8Denmark +++ - - + +++ ++ 9Finland +++ +++ +++ + + + 12France ++ ++ + +++ - - 8Germany + - +++ ++ - - 6Greece - - - - - - 0Iceland +++ - - - - - 3Italy + - - + - - 2Ireland - + - - - - 1Luxembourg + - - - + - 2Netherlands +++ +++ + +++ +++ ++ 15Norway +++ + + ++ + - 8Portugal + - + + + - 4Spain + + - + ++ - 5Sweden +++ +++ +++ +++ + ++ 14Switzerland +++ ++ ++ - +++ - 10UK ++ +++ +++ - ++ - 10
Incumbent
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Abandoning xDSL for FTTH?
Local loop length breakdown: Assumption: incumbent more likely to choose FTTH (PON + E P2P) than upgrading xDSL if their local loops are long
Short loops: xDSL will be upgraded progressively to FTTx+VDSL Long loops: more favourable to FTTH rollout
Short loops (estimated 70% of lines < 3km): Spain, Italy Long loops (estimated less than 50%-55% of lines <3km): France, Germany, UK
Average number of lines per MDF Assumption: a high score means that an average MDF covers a large number of line and is thus favourable to an xDSL rollout
Average number of lines per MDF is high in Belgium and the Netherlands Average number of lines per MDF is low in Finland and Sweden
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Abandoning xDSL for FTTH?
Country rating
This gives us an idea of operators’ likelihood of switching to FTTH, or of keeping DSL as their main VHS technology
Rating: more VDSL oriented <3< more FTTH oriented
Country Local loop length repartition Average number of lines per MDF Access Network ratingAustria ++ ++ 4Belgium ++ - 2Denmark ++ ++ 4Finland ++ +++ 5France +++ ++ 5Germany +++ + 4Greece + ++ 3Iceland + ++ 3Italy - ++ 2Ireland ++ ++ 4Luxembourg ++ + 3Netherlands ++ - 2Norway ++ ++ 4Portugal ++ ++ 4Spain - ++ 2Sweden ++ +++ 5Switzerland - ++ 2UK ++ + 4
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VHS BB market overview
VHS potential take-up across Europe
Classic broadband, led by ADSL, will remain by far the leading means of access
In Europe, replacing classic BB with VHS will begin in earnest in 2010/2012
VHS will represent around 19% of Western Europe’s total BB base by 2015. FTTH will be the first VHS broadband technology, with on average 11% of Europe’s total BB base by 2015. VDSL will represent 8% of Europe’s total BB base by 2015.
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Key points Europe & Key Questions
► 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.
► Including VDSL Europe counts 5.6 million homes passed mid 2006
► Rami: What will be the drivers to see FTTH explosion in Europe?
► If Ethernet is currently the most widely-used technology, several recent major deployments have opted for PON (Denmark, France Telecom test in France).
► 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
► Dave: What’s the better option for FTTH deployments?
► 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
► Roy: Is economics still the sticking point to roll out Fibre in Europe?
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Thank you… …visit us online at... …www.IDATE.org
a
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Round Table: Key Questions
► What will be the role of content providers in FTTH? Do they have interests in delivering HDTV on Fibre?
► Regulatory issues: what is the good position? Regulatory holiday? Sharing of passive infrastructure (ducts, Fibre)?
► Who will lead FTTH developments in Europe? The role of Municipalities and Local Bodies will be essential?
► Maturity of the FTTH technologies? What are the reasons for choosing Ethernet P2P or PON architectures for an operator?
► Wireless technologies will play a role in VHS deployments?
► Access to the Buildings could be a major barrier in Europe: solutions?
