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Belgium incumbent telco Proximus is the latest large Western broadband service provider to announce a significant fiber-to-the-premises (FTTP) rollout – in this case to 50% of households in its territory. The announcement represents a major shift from its current fixed broadband strategy of using primarily fiber-to-the-node (FTTN) plus DSL technologies. It follows a similar announcement by French ISP Altice, which has said that it is planning to move to FTTP in its US cable markets, bypassing the perhaps more obvious and easier upgrade to DOCSIS 3.1 in the process. Altice aims to deploy FTTP to its entire US footprint starting in 2017. Such announcements are not firsts and are certainly not unique (a number of operators around the world have had large FTTP initiatives for some time), but at a time when much R&D focus is on advanced wireless technologies, they do represent a renewed commitment to wireline broadband investment that in Ovum’s view is likely to continue well beyond 2020.
Globally, 2016 represented a tipping point for broadband access. Over the year, FTTP subscription count grew from 297 million to 382 million, surpassing DSL for the first time, which ended the year with 298 million subscriptions, down from 326 million at the start of the year. Ovum expects the number of subscribers on FTTP networks to keep growing steadily through 2021, at which point the technology will account for more than half of the 1.1 billion total fixed broadband subscriptions worldwide.
This result is largely driven by widespread FTTP rollout in Asia-Pacific and Eastern Europe. In Western Europe and North America, where copper access infrastructure has traditionally been prevalent, DSL (including FTTN/C) still accounts for the majority – and will continue to do so over the next five years, though it is starting to show signs of decline. In 2017, Ovum expects the deployment of G.fast technology to slow the decline in these regions, though announcements such as the ones from Proximus and Altice highlight a potential future tipping point in favor of FTTP even in these traditionally copper-based regions.
The business case for FTTP has improved dramatically over the past few years, with costs falling significantly. Ten years ago, Verizon’s cost to deploy FTTP was roughly $1,500 per home passed, plus another $1,500 per home to connect. Cincinnati Bell and CenturyLink have recently estimated the cost per home passed at $500–700, almost one-third of what it used to be. AT&T and Orange France are among other operators that have also highlighted such reductions in costs, boosting the business case for FTTP. While FTTP equipment prices have declined over time, it is the process of micro-trenching, a much faster and cheaper process of deploying the fiber itself, that is one of the biggest sources of FTTP cost savings.
DSL and cable technology are not dead, however. It is true that in Western Europe, DSL has seen very slow growth, and that in North America it has been on the decline, outmatched by the speed tiers offered by cable and FTTP providers. But Ovum expects a positive shift in 2016–17, with the deployment of G.fast helping the case for DSL by boosting speeds without the cost of taking fiber all the way to the customer’s door. It might not entirely revive DSL, but it will prolong the life of the technology in these regions, especially in countries such as the UK, Germany, Switzerland, and Austria, which have a high proportion of customers served via copper. Ovum expects DOCSIS 3.1 to do the same for cable HFC networks – to prolong their useful life by boosting speeds to gigabit levels.
Ovum is therefore not convinced that North America and Western Europe will see a significant shift in favor of FTTP over the current five-year forecast period. However, Ovum does expect to see continued investment in and rollout announcements for fiber networks over this period, placing FTTP firmly at the center of the future wireline broadband network in all regions.
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