FTTH could tip competitive landscape in favor of telcos, says iSuppli analyst
Sep 11, 2007 11:10 AM
How cable MSOs will counter growing competition from fiber-based IPTV operators is “the million dollar question,” says iSuppli principal analyst Steve Rago.
Fiber-optic cable to the home, although more costly to deploy, ultimately will win out over other alternatives for deployment of IPTV services, according to Steve Rago, principal analyst for market researcher iSuppli.
Rago, who has authored several reports on the topic of fiber and its impact on IPTV, forecasts that fiber to the home (FTTH) may take 15 to 20 years for that happen with fiber to the curb and VDSL providing an important step along the way. Not only will that allow telcos to offer more channels and greater services to consumers, it also will mount increasing pressure on cable MSOs to take steps to remain competitive.
IPTV Update spoke with the author of “Broadband’s Next Big Step: Fiber to the Home and VDSL2” to get some more perspective.
IPTV Update: You say despite being a costly technology, fiber to the home (FTTH) will ultimately win out in telco IPTV delivery. Is the reason simply the bandwidth FTTH offers?
Steve Rago: It’s the need for bandwidth, and that need is being driven by the need to support new services going over the existing infrastructure. This boils down to the fact that the telcos need to reinvent themselves if they are to survive.
Part of that scenario is that they want to become video service providers. This is a worldwide phenomenon, so it’s more than just the U.S. To do that, especially in the U.S., they recognize the need for much fatter pipes than they have today, so fiber is a way to go. Deep fiber and VDSL is another way to go.
Fiber is the only future-proof technology. Once I put in fiber, I can scale up bandwidth virtually indefinitely, whereas deep fiber and VDSL do have their limiting points. The bottom line is to be able to offer the new services, and for its very survival, telcos need to deploy fiber eventually. Now, the question is how quickly they will deploy it. On a worldwide basis, you see Verizon for one, Japan NTT for two and there have been announcements that French Telecom is going to go FTTH. Other major incumbent telcos have talked about driving fiber deep into the neighborhood, such as AT&T and Deutsche Telekom, and then running high-speed ADSL to the home as their first step.
Inflection points to drive fiber faster would be if telcos cannot provide a video experience over copper that’s equal to or better than what the consumer can get over broadcast, satellite or the cable MSO.
If they cannot achieve their goal, then my feeling is that they will spend the money to provide FTTH.
IPTV Update: Fiber to the curb (FTTC), or deep fiber, can save telcos 50 to 65 percent of the cost of provisioning broadband subscribers, according to your reports. Does that mean telcos will deploy fiber to the curb as a stop gap, or will it be an end-game, ultimate solution?
Steve Rago: FTTC with VDSL is not the end game. The only future-proof technology is fiber all the way. It’s a logical way to go, however, because of the cost involved is to bring fiber very close in the neighborhood where I have rights of way to run the fiber. In other words, I am not trenching, digging up homes, digging up rights of way and then having to put it back the way it was prior to my digging. That’s a very large expense. So, they’ll bring fiber as close as they can given rights of way and given conduits they have at their disposal, and then go over the copper plant. I fully believe that over time, that is going to migrate to FTTH. In 15 to 20 years, the install base will migrate to fiber.
IPTV Update: Will that be new construction or in existing neighborhoods?
Steve Rago: It will eventually be both. Currently, all the telcos have said that for greenfield locations, they will drive fiber all the way to the home, and it’s actually cheaper. But for brownfield locations, existing locations, with the exception of the countries I mentioned before — that is Japan, Verizon in the U.S. and French Telecom — most of the incumbent telephone companies are talking about driving FTTC or near to the subscriber, and then using existing copper.
The reason Japan, Verizon and French Telecom can do it is because, in the case of Verizon, 60 percent or more of the subscribers they are targeting their FiOS TV at are aerial-fed. Deploying fiber over aerial-fed is much, much cheaper. Japan is all aerial-fed and much cheaper, and in the case of French Telecom, the city of Paris is where they are going to do their deployment and the sewer system in Paris provides French Telecom with rights of way right to the residences. So for the most part, the three of them do not have to dig up the large amounts of real estate to deploy fiber. They have other ways of doing it that are much cheaper.
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