Carrier Evolution

Between 2012 and 2017, fixed network operators in developed economies will spend $53.5 billion on optical fiber network roll-outs, according to Analysys Mason. But keep that in perspective. On an annual basis, that amounts to $10.7 billion, over huge regions, including
Central and Eastern Europe, developed Asia-Pacific, North America and Western Europe.

The most spending is expected to occur in Western Europe, where operators will invest $25.9 billion during the next five years, or about $5 billion a year. Putting that into perspective, France Telecom has said it will invest about a billion Euros between 2011 and 2013 in France ($1.3 billion), or an average of about $430 million per year.

France Telecom expects total capital investment, in all regions of about 18.5 billion Euros (about $24.5 billion) between 2011 and 2013, or about $8 billion a year.

The point is that fiber access spending should not be seen as a huge change from current spending.

About 82 percent of the predicted expenditure ($43.9 billion) will be on fiber-to-the-home (FTTH) rather than very-high-bitrate digital subscriber lines (VDSL) – the other main FTTx roll-out solution.

However, those countries where the major operators are focusing on FTTC and VDSL will generally have much higher availability of next-generation broadband in five years’ time.

The report also suggests one reason why service providers are not in a bigger rush to install fiber access networks.

Att a time when cable TV operators and 4G mobile operators are able to upgrade more quickly than telcos, the financial payback from an expensive and big FTTH network investment is uncertain and risky.

New enhanced DSL technologies such as vectoring and bonding will make it easier for operators to keep pace with cable competitors and one step ahead of any challenge from mobile operators to their core broadband businesses, at less cost and less risk.

“Given the as-yet untapped potential of copper over short distances, we wonder whether it is really sensible at this stage to take fiber right to people’s homes,” says Rupert Wood, Analysys Mason lead analyst.

Sticking rigidly to FTTH runs the risk of delivering next-generation access to a largely urban or well-to-do elite, while delaying delivery to other users and potentially losing customers,” says Wood. “This may come to look both commercially and politically unacceptable.”

The report suggests that, five years after launch, take-up rates for telcos of 25 percent or more “seem perfectly achievable.”

The report also indicates that the business case for super-fast fiber access is challenging.Super-fast broadband has been a difficult sell in some European countries because regulation has succeeded in encouraging facilities-based competiton and, as a result, driving down ADSL prices, Wood argues.

Wood further argues that there remain key questions about whether any set of consumer services justifies 100 Mbps access speeds.