1. The Roadmap for a Fiber Future
Collaboration to ensure the next generation of networks
BBWF 2011
Pyramid Research
Sylwia Boguszewska

2. Three Questions About Fiber
What are the global and regional fiber broadband
1. What are the global and regional fiber broadband
adoption and revenue trends?
adoption and revenue trends?
2. What are the FTTx network deployment trends & &
What are the FTTx network deployment trends
evolving FTTx network operator business models
evolving FTTx network operator business models?
What next steps should regulators, operators, other
3. What next steps should regulators, operators, other
service providers take?
service providers take?
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3. What are
the global and regional
fiber broadband
adoption and revenue
trends?
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4. Global and Regional Broadband Adoption Forecast
Globally xDSL remains the dominant broadband access technology.
FTTH accounts for11% of total lines in 2011.
APAC accounts for almost half of all broadband lines.
TOTAL BROADBAND ACCESS LINES BY TYPE, GLOBAL TOTAL BROADBAND ACCESS LINES BY REGION 2011
2010 -2016 631M
xDSL Cable Modem FTTH Other
1,200
AME
NA 6%
Broadband Accounts (millions)
1,000 16%
800
LATAM
8%
600
APAC
400 41%
200 WE
21%
0
CEE
2010 2011 2012 2013 2014 2015 2016 8%
Source: Pyramid Research, Global Fixed Communications Forecast, Q2 2011
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5. Global and Regional FTTH/B Broadband Trends and Outlook
Since 2009 deployments have slowed in developed markets.
Increased focus in emerging markets has led to substantial growth
in FTTH subscribers.
TOTAL GLOBAL FTTH ACCESS LINES, 2007-2011 TOTAL FTTH ACCESS LINES BY REGION 2011
(MILLIONS) 68M
80
CAGR 32% AME
NA 2.7%
70
14.8%
Access lines millions
60 LATAM
2.6%
50
WE
40
8.1%
30
CEE
20
1.3%
10
APAC
0 70.4%
2007 2008 2009 2010 2011
Source: Pyramid Research, Global Fixed Communications Forecast, Q2 2011
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6. Global and Regional FTTH/B Broadband Trends and Outlook
Early adopters Japan and Korea lead the way today.
China should emerge as the largest FTTH/B market in the world.
FTTH/B SUBSCRIBERS – TOTALS AND % OF TOP TEN COUNTRIES FOR FTTH/B BROADBAND LINES,
TOTAL BROADBAND LINES, 2010 2010
Japan 20,145
80%
Korea 12,232
70%
US 6,559
60%
FTTH/B subscribers (000)
Russia 3,362
50%
China 2,174
40%
Taiwan 2,087
30%
Hong Kong 960
20%
Sweden 787
10%
Italy 747
0%
Australia 491
0 10,000 20,000 30,000
FTTH/B Broadband Lines (000)
Source: Pyramid Research, Global Fixed Communications Forecast, Q2 2011
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7. Global and Regional FTTH/B Broadband Service Revenue Forecast
FTTH ARPU is about 1.1-1.5x higher than average broadband ARPU.
The potential for increasing ARPU lies in the number of value-added
services that can be delivered over the fiber network.
Multiplay and value-added services are key to a viable business case for FTTH
networks, as they generate higher ARPU and create customer loyalty.
FTTH ARPL VS. AVERAGE BROADBAND ARPL, BY REGION, 2011
(US$)
FTTH ARPL Average Broadband ARPL
$70
$60
$50
$40
$30
$20
$10
$0
AME APAC CEE WE LATAM NA
Source: Pyramid Research, Global Fixed Communications Forecast, Q2 2011
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8. Global and Regional FTTH/B Broadband Service Revenue Forecast
FTTH broadband service revenue will more than double to $116bn
by 2016, up from $51bn in 2011.
APAC will keep its leadership position through 2016.
FTTH BROADBAND REVENUE BY REGION, 2010 - 2016 FTTH BROADBAND SERVICE REVENUE AS % OF BROADBAND
SERVICE REVENUE BY REGION, 2010 - 2016
$140 80%
Service revenue (US$bn)
AME APAC CEE AME APAC
% of total broadband service revenue
$120 70% CEE WE
WE LATAM NA
LATAM NA
$100 60%
50%
$80
40%
$60
30%
$40
20%
$20 10%
$0 0%
2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016
Source: Pyramid Research, Global Fixed Communications Forecast, Q2 2011
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9. What are the FTTx network
deployment trends?
&
What are evolving FTTx network
operator business models?
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10. FTTX Network Deployment Drivers and Considerations
Key drivers for fiber network deployments
Revenue attrition
Increasing demand for bandwidth
Competitive pressures and convergence
Regulatory requirements and incentives
Future-proofing & opex efficiencies
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11. FTTX Network Deployment Drivers and Considerations
Network deployments generally focus on areas that promise higher
margins.
These include business-centric and/or high-income regions, areas
where operators can achieve savings through existing infrastructure,
aerial deployment and/or strong brand.
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12. FTTX Network Deployment Drivers and Considerations
Although regulators and the European Commission encourage the
shared rollout of NGN networks, such agreements are rare, and
mostly stay on paper in WE.
Country governments and the EU provide funds to expand
broadband connectivity across CEE, while municipalities and utility
companies are usually not engaged in fiber deployments.
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13. FTTX Network Deployment Drivers and Considerations
CEE’s strong uptake in FTTB/H deployments has been driven by a
mix of alternative operators, MSOs and incumbent telcos, supported
by government incentives
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14. FTTX Network Deployment Drivers and Considerations
Our analysis of carriers fiber deployments show a three distinct
models: open access, closed access and collaboration.
Open access model
Collaboration model
Closed-access model
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15. What next steps that
regulators, operators
and
other service providers
should take?
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16. Pyramid’s perspective
• There is a space for regulators, operators, other service providers (i.e.
municipalities ) to work together to roll out and also drive adoption of next
generation networks. The role of governments and the European Commission is
particularly visible in a number of Central Eastern European markets.
• In cherry picking areas to roll out FTTH, it is critical to go for areas that can
be covered at lower costs and/or generate higher margins.
• In building a service portfolio, FTTH network operators should do several
things…
• Beyond its merits such as encouraging service innovation, the open-access
model carries significant risks.
• Capex per home continues to be very high for FTTH, and SPs will have to
improve the other metrics to make the FTTH investment a financial success.
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17. Sylwia Boguszewska, Analyst
Pyramid Research
sboguszewska@pyr.com
Ludgate House
245 Blackfriars Road
London, SE1 9UY
UK
Tel: + 44 (0) 20 7560 4471
Fax: + 44 (0) 20 7560 4485
Headquarters
Pyramid Research
10 Canal Park
Cambridge, MA 02141
USA
Tel: + 1 617 871-1900
Fax: + 1 617 871-1933
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