Roland MONTAGNE
IDATE
Telecom Player & Market watch
FTTx Global Panorama
Focus on Services & Pricing Strategies
Symposium ACOME 2014 – Saint Petersburg- May 30th, 2014
Roland MONTAGNE
Principal Analyst
Mob : + 33 6 80 85 04 80
r.montagne@idate.org
Agenda
 Worldwide FTTH / FTTx Quick Overview
 Which Services to Monetize FTTH?
 FTTx Services and Pricing Strategies
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Worldwide FTTH / FTTx Quick overview
Worldwide overview
 Superfast
Broadband
technologies(1)
represent 22% of broadband access
subscriptions
Breakdown of superfast broadband technologies, at end 2013
> FTTH/B is the leading superfast broadband
solution, far from FTTLA then VDSL
- FTTH/B represents 66% of superfast subscriptions at
mid-2013, compared to 22% for FTTx + DOCSIS 3.0
and 12% for FTTN+VDSL
Source: IDATE
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(1) For definition of superfast platforms we have considered here 3 main architectures: FTTH/B, FTTN and FTTx+ DOCSIS 3.0
Copyright © IDATE 2014
Worldwide overview
> But the regional breakdown is very heterogeneous
 FTTH/B is clearly the technology of choice in APAC whereas FTTLA is leading the superfast
broadband market in Western Europe and North America.
 VDSL is a technology of choice for several European incumbents.
 Latin America and MENA countries are at the very beginning of their FTTH rollouts: they will
participate to the global growth of superfast broadband more and more in the coming years.
> There are still questions from large players regarding the opportunity to deploy
FTTH/B or VDSL, mainly in Europe
 Several parameters are to be taken into account among which, of course, the required
investment. Nevertheless FTTH/B rollouts did progress in certain European countries
(Sweden, Switzerland, Portugal & Spain) which is encouraging at a time when EU Telcos are
seeing their margins shrinking.
 Some players are more betting on the future capacities of copper-based networks.
 Best Driver for FTTH: COMPETITION !!
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Copyright © IDATE 2014
Geographical panorama of leading FTTH/B players: Top 10
Worldwide FTTH/B leaders, December 2013 (in million)
13
3.7
29,4
3.1
1.9
2.3
18
10.4
6.6
6.1
3
20.7
2.4
3
FTTH
FTTN + VDSL
FTTx /D3.0
 2 Chinese operators in the Top 3 FTTH
 No EU 28 Telco with more than 2 million FTTH/B
subscribers, by far! …but BT and Virgin Media with
respectively 2 M and 3 M subscribers
Source: IDATE
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Copyright © IDATE 2014
FTTH : Zoom Europe
General ranking: FTTH/B Homes Passed
15 countries with 1 M HP or more in EU39
11 countries in EU28
Countries > 1 M HP
Countries from 500 K to 1 M HP
Countries with 1M HP or more at end 2013
[Top 5 Growth rates 2013]
Countries < 500 K HP
28%
+106%
+26
+26%
%
+31%
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Source: IDATE for FTTH Council Europe
General ranking: FTTH/B Subscribers
5 countries with 1 M subs or more in EU39
Sweden and France in EU28
Countries > 500 K subs
Countries from 100 K to 500 K subs
Countries with 200 K subs or more at end 2013
[Top 5 Growth rates 2013]
Countries < 100 K subs
+86%
+64%
+46%
+41%
+43%
+41%
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Source: IDATE for FTTH Council Europe
Highest growths: New FTTH/B subscribers in 2013
20% of FTTH/B subscribers in EU39 are 2013 “new subscribers”
This rate reaches 22.5% in EU28
Top 4 countries for 2013 new subs in EU39
Russia
+ 1.423 K
Turkey
+ 510 K
France
+ 373 K
Spain
+ 227 K
% of EU28 2013 new FTTH/B subscribers
France + Spain + Portugal => 31%
Scandinavian countries + Netherlands => 31%
Eastern countries => 25%
Rest of EU27 => 12%
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Source: IDATE for FTTH Council Europe
Which Services to monetize FTTH ?
FTTH: What will be the drivers? Residential market Usages
- 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
Minimum bandwidth requirements
3DTV
HDTVMPEG4
VoD
Increase in simultaneous usages
Music, blogs, e-commerce,
e-learning
Download
Upload
SDTV MPEG4
VoIP
More and more ICT equipments and
Wireless Mobile BB terminals to be
connected in households
Up to 75% of Mobile BB “WiFi
offloaded”
Online games
Visioconference
5 Mbps
10 Mbps
60 Mbps
Source: IDATE
- TV Centric Services as a clear Driver: Connected TV, 3D TV, Residential TelePresence launched by
Cisco with Umi in October 2010 … but too expensive!…and Skype: 40% of calls are Video calls !!
- Ultra HD TV (4K) is here with required bandwidth between 20 and 30 Mbps
Swisscom FTTH Service Strategy: better quality for TV
Beyond bandwidth: interactivity and low latency
FTTH Services : Portugal Telecom - Advance TV Services over FTTH
53% of Homes already covered by FTTH
Very low Churn
Source: Portugal Telecom
FTTH Services: Portugal Telecom - Interactive TV Services over FTTH
Source: Portugal Telecom, Nov. 2012
Source: Portugal Telecom
FTTH Services: Hong Kong Broadband: reversal Asymmetry!
First to launch 100 Mbps and 1 Gbps
675 K FTTH subscribers and 2 million Homes Passed
Source: HKBN
For nearly 10% of FTTH/B subscribers base
Source: Weekly statistics from HKBN
Monetizing Latency : MyRepublic in Singapore!
1 Gbps offer for around 29 EUR / month
But a dedicated offer with short latency
for online Gamers: + 10 Singapore
Dollar (~ 6 EUR)
This is representing 25% of their
subscribers base
FTTH deployment in Singapore has
been done following a 3 layers Open
Access model…
…but MyRepublic is deploying is own
OLT and ONT GPON equipment now!
… to control QoS!!
Source: MyRepublic
South Korea: MDU certification Program: pushing FTTH after FTTB
Fiber is not only for consumers final access!
 Future for backhaul upgrade: to mutualise FTTH and LTE backhaul investments
 Backhaul upgrade is definitely a superb opportunity for operators to share fixed and mobile
investments : expanding fixed broadband access coverage while meeting backhaul needs
Backhaul: potential driver of FTTH
deployment
- LTE players – Verizon and TeliaSonera – are
using deployed fibre infrastructure to backhaul
LTE traffic
- Fibre expansion plans are being designed to
include mobile backhaul needs (China Mobile,
Chunghwa,… )
Significant operators are using fibre as backhaul
Operator
Number of fibrefed cell sites
% of total cell
sites
Strategy
China Mobile
260,000
95%
Reuse of TD-SCDMA backhaul for TD-LTE
T-Mobile USA
23,000
50%
Reduce costs significantly and expand footprint with
new base station (with remote radio head)
AT&T
13,200
33%
Resell capacity to other operators
Verizon
8,900
20%
Resell capacity to other operators
Deutsche
Telekom
8,000
50%
Maximise costs savings and optimise synergy
between fixed and mobile infrastructure
Source: IDATE
 Fiber to the Business as to be taken more in consideration by player
 Fiber to the Business will be key especially for SMEs to allow access to Cloud services - Short Latency
 Fiber to the Business is starting to be deployed in several markets: APAC, LATAM, Middle East and also
in the US involving large MSOs like Cox Communication in the US
FTTx Services and Pricing Strategies
Current offers landscape: Speed and Bundles
Geography of FTTx access speed ranges
˃ The highest speeds are offered in Asia Pacific
 The first commercial 1 Gbps offer to the general public
was launched in Hong Kong.
 In North America, access offers based on optical fibre
(including FTTLA type) generally range between 50 and
200 Mbps. Verizon has launched a 500 Mbps offer.
 In Europe, most of the ultra-fast broadband players
have chosen to offer more segmented broadband
offers. But in the great majority of cases, the maximum
speed proposed is 100 Mbps.
 Nevertheless, during 4Q2013, 6 EU telcos have
launched 1 Gbps offer (Lattelecom, Free, PT
Luxembourg, RCS&RDS, Swisscom…Jersey Telecom)
Geography of FTTx packaged offers
˃ Bundles are far from being the general rule
 In the end, whichever the region concerned, packaged
offers including Internet + telephony and/or television,
rarely appear in operators' and providers' catalogues
 France stands out as the country of triple play
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Copyright © IDATE 2014
Current offers landscape: TV
˃ Segmentation of services: focus around TV and video services
 If there is one very significant point in common between FTTx operators it is the availability, besides
Internet access, of telephony and television services.
 Fixed telephony is now considered a commodity and integrated almost systematically into operators'
basic offers.
 As regards television, the offer of operators is more heterogeneous from one country to another, even
from one operator to another in the same country.
 Segmentation of TV and video services is much higher in the United States than in Europe. The
explanation: operators in the United States, particularly Verizon and AT&T have had to face increased
competition from cable operators in the broadband market
 In the United States, the FTTx operators' TV offer is particularly segmented: 3 or 4 different TV
packages are marketed,
 In contrast, TV offers are much less segmented in Europe, where most operators usually offer a single
basic package of some tens of channels, without any particular theme
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Copyright © IDATE 2014
Marketing FTTx access: all inclusive bundles or self service?
˃ The marketing of packaged services based on FTTH is not widespread
worldwide. Three major trends are emerging in the field of commercial offers:
 Access services can be marketed as stand-alone
 Complementary services (television, fixed and/or mobile telephony) can be marketed
with Internet access, as part of dual, triple or quadruple play bundles
 Predefined bundles can be offered but adjusted by end users who select the services
they need (access speed, number of TV channels etc.)
Main marketed services on FTTx networks
Standalone
Double
play
Triple
Play
Quadruple Play
Internet only
Internet +
Telephony
Internet +
TV
TV +
telephony
O
O
O
O
O
Partnership
with Verizon
Wireless
X
X
O
X
Default
telephony
O
O
X
X
O
X
O
X
X
X
X
X
X
X
X
O
O
X
O
O
O
X
X
O
X
TeliaSonera
TEO
Verizon
X
O
O
O
X
O
X
X
O
X
X
O
O
O
O
X
X
Virgin Media
O
O
O
O
O
Comcast
Free
HKBN
NTT
Orange
Telefónica
Triple Play +
Mobile
No bundle
but tariff
discounts
O
˃ On the APAC markets, end users can create their own bundle by 'digging' amongst the services
available. They work out themselves, according to their needs, the offer that best suits them.
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Copyright © IDATE 2014
Marketing FTTx access: Verizon build your own bundle!
The Verizon 'Bundle Builder' tool
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Copyright © IDATE 2013
FTTx access: Prices
 Pricing strategies for FTTx offers vary greatly from one operator to another and
from one region to another
 It is in Europe and Asia-Pacific that the lowest prices are found (on average 55 to 59
EUR per month for access at 100 Mbps, but there are very strong disparities within
regions
 In contrast, the highest rates are unquestionably in the United States and MENA
Price positioning of ultra-fast broadband triple play offers according to the level of speed segmentation
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Copyright © IDATE 2014
What changes for FTTx services and prices?
 Apart from speed, the main development in the offers of FTTx operators is limited to the enrichment of
TV services
 On the telephony side, the offer is, with a few rare exceptions, virtually unchanged
 Simultaneity of uses seems to already be taken into consideration in operators' offers, especially the
simultaneous viewing of TV channels and videos. Operators propose multi-screen solutions enabling members
a household to view different content at the same time.
 The new functionalities of equipment (several channels on the same TV, recording one channel while
watching another, interactive zapping, programming and recording...) are also a key selling point for
operators; some clearly focused their FTTx strategy around innovative set-top boxes.
 Video games, also considered as motors for FTTH by combining joysticks with the set-top box, which is then
considered a game console. EU telcos can go a little further in this logic when they proposes a Cloud gaming
offer which ensures game continuity from one terminal to another.
 Bundling with 4G: operators offering ultra-fast broadband subscribers the possibility of subscribing to a mobile
offer, so that they can have a modem or even a 4G compatible router.
 But other possibilities for enrichment of the offer exist already without being fully exploited by operators.
- The lack of symmetric offers is widespread in all regions and very few operators have integrated it into their
catalogue
- Another business opportunity for operators: guaranteed bandwidth
- One can also regret not seeing the FTTH access offer monetised by the low latency that optical fibre allows.
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Copyright © IDATE 2014
MERCI !
Roland MONTAGNE
Principal Analyst
Mob: + 33 6 80 85 04 80
r.montagne@idate.org