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Summary
The evolution of the fiber-to-the-premises (FTTP) broadband market was discussed at the FTTH Conference 2024 event in Berlin. This article analyzes trends related to the full FTTP lifecycle from passing premises to connecting premises and then to operating and maintaining networks as well as the latest trends in Passive Optical Network (PON) technology.
Passing premises
In many countries in Europe and for many operators there is still a long way to go before FTTP covers a significant majority of premises. Any discussion of passing premises has to consider the huge variations in costs per premises passed both within and between countries. In countries such as Spain and many countries in Eastern Europe, costs per premises passed can be below €100. In comparison, in Germany costs in more suburban areas can be €2,000 and above, and the absence of existing duct infrastructure for rollout is a very important factor.
These differences make generalizations on take-up rates required for a viable business case facile. Local market knowledge is key to understanding the business case. Such differences in cost per premises passed also have important implications for choice of business model. If altnet business plans in Germany require a 70–80% subscription take-up rate with a vertically integrated model, then all stakeholders need to realize that a purely commercially driven wholesale-only business model is simply not viable or applicable in all areas.
During the event there was discussion about the use of mobile mapping tools to improve the business case for FTTP rollout. The use of LiDAR technology with mobile mapping systems mounted on cars to survey potential deployment areas can deliver important benefits. The digital twin of the network could be important for assessing rollout feasibility. For instance, in some cases mobile mapping can quantify the number of premises in potential rollout areas since not all public authorities may have such information available. Such data then becomes very important in the assessment of whether to deploy in a particular area. The use of artificial intelligence (AI) can enhance the value of mobile mapping. For example, AI could determine the surface material (e.g., asphalt) in a particular potential deployment area, which could then serve as an important input in the determination of estimated rollout costs.
More broadly, arguably many vendors of active equipment such as optical line terminals (OLTs) can do more to help operators with the overall FTTP business case. This is particularly the case when it is conceivable that for some European rollouts, OLT costs could even be below 1% of total costs per premises passed. Vendors of active equipment could also sell passive equipment (e.g., components such as microducts for air-blown fiber deployments) for fiber rollouts. Active equipment vendors can promote their service offerings such as for the management of network builds. The expertise that vendors have accrued from past projects should be heavily promoted because examples from many deployments show that experience counts. With greater experience over time, costs per premises passed can be reduced even as deployments move to less dense geotypes.
Connecting premises
Individual assessments will also be required to assess potential take-up rates in different countries and geotypes. Several factors determine overall FTTP subscription take-up rates across countries, including existing broadband penetration, digital literacy, retail FTTP pricing, the quality of non-FTTP broadband connections, and copper switch-off timelines. These factors vary widely even across the big five Western European markets.
The quality of existing broadband connections is an important factor, and the presence of existing VDSL is a relevant aspect. Even here, though, not all VDSL is the same, and there is a big difference between countries such as the UK with nonvectored 17MHz VDSL and Italy and Germany with short copper sub-loops and VDSL 35b rollouts.
Operating and maintaining FTTP networks
Some operators noted that FTTP maintenance costs had been higher than expected. The evidence that FTTP has lower repair and maintenance opex than alternative technologies is clear, but unexpected issues such as rats biting cables can still be an issue. Opex costs are not sufficiently low that there are no opportunities for vendors to propose cost-effective solutions to reduce them.
A very important consideration for operators going forward will be to take opex costs associated with second fiber installations or technology upgrade installations (e.g., GPON to XGS-PON) out of the business. Operators must think about this now because the potential savings are very large.
Established operators must not cut corners when delivering good customer service to FTTP subscribers. The temptation might be to cut call center costs because these are a sizable line item, but this does not match well with the idea of FTTP offering a high-quality service. There are also lessons here for altnets in that a pure technology focus may not be the way to maximize subscription take-up. For smaller players, investing in customer service can help develop a positive reputation and a point of differentiation versus established players.
Technology trends
Many vendors now report that in Europe fewer than 10% of new OLT port shipments are for GPON only. However, there are still XGS-PON-related opportunities. Many operators deployed GPON before combo PON came to the market and will upgrade those rollouts in the coming years. XGS-PON-only rollouts are also by no means the only choice for new deployments in Europe, so there are still some questions around the overall XGS-PON business case.
In other words, there is still room for vendors to benefit from additional per port revenue from unlocking XGS-PON functionality on combo PON line cards. Vendors can also aim to lower the barriers to deploying XGS-PON optical network terminals (ONTs) by better enabling self-installation or with SFP slots on ONTs.
Appendix
Further reading
Fiber and Copper Access Equipment Forecast: 2024–29 (March 2024)
FTTP Subscription Conversion in Europe: Assessing Current and Future Trends (July 2023)
Analyzing FTTP Opex and the Value of Centralized OTDRs (October 2023)
Author
Stephen Wilson, Senior Principal Analyst, Broadband Access Intelligence Service
