Collaboration to ensure the next generation of networks_sept2011
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Global fiber broadband adoption is led by Asia Pacific which accounts for almost half of all broadband lines. While DSL remains the dominant technology globally, FTTH accounts for 11% of lines and is growing rapidly. Regulators, operators, and service providers should focus on increased FTTH deployment in emerging markets and on offering value-added multiplay services to increase revenue through higher ARPU.
Collaboration to ensure the next generation of networks_sept2011
- 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? 2
- 3. What are the global and regional fiber broadband adoption and revenue trends? 3
- 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 4
- 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 5
- 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 6
- 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 7
- 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 8
- 9. What are the FTTx network deployment trends? & What are evolving FTTx network operator business models? 9
- 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 10
- 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. 11
- 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. 12
- 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 13 13
- 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 14
- 15. What next steps that regulators, operators and other service providers should take? 15
- 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. 16
- 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 17