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Thursday, 10 January 2013 10:58

FTTH v FTTN: US market watchers disagree

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A report on the development of FTTH networks in the US from research firm RVA suggests that the Labor Government is on the right track with its ambitious plan to serve 93 percent of premises by fibre. However Ovum has backed AT&T's decision to focus on FTTN.

The report "North American Fiber to the Home and Advanced Broadband Review and Forecast to 2017", from US research firm RVA, says that fibre to the home networks, which are capable of providing broadband speeds of one gigabit and beyond, are now available to more than one-fifth of North American households.

The RVA report predicts that the number of subscriber receiving speeds of 100Mbps up to 1Gbps will now grow rapidly and, in turn, become an increasingly important market niche for application, software and programming developers.

It forecasts that annual direct investment in FTTH networks will reach $US4.7b by 2017, that total investment in FTTH over the next five years will be $US18b and that annual revenues derived by FTTH providers from ultra high bandwidth applications and services beyond the 'triple play' of voice, video and Internet will reach $US4b by 2017, or $US9b cumulatively over the next five years.

According to RVA, "The build-out has been led by Verizon's aggressive deployment of its all-fibre FiOS service in the US, while nearly 1,000 smaller operators, mostly local telephone companies and municipalities, are now providing services to their customers over all-fibre networks."

Verizon announced its plan for FiOS in 2004 and launched services in 2005. FiOS now passes some 18 million homes, half of all US households passed by FTTH and Verizon has been reported to ceasing further expansion.

The report has been welcomed by the FTTH Council. Its president Heather Burnett Gold, said: "This report backs up what we've been seeing and hearing from the market in recent months - that Americans and Canadians want their broadband providers to take it to the next level and deliver the gigabit speeds that will soon be necessary for economic advancement, overall competitiveness and rising living standards."

Others however are less bullish about demand for speeds of 100Mbps and above.

At about the same time that Verizon launched FiOS its major rival AT&T initiated its U-verse FTTN rollout. After passing 30 million homes by the end of 2011 AT&T called a halt but in November 2012 restarted the project. It announced Project VIP, a $US14b three year wireline and wireless network expansion plan that includes $6b to expand U-verse to pass 33 million customer locations.

Research firm Ovum commented that with maximum speeds in the 45-100Mbps range AT&T was "hardly entering the gigabit era."

Ovum added: "Customer demand for 50–100Mbps speed tiers has lagged worldwide, especially at a premium price, and instances of FTTH payback are hard to come by. In light of U-verse's growing revenue impact, network synergy savings, and DSL technology advancements such as vectoring, AT&T's less-ambitious but incremental FTTN/DSL approach to network upgrades seems reasonable and pragmatic."

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