FTTH/FTTB business models mainly pushed by alternative carriers

According to InfoCom’s latest report FTTX — EXPERIENCES AND STRATEGIES — Filling the pipe of the NGN, it results that in worldwide, fibre deployments are mainly pushed by alternative players. Altnets push own FTTH connections as with such a strategy they generate higher margins, saving ULL costs to pay to the incumbent. In some countries, fibre deployment from the side of the incumbent put further pressure on altents to push their own connection. In Germany, for instance, more and more city carriers have launched fibre projects in late 2007 to react on Deutsche Telekom’s FTTC/VDSL

deployment. Still, the majority of German alternatives, plan rather to invest in VDSL2.

The report presents various business models: “Open platform” business model, “Partnership” model, and “Proprietary” offers, where the chosen business model depends on the background of the infrastructure owner, local regulation and competition context. And different “levels” of players needed to provide telecom or media services to the end-user: Passive Infrastructure Owner (PIO), Active Infrastructure Owner (AIO) and Service & Content Providers.

The analysis of the different business models shows that incumbents’ main drivers to invest into fibre are actually a handful. First of all, pressure by competitors: in France and in the US, alternative carriers, fixed and CaTV, offer high-speed connections and TV/video content. Second, government programmes and subsidies, for instance in Japan and South Korea. A third driver is OPEX implications: cost cuts by reducing number of local exchange sites, related workforce and maintenance expenditures. As of economic drivers, many incumbents prefer investments into FTTC/VDSL2 instead of FTTH/B: incumbents, especially European ones, face relevant investments into NGN (next generation network) infrastructure and have a tight limit for further investments like FTTx. In new build areas for instance, FTTH/FTTB might be deployed, although the incumbent follows a FTTC strategy otherwise, as in the case of KPN, Telecom Italia and Telia.

The study provides also a detailed analysis of bandwidth needs for the different services to be delivered through the “pipe”, with factors influencing the service/bundle offer and services launched by advanced European and Asian players. A separate section illustrates in details online gaming applications. Market scenarios are provided by country through market dashboards in excel format. A closing technological section provides an assessment of FTTH/FTTB versus FTTC.

About InfoCom. InfoCom is a market research and consultancy company with more than 20 years experience providing strategic analyses and planning assistance to stakeholders in the telecommunications, IT and multimedia industries. InfoCom’s independent and fact-based analyses highlight trends and opportunities, supporting decision makers to understand market dynamics in order to improve their competitive advantage.