FTTx Case Studies - Leading Countries

Starting with an examination of national regulatory policies and the strategies of the leading FTTx players, this report looks at fibre-to-the-home rollouts as of March 2008 in the world's pioneer FTTx markets.

• For several years now, the American market has been dominated by cable companies which are able to market triple play bundles. As of June 2007, they enjoyed virtually nationwide presence, and were reporting a 52.5% share of the broadband market.

The RBOCs, meanwhile, continue to be hampered in some states by the obligation to obtain a franchise on a state-by-state, and even city-by-city basis to be able to market TV services.

To better compete with cablecos, the RBOCs are thus turning to optical fibre which allows them to deliver much more powerful services.

By the end of 2007, FTTx access accounted for 2.5% of the US market, or 2.4 million customers (2.1 million FTTH/B subscribers), of which Verizon controls 66% and AT&T 10%. These two telcos are the central players in this nascent market which is growing at a rate of 130,000 new customers a month.

Aside from the RBOCs, America's FTTH market is very fragmented, populated by a host of local operators. As of March 2008, 600 independent local exchange carriers (ILEC) were serving a total base of 833,000 FTTH customers.

The number of ILEC projects appears to be increasing steadily: forecasts indicate that 41% of ILECs that have not yet launched a fibre optic network plan to do so in the coming years.

These local players are particularly interested in more sparsely populated areas and are enjoying a certain degree of success with penetration levels reaching as high as 52%.

• One particular feature of the American housing landscape is the low population density and the small percentage of people living in multipledwelling units (MDU), which is a drawback for large-scale FTTH rollouts. Added to this, the length of the copper local makes for cautious predictions over the potential success of VDSL.
• America's FTTx market is not subject to strict regulation. As concerns access to fibre, there are no obligations or restrictions on sharing or renting infrastructure such as dark fibre. However, duct sharing between operators in the US takes place through commercial agreements over which the FCC has no power to intervene should disputes arise. Furthermore, the franchises required to market TV services are generally secured on a state-by-state basis, and more and more of them are being awarded.
• As a result, in the coming years, the expected growth in the ultra-broadband market and the more flexible process for obtaining TV franchises should allow telcos to make a sizeable dent in cablecos' dominance of the market. But such is not yet the case, as cablecos are actually managing to increase their lead: as the RBOCs are losing telephone subscribers, cable companies are gaining them, plus Verizon and AT&T's FTTx subscribers are not really new customers, as most of them have simply upgraded from ADSL.
• Forecasts indicate close to 22 million FTTH/B subscribers in the United States by 2013, and over 3 million VDSL customers.