ABI Research: FTTH costs giving telcos pause

Even though Fiber-to-the-Home (FTTH) networks bring blazing speed and a fat pipe on which to offer new, competitive services like IPTV, telcos worldwide are increasingly finding themselves in a financial quandary when deciding to quit copper and move to fiber, according to ABI Research's Broadband CPE report.

"Strong government initiatives to develop fiber infrastructure have in most cases been a necessary prerequisite to fund FTTH or fiber to the building (FTTB) deployments," said Sam Rosen, practice director of TV and Video at ABI, adding that those types of incentives "have been strongest in Western Europe and Asia Pacific."

Western Europe's financial instability and a "lack of innovative Internet video services force telcos to look into the cost-to-value proposition delivered by making large scale investments into FTTH," added Adarsh Krishman, ABI's senior analyst of TV and video.

In Asia Pacific, copper continued to be a precious metal for DSL deployments. China, ABI said, accounted for 33 percent of the worldwide DSL subscribers in 2011.

Even with copper's money-printing capabilities, FTTH has a ton of obvious benefits that tempt telcos to move in that direction--when moving. Fiber's rich pipe facilitates IPTV and OTT and lots of HD to bolster telco triple play and quad play offers competing against cable and satellite. On the other hand, fiber is not necessarily a must-have to deliver a triple play in tough economic times, the researchers said, pointing to AT&T U-verse IPTV service over ADSL2 and adequate, but obviously not blazing, 15 Mbps data speeds.

Still, in this economy, money is a factor and while worldwide FTTH service revenues were estimated to grow to $29.6 billion in 2011, DSL broadband service hit $106 billion with a compound annual growth rate of 14 percent in the five years up until 2011, ABI said.

The final factor, the research company said, is the cost to upgrade, noting that advanced forms of DSL require a fraction of the investment of FTTH.

For more:
 - see the CPE report release

Related articles:
China Telecom builds out broadband backbone with Alcatel-Lucent's routers
India's Bharat Telecom crafts ambitious FTTH initiative
Worldwide IPTV subscriber numbers grow 3.8 million in first-quarter 2012

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