ABI Research: FTTP too expensive for telcos?

While national broadband initiatives have some network operators looking at upgrading their access networks to fiber to the premises (FTTP), the cost of such roll outs, combined with advances in DSL technology, are leading some carriers to shy away from FTTP, says market research and analysis firm ABI Research.

This trend is particularly strong in Europe, where macroeconomic challenges make the cost/benefit tradeoff of FTTP more difficult. “Financial instability in the advanced economies of Western Europe and lack of innovative internet video services force telco’s to look into the cost to value proposition delivered by making large scale investments into FTTH,” according to Adarsh Krishnan, senior analyst of TV & Video at ABI Research.

DSL-enabled copper networks served more than 367 million subscribers worldwide in 2011, according to ABI. Global revenues from DSL broadband services have seen incremental growth to reach $106 billion, a CAGR growth of 14% in the last 5 years ending in 2011. Much like the FTTH space, Asia-Pacific serves as the major growth engine, with China playing a dominant role. China accounted for 33% of the worldwide subscribers in 2011.

Nevertheless, carriers around the world have begun to employ FTTH as a way to provide more bandwidth to subscribers, either to meet government-mandated national broadband targets or for competitive reasons. But in many cases, they haven’t been able to shoulder the cost of FTTH deployment alone, says ABI Research.

“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. These incentives have been strongest in Western Europe and Asia-Pacific,” according to Sam Rosen, practice director of TV & Video at ABI Research.

Worldwide, FTTH/B service revenues reached $29.6 billion in 2011, according to ABI Research.

Thefindings are part of ABI Research’s Broadband CPE service, which provides insight into telco’s network deployments as well as consumer adoption and service revenues for DSL and fiber broadband services.