Yankee Group: FTTH services generate more revenue than DSL

FEBRUARY 12, 2009 -- Key findings of a study produced by Yankee Group and the FTTH Council Europe reveal that FTTH services generate 20% to 30% higher average revenue per user (ARPU) than legacy DSL services.

FEBRUARY 12, 2009 -- That fiber to the home (FTTH) is broadly implemented is not news, but what services are making profits and where the future trends are is the subject of Yankee Group (search for Yankee Group) and FTTH Council Europe (search for FTTH Council Europe) findings released in conjunction with the FTTH Council Europe Conference this week.

As part of the study, Yankee Group analyzed the portfolios of 20 global next-generation access service providers and interviewed key executives in these organizations. Following up on the December 2008 Yankee Group Report, "Fiber to the World: A State of the Union Report on FTTH", Yankee Group senior analyst Benoît Felten and program manager Vince Vittore chart the course for the global expansion and profitability of FTTH.

Key findings include the following:

• Providers with legacy DSL services have found that FTTH generates ARPU of 20% to 30% higher than DSL.
• A number of FTTH operations around the world have broken even already, after only a few years of operation.
• HDTV is increasingly a key acquisition driver but requires the whole content ecosystem to shift to HD to succeed.
• The next wave of revenues will come from further integration of wireline and wireless networks as well as wider economy services such as home security and tele-education.
• Two-way video communication will be the enabler service that truly allows the bloom of partnership-driven wider economy services.

"The market is always in search of the killer app, the holy grail of future revenues that will justify network investment," muses Felton. "Our study demonstrates that the value to the customer and therefore the revenues to the service provider are in the bundling of many and diverse services. Some applications (HDTV, bandwidth offerings over 50-Mbps symmetric) are 'killer' in that they drive the customer to subscribe," he says, "but once he's become a customer, it's the whole panel of services that make a profitable, satisfied, and loyal customer."

"Here is an answer to the persistent question of 'Will anyone pay for
fiber'?" adds Joeri Van Bogaert, president of the FTTH Council Europe. "Consumers have, [they] are doing so and will likely pay more in the future because of the compelling basket of services that is only possible with FTTH. The results of this definitive joint study prove that FTTH is a critical enabler of innovative applications that can deliver real-world benefits on both a social and economic level."

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