The global FTTH/B panorama shifts

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by Roland Montagne

Overview
Before research firms release year-end '08 figures, it's useful to establish a baseline for comparison. Worldwide FTTx subscriber numbers jumped 23% during the first half of 2008, with Europe and North America showing strong growth. Asia continues to lead the way, however.


IDATE's mid-year 2008 FTTx subscriber database, part of our annual FTTx Watch Service, revealed that the number of FTTx subscribers worldwide reached 28.2 million as of June 30. This figure represented a greater than 23% increase since December 2007 in the market, which includes those served by FTTH/B, VDSL, and the “fiber to the last amplifier” (FTTLA) networks used primarily by cable service providers. Asia was home to the largest number of new subscribers, but FTTH/B customer growth rates were highest in Europe (32% growth) and in the United States (38%). The Asian market accounted for 80% of the globe's FTTx subscribers, with Japan still leading the way.

FTTH and FTTB remained the most prevalent network architectures, accounting for more than 90% of the world's optical fiber subscribers. VDSL did appear to be making strides, and accounted for 4.5% of the FTTx market as of June 30 of last year. This is due in part to the state of the European market, and particularly to Swisscom in the Swiss market and Belgacom in the Belgian market. Meanwhile, in the United States, AT&T's VDSL base continued to grow as well.

It was no surprise that Asia continued to dominate the optical access market, particularly in the area of FTTH/B.

As of mid-year 2008, there were just over 22.5 million FTTx subscribers in Asia; of these, FTTH/B served 21.2 million. The FTTx market as a whole grew by 17.3% in terms of volume, which represented an increase of 3.3 million subscribers in six months. Asia accounted for 82.8% of the world's FTTH/B market.

With 13.1 and 6 million respectively, Japan and South Korea were home to the largest number of ultra-high-speed Internet users in the world. There was a sharp rise in FTTH/B subscribers in South Korea (800,000 new customers) and in Japan (close to 1.8 million) in the first half of 2008 while, over in Taiwan, there was a 44% increase in subscribers between December 2007 and June 2008.Th 309655

Japan continues to dominate FTTH/B subscriber numbers, with more end users than North America and Europe combined.

FTTH/B's weight in the equation is increasing steadily. In Japan, FTTH/B accounted for 44% of the market in June 2008, compared to 40% at the end of 2007. Of particular note is the fact that FTTH/B subscribers have outnumbered ADSL customers since June 2008�13.1 million versus 12.3 million, with the ADSL customer base shrinking steadily each month as FTTH/B numbers rise.

The number of FTTLA subscribers in Asia has been relatively stable, growing very slowly by around 100,000 customers every six months. FTTN+VDSL subscribers are virtually nonexistent in Asia as fiber is pulled to the basement of apartment buildings, so VDSL technologies are considered to be part of FTTB networks.

There were still very few FTTH projects in China in the middle of last year. Most of the country's FTTx/LAN networks (16 million as of June 2008) do not support great enough speeds to be considered ultra-fast access.

Despite high growth rates and other impressive figures, Asia is slowly losing ground to Europe and North America. The Asian market's share of the global FTTx market dropped from 84.4% at the end of 2007 to 79.9% six months later. The same is true for FTTH/B, with Asia losing two points during that period (its share going from 84.8% to 82.8%), which means that the European and North American market shares are growing.Th 309657

On the operator front, NTT still had the world's largest subscriber base, with more than 9.5 million FTTH/B customers, or 72% of the Japanese FTTH/B market.

Europe's FTTx market is starting to grow at a significant pace, especially in the number of VDSL subscribers. VDSL is faster and cheaper to deploy than FTTH/B, and growth has been particularly substantial in Belgium, Switzerland, and Germany. This growth can be attributed to the fact that operators have been communicating more openly in recent months, whereas previously no figures had been available at all.

As of June 30, 2008, Europe accounted for 7.4% of the globe's FTTx market, or 2.5 points more than in December 2007. It remained well behind the Asian and North American markets, but does appear to be making real strides.

The number of FTTH/B (excluding VDSL) subscribers rose 32.5% over the previous six months in Europe, bringing the total number to around 1.4 million at the end of June, compared to just over 1 million at the end of 2007 (source: IDATE for the FTTH Council Europe). Meanwhile, the FTTx market as a whole (including VDSL) grew from 1.1 million subscribers at the end of 2007 to 2.1 million in June 2008.

Worth noting were the ongoing disparities from country to country. Six countries accounted for 83% of the Old Continent's FTTH/B subscriber base: Sweden, Italy, Norway, France, Denmark, and the Netherlands. Smaller countries such as Slovenia and Latvia are thriving, however. In Slovenia, for instance, FTTH/B customers accounted for 8% of the country's broadband subscribers in June, compared to 3% at the end of the previous year. The two countries with the largest FTTH/B subscriber bases were still Sweden and Italy with 367,540 and 291,500 respectively.

France was among Europe's largest FTTH/B markets since Numericable's network has been designated FTTB and not FTTLA. As of June 30, there were 137,800 FTTH/B subscribers in France, of which 90,000 were being served by Numericable. Alone, in June 2008, Numericable accounted for 2.7 million FTTB homes passed.

As it stands, FTTx represented only a fraction of the broadband access technologies across Europe, ranging from 0% in England and 0.7% in Germany to 13% in Sweden.

Among the largest optical fiber operators in Europe are FastWeb/Swisscom (Italy) with 275,000 subscribers, Lyse (Norway) with 107,000 subscribers, and B2/Telenor (Sweden) with 183,500 subscribers�all three of which have deployed FTTH/B architectures. As for VDSL, KPN in the Netherlands was one of Europe's largest operators, serving a base of 150,000 subscribers.

As of June 2008 there were still no major FTTx rollout projects in the works in Canada. Some cablecos are developing FTTLA networks but none of the major service providers had announced plans for FTTx, a situation that remained the same as it was at the end of 2007.

Meanwhile, the US market continued to progress, with an FTTx subscriber growth rate of 47% between the end of 2007 and June 2008, for an additional 1.15 million subscribers. In the FTTH/B market alone 851,000 new subscribers signed up in the span of six months, marking a 38% increase over the end of 2007. This made the United States the globe's fastest growing FTTH/B market�its share increasing from 4.8% to 5.2%.

The leading FTTx providers in the United States were still Verizon and AT&T. Verizon continued to pursue its FTTH-based strategy and reported a base of 2 million subscribers in June 2008 (of which 1.4 million subscribed to FiOS TV), an increase of 500,000 new subscribers in six months. Verizon's share of the US FTTx market decreased, however, going from 66% to 56%.

There were two reasons for this decrease. First was the momentum AT&T enjoyed as it increased its market share by 5% (going from 10% to 15% in six months) based on its strategy of FTTN+VDSL rollouts. The carrier attracted 318,000 new subscribers between December 2007 and June 2008 for an impressive 137% increase. This tremendous rise in the carrier's VDSL subscribers also drove up the technology's share of North America's FTTx market, from 10.2% at the end of 2007 to 15.3% in June 2008.

Another reason for the drop in Verizon's market share was that municipalities accounted for a sizeable portion of the United States' FTTx market. Estimates indicate that, in June 2008, around 30% of the country's FTTx customers subscribed to a service other than one marketed by the RBOCs, compared to around 25% at the end of 2007.

Roland Montagne is head of the Broadband Practice at IDATE (www.idate.org). He is leading IDATE's annual FTTx Watch Service.

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