The FTTH market is expected to grow significantly in 2006, with a ramp-up beginning in 2005. Fiber-to-the-home (FTTH) systems in the United States will reach 2.65 million homes by 2006, with fiber-to-the-curb (FTTC) systems reaching another 1.9 million, according to KMI Corporation's latest report, Residential Broadband Access in the United States: Fiber-to-the-Curb and Fiber-to-the-Home. As of year-end 2001, FTTH and FTTC are expected to reach 89,000 and 915,000 homes, respectively. During this same time frame, annual deployment of FTTH is expected to increase from 66,000 in 2001 to 1.15 million homes in 2006 -- a 63 percent compound annual growth rate (CAGR), with FTTC expecting a more modest 15 percent CAGR from 130,000 homes in 2001 to 260,000 homes in 2006.
To date, FTTH has primarily been deployed by three types of carriers:
(1) rural incumbent local exchange carriers (ILECs)
(2) competing carriers, often working with real estate developers, and
(3) small town governments.
FTTC has been deployed largely by one regional Bell operating company (RBOC) with smaller deployments by rural ILECs and by competing carriers. In the next four to five years, market demands and cost factors are expected to drive most or all of the RBOCs to begin FTTH deployment in new housing developments, then in network rebuilds. This will drive the market from 66,000 new homes served in 2001 to 1.15 million new homes served in 2006. As a result, the FTTH equipment market will grow from $100 million in 2001 to more than $900 million in 2006.
At the same time, FTTC is expected to achieve modest growth, from 130,000 new homes served in 2001 to 260,000 new homes served in 2006. This will be a result of some continued deployment by the one RBOC and slowly growing deployment by other carriers. This growth will see the FTTC equipment market rise from $110 million in 2001 to almost $200 million in 2006. The slow expected growth in FTTC can be attributed to cannibalization by the FTTH market as the cost difference between FTTC and FTTH narrows.
Factors that could accelerate FTTH market growth would be faster-than-expected cost reductions or applications that drive the demand for bandwidth to bit rates greater than non-fiber-based technologies can provide. Conversely, FTTH market growth could be delayed by slower cost reductions or non-fiber-based technology improvements that keep pace with bandwidth demand.
The FTTC market could be affected similarly by the same market forces that affect FTTH. In addition, if the gap between FTTH and FTTC costs closes more quickly, FTTH would cannibalize some FTTC deployment, while a more slowly closing gap could cause some carriers to deploy FTTC instead of FTTH.
About KMI Corp.:
KMI Corporation provides reports on worldwide fiber optics markets, news services, fiber optics route maps, and conferences on global, regional and undersea fiber optics markets. For more information, visit www.kmicorp.com.