The recent Cisco’s product announcement of the router CSR-3 is based on the vision of a future explosion of a broadband requirements in the consumer and in the B2B market (Cloud Computing). The Fiber to home (FTTH) access technology is necessary to cope with this kind of broadband requirements. Is there an opportunity for the channel?
The FTTH in the world.
The Asian Continent is much more advance in the implementation of the FFTH access technology that the USA and Europe. As Fig 1 suggests, the drivers are more for home entertainment (such as Internet video content and games), IPTV and home networking
Fig 1 - Global FTTH Ranking
What are the forecast of growth in the FTTH access technology in Europe? A recent study forecast that Dutch FTTH penetration will reach 19% of households by 2014. This looks like a general average value for West Europe and North America.
For Europe and North America the vision of Cisco looks quite far in the time; the requirement of the Consumer market are probably better described by the vision of LibertyGlobal ( fig 2).
Fig 2 - vdsl technology for consumer market
FTTH Operator Models
An ISP operator, in North America and Europe, that is targeting the end user market must be able to manage, for several years, a business model on the DSL infrastructure and, in the same time, preparing himself for the FTTH infrastructure.
A FTTH Network can be considered of three layers:
- The passive infrastructure (fibre, duct, enclosures) - P in Fig 3;
- The Active Network (Networking equipments) - A in Fig 3;
- The Retail Services (the ISP that sell the connectivity to the end users) - S in Fig 3.
The FTTH operator models depends how locally the three layers of the FTTH will be managed (and regulated) in each specific Country (Fig 3). In practice we can have:
Fig 3 - FTTH operators models
- Vertically integrated Model
One operator controls all three layers of the network, and consequently, if a second operator wishes to also offer broadband and telephony services in the same area, he will have to build his own infrastructure, operate it and market it directly to the end-users.
- Passive sharing Model
The active and services layers are owned by a different organization. A second service provider may share the same passive infrastructure with the first service provider, but will still have to invest in active network equipment and operations as well as the services and go-to-market activities.
- Active sharing Model
In the active sharing model a single organisation owns the passive infrastructure and operates the active network. This vertical infrastructure owner wholesales broadband access to the various retail service providers who will then compete against each other for customers.
- Full separation Model.
Each layer is owned by a different player, with the infrastructure owner generating income by providing passive infrastructure access to the network operator, who in turn wholesales broadband access to retail service providers.
Local Communities can strong influence the concrete model of the Country. For example, in the Nederland, Reggefiber worked successfully close with Communities to have a guaranteed subscription rate before starting digging. In this way, a full separation model has been successful implemented in a big part of Nederland.
Now Reggerfiber decided to cash his investment proving that FTTH infrastructure can be a good investment even in a short time period. Of course, for the channel, it is important to see if the entrance of the local Incumbent will change the Nederland Operator Model.
Do you see opportunities for the channel in the FTTH operator mode of your Country?
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To know more:
IPTV: what are the opportunities for the channel?
Clouds on the channel: transition to thunderstorm or to blue sky?
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