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Broadband Access
FTTH 2007 Europe: Iliad Claims Point-To-Point Advantage
Point-To-Multipoint PONs Not A Long-Term Solution, Says Chairman Of CiteFibre
by Ken Wieland
The Iliad Group, which runs the highly successful ‘Free’ ADSL-based broadband service in France, claims that point-to-multipoint passive optical networks (PONs) are short-term solutions for delivering fibre-to-the-home (FTTH). A point-to-point Ethernet solution (EP2P) is, they say, the best way forward.
“Fibre is going to be around for the next 30 to 50 years and so we need to get the FTTH architecture right from day one,” says Dominique Lancrenon, chairman of the management board at CiteFibre, a Paris-based FTTH operator that is now part of the Iliad Group. “We don’t want to go back to our investors and shareholders in a few years and say that we now need to review the choices we made.”
Lancrenon’s comments come on the eve of the Europe at the Speed of Light conference in Barcelona, an annual event hosted by the FTTH Council Europe. His views are bound to raise the hackles of GPON supporters – potentially the most popular of the point-to-multipoint PON variants – but certain to please the likes of Cisco, which is a supplier of EP2P equipment for Iliad’s FTTH rollout plans in France.
In broad terms, the main difference between an EP2P and GPON architecture is that the former runs dedicated fibre connections between the central office and the end-user while customers on a GPON share bandwidth on one fibre connection.
EP2P proponents claim they have greater flexibility (and security) to scale up bandwidth than GPON. GPON supporters, on the other hand, argue that EP2P architectures have far higher capex and opex requirements due to the need for dedicated optical ports in the central office and more outside plant. Alcatel-Lucent, for example, argues that an EP2P architecture – on a like-for-like basis with a GPON for serving 16,000 subscribers from one central office – requires 30 percent greater capex than a point-to-multipoint architecture.
“We don’t see that 30 percent level at all,” disputes Lancrenon. “The extra cost for the outside plant, where most of the costs are generated for FTTH rollout, are marginal [compared to GPON].”
Prior to its acquisition by the Iliad Group in October 2006, CiteFibre was a small-scale FTTH operator in Paris – deploying an EP2P architecture – with connections to 130 buildings (representing 4,000 households) and 130 customers.
Now, however, CiteFibre forms an important part of Iliad’s plans to ‘pass’ four million homes with fibre throughout Paris and other French cities by 2012. Targeting those areas where Iliad has at least a 15 percent market share, an initial €1 bn budget has been earmarked for the FTTH rollout plan. Iliad calculates that it will cost €1,500 per FTTH connection for existing Free customers, which includes the optical ‘Freebox’ set-top box. For customers where extra fibre has to be laid from the building to the apartment of a new customer, Iliad estimates that an incremental €350 per subscriber will be required.
In the first half of this year, Iliad intends to launch a monthly FTTH service for €29.99 per month (a comparable price to the ADSL service). The package includes unlimited high-speed internet access (50Mbps), free domestic phone calls and free calls to selected international landlines, as well as HDTV.
Although Lancrenon expects that Iliad will be able to launch new services over time and be able to charge for them, he says that the success of the business case does not rely on that happening. “We will start to see a return on our FTTH investment within six years based on a monthly ARPU of €33.50,” he says. “We will also get significantly higher margins with our FTTH customers than we do with our ADSL customers as we won’t have to pay the [ADSL] unbundling charges to Orange [France Telecom].”
Lancrenon doesn’t say how much higher those margins will be, but he sees unbundling as key to stimulating overall growth in the FTTH market. And point-to-multipoint PON architectures, in Lancrenon’s view, will do the FTTH market a disservice. “With point-to-multipoint PONs, it’s very difficult to do full unbundling,” he says. “Costs and quality of service are also harder to control, and innovation much harder to achieve. Point-to-multipoint PONs will stifle competition.”
An important part of the Iliad strategy is that it will wholesale a fully unbundled fibre connection to competitors so that they can develop their own services. “Of the four million homes we pass, we know that we won’t be able to acquire all the customers ourselves so making our network available to competitors makes good sense and will help us get the most out of our FTTH investment,” he says. “Free has got a good brand name and recognised for innovation, so we’re not worried that competition will adversely affect us.”
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