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NewsGlobe: Currents
Broadband connections to surpass 536 million by 2011, says study
Fiber deployments will accelerate during period
by Sean Buckley
Buoyed by the need for faster download speeds and the desire for IPTV
and bandwidth-hungry applications such as You Tube, world broadband
access over both DSL and FTTP is on the rise.
A new study by Strategy Analytics confirms that by 2011, worldwide
broadband subscriptions will surpass the 536 million mark. At the same
time, broadband revenue led by Europe, Asia Pacific and North America,
will exceed $150 billion in 2011. (See Figure 1.)
Out of this forecast, DSL represents over half the market, while FTTX
and WiMAX will be the fastest growing new access technologies over the
course of the next five years.
Albeit a relatively nascent market opportunity, major U.S.-based service
providers, namely AT&T with U-Verse and Verizon with its FiOS rollout,
are making steady headway with their respective fiber-to-the-X build
outs.
“Ambitious fiber rollouts in the U.S. by Verizon and AT&T, and in Europe
by French operator Free, will bring overall FTTX subscriptions to 64
million by 2011,” says Ben Piper, Director of the Strategy Analytics
Broadband Network Strategies Service.
AT&T, Verizon take alternate paths
In the U.S. fiber-based broadband drive, the race that everyone is
watching is the one between AT&T and Verizon.
Of course, neither provider is approaching the FTTX opportunity in the
same way.
Verizon has advocated an all-out FTTP network rollout that uses RF
overlay technology to deliver its TV and Internet signals, while AT&T has
taken a more conservative approach that delivers an all IP-based
connection via FTTC/FTTN in existing markets and FTTP in Greenfield
deployments.
“Verizon is betting the big money on its FTTH rollout, to the tune of
roughly $23 billion,” said Piper. “The advantage here is that Verizon can
claim true Fiber to the Home. “AT&T, on the other hand, is hedging its
bet to a certain extent, by deploying a fiber/copper hybrid solution at
about 30% of the cost.”
Their efforts seem to be making headway.
In the face of continued traditional access line loss, Verizon had a
decent second quarter for FiOS. During Q2 2007, it added 167,000 new
FiOS subscribers, bringing its total FiOS users to 515,000. These
additional FiOS subscribers were complemented by an additional 125,000
for satellite TV via its relationship with DirecTV.
Unlike AT&T, that’s advocated for an all out IPTV approach, Verizon has
gone forward with an RF overlay. While this approach will enable Verizon
to get a jump on the cable competition, it won’t be without its
challenges.
“It’s a more conservative strategy, which allows them to get a video
product to market quickly. The thorny issue, of course, will be when the
time comes for transition to all-IP,” said Piper. “Changing out that many
set-top boxes is a non-trivial task.”
Meanwhile, AT&T reported it has 51,000 subscribers for its IP-based U-
Verse TV and Internet service as of the end of Q2 2007. By the end of
2008, AT&T has set an ambitious goal to reach 18 million homes with U-
Verse.
Qwest and EMBARQ: The Pragmatists
Outside of AT&T and Verizon, many wonder how Qwest and larger tier 2
independent operators such as EMBARQ will approach the FTTX and IPTV
opportunity?
For the most part these service providers have been a bit more cautious
about moving forward on either opportunity.
Earlier this year, Qwest, which does have some FTTP deployments in
Greenfield areas and an existing TV over copper deployment in select
markets, revealed it’s sticking to its FTTN guns.
“If IPTV plays out scalable, we’ll look at that,” said Richard Notebaert,
Chairman and Chief Executive Officer of Qwest earlier this year. “We’re
getting franchises as we go and in the meantime we have DirecTV
(satellite) and we’re having very good success with them, get a percent
of the monthly bill, pretty good margin and we’re very comfortable with
it.” (see: Notebaert: Qwest To Keep Pushing Bandwidth)
Piper says that while the jury is still out on what Qwest will do, no one
should knock their success-based strategy either.
“Qwest has been growing their high speed Internet business—broadband
subs were up 30% last year,” he said. “Plus, they still have around 2
million dial up subscribers, which represents another potential upsell
market. They’re betting on new services such as an FMC solution.”
Similarly, EMBARQ, which said it is testing an IPTV service in its lab, is
waiting for equipment costs to come down before making any
commitment.
“When you buy that big screen, flat panel television you’re better off
buying it two years later when it’s cheaper. It’s the same thing,” said
Dan Hesse, Chairman and CEO of EMBARQ, earlier this year in a news
wire report.
Even without a major FTTX plan, EMBARQ continues to fare well in the
broadband arena, signing on its one-millionth customer in Q2 2006.
Piper argues that while EMBARQ can be more innovative as an
independent company, its focus on good customer service is something
that can’t be overlooked.
“EMBARQ’s approach has been measured and pragmatic,” he
said. “Rather than rolling out major fiber deployments, they’re relying on
copper bonding to increase speeds. It’s about giving customers what
they want—and apparently it’s working.”
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