© Copyright Ovum 2007 www.ovum.com
An International perspective on the status of Fibre investment in the access layer
Stefano Nicoletti
+44 207 551 9178
14/12/2007
© Copyright Ovum 20072
Agenda
Some figures
FTTx plans
IPTV case studies
Level 3Some data on fibre
© Copyright Ovum 2007 www.ovum.com
© Copyright Ovum 20074
FTTP -10 leading countries –subscribers #
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Su
bscri
bers
(000s)
2005
2006
FTTP = FTTH or apartment + Ethernet LAN; VDSL excluded
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FTTP – forecasts to 2011
0%
10%
20%
30%
40%
50%
60%
2005 2006 2007 2008 2009 2010 2011
Korea
Japan
Hong Kong
Sweden
US
Denmark
Russia
Taiwan
Italy
Norway
Figures in % of Households; Asia expected to widen the gap
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Non-DSL connection vs FTTP as% of total broadband
0%
10%
20%
30%
40%
50%
60%
70%
Non-DSL FTTP
Infrastructure competition seems to favour FTTP take-up
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Availability of high-speed services is an issue
Western Europe North America
Asia Pac Eastern Europe
Total Households
Households with copper access
Households that can get DSL
Households that can get DSL @ 2Mbps
Households that can get DSL @ 10Mbps
Key
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Monthly fee relative to monthly disposable income
0%
5%
10%
15%
20%
25%
% o
f d
isp
osab
le i
nco
me
Lowest fee Highest fee
All countries except Russia and Norway have entry product below 3%; In line with prices of other technologies
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IPTV ‘v’ consumer fixed voice
0
200
400
600
800
1000
1200
2005 2006 2007 2008 2009 2010
Re
ven
ue
(U
S$
)
IPTV revenues
fixed voice revenues
Hong Kong – most successful IPTV country in the world
0
2,000
4,000
6,000
8,000
10,000
12,000
2005 2006 2007 2008 2009 2010
Rev
enu
e (U
S$)
IPTV revenues
fixed voice revenues
France – most successful IPTV country in Europe
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FTTx plans
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FTTH plansCountry Operator/ aut
horityFTTH plans Current subscribers
(Q307)
Korea MIC 10M subscribers in Korea by 2010. 4.6M
KT
92% homes-passed by 2010 (~16.9M households). Cumulative CAPEX: FY07- US$435M;
FY08 – US$783M; FY10 – US$1.3B. 2.2M
Hanaro~US$120M in 2007, targeting 12.6M homes
passed by FY07. 1.3M
Powercomm 820k
J apan NTT20M subscriber target for FY2010. US$47B
budgeted for 2006-2010. 7.4M
Hong Kong HKBN2M homes passed (95% household coverage) by 2010. Total CAPEX budget for FY08 – US$22.5M. 220,000 (Q207)
US Verizon
18M homes passed by 2010. US$23B for 2006-2010, however this does not take account of a US$4. 9 B that would otherwise be required to
maintain traditional copper plant during the same period. 1.3M
Denmark DCAEst. US$1.3B by municipals, for a targeted 1M
subscribers.
Source: Ovum research
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Korea and Japan
U-Japan (ubiquitous Japan)
2006-10 program by MIC, revised every year
Eliminate “zero broadband coverage” towns and villages by 2008
High speed broadband to cover 90% of population by 2010
Support investment through funding, tax relief, loans
Support competition through open access to poles, ducts and physical infrastructure
KII- Korean information Infrastructure
Plan started in 1995
As of 2000 –Govt and operators invested W11trillion
Broadband development in rural areas a main objective, KT forced to roll-out coverage in remote villages
Incentives to invest through cheaper finance or extended loans
Govt objectives to remove digital divide AS WELL AS improve broadband speed
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Australia, Singapore, UK…public money on the way!
New Australian Labour govt.– broadband to the bush -
AUS $4.7billion ($4.1bn) to invest in FTTN infrastructure and cover 98%
Public private partnerships
Tender process to allocate the money: Telstra, G9 consortium, Deutsche Telekom; 6 months only!
Doubling Telstra money announced in its investment plan in 2005
UK – Stephen Timms – new minister for competitiveness
“Ultra-fast broadband …will allow our businesses to innovate, grow and create wealth. We need to be discussing today how we can put this new network into place, because delay could be a barrier to the future success of our economy.”
Estimated cost for FTTH in UK = £ 15 bn; FTTN £7bn (respectively 30 and 14bn$)
Singapore Government and two new RFPs
Netco to build and operate a Layer 1 passive infrastructure
Operating co.(Opco) to deploy electronics, switches and routers, and offer wholesale broadband access to downstream Service provider
Public funding for S$750mln ($520 mln)
Public money for FTTN and infrastructure upgrades is coming
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The French fibre race
Aggressive plans from incumbents as well as competitors
Unique situation in Europe
Re-use of public infrastructure essential (e.g. Paris, Marseille)
Early start of LLU empowered competitors and provides financial strength for stepping the last step of investment ladder
Source: Ovum research
LLU
FT retail
Wholesale DSL
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KPN and its NGA plan
KPN announces an all-IP investment plan in November 2005
From 21 local exchanges;1350MDF;28.000 street cabinets… …to14 central locations,150 Metro core exchanges, 24.000 street cabinets …and replacing copper with fibre in between the MDF and the street cabinets Plan To be carried out within 2011
This means
LLU will disappear (2011 but optimistic) and Sub loop unbundling will be introduced OPTA taking into account SDF investment but also
Revenues for selling MDF locations Savings from announced dismissal of 8,000 work force (about ¼ of KPN!!)
Future
prices for SDF expected to be in line with current MDF- Full LLU/Shared access OPTA assumes a 5 year pay back period for OAOs business cases for MDF, they have
opened a consultation and received business cases whose life span was 3-5 years. A minimum of 2 years for phasing out exchanges Functional separation ruled out
Is there a case for SDF access? OPTA considers option must be given
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ADSL v FTTCab v FTTP
To deliver TV service over:
ADSL from the exchange: ~$200 per year
FTTCab: additional investment of ~$900*
FTTH: additional investment of ~$1,800*
If ROI is over a 3 year period, that is $25 and $50 per month
In some cases FTTx brings cost savings in other areas
Reduction in opex
Reduction in churn
* Based on Ovum’s modelling and operator financial reports
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IPTV Case studies
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Verizon – throwing technology at the problem
Fios TV built on FTTH technology
8.5 million homes passed, 18 million targeted by 2010.
As over Q3 2007, 717 thousand Fios TV customers
Probably the most technically advanced TV service in the world
Largest choice of HDTV channels
multi room PVR, up to 6 separate remote terminals
Video on demand, tV channels, pictures
Competes on price, quality, package flexibility and functionality , the whole package for around 60$ (different options
80% of Fios TV customers take triple play package
Pick and mix menu: basic package, plus premium entertainment, plus hardware
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Now TV – a true media company
0
100
200
300
400
500
600
700
800
900
2004 H1 2004 H2 2005 H1 2005 H2 2006 H1 2006 H2 2007 H1
TV
su
bscri
bers
(000s)
PCCW
i-cable
- ARPU has increased from HK$57 to HK$166 in 3.5 years
- 68% are pay TV customers
- First to introduce HDTV
- Quickly catching the competition
- Exclusive content rights: UK Premier league, UEFA 2008,etc.
- Flexible payTV channels
-7 channels delivered on PCCW’s quadplay
-- pricing in between 20 -80 $ depending on the package
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Creating interactive services around premium content
Sports Barker – viewers can watch promotional videos of sports programming and view live match fixtures of all now SPORTS channels
Live Match Info – head-to-head statistics, team line-up, player profiles, team fixtures,
Live match scores of all games availableat a glance
Player-of-the-Match Voting – instant voting and results available
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“The future is Orange”
Build on existing satellitecontent
Expand to multi-screenexperience
Expand into content creationand production
Expand into consumerelectronics
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Thank you !!
Stefano Nicoletti
+44 207 551 9178
14/12/2007
© Copyright Ovum 200723
Non -Network neutrality al Grand hotel Brun!