The number of FTTP users exceeds DSL for the first time in the global broadband access development turning point

Recently, Proximus, the largest telecommunications service provider in Belgium, announced that it will launch a large-scale FTTP (fiber-to-the-premises) - achieving coverage of 50% of the country's households, which is the first such move by a large Western broadband service provider. This announcement represents a major change in Proximus' fixed broadband strategy, which currently mainly uses FTTN (fiber-to-the-node) plus DSL.

Prior to this, French telecom operator Altice had already stated that it planned to bypass the more obvious and easier to upgrade path of DOCSIS 3.1 in its US market and instead turn to FTTP. Altice aims to deploy FTTP throughout its US business coverage area starting in 2017.

The above FTTP deployment announcements are not unprecedented and certainly not unique (many operators around the world have been announcing large-scale FTTP plans for some time), but they do represent a renaissance in wired broadband investment at a time when much R&D focus is on advanced wireless technologies, which Ovum believes is likely to continue beyond 2020.

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2016 is a turning point for FTTP

Michael Philpott, Ovum's consumer services practice leader, said that from a global perspective, 2016 represented a turning point in the development of broadband access. Over the year, the number of FTTP users increased from 297 million to 382 million, surpassing DSL, while the number of DSL users fell from 326 million at the beginning of 2016 to 298 million at the end of the year. Ovum expects that the number of FTTP network users will grow steadily until 2021, when FTTP users will account for more than half of the total number of 1.1 billion fixed broadband users worldwide.

This result is mainly driven by the extensive FTTP deployment in Asia Pacific and Eastern Europe. In Western Europe and North America, where copper access infrastructure is prevalent, DSL (including FTTN/C) still accounts for a large proportion and will continue to do so in the next five years, although it has begun to show signs of decline.

According to Ovum, the deployment of G.fast technology will slow the decline in these areas in 2017. However, deployment announcements from Proximus and Altice show that even in these traditionally copper areas, there will be a potential turning point in favor of FTTP development in the future.

The business case for FTTP is improving

The business case for FTTP has improved dramatically over the past few years, with costs dropping dramatically. A decade ago, it cost Verizon about $1,500 per home passed, plus an additional $1,500 per home connected.

Cincinnati Bell and CenturyLink recently estimated that FTTP costs $500-700 per household, almost one-third of what it used to cost. Other operators, such as AT&T France Orange, have also highlighted the decline in FTTP deployment costs, advancing the business case for FTTP.

While FTTP equipment prices have fallen over time, micro-trenching – a faster and cheaper process for deploying the optical fiber itself – is actually the biggest reason for the falling costs of FTTP.

DSL and copper cable technology have not been declared dead. However, DSL growth has been very slow in Western Europe and has been declining in North America. However, Ovum expects a positive shift in 2016-17, with the deployment of G.fast helping DSL speeds without the expense of fiber to the home. This may not completely revive DSL, but it will extend the life of the technology in these regions, especially in countries such as the UK, Germany, Switzerland and Austria where copper cable accounts for a large proportion of users. Ovum expects DOCSIS 3.1 to do the same for cable HFC networks, extending their life by increasing speeds to gigabit levels.

As a result, Ovum does not believe that North America and Western Europe will see a major shift in favour of FTTP over the current five-year forecast period. However, Ovum expects that investments and deployment announcements for fibre networks will continue over the forecast period, placing FTTP firmly at the centre of future wireline broadband networks in all regions of the world.