Telecoms operators expected to spend USD53.5 billion on fibre roll-outs in developed markets through 2017

Maximising next-generation access coverage and gradually extending fibre in the local loop makes more sense than lumbering interventionist plans.

Between 2012 and 2017, fixed operators in developed economies are predicted to spend USD53.5 billion on fibre network roll-outs, according to new research from Analysys Mason. Of the economic regions that the report covered (Central and Eastern Europe, developed Asia–Pacific, North America and Western Europe), the most spending is expected to occur in Western Europe, where operators will invest USD25.9 billion during the next five years.

FTTx roll-out and capex in developed economies: forecasts 2012–2017 predicts that the amount that operators spend, and the rate of progress in extending the availability of superfast and ultrafast broadband to end users will vary enormously, raising questions about appropriate and efficient use of capital. About 82% of the predicted expenditure (USD43.9 billion) will be on fibre-to-the-home (FTTH) rather than very-high-bitrate digital subscriber lines (VDSL) – the other main FTTx roll-out solution. However, those countries where the major operators are focusing on FTTC and VDSL will generally have much higher availability of next-generation broadband in five years’ time. The report highlights the dangers of a pure FTTH approach at a time when cable and 4G mobile operators are able to upgrade more quickly than telcos. New enhanced DSL technologies such as vectoring and bonding will make it easier for operators to keep pace with cable competitors and one step ahead of any challenge from mobile operators to their core broadband businesses.

“Given the as yet untapped potential of copper over short distances, we wonder whether it is really sensible at this stage to take fibre right to people’s homes,” says Rupert Wood, author of the report and lead analyst for Analysys Mason’s Fixed Networks research programme. “Sticking rigidly to FTTH runs the risk of delivering next-generation access to a largely urban or well-to-do elite, while delaying delivery to other users and potentially losing customers. This may come to look both commercially and politically unacceptable.”

The report also shows that take-up of next-generation access (NGA) appears to be gaining some momentum in Europe, following a slow start. It argues that five years after launch, take-up rates for telcos of 25% or more in covered areas seem perfectly achievable. The report also indicates that the business case for NGA is not always best where the cost is lowest. The most critical factors are more likely to be income levels and previously poor quality broadband provision. It argues that superfast broadband has been a difficult sell in some European countries because regulation has succeeded in encouraging facilities-based competiton and, as a result, driving down ADSL prices.

Wood argues that the perennial question of whether any set of consumer services justifies 100Mbps access speeds is ill-conceived. “Supply of bandwidth probably will create demand, but not necessarily in ways that are helpful for operators’ service-oriented approaches. Few real-time video services require anything like these bandwidths, but those simply wanting faster-than-real-time download and upload will always be happy with more speed.” Some successful FTTH players now recognise this and have consciously positioned their services as non-value-add utility offerings, which leaves a wide space for over-the-top players to fill.

FTTx roll-out and capex in developed economies: forecasts 2012–2017 provides coverage and capex forecasts for FTTH, VDSL and DOCSIS3.0, as well as forecasts of service take-up on telco networks, split by incumbent and alternative operators. Forecasts are provided for 36 countries and four regions. The report includes:

  • an executive summary
  • an analysis of the forecasts
  • a discussion of network options for the business environment
  • a focus on European incumbent roll-out and take-up rates
  • European incumbent case studies
  • an analysis of cost trends for VDSL-CO, FTTC/VDSL, FTTB/VDSL, FTTH/GPON and FTTH/PTP.

FTTx roll-out and capex in developed economies: forecasts 2012–2017 is available for purchase as a standalone report, or as part of a subscription to Analysys Mason’s Fixed Networks research programme. For more information, contact us at research@analysysmason.com.

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