Tuesday, 16 October 2012

US losing interest in FTTH

Verizon, once the standard-bearers for FTTH in the US, seems rather to have gone off the idea. They've said that once they complete their current deployments, they will stop. To some extent the slack has been taken up by smaller, more local players. However, a graph of the pace of roll-out (measured in homes passed per day in North America) tells an interesting story:

Note: Figures are average daily homes passed over preceding year

These figures are based on numbers for total homes passed over time from RVA (the research firm of choice for the North American FTTH Council). As you can see, the pace of roll-out peaked in September 2008, and has been falling ever since, bar a slight up-tick in the year to March 2012, which RVA attributes to the combination of stimulus funds and a mild winter. The rate of deployment is now roughly 40% that at the peak.

Is this because FTTH coverage is already widespread? Not exactly - the 22.6m homes passed represent just 18% of total households in the US and Canada. At the current rate of deployment, it will take another nine years to get to 30% coverage (and even this is 'artificially' accelerated by government subsidy, which is unlikely to last).

A more likely reason for this decline in FTTH investment is that carriers are realising that is it very hard to make a return on such capex. A particular challenge for US carriers is the competition they face from cable operators, who have roughly 55% share of the broadband market and rising - something to keep in mind the next time you're told cable operators' HFC platforms are yesterday's technology which can never compete with FTTH.


  1. Something to keep in mind? based on the ability of private networks to continue to roll out FTTH against cable?

    So the technical issue is related to the financial issue?

    OK so people in the US are getting a raw deal - and this makes HFC an OK answer technically?

    HFC can with sufficient infrastructure give quite high speeds - but the issues are contention ratio on each channel and number of channels available.

    To get high data rates quite a few headend units are needed per cable segment.

    To get the high ratio of channels to subscribers you therefore need quite a few headends and a quite different architecture to what we have in Australia.

    Once you re-wire the HFC network, install more headends, allocate sufficient channels per subscriber etc. etc. it is unlikely you can achieve anything as ultimately cost-effective, let alone as future-proof as fiber.

    We could have much better HFC than we have now though, and this would at least provide a short term option whilst we wait for fiber.

    Telstra and Optus have already upgraded to DOCSIS 3 to fill in time. It wont compete with the NBN very well unfortunately.

    Tell me this - how do you see 4K TV being delivered on our HFC network?

    Now 4K on demand? - in our household where there are 1-4 users watching different content!

    Right now HFC is failing to do 1 video stream reliably.

    Don't care about which day the technology is from - I care about it's ability to do what I need today and what I need in the lifetime of the capex. HFC is letting me down right now!

  2. HFC, properly provisioned, does very well delivering its promised bandwidth. See for instance this from Ofcom, showing that people on 60 Mbps plans on Virgin Media's HFC network are getting 52-55 Mbps even in the busy hour (and are getting peak speeds above 60 Mbps). I'm sorry your local provider isn't delivering what you need, but it isn't a fundamental problem with the technology.

    I'm not sure what your evidence is to suggest that FTTH is more cost effective than HFC - everything I've read suggests it's dramatically cheaper.

    As to 4K TV, there's little point in TVs that offer resolution beyond that which the human eye can realistically perceive. Consumers make surprisingly little use of the HD TV they have today.

    And even if, at some distant future point, 4K TVs do become widespread, it's hard to know why governments should be subsidising consumers' use of them. You don't expect them to subsidise other luxury goods.