Telekom Austria completes GigaNet FTTH buildout to two Vienna districts

Telekom Austria continues to make progress with its GigaNet Fiber to the Home (FTTH) initiative, connecting customers in both the 15th and 19th districts of Vienna to the network.

To date, Telekom Austria has connected about 90,000 homes and businesses in the two districts with 30 Mbps speeds. In Q2 2011, the telco plans to launch a 200 home and business trial of 100 Mbps speed download.

Hannes Ametsreiter, CEO of the Telekom Austria group, said that the completion of the new FTTH network and the overall GigaNet initiative is all about sating the consumer's hunger for multimedia services.

"The rollout of a full-coverage fiber-optic network in the 15th and 19th Vienna districts marks a further important milestone in Austria's digital capabilities," he said. "With FTTH solutions, we can reach vastly improved transmission speeds going forward."

As of September 2010, Telekom Austria's GigaNet network reached 1.5 million homes and businesses across the country.

The next generation

Telekom Austria’s FTTH (fibre-to-the-home) and FTTC (fibre-to-the curb) rollout plans are part of the operator’s next-generation networks (NGN) project to modernise the country’s telecoms infrastructure. The funds for NGN are to come within Telekom Austria’s capex guidance of €1.5bn in the Austrian market over the next four years: €1bn is planned for the firm’s Fixed Net subsidiary (responsible for fibre rollout), while €500m of capex is scheduled for the Mobile Communication division. That means that Telekom Austria, despite the worsening economic climate, is keeping annual capex levels for the Fixed Net division through to 2013 (averaging out at €250m per year) at similar levels to 2008 (€263.5m) – and all while still being able to accommodate phase one of its fibre access plans.

Over the next four years Telekom Austria says it will connect 150,000 private households (four per cent of all households in Austria) in urban areas with either FTTH or FTTC through its ‘fibre cities’ pilot projects, as well as connect 750,000 private households in rural areas with VDSL2 – a copper-based technology – going directly to the subscriber from local telephone exchanges that are connected to Telekom Austria’s fibre-optic backbone.

Of the 750,000 household target, Telekom Austria says it will be able to offer up 30Mbps to more than 300,000 households by the end of 2009, although the higher speeds will only be possible for customers located near the local telephone exchange. The first fibre city to launch commercially (September 2009) will be in Villach where Telekom Austria has already rolled out a FTTC network capable of offering households up to 30Mbps, where copper-based VDSL2 provides the last short link between the curb and the building.

But it is not simply a case of dividing €1bn by 900,000 to give Telekom Austria’s average cost per broadband household over the next four years. Telekom Austria’s Fixed Net capex guidance of €1bn until 2013 covers all expenditure for the operator’s subsidiary, not just fibre and VDSL2 access, and that includes ambitious plans to start migrating Telekom Austria’s 125-year-old PSTN (Public Switched Telephone Network)   to a much more cost-efficient ‘all-IP services platform’. Because it uses the same transmission protocol as the internet – IP – the new streamlined all-IP platform should reduce opex and be capable of delivering more (hopefully) innovative services at a much shorter time-to-market than the old PSTN could manage.   

The first fibre cities projects, where preparation for FTTH rollout is currently underway, are based in two Vienna districts and the southern Austrian town of Klagenfurt. Using a GPON (Gigabit Passive Optical Network) architecture carrying a 2.5Gbps downlink wavelength from the local exchange to be shared by up to 64 households (there needs to be multiple GPONs deployed to give widespread coverage) the aim is to start offering households up to 100Mbps next year, which will eventually increase to an enormous peak rate of 1Gbps per household.

The 1Gbps peak rate assumes there is enough capacity on the same GPON through other households, at that particular time, easing back on their bandwidth demands. The completion of the development phase that will allow peak 1Gbps rates has yet to be given a specific timetable by Telekom Austria as it is still in the evaluation phase of its potential GPON vendors.

Capex and opex

Telekom Austria has selected different fibre city locations to give it insight into how different fibre access architectures play – in terms of capex and opex – among different network topologies facing the incumbent across Austria: from scattered housing through to residential neighbourhoods and areas of high-building density.

Establishing the economic pros and cons of FTTH and FTTC, along with making accurate assumptions about how much customers will be willing to pay for ‘superfast’ broadband, will be necessary preconditions for a successful fibre access business case. Unfortunately, these are far from easy tasks.

The economic plus side for FTTC plus VDSL2 compared with FTTH is that it provides much faster time-to-market to deliver higher-speed services. There is no need for operators to negotiate rights of way to lay fibre between the curb, where the telecoms cabinet sits, and the subscriber; and there is no need to negotiate with landlords for fibre access into the building. There is also less upfront capex required than FTTH through the re-use of existing copper resources, and no need for costly civil engineering works between the curb and the home/building.

The big disadvantage with FTTC plus VDSL2 is that the higher bandwidth speeds are only available to a small percentage of operators’ customers compared to FTTH architectures. According to IDATE, a consulting and market research firm, if all remote cabinets in France were equipped withVDSL2, less than ten per cent of the population would be eligible for 50Mbps. Similar coverage assumptions can be made about other markets, says IDATE.

  FTTC operators also have much higher opex through the need to manage more elements (cabinets) in the network. And the GPON standard has a 20km reach between the local telephone exchange and the subscriber, which offers the FTTH operator the prospect of local telephone exchange consolidation and a further reduction in opex. This option is not available to FTTC operators.

While CFOs wrestle with these issues, it is far from clear how much customers will be willing to pay extra for the much faster speeds. In Denmark, where fibre access is already available, ITSI, the telecoms regulator, reports that the number of subscribers paying for 50Mbps and 100Mbps services actually decreased in H1 2008 compared with H1 2007. There is a feeling among some customers, it seems, that there isn’t much point in paying extra for superfast speeds.  

For its part, Telekom Austria reports that traffic volumes are doubling every year and it needs the extra capacity to cope. The expectation seems to be that applications will come along and chew up even more capacity. That may well be the case. The big question is how much customers will be willing to pay for these applications, particularly if they can be accessed perfectly well using lower-priced and not-so-superfast broadband.

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