FTTH in APAC: adjust your expectations

The FTTH Asia Pacific Council recently held its sixth annual conference in Delhi, India. The theme of the conference was “Fiber to Bridge Socio-economic Divide.” While Asia-Pacific leads the world in FTTx subscribers, household penetration rates vary widely, from less than 0.01% in Bangladesh to 53% in South Korea. Bringing fiber to rural villages is challenging, but in many of Asia-Pacific’s countries, bringing fiber to urban areas is also difficult.

Successful deployments are requiring different approaches, whether network architecture, fiber ownership, business models, government support, financing, or all of the above. We need to adjust our expectations regarding subscriber growth, broadband applications, and network ownership.

First, we should not be lured into thinking that the rapid deployment of FTTx networks in Japan, Korea, and China can be replicated elsewhere. Japan has 20 million FTTx subscribers and reached this threshold in just over five years, while all of Western Europe had 2.9 million FTTx subscribers at year-end 2010. Japan, Korea, and China may become the exceptions rather than the norm.

We need to measure FTTx subscriber growth in the thousands and tens of thousands in remote villages and in the urban areas of India, Bangladesh, and Pakistan. While these numbers may not seem significant, the benefits of broadband to those involved are tremendous. According to the World Bank, a 10% growth in broadband services penetration is estimated to provide a 1.4% growth in GDP.

Second, we are used to hearing about triple-play services with an emphasis on bandwidth-consuming video. The applications driving FTTx to the village are livelihood-oriented, such as healthcare, education, agriculture, banking, and government. Even in selected urban areas, the goal is not video but rather consistent Internet connectivity.

For a farmer, access to information about the weather or crop diseases can save a season's plantings. On a smaller scale, access to crop-pricing information can help a farmer at harvest time. For a worried parent, a child’s illness can be diagnosed through e-medicine applications. Even in large villages where a nurse or primary physician may live, e-medicine supports access to specialists.

Third, we will see diverse FTTx network ownership and deployment models. To date, FTTx networks have been built and owned by telcos, such as Verizon and KT. Often, deployment plans are based on expected return on investment scenarios, leading to a focus on wealthier neighborhoods, for example.A frequent theme at this year’s conference was a shared or open network, whereby multiple service providers offer their respective services over the same network. The goal is to share the large capex associated with FTTx networks or to encourage faster and larger uptake of FTTx services, thereby enabling an acceptable financial return to the builder/owner of the network.

  • In Australia, the National Broadband Network (NBN Co) was established to provide a wholesale-only, open-access network with FTTP (fiber to the premises) for urban areas and wireless technologies for remote areas. NBNCo is slated to be funded by the national government, as attempts to secure private financing failed. The government hopes to be able to sell its stake in NBN Co eventually.
  • The "Fiber for Italy" project is a joint effort between several players, including Fastweb, Vodafone, and Wind.

Several start-ups that attended the conference are taking different approaches, for example:

  • Radius Infratel Private Ltd., based in New Delhi, is deploying the concept of an operator-neutral network, a network that can be used by multiple service providers but has a single, private-sector owner.
  • Fiber@Home in Bangladesh was granted a license to build a nationwide optical backbone. With financing by local investors, Fiber@Home’s neutral network is open to all access-network service operators.

The private network-ownership approach may avoid the bureaucracy of public ownership or the inherent issues from trying to cooperate with one’s competitors. However, it is much too early to assess the pros and cons of the business plans adopted by Radius and Fiber@Home.

The early lesson learned is there is no killer approach.Just as there is no killer application that guarantees a quick ROI for FTTx network builds, there is no easy and universal approach for bringing fiber to villages and even to some cities. We are going to see multiple approaches to network builds and network ownership. The common denominator is fiber's role in bridging the socioeconomic divide, whether in villages or cities, or both.

News from TelecomAsia.net

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