2015 and key trends in the US fiber market

1. Fiber to the Building (or Premise) continues to grow

The market demand for fiber broadband is there, and carriers are looking at how they can address it most cost-effectively. Consumers and businesses are keen to embrace faster speeds – Akamai's recent State of the Internet report found that the US had an average connection speed of 11.5 Mbps, behind the likes of Finland, Switzerland and South Korea.

This is driving widespread rollouts of Fiber to the Premise (FTTP), with high speed broadband connections to commercial and multi-tenant buildings (Multiple Dwelling Units – MDU). Getting fiber to individual tenants is then the next step, and can be complex and expensive, particularly in buildings with congested ducts and older infrastructure.

At the same time as subscribers are asking for the power of superfast broadband they do not want cosmetically ugly installations that clutter up their apartments with cables, so carriers are looking for equipment and techniques (such as pushable microfiber) that provide a fast, mess-free deployment.

2. Multiple players pushing fiber

Cable companies and traditional carriers are part way through the process of moving from their legacy coax and copper networks to fiber optic. Given the size of their infrastructure, this is always going to be a slow process, but the strong economy, consumer demand and entrance of new players – such as Google – is accelerating change. There have been plenty of announcements from carriers and cable companies, big and small, of new fiber deployment plans, and I expect this to accelerate in 2015. Examples include:

  • Google Fiber announced the next step in its rollout at the end of January 2015, with plans to bring fiber to 18 cities across Atlanta, Charlotte, Nashville and Raleigh-Durham;
  • AT&T originally announced plans to bring its GigaPower 1-gigabit broadband service into 100 cities in 2015. However, the potential changes caused by net neutrality have caused it to put at least some of these plans on hold;
  • After a successful launch in Omaha, CenturyLink has plans to expand FTTP further, including into Denver and Portland
  • Verizon is nearing the end of its rollout of its FiOS fiber network, and estimates that it will have passed more than 19.8 million premises, though it announced in early February that some operations will be sold to Frontier Communications.
  • Cox Communications has announced that it will bring 1 gigabit speeds to residential customers in all its markets by the end of 2016.

This is backed up by analyst figures – research organization RVA found that while the number of FTTH implementations in North America was broadly flat in 2014 compared to 2013, they are expected to grow dramatically by 2017, with new connections approaching 3 million households per year. This equates to annual direct investment of $4.7 billion, by 2017, by operators.

Coax and copper aren't going to disappear overnight, so carriers are investing their capex budgets where they see the biggest returns.

At the sharp end, network planners and installers are therefore looking for ways of bringing down the cost and complexity of fiber rollouts so that they can deliver on the plans that were announced in 2014.

3. Municipal deployments growing

There are wide discrepancies across the country when it comes to broadband access – research from the US Census and Pew Research points to a patchwork of speeds and availability between metro, suburban and rural areas.

Unsurprisingly, capex budgets from traditional carriers are being invested in projects with the biggest business benefits, which potentially leaves some communities trailing. To help plug this gap, President Obama announced plans, in January, to make it easier for communities and citizens to gain access to fiber broadband.

At the same time, figures from the FTTH Council Americas demonstrate the quantifiable benefits that gigabit fiber brings to communities. A Council study found that 14 areas it surveyed with gigabit broadband boasted GDP that was $1.4 billion higher than their comparable neighbors.

Many municipalities are therefore building out networks across their towns and local areas to meet untapped needs and deliver the benefits that high speed broadband connections can provide to their citizens, businesses and their own operations.

m2fx is involved in the extremely successful municipal rollout in the City of Loma Linda in Southern California. With 21,000 residents and a reputation as a healthcare center, Loma Linda has cost-effectively deployed a city-wide network within budget and tight timescales, using micro trenching and pushable fiber. Medical facilities are now able to share data in real time, enabling remote diagnostics and faster medical care, while new businesses have moved to the City thanks to the power of the network.

Given the success of trailblazers, such as Loma Linda, they expect to see many more municipalities deploying their own fiber networks to encourage new businesses to an area, make it an attractive place to live and enable greater efficiency and new services from government.

The US fiber market is currently incredibly dynamic, with a combination of increased competition, greater demand and growing investment meaning that 2015 is likely to be an extremely busy year for everyone involved.

FTTH subscribers in Europe: nearly 15 million homes

The number of fibre to the home (FTTH) and fibre to the building (FTTB) subscribers in Europe has soared, increasing by 50% over the 12 months ending December 2014, according to the latest update to the FTTH Ranking announced at a press conference held at the FTTH Conference in Warsaw.

There are now nearly 15 million FTTH/B subscribers on the European continent (14.5 million to be exact) – not including Russia and the Ukraine, which would add a further 14.8 million homes to the total (source: FTTH market panorama prepared by IDATE for FTTH Council Europe).

"This is phenomenal progress, and it proves that FTTH/B is poised to become THE mass market broadband product in Europe, even though there is still a long way to go to reach the Digital Agenda Target of 100 Mbps for 50% of Europe's households by 2020!" said Karin Ahl, President of the FTTH Council Europe.

Although there were no new countries in the FTTH Ranking, there is a new momentum in Germany where alternative operators like Deutsche Glasfaser are pushing ahead with fibre deployment. The country is now very close to entering the FTTH Ranking – if progress continues at this rate, Germany is likely to reach the qualifying threshold of 1% of homes subscribing to fibre sometime in 2015.

Good progress was also reported in countries like Romania, Spain, France, Netherlands and Portugal. However, a number of European countries are still holding back on their fibre roll-outs and are missing out on the economic and social advantages that FTTH can bring. Countries like Austria, Belgium, Czech Republic or the United Kingdom connected fewer than 20,000 new FTTH customers during the whole of 2014.

The FTTH Council Europe also announced today that dstelecom (dst group) and Dik Wessels received this year's FTTH Operators Award and Individual Award, respectively, for their outstanding efforts to accelerate the adoption of FTTH in Europe.

Portuguese operator dstelecom, represented by Xavier Rodriguez-Martin, member of the board, received the FTTH Operator Award in recognition for rolling out advanced fibre networks in rural areas located in the north and south of Portugal. With an investment of €90 million, dstelecom group has installed more than 9000 km of optical fibre cable to cover more than 50% of the households in these regions.

In awarding Dik Wessels the FTTH Individual Award, the FTTH Council Europe recognized the importance of his role in the investment in FTTH infrastructure by the family's investment group Reggeborgh. Dik Wessels is the initiator behind Reggefiber BV and Deutsche Glasfaser GmbH. The success of this innovative strategy has been confirmed by Reggefiber's penetration in the market in the Netherlands and its recent acquisition by KPN.

The FTTH Conference was opened by Andrzej Halicki, Polish Minister of Administration and Digitization and Iwona Wendel, Undersecretary of State for the Ministry of Infrastructure and Development. The event, which attracted nearly 3,000 participants from 85 countries, hosted 95 exhibitors and over 130 high-quality presentations and case studies from renowned industry speakers. A keynote speech by Anna Herold, Member of Cabinet, Cabinet of Günther H. Oettinger, Commissioner for Digital Economy & Society, European Commission followed opening ceremony speeches by Magdalena Gaj, President of the Office of Electronic Communications (UKE), Prof. Fatima Barros, Chairman of Body of European Regulators for Electronic Communications (BEREC) and Karin Ahl, President of the FTTH Council Europe.

The 13th edition of the FTTH Conference will be held in Luxembourg on 16 – 18 February 2016.