Monthly Archives: June 2015

Broadband received a boost last month with the news that the European Commission has taken an important step that will make more money available for investment in strategic infrastructure, including digital infrastructure projects like FTTH.

The Investment Plan for Europe will mobilise public and private investments of at least €315 billion over the next three years (2015-2017). In May, European legislators reached political agreement on a Regulation to establish the European Fund for Strategic Investments (EFSI), which means it should be operational by September as planned.

“When the fund becomes operational at the end of the summer, it will create a wonderful opportunity for fibre access projects to get financing for deploying FTTH,” said Edgar Aker, President of the FTTH Council Europe.

FTTH could play an important role in helping Europe meet its Digital Agenda targets, which require 30 Mbps broadband speeds for all Europe’s citizens and at least half of subscribers taking connections at 100 Mbps or faster by 2020. Progress on the second of these targets has been slow, and some reports cast doubt that it is achievable, especially with only five years remaining. The availability of new sources of investment could dramatically change the situation.

The EFSI is being created in close partnership with the European Investment Bank (EIB), which has considerable experience in managing investments in broadband and FTTH infrastructure projects. Previous EIB investments in FTTH include Iliad in France, Deutsche Telekom in Germany, Jazztel in Spain, and Reggefiber in the Netherlands.

First quarter sales of DSL, PON, and point-to-point Ethernet fiber to the home (FTTH) broadband aggregation equipment grew by 14% year-over-year, according to the latest figures from IHS (NYSE: IHS). However, the market research firm believes the space will end 2015 down versus 2014.

Sales of broadband gear totaled $2.1 billion in the first three months of 2015, according to the most recent IHS Infonetics "PON, FTTH, and DSL Aggregation Equipment" report. While that number is significantly better than the total for 1Q14, it represented a 5% decline versus 4Q14.

"Broadband aggregation equipment spending went above $2 billion in each of the last three quarters, so there was bound to be some slowdown to start the year,&" said Jeff Heynen, research director for broadband access at IHS.

A relatively mild slowdown versus the $8.2 billion spent during 2014 likely will continue throughout the year, he added. &"Though we look for spending to drop to around $7.8 billion for the full-year 2015, that total is well above historical years and shows operators' continued commitment to providing premium fixed broadband services around the world," Heynen said.

GPON and VDSL proved particularly hot in the first quarter of 2015. PON sales in general grew 18% year-on-year, with North America a particularly strong market for GPON. IHS says that telco operators and competitive carriers there are warming to gigabit FTTH deployments as a means of staying ahead of cable operator competition, whose DOCSIS-based hybrid fiber/coax networks currently can't support similar equivalent symmetrical speeds. A growing number of municipalities also have launched gigabit broadband projects based on FTTH.

While upcoming DOCSIS 3.1 technology will enable cable MSOs to offer 1 Gbps downstream, the technology's limitations will make symmetrical 1-Gbps services a challenge. Some cable operators, most notably Comcast, have turned to FTTH in response (see, for example, "Comcast one ups Google Fiber, AT&T with 2-Gbps broadband in Atlanta").

Meanwhile, IHS reports that Latin America is becoming a more vibrant market for broadband equipment, thanks to the lifting of regulatory restrictions as well as a slowing of operator consolidation.

The quarterly IHS Infonetics "PON, FTTH, and DSL Aggregation Equipment" report covers BPON, EPON, GPON, FTTH, FTTB, PON, and DSL aggregation equipment and subscribers. The research service provides worldwide and regional market size, vendor market share, forecasts through 2019, analysis and trends.

Fiber to the home broadband connections in Spain has shown a steady growth for the past many years and now the telecom regulator CNMC reports that the number of FTTH connections in the country grew to 1.81 million at the end of February 2015. There is a clear trend among subscribers to move towards fiber based broadband services.

Fiber to the home and Hybrid Fiber Co-axial connections continue to grow while there is a decline in the number of DSL subscribers. This indicates that more number of DSL subscribers are shifting to FTTH connection and new subscribers directly opt for fiber based broadband plans instead of choosing DSL connections. Service providers in Spain could add 127,735 FTTH connections in February to take it over the 1.8 million mark, while HFC lines grew by 23,820.

CNMC report also indicates that by the end of February 2015, Spain had 12.79 million broadband connections. There is an addition of 722,000 subscribers compared to the previous year suggesting a growth of approximately 5.64 percent.

Acquisition of Ono had helped Vodafone to contain or compensate the outward flow of subscribers from Vodafone's service schemes. Vodafone alone claims about 8.8% of the market in Spain. CNMC reports that, Vodafone was the one among fixed broadband operators in Spain to lose customers in February. Service provider Ono has reported growth in its subscriber base. Ono was acquired by Vodafone in 2014. The combined company claimed a market share of 21.9% at end of February 2015, that places them in the second place in ranking.

Telefonica is the largest service provider in terms of number of subscribers and the fiber optic networks it owns. Telefonica had a 45.2% market share in Spain. Orange with around 15.9 percent market share is the third largest service provider in Spain. Orange recorded highest growth in Spain in February 2015 with the addition of 19,000 subscribers to its service.

Orange is moving towards to acquire Jazztel. CNMC had cleared the proposal for take over. Orange had proposed a 3.4 billion euro plan to take over relatively smaller telecom service provider, Jazztel. The acquisition will make the combined company stronger to offer broadband services at competitive price in Spain. Orange and Jazztel together would have had a 27.9% share of the broadband market at the end of February. The acquisition will place them in second place replacing Vodafone-Ono team.

CNMC also reports that the Spanish mobile market as a whole has been losing customers since September 2014. The decline is reported from the prepaid market while postpaid customers continue to inch up, accounting for 36.31 million of the total 50.47 million connections at the end of February. Interestingly, many operators including Vodafone, Telefonica's Movistar, and Yoigo lost customers in February, while Orange could add fewer than 3,000 customers. Virtual operators, including Vodafone's Ono, together added almost 99,000 subscribers.