Category : Blog

Windstream (Nasdaq: WIN) may not be a wireless operator itself, but it has become a key member of the wireless ecosystem as a provider of Fiber to the Tower (FTTT) backhaul services.

Speaking at the Citi Global Internet, Media & Telecommunications Conference in Las Vegas, Jeff Gardner, CEO and President of Windstream, said that in 2012 the provider improved its methods to deliver FTTT.

“We made a lot of progress with our ability to quickly turn these up for our customers and begin generating revenue,” he said. “In 60 percent of the markets, we are the incumbent so the failure to win those contracts would have meant two things: letting another competitor in and losing all of the TDM revenue that we get today from the circuits that we provide to wireless carriers.”

By the end of 2013, Windstream will complete the majority of its FTTT buildouts in both its traditional legacy regions and in new regions it entered through the various acquisitions it made in recent years.

About 40 percent of the service provider’s FTTT contracts are in these new regions. While Windstream has been providing traditional TDM-based backhaul in its own legacy markets for a number of years, it bolstered its out-of-market wireless backhaul capabilities when it purchased Kentucky Data Link (KDL) in 2010.

“When we bought KDL in 2010 we got a long-haul network, which really made us a logical bidder for some properties outside of our footprint today,” Gardner said.

Gardner added that as it winds down its FTTT roll out, the investment will be reduced from $250 million to $125 million in 2014.

At the same time, the ongoing growth of wireless data and the opportunity to serve more than one tenant at each cell tower means that there will plenty of services to sell.

“The Fiber to the Tower model was built and justified with an assumption of there being only single tenant,” Gardner said. “Companies like American Tower have five or six carriers hanging off those towers so there are lots of opportunities to pursue.”

Like other telcos, Windstream has to also deal with the near-term revenue loss that results from the migration of copper-based TDM to fiber.

While Gardner admits the migration process is an issue, he said that because it has processes in place to more efficiently roll fiber to the sites it can mitigate TDM losses.

Although many wireless operators purchasing backhaul begin at a certain rate, what they pay to Windstream will increase as their customers’ data use grows. Unlike TDM-based circuits, which were designed mainly to accommodate voice, fiber will be able to meet these higher wireless data speeds.

“We’re building these sites much quicker than we did originally and the wireless carriers are grooming their sites more effectively,” he said. “Obviously, they want to take full advantage of their investments as quickly as possible, which means will take more an upfront on the TDM, but it also means that more traffic will get pushed to that fiber connection.”

FTTT continues to be a larger factor in Windstream’s wholesale revenue machine.

Although Windstream’s overall wholesale revenues declined $220 million year-over-year in Q3 2012, carrier service revenues rose 3 percent year-over-year to $162 million, a factor it attributes to ongoing fiber-to-the-tower installations for its wireless operator customers and other carriers.

NBN Co, the organization responsible for construction of Australia's National Broadband Network, says it either completed or at least began construction of the fiber to the home (FTTH) network in areas covering 784,592 premises by the end of last year. This total slightly exceeds its goal of 758,000 premises before the end of the year.

The Australian Government has charged NBN Co with constructing the fiber-based broadband access network to 93% of Australian premises by June 2021. The open-access FTTH network will support download speeds of up to 100 Mbps. The remaining 7% of Australian households will be served by a combination of fixed-wireless and satellite by 2015.

"The National Broadband Network is an ambitious project which requires the efforts of many people working cooperatively towards a common goal," said NBN Co CEO Mike Quigley. "To have achieved our year-end target is both pleasing for all involved and a clear indication that the NBN project is ramping up to full volume rollout."

"I particularly thank our network planning and design team, our contract managers, and our construction partners for their efforts. By working together to achieve this year-end outcome the combined project team has established the settings to reach the peak rollout target of passing over 6000 premises a day by 2015," Quigley added.

So far, four contractors are working with NBN Co to build the national fiber-optic network:

• Silcar in NSW, Queensland, and the ACT
• Visionstream in Tasmania
• Transfield in Victoriad
• Syntheo (a Lend Lease/Service Stream joint venture) in the Northern Territory, South Australia, and Western Australia.

NBN Co's next milestone comes in June 2013, when it hopes to pass an additional 286,000 premises

The Chinese governments wants all new properties to be equipped with fiber connectivity

The Chinese government is to make fiber-to-the-home (FTTH) connectivity mandatory for all domestic new-build residences. The country's Ministry of Industry and Information Technology will introduce the legislation from April 1, 2013 according to local reports.

The policy will only apply to regions of the country where a public fiber-optic telecom network is available, according to Chinese newspaper China Daily, and residence owners will be offered services from a variety of ISPs, in order to ensure customer choice.

China's government hopes to have 40 million families connected to fiber networks by 2015 according to a report in another Chinese national newspaper, Economic Information Daily.

The news follows forecasts from research firm Ovum that smart grids based on passive optical networking (PON) technologies are set to provide a $1.5-2bn opportunity for fiber and FTTx component and infrastructure vendors targeting China.

The construction of PON-based smart grids would enable fiber connectivity to residences in China. A major driver is expected to be the State Grid Corporation of China (SGCC) which is pursuing a smart grid project that could also be part of a plan to become a communications service provider. Ovum believes such projects would also benefit optical line termination (OLT) equipment vendors, optical network terminal (ONT) box manufacturers, component vendors and cabling manufacturers operating in China.

Sales of systems for access networks – which includes PON, DSL, and cable hybrid fiber/coax (HFC) equipment – grew by a “moderate” 6% year-on-year in the third quarter of 2012, according to a new report by Dell’Oro Group. PON systems were the stars, advancing 21% over the same quarter of 2011.

Systems for cable MSO networks grew 5% annually. However, DSL equipment declined versus the year-ago quarter, as a decrease in ADSL revenues offset 30% growth in VDSL revenues.

“We saw strong growth from three segments in the third quarter. PON revenue surged to a record level, largely driven by strong GPON shipments to China, continuing the trend of the last several years,” said Steve Nozik, principal analyst of access research at Dell’Oro Group. Cable revenue growth was driven by strong DOCSIS 3.0 CPE sales that more than offset sharply lower CMTS sales.

“For DSL, high-speed VDSL port shipments grew more than 50% over the year ago period driven by Western Europe, where a number of operators have chosen a fiber-to-the-node (FTTN) upgrade strategy utilizing VDSL,” Nozik said.

Alcatel-Lucent, Huawei, and ZTE won the quarter in the GPON space; excluding sales in China, however, Calix would jump into the third position, the report states. In the growing VDSL segment Alcatel-Lucent and Huawei again held the top two slots, with ADTRAN at number three. For cable equipment sales, Cisco retained its top position in CMTS sales in 3Q12, while Arris led the cable CPE segment.

The Dell’Oro Group Quarterly Access Report provides tables that cover manufacturers’ revenue, average selling prices, and port/unit shipments for cable, DSL, and PON equipment.

Forthnet, a competitive telco based in Greece, launched a pilot Fiber to the Home (FTTH) service in Athens over which it will offer a triple play bundle to residential and business subscribers.

Leveraging ADTRAN’s (Nasdaq: ADTN) GPON (Gigabit passive optical network) equipment, the service provider is serving 2,000 homes with FTTH-based services in the municipality of Nea.

The ADTRAN GPON solution allows a simplified migration of Forthnet’s customer base to the new FTTH services, while enabling capacity and bandwidth scale for future demands of new media-rich services

With the ADTRAN GPON gear, Forthnet said it will be able to more easily migrate their existing customer base to the new FTTH-based services and scale to access whatever new over-the-top (OTT) and their own bandwidth-hungry services they develop in-house.

“By taking this approach, we are not only enabling the Metropolitan area of Athens to make the necessary technology leap, but are also giving local residents and businesses the opportunity to use new bandwidth hungry applications without fear of reduced performance or latency,” said Giannis Kavaklis, Chief Commercial Director at Forthnet, in a release announcing the deployment. “ADTRAN’s FTTH solution not only gives us the bandwidth required today, but also provides a simple migration path forward that helps us to stay competitive in our market in the long term.”

This FTTH network will complement its ongoing DSL service offerings, which includes a bundle of sports, movies and entertainment, in addition to voice services. Currently, Forthnet offers its triple play bundle over traditional DSL and it recently launched its new VDSL service.

Like fellow providers OTE and Wind, Forthnet is offering up to 50 Mbps data on its VDSL-based service. Eligible customers will have to pay an additional €10.00 ($13.00) to add VDSL services to existing ADSL2+ offerings.

While the new FTTH service will up Forthnet’s competitive footing, it also provides a vote of confidence for ADTRAN as they look to establish a greater presence in the European broadband market. In addition to their own internal efforts, the vendor immediately broadened its international presence when it purchased Nokia Siemens Networks’ access division last year.

Rogers Communications Inc. (Toronto: RCI), Canada's largest cable operator, confirmed that it is using fiber-to-the-home (FTTH) to power a new broadband service tier that provides upload and download speeds of up to 250Mbit/s.

The tier, called Rogers Ultimate Fibre Internet, is currently available only in parts of Toronto and the MSO's Atlantic region, which includes Moncton and Halifax. The service comes with a monthly 500-gigabyte usage limit. Rogers has yet to provide pricing options for the new 250-Meg tier.

The new service outpaces Rogers's current top-end Docsis 3.0-based service, which, following a recent set of upgrades, maxes out at 150Mbit/s down and 10Mbit/s upstream and runs $122.99 per month (depending on how it's packaged). Customers of the 150-Meg tier are subject to a charge of $0.50 per gigabyte (up to a maximum of $100) if they exceed the tier's monthly 250GB data threshold.

Outgunning Bell Canada

The new Rogers offering also outruns BCE Inc. (Bell Canada) (NYSE/Toronto: BCE), which, depending on the region, sells a symmetrical 175Mbit/s service (with a monthly 500GB cap) for $202.95 per month when bundled with other services.

Word of the Rogers fiber-fed tier began to spread on blogs such as Broadband Reports in mid-November. Rogers denied any characterizations that the 250-Meg service is a trial or test.

"[T]his is not a beta. … Rogers is implementing a first market rollout of fibre to the home in select regions in Toronto and the Atlantic," a Rogers spokeswoman said via email.

She noted that the current, limited deployment is based on GPON and got underway in early November. Rogers isn't saying when or where it will expand the reach of the Ultimate Fibre Internet tier.

Rogers marks the latest major North American cable operator to use FTTH surgically for high-end speed tiers. Comcast Corp. (Nasdaq: CMCSA, CMCSK), for example, is using its Metro Ethernet platform for a new residential service that offers 305Mbit/s down by 65Mbit/s upstream. That Extreme 305 service, launched in the fall, is currently offered in several major markets in the Northeastern U.S., including Boston, Philadelphia, Baltimore and Washington, D.C. (See Comcast Gives FTTH a Shot .)

The latest generation of Docsis 3.0 chipsets can support downstream bursts of 1Gbit/s. Comcast, however, intends to use MetroE in the near term for Extreme 305 as it gauges consumer demand for the new tier, which is uncapped and runs $300 per month. (See Intel's New Docsis 3.0 Chip Guns for 1-Gig .)

EU's Digital Agenda commissioner admits business case for rural network investment still shaky.

The European Union's digital agenda commissioner Neelie Kroes took to the stage on the opening day of this year's Broadband World Forum in Amsterdam to call on policy makers to spur network investment as a matter of urgency.

"We are at a crossroads," she said. "Take the right turn, and we will see the benefit for years to come. Take the wrong turn, and future generations will curse our missed opportunity."

Kroes warned that Europe is slipping behind other regions in terms of broadband availability, which if left unchecked will have dire economic consequences as more and more business is conducted online.

"In 2020, when an international business looks at where to put itself, it is going to look at digital societies with high-speed broadband," she said, the implication being that Europe may find itself without the infrastructure needed to attract high-flying multinationals.

"Be aware that your competitive position is not forever carved in stone," Kroes continued. "We have the talent, and we have the research capability, but we still need to fill in the gaps to make a digital single market."

Kroes earlier in October called on telcos to help lobby for the release of €9.2 billion from the EU's Connecting Europe Facility, which could go towards broadband infrastructure deployment in underserved areas.

However, even with public funding, rollout targets at both national and EU-level, and demand for broadband from end users, Kroes admitted that building a business case for investing in rural networks , particularly fibre, "is still shaky".

"Where you can't expect to put fibre, other technologies should be used," she said.

However, when questioned about whether speed or availability should be the priority for broadband strategists, her message was clear: just any Internet connection will not suffice; it has to be broadband.

"It's essential to our future….we are far from hitting the Internet's innovation potential," Kroes said. Realising that potential requires a broadband connection

BT is accelerating rollout of its fibre broadband network and expects it to pass two thirds of UK premises by spring 2014, more than 18 months ahead of schedule.

The announcement came during the telco’s second quarter results that showed it had over 950,000 fibre subscribers, of which 875,000 were retail customers. BT said it added 160,000 retail fibre customers during the quarter which meant 14% of its retail broadband base took the high speed service.

Ian Livingston, BT chief executive, said, “Fibre is at the heart of our broadband plans for both town and country. We plan to step up our efforts yet again to complete our commercial fibre rollout early as this will allow us to focus even further on the next exciting stage of our fibre broadband strategy. This will see BT working hand in hand with the public sector to extend fibre broadband to UK homes and businesses in the “final third” of the country that are harder to reach.”

BT’s hybrid TV service BT Vision added 21,000 customers during the quarter, taking its total base to over 750,000.

Telefónica’s Chilean subsidiary Movistar has connected up half a million homes across the country with fibre and is now getting ready to launch an IPTV service, according to local reports.

Movistar’s General Manager Roberto Muñoz is quoted by Chilean newspaper La Tercera as saying that the company has already deployed 16,000 kilometres of fibre at a cost of US$ 500mn across the capital city of Santiago and major cities including Arica and Puerto Montt.

Muñoz relates that these new fibre connections reach around 500,000 homes and 1,300 large companies, representing 30 per cent of its footprint.

While he concedes that it is not viable to connect all homes with fibre, expanding its footprint is thought to offer many advantages, including the ability to deliver super-fast broadband, mobile backhaul, and IPTV.

On this last point, the Movistar exec adds that the launch of IPTV services in Chile will change the local TV market “in the way as cable TV did in the 1990s”.

Intriguingly, he also mentions a partnership with Microsoft’s Xbox team which will enable the delivery of cloud-gaming services on the IPTV service, using a set-top box rather than the Xbox console.

Revolutionising the Chilean TV market will take time however: Muñoz concedes that mass take-up of the IPTV service will take years, and estimates that achieving the same impact as cable TV did will take five to eight years.

Drum roll… two new countries have joined the European FTTH Ranking, including one of the major European economies. There are now 22 economies in Europe where more than 1% of households have a fibre connection. (Our definition of Europe includes the EU27 plus Andorra, Croatia, Iceland, Israel, Macedonia, Norway, Serbia, Switzerland, and Turkey.)

In the last six months, the region saw solid growth in the number of FTTH/B subscribers, reaching 32 million homes passed and 5.95 million subscribers by the end of June 2012. Russia also saw a significant increase with 15.8 million homes passed and 5.2 million taking a fibre subscription.

Spain entered the ranking at 20th position with household penetration of 1.42% following a 44% increase in the number of FTTH/B subscribers in the first six months of 2012. Despite the country's challenging economic situation, telecom operators such as Telefónica, Orange Spain and cable operator Ono, amongst others, have continued to invest in fibre.

The other new entrant in the ranking was Luxembourg in 19th place with household penetration of 1.45%. State-owned operator P&T Luxembourg working towards ambitious government objectives: to pass 80% of all homes with 100Mbps by end 2013, and 100% of homes by the end of 2015.