Category : Blog

Co-operation is the sign of a healthy competition and one of characteristics of a professional market. In telecom business and changed global scenario, it is almost impossible to do business without co-operating with existing competitors. The recent best example is the agreement between Telefonica , Vodafone and Orange in Spain. All three are telecommunication giants having their own business strategies and worldwide presence.

Telefonica has extensive network in Spain and as per agreement it gives permission to Vodafone and Orange to use the network to provide broadband services to subscribers. Vodafone and Orange have to make a one time payment per installation to Telefonica. This payment will permit Vodafone and Orange to use the network for 20 years. The pricing will be decided by a third party, in this case, Spain’s telecommunication regulatory authority CMT. As per the agreement Telefonica can utilize Vodafone’s or Orange’s fiber optic networks, wherever they do not have, meaning the agreement is reciprocal in nature. That makes a good business sense.

The agreement signed among the parties details the types of buildings in which Riser infrastructures will be shared and the technical procedures for implementation. The competitors will gradually specify the cities, areas and building in which they want to deply optical fiber. The agreement also includes the option to transfer existing undertakings or for each company to build its own.

This Co-Co business style (Compete and Co-operate) in fiber optic business will make the broadband deployment faster. Fiber optic networks can be shared among broadband service providers that makes effective utilization of existing infrastructures and also helps to reduce carbon footprint. This Co-Co business model is different from Open Access business model that being in practice in many countries. We can say this agreement is a Limited Open Access model. Since Telefonica’s fiber optic networks passes more than 2 million houses in Spain, Orange and Vodafone would be the major beneficiaries. CMT figures show that more than 250,000 houses in Spain have Fiber to the home connection out of a total of 9 million broadband connections.

Hit by economic recession, 27 percent of Spain’s workforce is unemployed currently. Telecommunication service providers have started offering reduced monthly charges as a measure to retain subscribers. The dropping service charges tightens the competition in the telecom market. Telefonica slashed their broadband service charges this year. It was in this scenario, both Vodafone and Orange approached the telecommunication regulation authority to intervene to reach an amicable solution. Vodafone and Orange together plan to construct high speed fiber optic networks by investing around US$1.3 billion. These networks will take optical fibers to 6 millions more homes in Spain.

Telefonica offers quad play service package to its subscribers in Spain. The quad play package includes Internet, Television, Mobile and Land line telephone.

CMT’s intervention made the negotiation possible for the competitors to co-operate, which will be beneficial to the broadband subscribers in Spain. The competition will ensure reasonable monthly charges and the co-operation will ensure faster deployment of broadband services. This business model in fiber optic broadband market could be tried in other countries where fiber optic infrastructure is already built by an operator and other service providers without a network feels the pressure of competition, but are ready to reach to customers. Network sharing is not a new thing, but what makes this a news is the role of CMT to effectively intervene to make a co-operation among the competitors that finally benefits consumers.

Telecom Argentina says that it is in the midst of an ambitious plan to extend triple-play service provision across the country. The plan will see fiber-optic networks built in Argentina’s major cities to support GPON-based fiber to the home (FTTH), fiber to the building (FTTB), and fiber to the cabinet (FTTC) combined with VDSL2. Telecom Argentina expects the various architectures to enable 100-Mbps Internet services.

The carrier says it plans to spend more than ARG$1.1 billion on the project.

The services offered on the upgraded broadband access networks, particularly in the case of FTTC, will depend on the quality of the outside plant and the distance of the local loop. Along these lines, Telecom Argentina expects to upgrade several current ADSL2+ networks to VDSL2, with potentially more than 1 million customers affected in the first stage of implementation. These customers will see their service offerings rising from a maximum of 20 Mbps to 100 Mbps, the carrier says.

The FTTH deployments will focus initially on what Telecom Argentina describes as “geographical areas which require a high concentration of ultra broadband access.” These include AMBA, Cordoba, and Rosario.

NTS, a competitive fiber-centric broadband provider, has begun providing fiber to the premises (FTTP) services to its first customer in Abilene, Texas.

Leveraging the same methods it used in its Wichita Falls buildout, the network in Abilene is a metro build that’s targeting over 1,000 area business customers.

Since launching its PRIDE FTTP network in 2010, NTS has built out the network in 17 markets in Texas, including a recently completed build in Iowa Park and earlier in Slaton, Texas. It complemented its own ongoing build out in September 2011 by purchasing 1,800 cable customers and equipment from regional operator Reach Broadband.

“We have seen a strong demand for our high speed, triple-play offering from our metro build in Wichita Falls, and we believe Abilene is an ideal market for the expansion of our metro build strategy,” said Guy Nissenson, chairman, president and CEO of NTS, in a release. “The business community relies on high speed bandwidth and the speed and accessibility of our network meets its expectations. We’re pleased to have connected our first customer in Abilene and look forward to adding more in the coming weeks.”

Outside of Texas, NTS has begun building its fiber network in Hammond and other communities in Louisiana. Upon completion, the service provider said that its fiber network will reach 19 new communities and will pass over 53,000 locations.

To build out the PRIDE network, NTS is leveraging $54 million in loans and $45.9 million in grants from the U.S. Department of Agriculture (USDA) Broadband Initiatives Program.

Alcatel-Lucent (Euronext Paris and NYSE: ALU) CEO Michel Combes today unveiled his vision for how he’ll reshape the company from what he called a "generalist" approach to the market to one that focuses on high-growth areas. The strategy, called "The Shift Plan," will see Alcatel-Lucent focus on IP networking and ultra-broadband access, shedding assets that fall outside these areas. Combes did not identify specific product and service lines that will be targeted for removal. However, initial indications were positive for the company's current optical-related business lines.

The Shift Plan will see the company's activities reorganized into three main areas:

• Core Networking, which will include IP routing, IP transport (including both terrestrial and submarine optical transport), and IP platforms
• Access, which will include wireless access, fixed access (including all FTTx activities), patent licensing, and managed services
• Other, which includes the company’s enterprise and government businesses.

The Core Networking operation will be managed for growth. Combes said he expects revenues within this segment to growth from €6.1 billion in 2012 to €7 billion in 2015. Meanwhile, he said he wants to see the group's operating profit to grow from 2.4% in 2012 to more than 12.5% in 2015. To help achieve these targets, Combes says he plans to boost R&D spending by 8% while cutting SG&A costs by about 13%.

The other two segments will be managed for cash generation. LTE and FTTx will be areas of primary focus here. However, the company plans to take a hard look at its current managed services business. As a result, Combes expects operating cash flows in 2015 of €250 million, versus the negative €115 million from last year.

Overall, the company will embark on a strategic review of all its assets, with an eye toward selling those that don’t fit the new vision. Combes estimates the company will earn as much as 1 billion euros through such sales. Meanwhile, other cost-cutting measures – including reducing the number of markets in which it operates – should save an additional 1 billion euros. The company also plans to "reprofile" €2 billion of its existing debt, with another €2 billion reduction after the new strategy starts to show results.

"Today we are taking comprehensive action to position Alcatel-Lucent at the heart of the digital ecosystem, a place from which we will be able properly to capitalize on our many strengths. The Shift Plan is fundamentally an industrial plan that also addresses the Group's operational and financial challenges by putting in place a strong and fully accountable leadership team with clear goals and the appropriate levers to deliver on these goals and on our commitments to all stakeholders," Combes said via a press release. "With The Shift Plan, which is designed to be self-funding, we are aligning realistic and deliverable ambitions with our core competencies."

To execute this plan, Combes has reshuffled responsibilities among the leadership team. The new lineup includes:

• Basil Alwan, IP Routing & IP Transport
• Andrew Mcdonald, IP Platforms
• David Geary, Wireless
• Federico Guillen, Fixed Networks
• Newly hired Philippe Guillemot, Operations
• Philippe Keryer, Strategy & Innovation
• Robert Vrij, Sales
• Nicole Gionet, Human Resources
• Tim Keller, Legal
• Paul Tufano, CFO. Tufano will then surrender the CFO position once implementation of The Shift Plan has begun.

The plan received a positive review from Simon M. Leopold, communications equipment analyst and managing director at Raymond James. "Overall, we left the meeting encouraged and hold a favorable bias on our estimates and price target," he wrote in a note this morning. "The strategy makes sense with the dual focus including a profitable growth element based on Internet Protocol (IP) (including optical) and an element managed for cash based on access (fixed and wireless). Management expects 5% annual growth in Core Networks, including double-digit IP sales growth to €7 billion from €6.1 billion in 2012; it forecasts operating margin of 12.5%, up from 2.4% in 2012. Fewer targets were identified for the Access & Other unit, and we assume flat sales and breakeven operating margin. The forecasts implied that 2015 sales could near €15.3 billion, 5% above the €14.6 billion we model for 2014 with an operating margin near 6% vs. the 3% we model for 2014."

First quarter 2013 (1Q13) spending on broadband aggregation equipment was up in North America, but down elsewhere, according to the latest report from Infonetics Research.

Overall, spending on DSL, PON, and FTTH equipment decreased 7% in 1Q13 from 4Q12, to $1.5 billion worldwide, the market research firm said.

“The broadband aggregation equipment market is off to a difficult start this year, with overall revenue down both sequentially and from the year-ago first quarter, though there is significant disparity in results between regions and technologies,” observed Jeff Heynen, who was promoted this week to principal analyst, broadband access and pay TV, at Infonetics.

The Europe, the Middle East, and Africa (EMEA) region was hit hardest, with spending on DSL, PON, and FTTH equipment down 27% from the previous quarter, putting an end to three consecutive quarters of growth, Heynen says. China saw a big drop in EPON spending, but an eighth consecutive quarter of growth for GPON as China Telecom and China Unicom continue their GPON-based FTTH deployments (see, for example, “Alcatel-Lucent to expand broadband FTTH network for China Telecom”).

Meanwhile, North America bucked the trend and avoided its typical first-quarter softness as operators increased spending to fight the aggressive DOCSIS 3.0 initiatives by cable operators, the analyst pointed out.

PON equipment revenue in EMEA dropped 50% in 1Q13, following two quarters of double-digit increases, due to seasonality and the conclusion of initial GPON purchases by Russian and Middle Eastern operators

Despite a 5% decline in worldwide GPON revenue and a 4% decrease in EPON equipment revenue, Huawei maintained its worldwide revenue lead in the overall broadband aggregation equipment market, with 33% market share. Alcatel-Lucent maintained second place in the overall broadband aggregation market, followed by ZTE, which is having a tough few quarters as it gouges prices to win a piece of China Telecom’s FTTX business.

Infonetics’ quarterly broadband aggregation report “1st quarter 2013 (1Q13) PON, FTTH, and DSL Aggregation Equipment and Subscribers” provides worldwide and regional market size, vendor market share, forecasts through 2017, and analysis for EPON, GPON, FTTH, FTTB, PON, and DSL aggregation equipment and subscribers.

Orange and Nantes Habitat, public housing agency of Nantes signed an agreement to deploy high speed broadband through FTTH network to the premises managed by the housing authority. The agreement is valid for six years. More than 24,000 houses can avail high speed broadband services in Nantes. First premises to be offered the high speed broadband service are situated in Beaulieu, Hauts Paves and the old Tobacco Factory. Orange will deploy the fiber to the home broadband in six months to the priority sites thar are shortlisted. The open access network will give choice to the tenants to select their preferred service provider. Orange in France has been aggressive in Fiber rollout. This is recent example for their commitment to work in partnership with real estate players for the deployment of optical fiber networks especially, an open access model to the 46,000 inhabitants of the rental Nantes Habitat.

The latest Point Topic report for Q1-2013 reveals that the total number of global broadband subscribers has grown by 2% (12.5 million) in the quarter to hit 654,600,000 (up from 643.7m in Q4-2012), which remains fairly flat but continues to be fuelled by the rollout of new superfast fibre optic (FTTH, FTTC etc.) connectivity.

Overall, world broadband subscribers saw an annual growth of nearly 8% and the East Asia region continues to have the largest share of the market (37%), which is primarily being driven by the dominance of China. Indeed East Asia also accounts for 49% of all net additions across the world.

But the real news is the way that a new generation of superfast fibre optic (FTTH/P/B) and hybrid fibre (FTTx/FTTC) technologies are continuing to add new connections and cannibalise others from the old methods of slower copper (ADSL/ADSL2+) services. It’s noted that copper services declined by 2.77m subscribers in Q1-2013 and that’s up sharply from the 415,000 lost in Q4-2012.

As a result of this the overall market share of all fibre optic technologies (hybrid and full fibre) is now 22% (up from 20.78% in Q4-2012), which puts it just ahead of cable services (e.g. Virgin Media) that have held fairly stable at around 19%.

This of course still leaves copper broadband with just over half of the whole market and the most dominant method of internet connectivity, albeit one that is clearly in a slow decline. Fibre solutions are continuing to expand and thus we’d expect to see this trend in copper decline increasing.

The United Kingdom itself is home to around 22 million fixed line broadband ISP subscribers (here), which is incidentally just a little above the 19.6 million premises or so that can now access a superfast broadband connection through fibre and cable services (dominated by BT and Virgin Media).

Point Topics report said:

“FTTx has grown much more rapidly than FTTH in the quarter. Countries posting the highest growth are Belarus, Singapore, the United Kingdom, Spain and Turkey. In particular, the United Kingdom has contributed significantly to FTTx net additions, as the incumbent BT continues the national roll-out of its VDSL [FTTC] network.”

High-speed broadband has become so ubiquitous in the United States that the baseline for broadband could become as high as 10 Mbps downstream, suggests a new White House report. Meanwhile, fiber-based broadband access continues to lag other media in terms of reach, even at 100-Mbps levels.

The report, “Four Years of Broadband Growth,” represents the White House’s assessment of how broadband access in the United States has improved as the result of the Obama Administration’ policies as well as significant investment from the private sector. Report authors the Office of Science and Technology Policy and The National Economic Council note that the government defines “broadband” services as 3 Mbps downstream and 768 kbps upstream – although the Federal Communications Administration uses at least 4 Mbps downstream and upstream speeds of at least 1 Mbps. However, thanks to greater penetration of wired and wireless broadband access networks, 91.4% of Americans have access to wired broadband networks that are advertised as capable of offering 10 Mbps downstream, the report authors assert. Wireless networks capable of such downstream speeds reach 81% of the U.S. population, the report adds.

“Nonetheless, we acknowledge that the country is rapidly reaching the point at which baseline broadband evaluations should increase, and might instead begin at 10 Mbps downstream. This evolving baseline reflects a growing need for increased bandwidth as more Americans use the Internet for work and to build career skills,” the authors suggest.

While the government has helped fund broadband expansion through such programs as the American Reinvestment and Recovery Act, private industry has footed most of the bill for broadband access network improvements. The report says that the private sector has invested nearly $250 billion to improve wired and wireless broadband infrastructure since President Obama took office in January 2009.

The report also notes that more fiber cables have been deployed in the United States over the last two years than in any similar period since 2000, according to the FCC. That said, fiber to the home (FTTH) has a ways to go before it becomes the primary means of broadband services access. According to the report, only 19.86% of the population has access to 10-Mbps downstream services available to them via FTTH. This compares to just over 86% offered this speed via cable operators, just over 43% via DSL, and 78% via wireless.

Fiber’s support of 100 Mbps by percentage is even worse comparatively. Fiber-fed 100-Mbps services are available to only 6.79% of the U.S. population, compared with 44.22% of the population via hybrid fiber/coax (HFC) networks. The only data rate that FTTH dominates is 1-Gbps services, which the report says are only available via fiber cable. However, a mere 3.1% of the U.S. population has access to such services, according to the report.

BTOpenreach has today officially made its new 220Mbps (20Mbps upload) capable Fibre-to-the-Premises (FTTP) based ultrafast broadband service, which will eventually replace its old 110Mbps/100Mbps products, available to UK ISPs and their customers.

The new product is intended to help Openreach “streamline” their portfolio of Fibre-to-the-Premises (FTTP) products (here). It’s also intended to act as a more attractive alternative to the operators top-end 330Mbps (30Mbps uploads) service, which few ISPs have adopted due to the high cost of data capacity and less attractive pricing.

The 220Mbps service, which also supports a prioritised rate of 20Mbps, costs £92 +vat to install (engineer visit and the necessary connection kit) and its annual rental price ranges from £187.32 +vat per year if you take the Transition Product (only available in conjunction with a phone line) to £288 +vat for the standalone solution. ISPs will charge more than this as they also need to account for additional costs (e.g. value-added features) and a profit margin.

By comparison the standalone price for BT’s 110Mbps (15Mbps upload) product is £258.48 per year, which rises to £396 for their 330Mbps (20Mbps upload) solution. Unfortunately only a small number of UK premises currently have access to a native FTTP service but BT are currently rolling out a new FTTP-on-Demand (FTTPoD / FoD) product to solve that.

FoD essentially makes FTTP available to all existing FTTC (up to 80Mbps) lines, which is currently on course to cover about 66% of the UK by spring 2014. The only downside, which is sadly rather significant, is that you could end up paying thousands of pounds to have it installed (details). Suffice to say that many ISPs find this to be a confusing proposition (here).

But anybody that does have deep enough pockets could perhaps consider it to be a worthy long-term investment in the value of their home.

Telus (NYSE: TU) is expanding its fiber and rural broadband facilities in Calgary and Edmonton as part of a broader plan to spend $676 million throughout Alberta this year.

The telco will invest $121 million U.S. dollars in Calgary and $99.5 million in the Edmonton region. These investments are part of its three-year, $1.93 billion commitment made a year ago to expand services in the region.

A key piece of the new investments will be dedicated to expanding the reach of its GPON-based fiber to the premises (FTTP) Optik service, which currently provides 50 Mbps and supports its IPTV service, Optik TV.

By the end of the year, Telus said Optik TV will be built out to reach almost 90 percent of Alberta households. Telus currently has 712,000 Optik TV customers.

Telus’ IPTV moves continue to help drive broadband growth.

Similar to AT&T (NYSE: T) and CenturyLink (NYSE: CTL), Telus reported in Q1 2013 that the 16,000 new broadband Internet subscribers it added “reflect successful promotions and the pull-through effect of Optik TV sales.” The telco’s high-speed subscriber base of 1.3 million rose 85,000, or 6.8 percent year-over-year.