idate digiworld - ftth global perspective 241017 gigabit vf - roland montagne

FTTH Global PerspectivesToward Gigabit Era

Broadband World Forum – Berlin, October 24th 2017

ContactRoland MONTAGNEPrinciple AnalystDirector DigiWorld Institute [email protected]

www.idate.org © IDATE DigiWorld 2017 – p. 2

1. FTTx Worldwide Key Trends 3

2. Major Players Worldwide 7

3. FTTH…

3.1. ... in Europe 10

3.2. ... in APAC 20

4. Toward Gigabit Era ____________________________________________________________________ 27

Agenda

www.idate.org

1. FTTx Worldwide Key TrendsFTTH Global Perspective


FTTx Worldwide key trends

> Superfast technologies(1) represented nearly 48% ofbroadband access subscriptions at end 2016, 9 points morethan one year before.

> FTTH/B is still the leading superfast broadband solution, farahead of FTTx/D3.0, followed by VDSLFTTH/B represented 68% of FTTx subscriptions at end 2016. Growth ofFTTH/B subscriptions will continue until 2021.FTTx/D3.0 represented at end 2016, 20% of FTTx subscriptions. After twoyears of significant growth, proportion of FTTx/D3.0 on SuperfastBroadband is levelling off.VDSL, for its part, lagged behind, representing 12% of subscriptions atJune 2016 . This proportion is quite stable.

> The regional breakdown is very heterogeneousNo huge changes in the geographical predominance of APAC on theFTTH/B market.FTTH/B is also the main deployed technology in MENA. It was the casealso in LATAM, but now it is meeting stronger competition from VDSLtechnologies in the region (especially in Brazil).FTTx/D3.0 is still dominant in North America and is by and large growingmore rapidly than other technologies.There is considerable space for VDSL and other copper basedtechnologies such as G.Fast in Europe, where incumbents still wish tooptimise their copper networks.

(1) For the definition of superfast platforms we have considered here three main architectures: FTTH/B,FTTN and FTTx/D3.0 deployed by cable operators

Breakdown of superfast broadband technologies, as of December 2016

Source: IDATE DigiWorld, World FTTx market, August 2017


Breakdown of Superfast broadband technologies

Geographical breakdown of the three main superfast broadband architectures, at December 2016


VDSL: 62 million subscribers (1) FTTH/B: 342 million subscribers FTTx/D3.0: 101 million subscribers

505 million FTTx subscribers Worldwide

at end 2016

MEA = Middle East and Africa; LATAM = Latin America; APAC = Asia-Pacific; NA = North America; EUR = Western + Eastern Europe(1) 11.8 M FTTx°+LAN subscribers in China are not taken into account.


Leading countries, by FTTx solutions at December 2016> China , leader on worldwide FTTH/B marketUntil end-2012, Japan was the most advanced FTTH/B market in the world.Chinese players are increasingly focused on FTTH/B and, as the largest country inthe world, it will remain the leading market for the near future. The number ofFTTH/B subscribers has already significantly risen since 2014.China and Japan are followed by Russia, which is ahead of South Korea, while theUSA is ranked 5th worldwide.Elsewhere in the world it is worth noting that FTTH/B is the only architecturedeployed, such as in Gulf Cooperation Countries (GCC) or the MENA region.

> Strong competition from VDSL technologies in North America,Europe and also in LATAMThe promise of VDSL-based technologies has convinced several Europeanincumbents to bet on the potential of their copper networks.However, as these deployments will concern limited areas, VDSL will not overtakethe two other major FTTx architectures at a worldwide scale.It can be noted that VDSL is the main architecture deployed in Brazil(17.2 million homes passed and 3.87 million subscribers) and in Israel (2.3 millionhomes passed and 1.5 million subscribers) the only two countries in their own regionto deploy this solution on a large scale.

> FTTx/Docsis 3.0 is the technology implemented by MSOsThe US market is clearly ahead of any other in the world concerning Docsis 3.0.Cablecos are implementing Docsis 3.0, expanding also fibre closer to homes, inorder to provide higher speed rates. In general, cablecos do not plan to expand theirgeographical footprint (with a few exceptions for those who decide to deploy FTTH).In the coming months they will focus on updating their existing networks with Doscis3.1. with a few exceptions betting on FTTH.European MSOs have completed also the upgrade of their networks, thus enteringthe Top 5, like Germany and the UK.

"Top 5" FTTH/B countries at December 2016 (‘000 subscribers)

"Top 5" VDSL countries at December 2016 (‘000 subscribers)

"Top 5" FTTx/D3.0 countries at December 2016(‘000 subscribers)




www.idate.org

2. Major players WorldwideFTTH Global Perspective


World leading providers, all FTTx architectures> There are 5 Asian and 3 US players in the global Top 10. Then one player from Russia and one from Western Europe

> Indeed, only one player from Western Europe enters the ranking thanks to its large-scale FTTN+VDSL rollouts (BT)

> Two US cablecos have now completed their infrastructures migration to FTTx/D3.0: Comcast and Charter (Spectrum)

> The Mega merger in USA has taken European cableco Virgin Media out of the TOP 10 chart

> China’s three telcos (China Telecom, China Unicom and China Mobile) top this FTTxranking

106 M subscribersFTTH/B

4.7 M subscribersFTTN+VDSL#9

5.7 M subscribersFTTH

#10


#2

#1

7.4 M subscribersFTTB

#819.9 M subscribers

FTTH/B

#424.7 M subscribersFTTx/D3.0

#3

#77.8 M subscribersFTTH/B


#6

#521.4 M subscribersFTTx/D3.0



Snapshot of the world’s leading FTTH/B providers

19.9

106

70

7.85.7

3.8

3.54.6

7.4

31

Worldwide FTTH/B leaders (million), December 2016


3

<1

www.idate.org

3.1. FTTH in EuropeFTTH Global Perspective


FTTH/B figures at September 2016

There were more than 44.3 million FTTH/B subscribersand nearly 148 million FTTH/B Homes Passed in EU39 at September 2016

Subscribers = 49%Home passed = 52%

EU 28

Subscribers = 43%Home passed =36%

CIS


Historical data and growing trends

•Interesting dynamism of the European Union since 2013•CIS countries : higher growth rates for subs than for HP between January and September 2016•Globally: an increase of the growth rate during the first 9 months of 2016! Especially for EU28

Source: IDATE DigiWorld for FTTH Council Europe

Growth of FTTH/B subscribers(million)

Growth of FTTH/B Homes Passed(million)

05

101520253035404550

Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Sep-15 Sep-16

EU39

EU28

CIS

0

20

40

60

80

100

120

140

160

Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Sep-15 Sep-16

EU39

EU28

CIS


Major projects / categories of players

•400 analyzed FTTH/B projects in EU39 at September 2016:- There are less and less new projects from one year to another- All major operators are involved in each country, among which 35 incumbents at least- There will probably be more and more small players involved in local deployment in the coming years (Rural andSuburban)

• Incumbents now represent 43% of the total number of Homes Passed- This ratio was only 21% at end 2011- Alternative players, which promoted FTTH/B in most countries since 2008-2009, now represent 53% of the totalnumber of HP; this ratio is increasing

•The market is clearly dominated by those two categories of players.

•But municipalities/Local Authorities, along with utilities when appropriate, will remain those ones that will help ensurean exhaustive coverage at term


% of Homes Passed per category of player


General ranking: FTTH/B Homes Passed

•17 countries with 2 M HP or more in EU39 (10 countries in EU28, in blue on the map)•Most significant growth rates do not necessarily concern the largest market but this confirms that, even incountries where FTTH/B is not the leading NGA solution, the interest is growing (e.g. Bulgaria: +40%)

Countries with 2 M HP or more at Sept 2016 [Top 5 Growth rates for 9 first months 2016](million)



General ranking : FTTH/B coverage

Average FTTH/B coverage*: EU39 45%EU28 33%

(*) Number of HP/total number of Households

Top 10 countries in coverage at September 2016



General ranking: FTTH/B Subscribers

•9 countries with 1 M subscribers or more in EU39 (5 countries in EU28, in red on the map))•Strong growth in Spain, Belarus, Finland and Portugal•Dynamism to highlight in France and ItalyCountries with 2 M HP or more at Sept 2016 [Top 5 Growth rates for 9 first months 2016](million)



General ranking : FTTH/B take-up rate

Average FTTH/B take up rate (*): EU39 30%EU28 28%

(*) Take up rate = number of subscribers / number of Homes Passed

Top 10 countries of more than 200 K subs in take-up rate at September 2016



European ranking

•The European Ranking includes countries of more than 200 K HH where the part of FTTH/B subs in the totalnumber of HH is at least 1%•Only 12/31 European countries with a penetration rate > 20%



Key points for Europe

> There already 31 European countries that are part of the Global ranking … a positive sign even if thebottom line is only 1%.

> Even the “reluctant” countries are moving towards FTTH/B technologies. The historic trend shows thisevolution and there are more countries reaching the 100% of coverage!

> End users are migrating to FTTH networks. But the switch to FTTH/B connection is not systematic yetand therefore there is still a large room for communication by operators.

> Governments and local authorities are entering the game and the Digital Agenda is one of the mainimportant objectives to achieve.•DAE’s main requirements are respected in all EU28 countries•Local authorities are more dynamic in Scandinavian countries and in France: they should impulse a newdynamic to reach more rural areas and in countries where FTTH/B is lagging far behind other architectures•“French Model” as an example for Europe?

> Highest take up rates in Northern and Eastern countries: still strong competition from otherarchitectures elsewhere.

> Nearly all players, even if less involved in FTTH/B than other architectures, consider that FTTH is theend game! … and 5G will need Fibre!

www.idate.org

3.2. FTTH in APACFTTH Global Perspective

www.idate.org

FTTH/B is taking a bigger place in the APAC Market due to a positive evolution in the deployment and specially in the user’s adoption

Source: IDATE for FTTH Council APAC

297.8 million FTTH/B

subscribers by Dec. 2016

in APAC

436.5 millionFTTH/B Homes

Passed by Dec. 2016 in

APAC

68% growth from 2015

12.5% growth from 2015

68% FTTH/B Take

up rate by Dec. 2016 in

APAC

> + 20 points from December 2015

Take up rate = FTTH-B subs / Total FTTH-B Homes Passed


Total FTTH/B Homes Passed by country

The Top-4: China is N0 1 by far due to the size of its market. Even though, countries like Japan, South Korea andIndonesia have reached 50 or more than 10 million homes passed with FTTH/B networks

Also it can be observed 10 countries that have deployed FTTH/B networks passing more than 1 million homes

7.6 7.5

3.85

3.08 2.8 2.5 2.3 2.28

1.21 1.06

0

1

2

3

4

5

6

7

8

Thailand Taiwan India Australia Kazakhstan Philippines Hong Kong Malaysia Singapore New Zealand

FTTH

/B H

P M

illio

ns

320

5218 13

0

50

100

150

200

250

300

350

China Japan South Korea Indonesia

FTTH

/B H

P M

illio

ns

Source: IDATE DigiWorld for FTTH Council APAC

The largest market worldwide. Important network overlapping. Coverage higher than gvt’s objectives

Source: IDATE DigiWorld for FTTH APAC


0,00%

100,00%

200,00%

300,00%

400,00%

500,00%

600,00%

700,00%

Philippines Thailand Australia New Zealand Indonesia India China Taiwan Malaysia Kazakhstan


% variation from Dec-2015 to Dec-16 in the number of FTTH/B Homes Passed by country

An aggressive deployment plan performed by PLDT

Also, significant deployment efforts has been executed during 2016 for example in Philippines, Thailand, Australia and New Zealand…


Number of Homes Passed not representative of effectivecoverage

Here, the ratio represented is % of FTTH/B Homes Passedin total households•5 countries > 90% !!!•7 countries > 20%•1 country over 10%


Japan: 100%

Singapore: 100%

Taiwan: 96.5%

South Korea: 95.7%

Hong Kong: 93%

China: 70.2%

Kazakhstan: 62.2%

New Zealand:

60.4%

Thailand: 38.7%

Australia: 34.3%

Malaysia: 33.7%

Indonesia: 20.9%

Philippines: 12.4%

India: 1.4%

Coverage: Top countries in terms of % of FTTH/B Homes Passed in total Households


Total FTTH/B Subscribers by country

While China has increased its fibre subscribers and is still the leading country….… countries like Japan and South Korea also have more than 30 or 10 million FTTH/B subscribers…… and it can be observed 8 countries that already passed 1 million of FTTH/B subscribers

230

0

50

100

150

200

250

China

Mill

ions

33

15

0

5

10

15

20

25

30

35

Japan South Korea

Mill

ions

0

1

2

3

4

5

6

Mill

ions



Key points for APAC

> Demography: a huge market potential•India and China are the most populated countries in the world•MDUs are dominating in large cities especially in China•A huge potential of 550 M population: Bangladesh, Philippines, Vietnam and Pakistan

> Low competition from other xDSL or Cable networks•The “quality gap” between copper and fibre networks is important: end users need fibre for higher bandwidth•Cablecos are less dominating the broadband market than in Europe or in the US … and it’s not going tochange for now (SARFT in China)….a few exceptions like in India

> A key driver for mass market migration in APAC: NBN programs… the NZ success, now followed by theAustralian one

> Incumbents leading rollouts in APAC but also some free room for new entrants•Some incumbents are deeply involved in national FTTH/B deployments (Philippines: PLDT accelerating now,Indonesia, Malaysia)•New entrants in large countries (India), mature markets (HK) or emerging markets (Vietnam)

> APAC Fibre dynamic is also being pushed by Mobile demands…•Fibre for mobile Backhaul : LTE and metro / small cells … and 5G coming soon in APAC !!

www.idate.org

4. Toward Gigabit EraFTTH Global Perspective


Several technologies available to deliver Gigabit access

Source: IDATE DigiWorld, Ultrafast access technologies, November 2016

Current status and medium-term outlook for UFB technologies


How Gbps plans are evolving

29

Since 2013, Providing Gigabitaccess has become a goal initself. The momentum hasbeen largely influenced byGoogle’s initiatives, sincefollowed by private sectoroperators and especially anumber of cities.

At the federal level, theGovernment and the FCChave announced newmeasures in support of city-led rollouts.

Europe

The Digital Agenda (DAE)sets Europe’s connectivitytargets: 30 Mbps for all, and100 Mbps connections or morefor at least 50% of Europeanhouseholds by 2020.

These appear very modest targets when compared to current technological possibilities, and the accelerated pace of the Gigabit race, which more and more ISPs seem willing to join.

Elsewhere around the world

In Asia, selling Gigabit-speedaccess is a strategic choice forprivate sector operators..

In Latin America and the MiddleEast, just providing the entirepopulation with broadbandaccess is already a challenge,so Gigabit access is not reallyon the table as yet. But a fewISPs do offer ultra-fast plans,aimed at a very specificclientele.

USA


2025 EU New Objectives: September 14th 2016

•1 Gbps for schools, universities, research centres, transport hubs, all providers of public services such ashospitals and administrations, and enterprises relying on digital technologies,

•All European households, rural or urban, should have access to connectivity offering a download speed of atleast 100 Mbps, which can be upgraded to 1 Gbps,

•All urban areas as well as major roads and railways should have uninterrupted 5G coverage. As an interimtarget, 5G should be commercially available in at least one major city in each EU Member State by 2020

30


Status of 1 Gbps plans around the world

Where are 1 Gbps plans available?

Source: IDATE DigiWorld, The Gigabit Race


Gigabit-specific applications > Growing use of the cloud stimulating businesses’ interest in Gigabit access•The growing availability of UFB is particularly appealing to businesses which download as much data as they upload, added to

which cloud solutions are being adopted more and more widely.•The aim is to develop collaborative work spaces where users can view and work on shared content, without having to be in the

same location.•The ability to access more powerful servers more quickly, and ideally located not too far from a city’s business district (which has

also been one of Google’s criteria for selecting the cities where Google Fiber will be deployed), helps bolster productivityconsiderably.

> Personal communications and the Smart City•Skype’s global success is undeniable and the application allows users to communicate cheaply between continents. Other online

players like Facebook (via Messenger and WhatsApp) have also entered the video calling fray.•But quality of service is often lacking, and users are becoming more and more demanding.•For public authorities, the driving forces behind their support for Gigabit access are clearly bound up with the services they

will be able to offer citizens.• In the United States, US Ignite is an initiative launched by the Obama White House that aims to define 60 consumer applications

over the next five years that use Gigabit networks, as part of the Smart Gigabit Communities project.

> Entertainment still the name of the game in the residential market• Video related requirements are increasingly steadily. Picture quality image also has a decisive impact on a household’s

bandwidth requirements. Some operators therefore put 4K and Gigabit side by side in their promotional material. In Canada,Rogers Communications launched a Gigabit plan at 149.99 CAD a month, following announcements over the advent of 4K.

• 4K HDR is the next evolution ; one channel requiring up to 30 Mbps. A player like Fox making more and more content availableon 4K HDR

•The issue of 8K is also on the agenda, albeit further down the road. However, Japanese broadcaster NHK is working ondeveloping and broadcasting programmes in 8K, with a view to being ready commercially in time for the 2020 Olympic Games inTokyo. The bandwidth needed to stream content in 8K is estimated at 100 Mbps minimum.


Gigabit-specific applications

> Video games, virtual and augmented reality•As with other business-related uses, consumers aremaking increasing use of cloud solutions. This isespecially true when it comes to cloud gaming.•Speculation over virtual reality has been rife forseveral years now, which is is one of the mostdemanding applications in terms of speed andlatency.• High-end VR headsets only barely deliver theperformance needed for a fluid experience. Morethan anything, however, a Gigabit connection isvital for virtual reality apps which requires the veryfast transmission of a large volume of data to be ableto provide a realistic experience.•Gigabit networks are also needed to ensure a goodquality image and efficient data transmission, forinstance when it comes to applications likeGoogle Earth VR. This application reconstitutes auser’s location in the world based on data (textures,3D elements) stored in Google Earth datacentres.

Source: Goldman Sachs Global Investment Research

Virtual and augmented reality hardware shipment forecasts, 2015-2025(000 units sold)


IDATE Research: Stream FTTx & Gigabit

34

MERCI !!! Roland MONTAGNE

Principle AnalystDirector DigiWorld Institute UKmob: +33 680 850 [email protected]

idate digiworld - ftth global perspective 241017 gigabit vf - roland montagne

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