VDSL2 causes competition concerns

There were two major themes at this year’s Broadband World Forum.

 

The first was the longevity of DSL, which will be bolstered by VDSL2 vectoring and the ongoing challenges involved in making a business case for large-scale FTTH deployments.

 

The second theme was the importance of providing a quality broadband experience for users across different networks as the use of connected devices, video, and applications increases. This requires the addition of intelligence across the network to provide greater visibility into usage and performance, and to enable tailored services and tariffs.

 

Another significant point from the conference was the limited focus on speed, particularly in presentations from the growing number of content and application providers that are working closely with telcos.

 

While policy management has never been a hot topic, it is rapidly becoming a vital ingredient in an all-IP world. “Brawn” (extra capacity/higher speeds) is no good on its own in a multi-device, multi-service, and application world. Operators need intelligent systems to develop a clearer picture of users and their preferences so they can tailor their products, pricing, and marketing accordingly. This intelligence is rapidly evolving as policy management tools become more adaptive and flexible.

 

It is clear from conversations with vendors such as Sandvine, Alcatel-Lucent, and i-Poque that the days of deep-packet inspection only being used to block P2P traffic are over. Policy management is being used in a more positive way to create offerings such as unlimited mobile access to Facebook. In order to develop these kinds of user/content/application-specific products and tariffs, these types of intelligence tools must feature much more prominently in telco’s strategic planning across their network, product, and marketing divisions.

 

 

FTTH continues to grow strongly in areas where rollout costs are low due to factors such as high population density, cheap labor costs, and strong government support. Civil engineering is also extremely important, as demonstrated by Hong Kong City Telecom (HKCT), which is one of the world’s few competitive, fixed-only, FTTH players. HKCT’s initial strategy was to focus on in-building cabling before laying fiber in ducts. In Europe, this final cable deployment is proving to be a significant bottleneck.

 

HKCT’s strategy for high-speed broadband is swimming somewhat against the tide. The company offers speeds of 1Gbps for the same price as an 8Mbps ADSL service, and is encouraging users to consume more bandwidth. Google must love them. However, Google is itself experiencing the realities of rolling out networks in Kansas City, with the company recently complaining of unreasonable regulatory fees and restrictions related to right of way and pole-attachment rules.

 

FTTH is turning out to be a more difficult process than many predicted, and shared investment and effective collaboration in the supply of the technology have become prerequisites to scale in Europe.

 

Recently, a number of tier-1 operators have settled on VDSL2 as a more viable alternative to FTTH in the short to medium term. The European Commission was always going to face a difficult balancing act between promoting the rapid rollout of NGA networks and facilitating and encouraging competition at a deeper network level. The rise of VDSL makes the latter challenge even more difficult.

 

Sub-loop unbundling is technically complex and is not regarded as a viable option by altnets, which, having leveraged LLU successfully to gain greater operational freedom and improved access margins, are facing complicated fixed NGA migration strategies.

 

The options facing altnets in an NGA environment are not particularly attractive as they involve costly investment in FTTH networks, participation in consortium-type access ventures that involve protracted negotiations, or reliance on NGA bit-stream products with widely varying levels of supply. As a result, major altnets such as Tele2 and Vodafone are focusing on mobile broadband [which] is an “easier” option for these types of players and in many cases is accounting for the majority of their revenue growth.

 

Cable operators, with DOCSIS 3.0 upgrades completed or nearing completion, are emerging as the major infrastructure competitors in Europe and elsewhere in the medium term. However, we believe that this will change again in the long term as the FTTH landscape develops.