Questioning the unquestionable: Is fiber-to-the-home really the future of broadband?

So, everyone’s agreed: broadband operators will eventually replace their decades-old copper networks with superfast fiber all the way to the home. That, at least was the consensus of some speakers on stage at last week’s Fiber-to-the-x (FTTx) and Next-Generation Access (NGA) Summit in Berlin, Germany. But talk from operators and vendors on the show floor gave me yet more cause to question this conclusion.

The risk of being a next-generation nay-sayer

It has become a risk for anyone in the broadband industry – and increasingly, in the world of politics and public affairs – to question whether operators and nations need fiber-to-the-home (FTTH). To do so would be akin to making Bill Gates’ reported 1981 proclamation that “640K of [home computer] memory should be enough for anybody” – a statement which, incidentally, the Microsoft co-founder denies he ever made.

Certainly, the history of the Internet backs up the view that people will find uses for extra bandwidth in the same way that they found uses for extra home computer memory. Take online video, for example. As speeds have ticked up from 512Kbps to 1Mbps, then 2Mbs, 8Mbps and beyond, video has evolved from short, downloadable low-resolution clips to full-length high-definition movies that can be streamed within a few seconds.

Broadband even has its own law, similar to Moore’s law, which essentially states that computing hardware power will double every two years and is generally believed to have held true since the invention of the integrated circuit in 1958. Nielsen’s law states that Internet connection speeds for high-end home users will increase by 50% every year, which various observers say has similarly held true since the early 1980s.

The problem for operators is that adding more fiber to their networks is profoundly more risky than increasing the power of computers.

Bandwidth is a commodity; FTTH definitely is not

It is true that bandwidth, like computing power, has become become more widely available and inexpensive over time. A study I led last year, for example, found that 100Mbps tariffs were available in several European and Asia Pacific countries for less than US$30 per month, equal to a cost per Mbps considerably lower than that offered by current-generation broadband services with much slower speeds.

But while the cost to consumers is likely to continue to fall in more countries around the world as next-generation services become cheaper and more widely available, the cost to operators of rolling out the networks to provide those extra Mbps will follow a quite different trend.

In most countries, the cost to the consumer has followed a smooth curve as operators’ marketing departments have set prices based on what people have been prepared to pay before and what they are likely to pay in future. As such, the rate of decline in cost per Mbps has exceeded expectations as operators have slashed their prices after realising that few people are prepared to pay a significant premium for faster speeds. In some markets, operators have even priced superfast services below those on their current-generation networks in order to encourage apathetic subscribers to migrate to their next-generation infrastructure.

The problem for operators is that increasing speeds to certain levels is much more costly than updating their marketing collateral. The upgrade from up to 8Mbps ADSL to up to 24Mbps ADSL2+ requires the replacement of equipment in local telephone exchanges and the home, for example. The upgrade to 100Mbps+ FTTH can be the mostly costly of all, requiring operators to also replace the copper leading to and within the home with fiber, a task which can cost thousands of dollars per household.

Why not fiber-to-somewhere-near-the-home?

Proponents argue that only FTTH is future-proof enough to provide the speeds operators need now and in future. But momentum is growing behind an array of technologies which promise to do the same by harnessing decades-old copper networks, as talk from the FTTx & NGA Summit demonstrated.

Until recently, it had been assumed that operators could only reasonably provide speeds of about 50Mbps using the “half-way house” approach of rolling fiber to street cabinets (FTTC) and using VDSL2 for the final copper connection to the home. Technologies such as vectoring and line-bonding, however, promise to boost commercial VDSL2 speeds close to 100Mbps at a fraction of the cost compared to FTTH.

Conversations with operators and vendors at the summit also confirmed my growing suspicions that certain technical and commercial obstacles to line-bonding and vectoring are even less insurmountable than previously thought. Line-bonding has already been deployed by AT&T in the US and Pakistan’s PCTL, vectoring has been trialled by Belgacom, Orange, Swisscom and Telekom Austria amongst others and many across the industry are confident that operators will deploy one or both before the end of this year.

Plus, vectoring and line-bonding might by no means be copper’s swan song. Stefaan VanhasteI of Alcatel Lucent provided some insights into what is being called “the final form of DSL”. Omega DSL promises to deliver speeds of up to 1Gbps – or 1,000Mbps – over 200 meters or less of copper, perfect for enabling operators to provide FTTH-like speeds without having to dig up subscribers’ gardens or enter their homes.

Research into Omega DSL is only at an early stage, though Vanhastel was confident that products would be available before 2020.

Remembering what’s Nielsen’s law is really about

FTTH purists will probably scoff at such a timetable, adding that any speed increases vectoring and line-bonding may provide in the meantime won’t be enough.

Nielsen’s law also appears to suggest that even if operators start using the latest VDSL technology to provide 100Mbps services next year, they would need to upgrade to FTTH by 2014, by which time top speeds will have passed the 200Mbps mark. This need would be especially pressing in markets where cable TV operators are strong, because the structure of their hybrid fiber/coaxial (HFC) networks makes upgrading to offer progressively faster speeds a much less costly option.

But such an analysis ignores some fundamental principles that Nielsen built into his law. First of all, the law applies to connection speeds only for high-end users, not all users. And as Nielsen notes, average connection speeds will diverge ever further from high-end one as the mass-market of customers get online, as they are more likely to be low-end users.

“Unfortunately, I can argue as much as I want: most users still save on bandwidth and prefer a $20/month ISP over a $30/month one with better service,” he states.

Nielsen wrote that in 1998, when few people had dialup connections let alone DSL or fiber ones, but the sentiment remains true to this day. In most markets, at least 80% of all broadband users are subscribed to low-end services with speeds well within the means of current-generation networks.

Surprisingly, the same is true of FTTH networks. The vast majority of FTTH customers are subscribed to services with speeds ADSL2+ could easily deliver. The top-tier 100Mbps+ services are akin to the most expensive bottle of wine on a menu; they’re aimed at making the restaurant look more sophisticated and the mid-priced and house options most people actually order appear more affordable.

The exceptions are countries such as Japan and South Korea where for reasons related to market structure and regulatory concessions, 100Mbps+ services are the only ones available over FTTH networks. Even then, take-up has been slower than operators have wanted.

Build-it-and-they-will-come… many years later

Given that Nielsen published his law in 1998 he is understandably vague about the rate at which speeds for the vast majority of low-end users will increase, merely stating that they will lag two to three years behind those for high-end users.

But a back-of-the-envelope calculation based on applying Nielsen’s law to packages offered by UK cable operator Virgin Media at the end of last year suggests rival operators will be able to comfortably serve the 70-80% of broadband customers with “low-end” 50Mbps services and 10-20% with “mid-tier” 100Mbps ones by 2015.

This would make the decision by Virgin’s arch-rival BT to invest in widespread FTTC and VDSL and offer 40Mbps speeds at mid-market prices eminently sensible. This analysis was backed up by two very senior executives of two very different major operators, who told me at the summit that they believed that 100Mbps would be more than enough for the vast majority of their customers for the next 5-10 years at least.

The irony is that Nielsen alludes to one of the central causes for the slow take-up of superfast broadband in the blog post where he sets out his law: the lack of applications that require such speeds.

Nielsen is a web usability expert at heart, and makes his observation about Internet bandwidth in service to a wider point about web design. In short, he advises his readers to stick to minimalist web pages until about 2003, despite his prediction that high-end users will be using 1.5Mbps connections by then. To serve the mass-market, websites need to be designed to be downloaded quickly by the vast number of low-end users on much slower connections.

This same principle holds true for all manner of online content providers today. The BBC’s iPlayer service, for example, employs so-called adaptive bit-rate technology to enable the broadcaster to deliver reliable video streams over connections not much faster than those available in the early part of last decade. Online video provider Netflix, meanwhile, recently reduced the default bit-rates of its Canadian service to take into account relatively low download caps introduced by operators.

The lesson for operators is that content providers won’t help them drive take-up of superfast broadband; they’ll always aim to serve the lowest common denominator.

Another irony is that FTTH operators have arguably widened the lag between the availability of superfast services and the emergence of more bandwidth-hungry online services. By marketing speeds so far in excess of what’s required today, they might have inadvertently made customers less likely to upgrade, which will further delay when content providers will eventually produce services that use them.

Simply throwing bandwidth at the problem won’t work for another reason: the emergence of popular online content and applications is dependent on factors that have little to do with broadband speeds. Did you know, for example, that average Internet users in the US, Spain, the UK or Italy generate more traffic than those in Japan, despite the fact that some 20 million homes are subscribed to 100Mbps FTTH/B services there?

Farewell to arms: Broadband in a post-speed world

The key question is when – or even if – operators will feel the need to make those multi-billion dollar investments in FTTH. To serve high-end users prepared to pay for superfast broadband now? Certainly, the shrinking premiums operators are able to charge this small sliver of customers suggests that the business case can’t be justified on increased revenues alone.

Perhaps then, when Nielsen’s law dictates that low- and mid-tier speeds will exceed xDSL’s capabilities?  Well, maybe Nielsen’s law just won’t apply by then.

Top speeds in the advanced markets of Japan and South Korea have been defying Nielsen’s law for some time, having been stuck at 100Mbps for three or four years. KT offers 1Gbps WDM-PON in Greater Seoul as a showcase trial, but is already losing money on IPTV and so sees no point in upgrading on a wider scale and throwing good money after bad. Speeds offered by NTT East and NTT West have stalled for similar reasons, although IPTV is not as advanced in Japan.

And as Nielsen predicted, price has trumped speed in consumers’ minds time and time again. Demand for telecoms is also shifting away from standalone broadband to bundles that include telephony, TV and other services. Who’s to say that broadband speeds won’t become increasingly unimportant to consumers, and so fail to justify the multibillion dollar investments FTTH requires? Could operators simply hold their nerve and compete for the mass-market of less-demanding low-end users on well-priced bundles alone? Certainly, we’ve seen numerous ISPs use low-priced no-frills ADSL2+ services to neutralise the supposed threat posed by FTTH in many markets.

The real question of whether telecoms operators need to lay fiber all the way to the home will come when their cable TV rivals boost the speeds of their low-end packages beyond those that even the most advanced fiber/copper hybrid networks can support. Even so, the aforementioned advances in VDSL2 technologies and trends in demand for broadband suggest that the time to pose this question, let alone answer it, could be several years away.

Perhaps telecoms operators are committing to next-generation networks because secretly they know that providing connectivity, rather than content and services, is what they do best. After all, if operators don’t invest in infrastructure, then what is the point of them? If the investment cripples them financially then there is a fair chance that the regulator will step in to protect them.

I am well aware that it is a risk to even pose these questions, especially given my role as an analyst seeking to engage with the very companies promoting the opposite views. And personally speaking, I would very much like to live in a world where near-infinite bandwidth has led to the emergence of all manner of unimaginable new applications and services.

But given how demand for superfast broadband is likely to play out and the vast amounts of money operators – and increasingly, governments – are being urged to invest in it, I feel these questions need to be asked. As always, your feedback is welcome and encouraged.

Comments
  • cyberdoyle June 18, 2011 at 8:54 am

    Very valid points, and nobody blames the incumbents for wanting to make a profit. I agree, the connections to properties next to exchanges and cabinets are probably adequate for now, and customers will always look for the cheapest service (and then moan about it).

    What is worrying with the patching up of the copper phone networks is that investment is made in these technologies, both R&D and hardware, and it is still only a stop gap solution.

    To provide the UK USC of 2 megabit to everyone means that new copper will have to be laid, and very expensive kit used. It makes far more sense to leave the urban areas alone that have poor take up and invest in the areas with limited or no access to the internet. These areas are the most expensive to serve and have had no investment due to small returns on expenditure.

    If the 10% of the country who have no decent internet access are provided with a futureproof fibre feed instead of new copper (this will actually work out cheaper) then the take up will be higher, and that investment will also serve to provide backhaul for mobile masts, which are also underserved and few and far between. This investment will mean that everyone has a connection, and not just those in urban areas. This will mean the government has a far better chance of getting everyone online.

    Once everyone has a connection then the new fibre networks can expand into the more urban areas, and instead of wasting money patching up copper, fibre can be laid where demand is.

    The problem we have at the moment is that unless you live close to an exchange and unless you have a decent ISP and full line checks you have a poor service. People don’t understand why they have a bad connection and aren’t prepared to invest the time to find out. They expect a connection to just work. Like electricity and water. They don’t understand that cheap ISPs overload the contention. They don’t understand about faceplates or filters. They don’t want to. Millions end up doing things the analogue way. Until connectivity is ubiquitous and fit for purpose we won’t see a digital britain.

    The way to get a digital britain is to get fibre to the rurals, simply because copper is too expensive to get to them. Market forces will do the rest.

    Any public money spent on increasing the speed for a select urban few who already have a connection is a total waste. As it has already been proved. Poor take up. The whole ‘superfast’ through cabinets is a hype. Virgin have already provided that service, there is no need for BT to replicate that footprint. The only purpose it serves is to keep the prices lower. The best thing anyone could do is get futureproof solutions, even if the ROI takes a bit longer it will pay off in the long run, as the ROI is more than just money.

  • Rob Gallagher June 21, 2011 at 11:18 am

    Hi @cyberdoyle,

    Thanks for the comment. Always good to get feedback.

    I agree with you that rolling out fibre closer to home can be the most cost-effective solution for providing any kind of broadband to some homes in certain geographies. Australia and Malaysia, where copper networks are in a very poor condition and many homes are too far from exchanges to be able to receive xDSL, are cases in point.

    My main concern is that hype around superfast broadband is causing operators and governments to commit to fiber for the wrong reasons. If operators and governments want to invest in FTTH because it’s the most cost-effective technology for providing low- and mid-end broadband services as well as superfast ones, great! But if they do so on a build-it-and-they-will-come business case based largely on consumers demanding superfast broadband speeds that require FTTH, then they will be disappointed.

    Even so, operators and governments that invest in fiber for the right reasons need to exercise caution. You say “get fibre to the rurals…Market forces will do the rest”. But investing in next-generation access is also risky for several different reasons, apart from the obvious ones about upfront cost.
    Various different broadband technologies have only been truly successful once the maturity of several different ecosystems – for network equipment, customer premises equipment, wholesale products, self-install models, service provider demand, etc. – has been reached.

    If operators move too soon, they could be left with networks that are less future-proof, than technically and commercially not up to the job to delivering broadband services people will actually want for the next few years. A number of open access FTTx networks are floundering with few subscribers because the technology and business models they have employed have not convinced service providers (SPs) who are well aware that demand for broadband is about more than speeds.

    This should be a key concern for such projects. While getting superfast speeds now from any niche SP will satisfy some early adopters, I doubt the majority of people will be happy when they realise they can’t get their “free” or cheap broadband (of whatever speed) from Sky, TalkTalk et al.

    (For the record, I think Fujitsu’s plan to bid for funds to roll out to rural areas in the UK has potential precisely because the company has secured anchor tenants, Virgin and TalkTalk, rather than opt for a build-it-and-they-will-com mentality.)

    The fact is that ecosystems for so-called stop-gap technologies such as FTTC/VDSL are getting more mature by the today, thanks to growing operator and service provider demand and because they more closely resemble, or are intertwined with, the xDSL ecosystems of today. Which is why, together with the way in which demand for speeds is likely to evolve, I wanted to question how long this stopgap would really last, or whether it will in the vast majority of cases be a less a stop gap and more a permanent solution, at least for an indefinite period of time.

    I would also add that operators and vendors have made considerable financial and intellectual investments in FTTH technology, but I would argue that a disproportionate amount has been invested in increasing speeds rather than building ecosystems, solving practical problems for operators and generally reducing the total cost of ownership (all of which would make the case for rural roll out that you outline even stronger) as I point out here: http://blogs.informatandm.com/442/less-speed-less-haste-four-trends-from-ftth-council-europe-2011/ As such, many operators see these investments as an “insurance policy” against the death of copper, which they may not cash in for many, many years.

    Finally, if the fiber vs. copper debate is framed in terms of universal service and getting people online then it really is distracting from a much pressing debate which transcends technology. Just under three out of ten homes in the UK are not subscribed to broadband, and not just because they can’t get access to services. Many of these broadband have-nots do not have the incomes or IT-literacy to go online. Addressing these problems, however, has received depressingly little attention over the past few years, thanks largely to the hype surrounding FTTH and superfast broadband.

  • cyberdoyle June 21, 2011 at 7:31 pm

    HI, disagree totally with your response.
    many millions has already been spent trying to get the broadband have nots online, including the uk online centres, free computers etc, all to no avail. I am not saying build expensive networks and the people will come, I am saying what a lot of people now have is so poor they don’t see any reason to go online.
    Giving someone a computer is not the answer. Giving them a reason to use it is. Nobody had to spend millions promoting the benefits of moblies. As soon as people saw a reason to have one they got one. Same with the internet.
    The reason for getting fibre to the rurals is so that they get a futureproof connection, the real thing, whether it delivers 2 meg or 2gig, as long as it works properly and can be scaled up when needed then that is money well spent. If we continue to be conned by the copper cabal that an ‘upto’ 2 megabit bonded phone line can do the job (which costs thousands) then we deserve the place in the world rankings we are sinking to. The global village will not wait for us to catch up. Other countries storm ahead with fibre networks and we languish in the copper slow lane.
    We have to get real, and realise that fibre is the future. The areas round exchanges will be happy on their cheap connections via the phone lines, but the copper cannot serve the other areas. Therefore investment has to be made to give the rest of the people a decent connection. Only when ALL have access will we start to see ALL using it. And once someone has found the benefits it will bring they never give it up.
    Until we can demonstrate those benefits we are fighting a losing battle.
    You try streaming a live video from a normal connection and tell me how you get on.
    Even at localgovcamp in Birmingham they couldn’t do it the other day, even audio stream failed.
    digitalbritainmyarse.
    chris

  • tukka July 5, 2011 at 12:49 am

    So, everyone’s agreed: broadband operators will eventually replace their decades-old copper networks with superfast fiber all the way to the home.

    And that’s really all that matters, together with the fact that fibre will always be faster than copper (ie copper of tomorrow may be faster than fibre of today, but fibre of tomorrow will be faster than copper of tomorrow).

    “Build-it-and-they-will-come… many years later”. It is already quite a few years later, because others have a head start. And we won’t be finished building before 2021 (and that’s the estimate. Ever met an IT project that goes according to schedule?)

    Even if we assume that we will NEVER reach a physical maximum over copper, that is not the same as saying that copper will be able to cope with everything that the world has to offer at any given point in time, or that keeping copper even remotely adequate is cheaper in the long run.

  • @TatteredRemnant July 5, 2011 at 12:57 am

    I agree with CyberDoyle’s last comment. The main reason people are not taking up broadband en masse is that many do not currently have a use for it. Typically, an older person, for instance, does not use websites to read newspapers or shop online, they do not email, social network, download music or watch YouTube – all the things that the young use often and instinctively.

    What they do already though is watch TV; and if TV is distributed over the net (either streamed or VoD) they will certainly use it. Without super-fast FTTx (preferably ‘ to the home’), they will miss out not only on accessing enhanced legacy pastimes such as watching TV, but on future online uses that they will understand and use. For instance, VoD, online medical conferencing, assistance alarms, online interactive grocery shopping video monitoring, video telephone etc.. etc…

    Dark fibre technology, while not future-proof, will support this generation and the next, and, like copper, may even take us further than we imagine. Technology at each end of the fibre may change, but the basic tubes that reach into every home and business will form the backbone to a great technological leap.

    I understand the problem with building “field of dreams” networks, but I don’t think that we should underestimate how online connectedness will transform our society and how much FTTH and fast broadband can achieve. Maybe even one day economists will stand up for the utility of governments building these networks as an integral part of the continued well-being of its citizens.

    You’re probably right, Mr Gallagher, that over the ‘next few years’ FTTH may seem like overkill, but with speedy broadband in everyone’s home, I think that argument will look decidedly short-sighted. The amount of data which will be required for the average broadband user will only increase as more products and services are delivered online. Photographs, backup, music, home videos will all be sent to the cloud. Word processing, photographic retouching, video editing, etc.. etc.. will be online software as service. Music and video streaming services will become the norm.

    It’s highly likely that online will replace, radio, TV. DVDs, telephones, newspapers, books and magazines. And once the tipping point comes where online is the principle place where these things ‘happen’, then try and mount the argument that speed will ‘not be an issue’.

    The argument about super-fast broadband cannot be had using the mind-set of 2011, we have to imagine a different world – and that world can and must be built by us. Even if the invisible hand has a short reach, we should extend ourselves so as to enable a future where our information is up-loadable and downloadable at speeds which are commensurate with our patience. Bring it on I say, and watch humanity grow – fast.

  • Rollo July 5, 2011 at 2:13 am

    If left up to private enterprise to build a FTTx network, Australia has proven itself to be utterly and totally incapable. When no infrastructure gets built at all, the market has failed.

    Japan introduced FTTN in 1999 and it wasn’t really for a full 8 years that traffic over FTTN networks eclipsed DSN networks. The thing is though that NTT was placed in a position to roll-out FTTN whereas neither Telstra nor any other telco in Australia has the capital base to do so.

    The whole point about NBN Co. is to provide the underlying highway by which the retailers will access. As part of the process of an ongoing management strategy, the FTTN network would be improved on an ongoing basis, yet you’ve seemingly ignored this.

    For the record, the UK also has a capital raising problem for the same reason Australia does. British Telecom was privatised in 1984, and like Telstra has offered sub-standard service ever since.

  • Golfman July 5, 2011 at 3:58 am

    I agree 100%. I’ve been trying to preach this stuff to the unconverted “NBN must be expensive, slow to rollout FTTH” spinners for some time now.

    If you want fast broadband soon (avg 12 months) it must be via FTTN or FTTC. If you want Ferrari speeds via FTTH then you could be waiting for up to 10 years for that.

    The much better ROI on the much cheaper FTTN & FTTC options means that you can easily encourage much more private sector investment instead of the very LOW ROI of FTTH which implies massive new tax payer funded debt.

    It all makes sense to people who aren’t blinded by political persuasions and have an open mind to facts and experiences of other countries but to the NBN fan boi’s talk of anything but FTTH gets you labelled as “hysterically uninformed”

  • Grimbaud July 5, 2011 at 9:38 am

    Why would anyone want or conceive of traveling faster than a horse

  • Dr Ross kelso July 6, 2011 at 7:37 am

    Rollo makes two assertions which I question, viz.

    “If left up to private enterprise to build a FTTx network, Australia has proven itself to be utterly and totally incapable. When no infrastructure gets built at all, the market has failed.”

    and

    “The thing is though that NTT was placed in a position to roll-out FTTN whereas neither Telstra nor any other telco in Australia has the capital base to do so.”

    In reality, prior to the NBN initiative of the Gillard government, Australia didn’t get a FTTx network (apart from TransACT and a few housing estate examples) because of regulatory – not market – failure. The regulatory regime supposed to enable access seekers to gain access to Telstra’s local access network in effect only encouraged Telstra to be obstructionist; at no time was the regime directed to bettering the interests of the end-users.

    On the second point, Telstra never indicated that they lacked the capital base to roll-out a FTTN.

  • Avatar
    Rob Gallagher July 6, 2011 at 12:25 pm

    Hi all,

    Thanks for all your comments. As mentioned, feedback is always welcome and I would love to reply to each one. Unfortunately, my time is a little constrained at the moment.

    But to summarise, what I was hoping to achieve with this piece was to encourage a more nuanced debate about superfast broadband and what this means for operators’ and governments’ investment choices that goes beyond slogans (build-it-and-they-will-come), analogies (horses and cars, motorways and slow lanes, etc.) and comparisons with other markets (Japan, South Korea, mobile, etc.) that are not entirely appropriate or helpful.

    For example, one of the principle concerns seems to be that if operators and governments don’t invest in FTTH, their nation will be left in some kind of slow lane. What I was trying to point in my blog is that the availability and take up of FTTH has had little effect on what the main benefit of broadband networks should be – that is a platform for the delivery of new services and applications, not just bandwidth per se.

    Take Japan. As mentioned in the piece, its FTTH networks are actually massively under-utilised, simply because the market for applications and services that require superfast broadband simply hasn’t emerged. The UK, in contrast, has much higher Internet traffic per user and one of the world’s most advanced Internet video markets, despite the fact that much of its broadband infrastructure is far from advanced.

    To (reluctantly) use the analogy of fibre proponents, the UK’s Internet market is in no way stuck in a slow lane while Japan speeds off in to the future. You could actually make the case that the UK’s applications and services market is arguably more advanced than Japan’s in many ways.

    To re-state my point, if you build an FTTH network consumers and content providers won’t necessarily come. In fact, our global studies into the patterns of consumer broadband purchasing behaviour and online content ecosystems suggest that the odds are very much stacked against this happening.

    People should also question why this fear of being stuck in the slow lane has emerged.

    Clearly, it is understandable that people might worry that their nations will fall behind as a few unfortunate ones did during the first roll out of broadband. However, the move to superfast broadband does not represent the same step change that the move from dial-up did, with its ‘always-on’ nature and freeing up of the phone line. I refer you to my point about content providers always looking to serve the lowest common denominator.

    Those worried about their country’s rankings should really think consider who funds these rankings and decides their interpretation.

    By and large, it’s not consumer groups, charities, governments or even operators. It’s equipment vendors or lobbying groups set up by equipment vendors looking to drive what could be the largest single concentrated period of investment in network equipment in the telecoms industry’s history.

    Now while many of the people in these organisations hold the same views as many of the commenters, let’s just say that they are not entirely in it for the advancement of humanity…

    (By the way, I am not criticising some of the academics and other industry observers who produce the studies for the vendors or lobby groups. You may be surprised to find that some actually hold the same views as Informa: http://blogs.informatandm.com/457/oxford-university%E2%80%99s-wake-up-call-to-superfast-broadband-fear-mongers/ Many people at vendors also agree; the FTTH drive is just one strand of their strategy to hedge their bets on a variety of technologies.)

    Pushing for superfast broadband for the wrong reasons can also have unfortunate consequences, as discussed in this piece on Japan: http://www.lteportal.com/MediaChannel/Articles/LTE__LTE-Advanced;6/Market_Analysis;40/Japan%27s_no_role_model_when_it_comes_to_next-generation_broadband;583?PHPSESSID=2328e4564270a2d699c73b23ed145da4

    Finally, some argue that my argument is short-sighted. Apart from the fact that my argument is based on detailed studies and modelling of markets which have supposedly been living in the future for several years now, such as Japan, Korea, etc., my response would be that many fibre proponents could do with some reading glasses! It’s my perception that many fibre proponents either aren’t aware of or are in denial of the true challenges superfast broadband faces.

    After all, if you don’t understand the present, how can you predict the future?

    As I say, I wish I could reply to each of your comments, but I hope this post has given you some food for thought. My main interest is deepening the debate, particularly given the issues at stake.

  • cyberdoyle July 6, 2011 at 2:04 pm

    Until everyone has access to decent internet service there is no way you can say the UK is a successful digital nation. Come and live in the final third if you don’t believe me. Most have tried to get on line and its such an awful experience they just remain analogue. The reason we need fibre to the home is for those people, not the ones who are currently happy with their connection because they live close to an exchange or cabinet.
    They don’t see the need for anything faster in the majority. That is why take up of ‘superfast’ is slow. If you offered 8/20/40meg to anyone in a rural area they would bite your hand off.

    Those sort of speeds will never be available to rurals, indeed many urban areas are also on very long line lengths and have abysmal connectivity. Those are the people where take up of a good service will be over 60%. Unfortunately those are the areas where no improvement will be made, apart from BET or the offer of satellite.

    Our main argument is that it is wrong to patch up this copper network in rural areas when fibre is the only answer to a futureproof solution if we want everyone to have access.
    Its not that we expect fibre to the home to take the place of copper in urban areas, not until the people want and need it.
    As you quite rightly point out, there are no applications today that could use a gigabit connection to the home, but it is cheaper in the long run to lay that pipe, rather than doing patch ups over and over again in the coming years.

    The applications will soon start to emerge, but if we aren’t ready then we will hit panic mode in a few years when they do.

    If we build futureproof networks now then we will reap the benefits.

    I think we do understand the present, we live and work with people who can’t get connected no matter what they do unless they go for expensive satellite solutions, with massive charges once you go over a gigabyte download a month, and only very limited upload capability.

    Living in a city are you?
    Have access to a good connection?
    It is easy to say you understand the present, but it is only the present in your world, so we may both be right on this one.

    chris

    • Avatar
      Rob Gallagher July 6, 2011 at 2:16 pm

      Hi Chris,

      Thanks again for your comment.

      I’d just like to refer you to my first response to your comment, which I should have stressed in my last comment:

      “I agree with you that rolling out fibre closer to home can be the most cost-effective solution for providing any kind of broadband to some homes in certain geographies…

      “My main concern is that hype around superfast broadband is causing operators and governments to commit to fiber for the wrong reasons. If operators and governments want to invest in FTTH because it’s the most cost-effective technology for providing low- and mid-end broadband services as well as superfast ones, great!”

      So, I hope we’re in line in this regard. If not, I guess we will just to have agree that we disagree that we disagree, if you see what I mean!

  • Avatar
    Rob Gallagher July 6, 2011 at 3:02 pm

    (Posted this a few minutes ago, so apologies if it appears again.)

    Hi Chris,

    Thanks again for your comment.

    I’d just like to refer you to my first response to your comment, which I should have stressed in my last comment:

    “I agree with you that rolling out fibre closer to home can be the most cost-effective solution for providing any kind of broadband to some homes in certain geographies…

    “My main concern is that hype around superfast broadband is causing operators and governments to commit to fiber for the wrong reasons. If operators and governments want to invest in FTTH because it’s the most cost-effective technology for providing low- and mid-end broadband services as well as superfast ones, great!”

    So, I hope we’re in line in this regard. If not, I guess we will just to have agree that we disagree that we disagree, if you see what I mean!

  • cyberdoyle July 6, 2011 at 3:58 pm

    yup. in line with you there too. But sacking off the FTTH campaigners will not help us achieve a digitalbritain to be proud of. If we don’t get some networks built then the telcos will have no competition and we will be tied to the copper cabal for our lifetimes. Research organisations such as yours should not call it ‘hype around superfast’ in regard to FTTH. The hype around superfast comes from telcos calling fttc ‘superfast’. In our opinion it isn’t. Its just faster than adsl. It also makes me cross when they call it ‘fibre broadband’. it is no more fibre broadband than my dial up is. That too is fed by fibre in the exchange.
    I don’t know any governments committing to fibre for the wrong reasons. There are no wrong reasons. As long as they get it to the hardest to reach places first they can’t go wrong. People have no conception of speeds and what the internet can do until they can see it for themselves. Its like telling a cave man about a car. When he’s quite happy with a horse and cart.
    I wish our government would commit to fibre.
    Guess they have had to much of the vital vision crash course to understand what a real next generation network is?
    Suffice it to say that if you want to do some quality research you are more than welcome to visit here and see the issues we face, and how only fibre can possibly be the solution in our type of area (ie 90% of the uk land mass) and that is where investment in fibre should go first. That in its turn will make sure everyone else wants it too, which will more than pay a decent ROI in time.
    We have to do this for the next generation.

  • [...] but see Rob Gallagher “Questioning the Unquestionable: Is FTTH really the future of broadband?” http://blogs.informatandm.com/2357/questioning-the-unquestionable-is-fiber-to-the-home-really-the-fu…  Accessed August 2, 2011  See BT’s announcement from May 2011 regarding 80 mbps over FTTC [...]

  • Valerio August 19, 2011 at 1:40 pm

    Dear Rob, my understanding is that solutions like FTTC or FTTB + VDSL2 could represent a good trade-off between future proof and economically viable solutions. Did I get it right? I ask because the scenario often changes according to whom to talk to. There are Vendors that claims that VDSL is almost dead, that most Telcos are moving to FTTH and alterntive solutions like HFC are better positiones vs VDSL. What’s your view on this? thanks

  • Avatar
    Rob Gallagher August 22, 2011 at 8:33 am

    Hi Valerio,

    Thanks for your comment.

    VDSL is far from dead – quite the opposite in fact. The technology is seeing a resurgence of interest and investment both in new technologies and deployments for the reasons outlined in my blog post. The only reasons I can think of a vendor claiming that VDSL is almost dead is that it lacks VDSL technolgies in its portfolio, is gambling on making a bigger sale with FTTH or is talking about a specific country.

    Whether VDSL represents a good trade-off between what services an operator is required to offer in order to stay competitive (a clumsy phrase I know, but I prefer it to the value-laden “future-proof”) and economic viablity depends on the market. Next-generation access rollouts involve a huge amount of variables and so whether a FTTH or VDSL deployment makes sense should be decided not only on a country-by-country, but by a city-by-city or a town-by-town or in some cases, even a street-by-street basis.

    Certainly, cost should should trump any vague notions about what top speeds operators will need to offer in x number of years time. The fact is that few subscribers will pay more for these speeds over whatever timeframe and the majority will be content with lower ones.

    As for HFC infrastructure, if an operator has it, it should DOCSIS 3.0-enable it to offer faster speeds, as in many cases it will be cheaper and faster to roll out than FTTH or FTTC/VDSL. Norway’s Telenor and TDC of Denmark are examples of operators pursuing this strategy.

    However, Telenor and TDC are among the few telecoms operators (as opposed to cable TV operators) that own and operate HFC networks. But while cable operators with DOCSIS 3.0 networks will present a strong challenge to telecoms operators, competition will still revolve around price and increasingly bundle elements (telephony, TV, etc.) and not just speeds.
    In other words, telecoms operators will not necessarily need to roll out FTTH in order to competet.

    Hope that helps to answer your question.

    Thanks,
    Rob

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