ITEM: The next few years could see a lot of FTTH activity in Asia-Pacific – not as a residential broadband play, but as a mobile backhaul strategy.
That’s according to Ovum principal analyst Julie Kunstler, who says that while mobile broadband may be the sexy access technology of choice, wireline broadband is far from dead – at least when you look at wireline broadband access equipment revenues ( which covers FTTx PON, DSL and CMTS), which rebounded last year globally after a fairly steady decline over the last couple of years.
Part of that is due to the growing number of copper-based broadband initiatives (including VDSL and vectoring) by CSPs and DOCSIS deployments by cable operators. It’s also due to an increase in FTTx activity, particularly PON equipment sales and OLT shipments.
What’s interesting is that a lot of FTTx growth is being driven by non-FTTH activity such as mobile backhaul, says Kunstler.
“We’re seeing more PON equipment being used for mobile backhaul, and we’re also seeing TWDM PON pick up momentum, being deployed to support backhaul, fronthaul and enterprises,” she says.
A number of operators are already either using or evaluating PON for mobile backhaul, including China Telecom, China Mobile, NTT, KDDI, Telekom Malaysia and Telkom Indonesia.
The argument for PON-based mobile backhaul is pretty straightforward, she says: “As operators evolve to 4G, we’re seeing new architectures emerge that include small cells and centralized RAN that will require alternative backhaul access and transport capabilities. Meanwhile, the biggest trend affecting backhaul is unrelenting growth in traffic driven by smartphones. Operators will find it very difficult to keep pace with that – it will simply cost too much, which opens the door for alternative access and transport technologies.”
In some cases, cellcos also won’t have much choice – some regulators have issued 4G licenses requiring licensees to build FTTH networks to support their backhaul needs.
The catch is that deploying FTTx isn’t cheap – which is why FTTH still lags as a broadband access technology. For all the advances in the technology, it’s still expensive to deploy, and the ROI is slow at best, which makes for a weak business case. Comparatively, mobile broadband and even DSL are more attractive propositions.
Case in point: FTTH household penetration in APAC isn’t all that high, and won’t get much higher for most markets in the region. According to numbers from Ovum and FTTH Council Asia-Pacific, just five markets will be able to boast FTTH penetration above 50% by 2017: Hong Kong, Singapore, South Korea, Japan and Taiwan. Another three markets (New Zealand, China and Malaysia) will see penetration rates above 20% by then. That’s just household penetration, mind. The number of actual FTTH subscribers will be much lower (except in China).
However, while cellcos may face similar challenges with PON backhaul in terms of construction costs, they have better opportunities for monetizing that fiber – namely by leasing it to other players (data center operators, for example), and in some cases even going into the fiber access business for themselves, Kunstler says.
“Also, deploying FTTx for your own internal mobile backhaul needs is cheaper in terms of opex compared to leasing mobile backhaul services from wireline operators,” she adds.