Always room for fiber

05 May 2008

First things first. Any discussion on the growing prominence of fiber to the home - the ultimate end game in the fixed-line broadband business - requires a little perspective. For a start, there were almost 350 million broadband subscribers in the world at the end of 2007, according to Point Topic. DSL accounts for 65% of that number - around 228 million. Cable modem users take up close to 22% (76.8 million). FTTx brings up the rear with 37.8 million users, which works out to just under 11% global market share.

Look closer, and the numbers start to get interesting. In the last quarter of 2007, FTTx was the faster grower of the three at 6.3% quarter on quarter. DSL also added to its user-base with 4.6% growth, but its quarterly growth rate has been in decline for the past year, Point Topic says.
The story in Asia Pacific is even more encouraging for fiber. The region dominates the FTTx world, with 31.6 million subscribers - that's 83% of the global base. And it's the only region in Point Topic's stats to see a drop in its DSL base (albeit by less than one percentage point).

Granted, the vast majority of Asia's FTTx subscribers are concentrated in a handful of countries - specifically, China, Japan and South Korea. It's also worth mentioning that in the FTTH Council's FTTx penetration report released in February, only 14 markets worldwide sported FTTx penetration over one percent. Still, that's three more markets since the council's first such report in July last year. And again, Asia topped the rankings, with South Korea, Hong Kong and Japan occupying the top three slots. Tellingly, the drop-off between third-ranked Japan and fourth-ranked Sweden is steep - from 21.3% penetration to 7.1%.

While all this seems to bode well for FTTx in Asia, the truth is a little more complex. Many of the factors that have held back FTTx rollouts in various Asian markets are still very much in play, and - Asia being the heterogeneous playground that it is - fiber isn't always going to be the right solution.

Low broadband penetration

That's not to say they hype is totally unjustified, says ABI Research analyst Serene Fong. 'The FTTH market is getting more interesting to watch as consumers get much higher bandwidth and more content at much lower prices than they ever would if ADSL remained the dominant transmission medium,' she told Telecom Asia.

Indeed, the quest for triple plays to drive growth and reduce churn, and the bandwidth demands that come with it, such as demand for richer multimedia content are key factors for telcos that are already deploying fiber access. IPTV and VOD are key drivers - particularly HDTV - but so are emerging applications like multiplayer online gaming, and even online karaoke sessions.
The catch is that, like any telecoms service, broadband is a balancing act. Telcos still have to balance consumer demand against CPE and infrastructure costs. Users want more for their monthly subscription; telcos want economies of scale to be able to give it to them. And that's just in the developed markets.

Which brings us to the other chief issue FTTx, or any other form of broadband, faces in Asia - broadband is the exception to the rule in many countries in the region.

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