Deploying VDSL-FTCO makes sense
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.... retail residential DSL subscribers had switched to VDSL, even though the rollout only began in May 2011. Nevertheless, the fact that O2 is migrating customers without increasing the price shows limitations in terms of how much extra revenue the VDSL-FTCO rollout will generate.
Market assessment
Overall, it is likely that VDSL-FTCO is a strategy that is most viable in Western Europe (see fig.4).
Fig. 4: VDSL-FTCO scorecard by region
There are a number of reasons for this, especially the fact that loop lengths are shorter than in other regions, notably in the US and Canada. The lack of copper networks and longer local loops makes the technology difficult to deploy in Africa and Latin America, respectively. The fact that local-loop unbundling is largely a model confined to Western Europe also means that there are more potential operator customers for the technology there than in other regions. The existence of widespread DOCSIS 3.0 cable networks and FTTH/B networks is likely to be something of a constraint on the deployment of VDSL-FTCO. Because VDSL-FTCO offers the lowest maximum speeds of any next-generation access technology, widespread FTTH/B networks with large numbers of subscribers taking superfast broadband speeds of 50Mbps would lessen the attractiveness of a rollout. Nevertheless, there is still a good case for deploying the technology as a churn-reduction tool and migrating subscribers to higher speeds at no additional cost, even if those speeds are lower than what is being offered by cable and FTTH/B competitors.
Informa viewpoint
Simple is often best
The VDSL-FTCO rollouts that have taken place seem to have garnered success. If possible, operators should deploy VDSL-FTCO even if it means having maximum bandwidths that are well below those of cable operators. The cost savings and time-to-market are both important factors in favor of the technology.
Good for incumbents - even better for unbundlers
One reason unbundlers might pursue VDSL-FTCO is that it could give them a speed advantage over incumbents that deployed no next-generation access. Realistically, few unbundlers, certainly outside of Germany, have the local concentration of subscribers to deploy their own FTTH/B networks or use subloop unbundling. The unbundlers potentially face uncertainty and less flexibility in having to migrate to bitstream-based models on GPON FTTH networks, and deploying VDSL-FTCO enables them to offer improved speeds while maintaining their business models.
Judgment of how quickly speeds will increase is key
If operators judge speed to be especially important in a market and think demand for higher speeds will increase quickly, deploying FTTC may make more sense than deploying VDSLFTCO, because FTTC can be combined better with vectoring. Overall, this means that FTTC networks will be able to offer significantly higher speeds in the long run than VDSL-FTCO networks. FTTC networks will also migrate more easily and quickly to FTTH.
But migrating from VDSL-FTCO to FTTC looks sensible.
In summary Superfast broadband phase two: New NGA opportunities, technologies and strategies finds:
> A growing number of operators are proving that you don't need fiber to compete - and win -in the next-generation broadband market.
> Copper-loop length is a key factor in choosing whether to deploy VDSL-from-the-central-office (VDSL-FTCO). Beyond a certain loop length, performance is no better than via ADSL2+.
> Deployment is easy, and an increasing number of operators, both incumbents and alternative players, are rolling out VDSL-FTCO.
> Cost is VDSL-FTCO’s strongest suit, with little work needing to be done to upgrade ADSL2+ subscribers.
> Time-to-market is also the best of any next-generation access technology, giving a rapid boost to an incumbent or unbundler losing subscribers to cable.
> If operators see higher speeds increasing slowly, VDSL-FTCO is the best strategy to help retain existing customers. If demand is increasing more quickly, fiber-to-the-cabinet/node (FTTC/N) or fiber-to-the-home/building (FTTH/B) might be more advisable. Because of loop lengths and the extent of existing FTTH/B deployments, Western Europe and, to a lesser extent, Eastern Europe will be the key markets for VDSL-FTCO.
In those markets where demand for superfast broadband remains low, initially deploying VDSL-FTCO makes sense. If demand stays low, the operator need do no more. If demand for higher speeds rises, more operators can migrate to FTTC and reuse much of the equipment they were using with VDSL-FTCO - for example, line cards and VDSL modems. However, if the operator wanted to move to FTTC with vectoring, the line cards would need to be replaced.
Click here to learn more about Superfast broadband phase two: New NGA opportunities, technologies and strategies
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