Thursday, October 7, 2010

Wideband telco subscribers to rise by nearly fourfold by 2014

EL SEGUNDO, USA: Global subscribers to wideband telco services such as Fiber To The Home (FTTH) and VDSL are expected to rise at more than triple the rate of ADSL during the next few years as carriers seek to boost their networks’ performance, according to the broadband market research firm iSuppli Corp.

Wideband telco services subscribers are forecasted to rise to 281 million in 2014, expanding at a Compound Annual Growth Rate (CAGR) of 30.9 percent from 73 million in 2009. In contrast, ADSL subscribers will grow at an 8.4 percent CAGR during the same period, reaching 458 million in 2014, up from 305 million in 2009.

The figure presents iSuppli’s forecast of global telco VDSL and FTTH versus ADSL subscribers.Source: iSuppli, USA.

The telco broadband market is undergoing a seismic shift in technology as technologies like ADSL begin to give way to wideband services like FTTH and VDSL. While ADSL will continue to dominate most telcos’ broadband installed bases for years to come, subscribership has begun to contract in many developed countries such as the United States, Japan, Korea, Canada and Germany.

Rising competition from other industries is compelling the telcos to turn to wideband technology.

Telcos around the world are facing stiff competition from competitive access suppliers, cable providers and wireless operators. This competitive pressure, which has resulted in stagnating revenues and subscribers eroding by as much as 10 percent per year, has caused telephone companies to rethink how they do business in the residential space.

Virtually all carriers, as well as competitive access suppliers, have chosen a strategy of deploying value-added services, such as IPTV, in combination with their core residential business of voice and data in order to stop subscriber erosion and to increase subscriber Average Revenue Per User (ARPU).

Among bandwidth-intensive applications, IPTV is one of the few that has proven to be successful with subscribers. However, telcos plan to offer other services to boost revenue during the next few years, including 3-D HDTV, cloud-based Digital Video Recording (DVR), distance learning, video telephony, home automation and remote home networking management.

ADSL can deliver a downstream rate of up to 24Mbit/Sec. depending on the distance. VDSL can deliver in excess of 100Mbit/Sec., though the rate falls off rapidly after a relatively short distance, measured in hundreds of meters, eventually matching ADSL rates. FTTH can support speeds up to 1Gbit/Sec. or faster over tens of kilometers.

Telcos’ shift toward wideband will generate significant new opportunities for OEMs and component suppliers. VDSL equipment factory revenue is expected to increase at a 32 percent CAGR from 2009 to 2014, while FTTP is expected to grow at a 21 percent CAGR.

However, OEMs and component suppliers face many key questions as they ponder their transition to wideband, including, which technology should investments be made in, when should those investments be made and which regions should they focus on.
Each of these service offerings demands increased bandwidth in the service provider’s access loops.

Telcos now have almost 340 million ADSL loops in service worldwide, most of which cannot support the increased bandwidth required in both downstream and upstream directions to support the potential value added services that telephone companies would like to offer.

The wideband access technology used by each carrier is unique and depends on many factors, such as the bandwidth required, current deployment of fiber in the access network, the availability of conduits or aerial facilities to run fiber in the neighborhood without the need for trench work, greenfield vs. brownfield, length of the carrier’s copper loops and the time to market.

The answer to the bandwidth requirement question varies significantly by region and by country. For the United States, the need will include the simultaneous transmission of multiple HDTV data streams to the home, requiring a very large amount of bandwidth. For some telephone companies in Asia and Europe, the need is to transmit two Standard Definition Television (SDTV) channels. In some cases this requirement can be met by the existing ADSL networks.

Telephone companies have also chosen a strategy to turn around their stagnating revenues and subscriber erosion in the residential segment—a strategy of transformation from being a voice and data service provider to a full-line multimedia service provider. For most telephone companies, this strategy demands that the telcos migrate their installed base of ADSL subscriber to the next-generation, very high-speed broadband access technologies of VDSL2 and FTTH.

Source: iSuppli, USA.

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