The Last Mile Challenge Continues
Though Fiber-to-the-Home (FTTH) deployments may have slowed recently, there are now approximately 20.9 million homes passed in North America as of March 30, 2011. RVA LLC, in partnership with the FTTH Council, shares interesting findings from a large-scale survey of providers across North America.
Overall, the number of homes actually connected with lit fiber now exceeds 7 million. Not surprisingly, about 97% of this North American activity has been in the United States to date.
How does that relate to video delivery to the home? The number of homes serviced with traditional paid video channels over end-to-end fiber has now reached 5 million with help from Verizon and many smaller FTTH providers and their television offering via fiber. In some cases this is via a channel lineup of RF video. More often, it is via an IPTV connection.
While still relatively strong, FTTH growth has slowed somewhat since 2008. Slower growth in the number of homes passed over the past 2 years is primarily due to Verizon slowing their network build and turning attention to marketing connections as they get closer to their first FTTH project targets.
Other factors include general economic conditions, and the fact that the federal stimulus legislation may have had unintended negative consequences in 2009 and 2010. Many interviewed in those years felt the stimulus program caused some projects to be put on hold while the providers evaluated the possibility of public funding. Thankfully, annual build rates are expected to stabilize and grow slightly in 2011 as U.S. projects from non RBOC providers accelerate, and fairly large projects in Canada continue to build out.
U.S. growth in 2011 is a result, in part, of stimulus money now starting to flow to FTTH projects. Based on data collected from more than 50 random surveys with FTTH ARRA stimulus award recipients, RVA estimates that a total of 38% of FTTH stimulus projects are currently underway, and another 36% are preparing to start. The remainder of the ARRA projects are in various stages of engineering and environmental approval. (A small percentage of those interviewed have actually declined funding due to unexpected factors, such as the high wage rates required under regulations for such Federal grants.) (See Figure 1.)
Figure 1. Status of ARRA FTTH Stimulus Grants
Who Is Doing What -- Right Now?
Regional Bell Operating Companies (primarily Verizon) represent over 73% of all North American FTTH connections. (It should be noted that total FTTH connections estimated for Verizon includes reported FiOS Internet connections, plus an estimate of FiOS television-only connections.)
While Verizon is the largest U.S. FTTH provider by a very large margin, there is actually a very long tail of other providers. As of March 30, 2011, RVA estimates that there are more than 770 providers of FTTH in North America. Of these non RBOC suppliers, smaller incumbent telephone suppliers (ILECs) account for 61% of the primary base. (See Figure 2.) Most of these are classified as “Tier 3” ILECs with a market concentration in 1 limited geographic area.
Figure 2. FTTH Non RBOC Deployments By Provider Type
Some of these also have associated competitive or CLEC activity. True facilities-based competitive providers (CLECs) and publicly owned systems (MUNIs) together account for 24% of the total. The remaining builds are from integrators working with developers, MSO/cable TV companies, and electric utilities and coops.
Overall, FTTH has now reached over 18% penetration of U.S. households in terms of homes passed and 6% in terms of homes connected.
Growth in FTTH after 2011 looks positive. As just 1 example, non RBOC incumbent telephone companies are already very bullish on FTTH. (See Figure 3.) Most ILECs that have already deployed FTTH plan continued deployment, and those who have not deployed any FTTH are now planning future deployment.
Figure 3. Likelihood of Adding FTTH Lines: Non RBOC Providers
In addition, the USDA Rural Development agency recently announced almost $40 million in loans for projects in Georgia, Illinois, Iowa, Kansas, North Dakota, Montana, and Oklahoma. The telephone companies and cooperatives that have been selected to receive the financing will construct more than 1,000 miles of Fiber-to-the-Premises (FTTP) systems. USDA Rural Development funded more than 16,000 miles of FTTP projects during fiscal year 2010 to upgrade, expand, or replace networks and perform system maintenance.
Approximately 70% of North American countries outside of the United States also report increasing activity in the next 5 years. Canada is currently experiencing growth as incumbent telephone companies in some areas are moving quickly to FTTH to better compete with cable TV MSOs that are introducing higher bandwidths using DOCSIS 3.
About the Author
Michael Render is president of RVA LLC. Render has overseen a census of North American FTTH deployments for 9 years, and has more than 30 years of experience in Market Research. Since 2001, RVA LLC has surveyed North American communications providers in order to determine the growth in FTTH. Partnering with the FTTH Council North America, RVA releases 2 market estimates annually (Q1 in March and Q3 in September).
The Fiber-to-the-Home (FTTH) Council is a non-profit association consisting of companies and organizations that deliver video, Internet, and/or voice services over high-bandwidth, next-generation, direct fiber optic connections -- as well as companies that manufacture FTTH products and others involved in planning and building FTTH networks. The Council’s mission is to educate the public and government officials about FTTH solutions and to promote and accelerate deployment of fiber-to-the-home and the resulting quality of life enhancements such networks make possible. For more information, visit www.ftthcouncil.org.
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