ftth market report 908,000 new ftth customers! a record ... · ftth market report ftth ftth

20 | BROADBAND PROPERTIES | www.broadbandproperties.com | OctOber 2009

FTTH MarkeT reporT

Bouncing back from the recession, fiber-to-the-home deployments set records for the six months

ending in October 2009:

• More new connections – 908,000 new FTTH customers.

• More total FTTH connections, which crossed the 5-million thresh-old in early August. Just three years after reaching the million-cus-tomer mark, the industry now adds 300,000 customers a month.

• Higher take rates – now above 53 percent for non-RBOC deployers and 28 percent for Verizon – con-tinuing an inexorable rise uninter-rupted even by the deployment slow-down of last fall and winter.

The improvement in overall take rates continues despite an almost to-tal absence of greenfield deployments. In earlier years, high take rates in new housing developments, often 70 to 80 percent or higher, helped make up for lower take rates in competitive over-builds. Now that the competition is on the run, greenfield deployments have become less important.

The new data comes from research conducted by Michael Render of RVA LLC, a market research firm based in Tulsa, Okla. In September, he released his newest report at the FTTH Coun-cil annual conference, in Houston. De-ployment information is based on tallies taken by Render in August and Septem-ber, while consumer data comes from his survey last spring of 3,000 broadband users, culled from a panel of 100,000.

In addition to confirming fiber’s strong health in a period of economic adversity, the newly released data offers new evidence of fiber’s contribution to the economy.

POWERING THE NEW ECONOMYSurveys over the past few years have shown that reliable broadband connec-tions are associated with more telecom-muting. Render’s newly released data confirms that finding and adds a new dimension – fiber. Some 44 percent of FTTH subscribers telework, compared with only 29 percent of those with DSL connections and 37 percent of those with cable modems.

More than bandwidth and reliabil-ity are in the mix, of course. Those who expect to telework – and Render prefers that term to telecommuting, as many work-at-home personnel have no office to commute to – tend to seek fiber-con-nected homes in the first place.

Render also found that FTTH ac-cess correlated strongly with establish-ment of home-based businesses. The survey, taken during the depth of the economic troubles in spring 2009, shows 15.7 percent of those with DSL run a home-based business, versus 17 percent of those with FTTH.

At the sample size used, the chances of this statistical association’s being spu-rious are only about 1 in 10. But that assumes broadband users in all parts of the country are equal. We know, how-ever, that the Northeast – where most of the FTTH is – has been a national pacesetter in creation of home-based businesses since long before the advent of FTTH.

Nevertheless, the economic impact of even that small percentage differ-ence could be huge. Nationwide, the 1.3 percentage-point difference in busi-ness formation between households

908,000 New FTTH Customers! A Record Summer for Fiber

By Steven S. Ross ■ Broadband Properties

Led by Verizon, fiber-to-the-home deployers clocked their strongest half-year yet, returning to the long-term growth trend abandoned last fall.

The 908,000 new FTTH connections bring the North American total to more than 5 million.

Take rates for fiber continue to rise even in competitive environments, reflecting higher

customer satisfaction with FTTH.

About the AuthorSteve is corporate editor of Broadband Properties. See his blog, “Take it to the Bank,” at www.bbpmag.com. He can be reached at [email protected].

OctOber 2009 | www.broadbandproperties.com | BROADBAND PROPERTIES | 21

FTTH MarkeT reporTwith “pretty good” DSL and those with “great” FTTH would amount to about 1.5 million new businesses and full-time-equivalent (FTE) employment equal to roughly half a million jobs (some econo-mists say FTE per home business is even higher during bleak economic periods).

MORE THAN 2M HOMEs PAssEd As investors panicked and fortunes evap-orated in fall 2008, money to finance new FTTH builds dried up. Only those deployers that used their own retained earnings or that had lined up financing ahead of the September 2008 collapse were building last winter and spring.

Investors started testing the market this past summer – with timidity. And the stimulus program for broadband ac-tually delayed some deployments while potential deployers waited to see whether they would be eligible for federal loans or grants. Thus, the showing of the past six months is all the more remarkable.

North American FTTH deployers, almost all of them in the United States, passed 2,029,100 additional homes in the six months ending October 2009. Despite the weak economy and a dearth of greenfield deployments, the total came close to the record of 2.21 million set in the six months ending March 2008.

Non-RBOC entities, typically mu-nicipalities expanding their existing footprints or Tier 3 local exchange car-riers (LECs) overbuilding their own copper networks, accounted for about a quarter of the homes newly passed. Veri-zon deployed almost all the rest. But be-

cause Verizon typically operates in more competitive environments, the smaller entities accounted for about a third of the new FTTH customers.

What’s more, deployers of all kinds were willing to spend on marketing. The increase in homes marketed for FTTH smashed all previous highs. The last six months saw more than 2.5 million new homes marketed for FTTH, about 10 percent above the previous high, which was recorded for the six months ending September 2008.

By September 2008, of course, the greenfield market was softening, reduc-ing chances for easy sales, but take rates continued to climb anyway. The ratio of homes connected to homes marketed is

now 31 percent, up from 27 percent a year ago.

Indeed, FTTH deployments in the six months just ended rebounded by all measures – homes passed, marketed and connected – and returned to the long-term trend we’ve been calculating since 2005. This was true whether we calcu-lated the rise in absolute numbers or in percentages (see table below).

Render was unable to supply an up-date on the number of FTTH video cus-tomers before press time. Nevertheless, with more than 15 percent of all homes in the United States now passed by fi-ber, FTTH technology is clearly now a major player in both broadband and video services.

COMPARIsONsBandwidth supplied by FTTH providers is, on average, greater than that offered by cable or DSL providers. The biggest gap is in upload speed, where FTTH en-joys a 5-to-1 advantage over both DSL and cable modems. Render expects cable speeds to increase over the next year as large cable providers continue to phase in DOCSIS 3.0. But FTTH speeds will increase even faster, he emphasizes.

Smaller cable companies are trying to improve bandwidth for customers by laying more mid-mile fiber and by split-ting DOCSIS nodes so each node serves fewer homes. Most cable companies, fearing open-access requirements, boy-

GROWTH OR dEClINE, HAlf OvER HAlf fTTH Homes fTTH Homes fTTH Homes video Passed Marketed Connected Customers

Apr-06 -57% 252% 23% 1018%Sep-06 333% 27% 176% -2%Mar-07 -5% -16% 38% 37%Sep-07 -19% -13% 42% 118%Mar-08 43% 54% 16% 33%Sep-08 -7% 10% 10% -6%Mar-09 -35% -34% -22% -17%Sep-09 51% 66% 37% NA

FTTH homes passed, marketed and connected increased at stellar rates after a slow fall and winter.

FTTH penetration by state for the lower 48 states; the deepest green indicates states with penetration rates of 10 percent or more. Pure white indicates states with close to zero penetration.


FTTH MarkeT reporT

cotted the first round of broadband stimulus funding. But the names of as many as 83 cable companies show up in the initial stimulus funding request summaries – and three-quarters of the projects are for the middle mile.

CUsTOMER APPROvAlAll this progress comes despite customer uncertainty about FTTH; Render reports that only 28 percent of the public even knows what FTTH is and understands its advantages over other broadband delivery technologies. Indeed, lack of public awareness about FTTH translates into a generally blasé atti-tude about fiber – until, of course, a potential customer sees it in action in a neighbor’s home.

Customers who have FTTH say it beats other broadband de-ployment technologies by every measure of service, bandwidth and reliability except for the in-home installation process. Cus-tomers complain about installation no matter who the service provider is – all providers are struggling to bring more band-width and flexibility to home networks.

When it comes to video, the customer satisfaction gap be-tween FTTH and other technologies opens extra wide: In Ren-der’s surveys, FTTH wins in every category of service.

FTTH now also tops the list of desired amenities in green-field developments, and the gap between FTTH and second place (green space for walking or jogging) is especially wide among current FTTH users.

It is clear that buyers of new homes – a younger-than- average demographic – are more likely to be among that 28 percent who know about FTTH.

Now, if the economy would only improve enough to reig-nite the greenfield market! BBP

For more information about RVA’s research and publications, see www.rvallc.com.

FTTH Homes Passed, September 2009 (Cumulative, North America)

19,40035,700

72,100110,000

180,300189,000

970,0001,619,500

2,696,846

3,625,000 4,089,000

6,099,000

8,003,000

9,552,300

11,763,000

13,825,000

15,170,900

17,200,000

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

Sep-01 Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09

Source: RVA LLC

FTTH deployers in North America, almost all in the U.S., passed 2.03 million additional homes in the six months ending September 2009. Despite the weak economy and a dearth of greenfield deployments, the total came close to the 2.21 million record set in the six months ending March 2008.

FTTH Homes Marketed, September 2009(Cumulative, North America)

19,4

00

35,7

00

72,1

00

110,

000

180,

300

189,

000

413,

221

829,7001,754,300

3,218,600

5,079,999

6,643,000

7,996,400

10,082,065

12,369,000

13,875,600

16,380,100

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000


Source: RVA LLC

The increase in homes marketed for FTTH in the most recent six-month period set a record – more than 2.5 million, or 10 percent above the previous high, the six months ending September 2008.

Homes Passed, Marketed, and Connected in Each Six-Month Period Since March 2004 (Calculated by BBP from RVA Data)

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09

Nor

th A

mer

ican

Hom

es

Passed 8,700 781,000 649,500 1,077,346 928,154 464,000 2,010,000 1,904,000 1,549,300 2,210,700 2,062,000 1,345,900 2,029,100

Marketed 70,300 8,700 224,221 416,479 924,600 1,464,300 1,861,399 1,563,001 1,353,400 2,085,665 2,286,935 1,506,600 2,504,500

Connected 13,300 68,500 66,500 99,700 235,300 123,000 340,000 467,597 663,403 770,500 847,500 662,000 908,600

Video Connected 7,750 27,825 50,400 13,500 8,600 150,900 147,900 202,600 442,600 587,000 554,000 459,300

Mar-04 Sep-04 Apr-05 Sep-05 Jan-06 Apr-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09In six months ending:

In the six months ending in September 2009, FTTH deployments rebounded by all measures – homes passed, marketed and connected. In fact, they returned to the long-term trend. RVA was unable to supply video data before press time.

FTTH Homes Connected, September 2009(Cumulative, North America)

5,50

010

,350

22,5

00

38,0

00

64,7

00

78,0

00

146,

500

213,

000

312,

700

548,000

671,000

1,011,000

1,478,597

2,142,000

2,912,500

3,760,000

4,422,000

5,330,600

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

5,500,000


Source: RVA LLC

More FTTH customers signed on in the past six months than in any previous six-month period. The rate of homes connected is now 31 percent of those passed, up from 27 percent a year ago. Rates differ substantially by circumstance and type of build. The continued rise in the take rate comes despite a loss of greenfield deployments, where take rates often top 80 percent.

Only 28 percent of the public is even aware of FTTH and its

advantages. But those who see FTTH in action want to sign up for

it, and those who sign up for it are happy with it.


FTTH MarkeT reporT

Overall FTTH Take Rate, RBOC vs Non-RBOC (Cumulative, North America, September 2009)

35.4%

26.0%

18.4%

20.8% 19.9%

22.3%

26.8%

28.8%

30.4%

31.8%

32.5%

28.4%

29.0%

31.2%

34.5%

35.9%

41.3%43.7%

47.4% 48.2%51.0%

52.4%

51.5%

51.8%

51.9%

52.4%

52.6%

53.1%

0%

10%

20%

30%

40%

50%

60%


Source: RVA LLC

Overall FTTH

Non-RBOC

Take rates for FTTH (homes buying services as a percentage of home marketed) continue to rise. Take rates for RBOCs (mainly Verizon) have been improving since they began marketing video services. Non-RBOC take rates tend to be higher than RBOC rates because, until recently, more of their deployments have been in greenfield developments.

Overall FTTH Take Rate, RBOCs (Cumulative, North America, September 2009)

3.0%8.3%

9.8%

15.5% 14.6%

17.6%19.0%

23.0%

25.0%

27.0%28.0%

0%

10%

20%

30%

Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09

Take rates specifically for RBOCs (the data is almost entirely from Verizon) continued to climb during the past six months, despite the recession. Although deployments slowed, marketing surged ahead.

Percent of US Households Passed and Connected to FTTH

0%

2%

4%

6%

8%

10%

12%

14%

16%

Aug-04 Feb-05 Sep-05 Mar-06 Oct-06 Apr-07 Nov-07 Jun-08 Dec-08 Jul-09 Jan-10

Passed

Connected

More than 15 percent of all homes in the United States are now passed by fiber, making FTTH technology a major player in broadband and video services. About 4.6 percent of all U.S. households were connected to FTTH by last month.

Broadband Performance (Median) Source: RVA survey March 2009

10.4

6.9

1.5

2.4

0.5 0.4

FTTH Cable Modem DSL

Download, Mbps Upload, Mbps

Bandwidth supplied by FTTH providers is greater than that offered by cable or DSL providers. The biggest gap between FTTH and cable is in upload speed, where FTTH enjoys a 5-to-1 advantage.

FTTH Sa�sfac�on vs Other Broadband % Very Sa�sfied Source RVALLC Spring 2009

63%67%

55%

70% 70%64%

47%52%

47%

58%64% 65%

Consistency ofspeed

Broadbandspeed

Provider'scustomer

service

Internet overall Reliability -service up�me

Installa�onprocess

FTTH Other broadband

FTTH beats other broadband deployment technologies by every measure of service, bandwidth and reliability, customers say, except for the in-home installation process. All deployers are struggling to bring more bandwidth and flexibility to home networks.

Compara�ve Adop�on Rate, FTTH vs Coax and Copper PairsSource: RVALLC September 2009

0%

50%

100%

150%

200%

250%

300%

3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Ann

ual %

Gro

wth

a�

er In

trod

uc�o

n Copper

Coax

Fiber

Ten years after initial deployments, FTTH continues to rack up faster adoption rates than did coax or copper twisted pair at similar points in their life cycles.


FTTH MarkeT reporT

FTTH Sa�sfac�on vs Other TV Delivery, % Very Sa�sfied Source RVALLC Spring 2009

74%69%

61%

70%

56%

69%

51% 49%

41%

54%

40%

60%

Quality of HDpicture

Standardtelevision

overall

Number of HDchannels

Number ofstandardchannels

Video onDemand

HD TV overall

FTTH Other broadband

When it comes to video, the gap between customer satisfaction with FTTH and with other technologies opens wide – FTTH wins in every category of service. General Public Awareness of FTTH:

Source: RVALLC Spring 2009Aware

28%

Not aware72%

RVA reports that there is still considerable customer uncertainty about FTTH. Only 28 percent of the public even knows what FTTH is about and how it compares with other broadband delivery technologies.

General Public Interest in FTTH If AvailableSource: RVALLC Spring 2009

3%

16%

28%

54%

0% 10% 20% 30% 40% 50% 60%

100 Mbps symmetrical $145



Would keep exis�ng service

General lack of awareness about FTTH translates into a generally blasé attitude about fiber – until, of course, a potential customer sees it in action in a neighbor’s home. Note the sharp price sensitivity.

Importance of Development Ameni�es if Shopping for New Home

Source: RVALLC Spring 2009

36%

39%

59%

62%

69%

35%

36%

56%

65%

82%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Fitness center / Club house

Community pool / park

24 hour neighborhood patrol

Green space / walking, jogging

Internet from a direct fiberop�c line

Current FTTH Users

Non FTTH Users

FTTH now tops the list of desired greenfield amenities – and the gap between FTTH and second place (green space for walking or jogging) is especially wide among current FTTH users.

Adoption of FTTH is driven both by entertainment – customers greatly prefer fiber-based video services – and by its advantages for

telecommuting and running businesses from home.

Projected Bandwidth Gaps: FTTH vs Other Technologies

0

2

4

6

8

10

12

14

16

2008 2009 2010

Dow

nloa

d Sp

eed

(Mbp

s)

FTTH

Cable

DSL

RVA expects cable modem speeds to increase over the next year as DOCSIS 3.0 continues phasing in. FTTH speeds are set to increase even faster.

Correla�on of % who have done telework with Download/Upload speed (Mbps)

DSL

Cable Mode

FTTH

20%

25%

30%

35%

40%

45%

50%

0 1 2 3 4 5 6 7

FTTH access is strongly correlated with working at home, in RVA customer survey data from last spring.


FTTH MarkeT reporTFTTH Tested Average Bandwidth Trends

1.1

1.8

4

5.2

7

12.2

0 2 4 6 8 10 12 14

2007

2008

2009

Mbps

Download Mbps

Upload

A detailed look at bandwidth offered over fiber shows an accelerating trend.

Correla�on of % who have a home-based business with Download/Upload speed (Mbps)

DSL

Cable Modem

FTTH

15.6%

15.8%

16.0%

16.2%

16.4%

16.6%

16.8%

17.0%

17.2%

0 1 2 3 4 5 6 7

FTTH access also correlates strongly with establishment of a home business, in the RVA data. At the sample size used, the chances of this statistical association being spurious are only about 1 in 10.

®

►

►

►

Fiber’s bandwidth advantage over other broadband technologies continues to grow. Because home-based businesses are strongly

associated with bandwidth, making fiber to the home generally available could add as many as 1.5 million new home-based businesses.

ftth market report 908,000 new ftth customers! a record ... · ftth market report ftth ftth

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