Copper still in fashion despite speed allure of FTTH
Fiber to the Home (FTTH) may have its advantages in offering unlimited speed, but the near-term reality is that telcos can upgrade their copper-based networks with higher-speed DSL services like ADSL2 and VDSL2 for far less capital, according to ABI Research.
Despite the benefits of FTTH, copper-based DSL continues to be king. According to ABI, there were over 367 million subscribers worldwide in 2011.
While it's clear that deploying IPTV and high resolution OTT video are necessary to compete with cable operators, some service providers like AT&T (NYSE: T) are finding they can deliver a decent experience to their customer base. Leveraging ADSL2, AT&T can deliver its U-verse IPTV service over 15 Mbps of bandwidth.
AT&T's U-verse product set may lack the speeds of Verizon's (NYSE: VZ) FTTH-based FiOS service, but its TV and broadband base continues to rise. In Q1, the telco reported that it added 200,000 U-verse TV subscribers to reach 4 million in service, for example.
Outside of the United States, Asia-Pacific continues to be a hotbed of DSL growth. China, in particular, accounted for 33 percent of worldwide DSL subscribers in 2011.
"Financial instability in the advanced economies of Western Europe and lack of innovative internet video services force telcos to look into the cost to value proposition delivered by making large scale investments into FTTH," said Adarsh Krishnan, senior analyst of TV & Video at ABI Research, in a release.
That's not to say there is no case for FTTH. Not only does FTTH offer greater speeds and scale, but a number of governments of Asia Pacific and European-based countries have given local service providers capital and other incentives to encourage investment.
"Strong government initiatives to develop fiber infrastructure have in most cases been a necessary prerequisite to fund FTTH or Fiber to the Building (FTTB) deployments," said Sam Rosen, practice director of TV & Video at ABI Research, adding that these types of "incentives have been strongest in Western Europe and Asia-Pacific."
At the same time, a large revenue gap between FTTH and DSL remains. While FTTH/B service revenues reached $29.6 billion in 2011, ABI reported that DSL broadband services have seen incremental growth in service revenue to reach $106 billion with a CAGR growth of 14 percent in the last 5 years up until 2011.