InfoCom says higher bandwidth slowly available in Europe but where is consumers’ demand?

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Around 10% to 15% of all European households passed with FTTH/FTTB — Most developed Asian countries still showing highest fibre deployment with 70% to 90% on households — In Europe, scarce bandwidth-hungry applications damp demand for higher bandwidths — In Asia, bandwidth-hungry content key driver of higher fibre connection demand.

Stuttgart, Germany and Manila, Philippines — According to a recent InfoCom report, in Europe, around 10% to 15% of all households (1H2010) are passed with FTTH/FTTB, at least in the most developed markets, such as in Scandinavia. In Lithuania, initiatives by the government and the incumbent have strongly pushed the FTTH availability in the past few years, also in rural areas. Incumbent TEO LT plans to increase its FTTH coverage from 17% at end-2009 to around 40% at end-2010. Dansk Energi, an association of energy companies in Denmark, has similar goals with an envisaged 50% FTTH coverage by 2015 while France Telecom for its part is planning on around one third of households in 2015 too.

Comparing the percentage of passed households with FTTH and FTTC/VDSL of selected providers, Asian countries such as Japan, South Korea and Hong Kong still have the highest fibre deployment with 70% to 90% of all households (1H2010) passed by either FTTH or FTTC/VDSL. KT of South Korea is at present aiming for a virtual 100% coverage by 2015. The vast majority of the Asian fibre connections are FTTH/FTTB, with VDSL deployed in some areas. In Europe, if VDSL is considered, where available as in Denmark, some European countries reach similar fibre coverage rates as in some Asian markets.

As of usage, most European subscribers are still comfortable with broadband download speeds at around 2 to 10 Mbit/s. On the one hand, this situation is due to a lack of wide availability of bandwidth-hungry applications, if excluding online gaming and IPTV. On the other hand, it is still unclear whether consumers would be willing to spend more than an average of 50 euros per month for higher broadband connections and services. Carriers, as for example KPN in the Netherlands, very often match their deployment strategy with detected user interest and readiness to pay more for access and services. On the whole, leading European telecom operators, that it, mainly incumbents, have not detected a high consumer demand that could justify investing in FTTx, especially in FTTH. Consequently, carriers have favoured more CAPEX friendly deployments, such as FTTC+VDSL; or even ADSL2+.

The experience in Asian markets has shown that the availability of bandwidth-hungry con- tent can be a key driver for fibre connection demand. Government initiatives like the “iJapan” strategy pushed the creation of services like e-health, e-government and online education and thus stimulated consumer awareness on the advantages of very high broadband connections. In all markets, the increasing number of smartphones and digital cameras along with a growing number of people wanting to share their own content (e.g. videos, photos) within social online communities may also contribute to stirred the demand for higher broadband connections in the short to medium term.

About this contribution:
InfoCom latest paper Trends in FTTx Deployments and business models, is one of the reports of the new Series FTTx 2010 — Telecom carriers’ strategies, a new series of reports focused on specific topics all around FTTx. This paper presents key findings as of deployments, innovative services and carriers’ business models with compelling examples in a worldwide perspective.

About InfoCom:
InfoCom is a market research and consultancy company with over 20 years experience providing strategic analyses and planning assistance to stakeholders in the telecommunications, IT and multimedia industries. InfoCom’s independent and fact-based analyses highlight trends and opportunities, supporting decision makers to understand market dynamics in order to improve their competitive advantage.

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