What Fiber to the Home Can Do For Your Community

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1. What Fibre to the Home can do for your community FTTH is not just about speed… it’s a revolution! Health care of the future Smart city, smart home Finding a way…
  • 1. What Fibre to the Home can do for your community FTTH is not just about speed… it’s a revolution! Health care of the future Smart city, smart home Finding a way through the FTTH funding maze 1 3 1 www.ftthcouncil.eu www.ftthcouncil.eu
  • 2. Table of contents What is fibre to the home, and why should you care? . . . . . . . . . . . . . . . . . . . . . . . . 3 Better broadband boosts the economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 FTTH around the world . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 FTTH is not just about speed… it’s a revolution! . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Health care of the future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Working from home: good for the economy and the environment . . . . . . . . . . . . . . 10 FTTH boosts productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Entertainment in the FTTH era . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 FTTH for a sustainable future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Smart city, smart home (cities of the future) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Finding a way through the FTTH funding maze . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 What is the FTTH Council Europe? The FTTH Council Europe is an industry organisation with a mission to accelerate the availability of fibrebased, ultra-high-speed access networks to consumers and businesses. The Council promotes this technology because it delivers unlimited speeds that empower the development of a flow of new services and content that enhances the quality of life, contributes to a better environment and increased competitiveness. We believe that Fibre to the Home is key to developing a sustainable future, as it is now widely acknowledged that FTTH is the only future-proof technology, when it comes to bandwidth capacity, speed, reliability, security and scalability. The FTTH Council Europe consists of more than 150 member companies, including many world leaders in the telecommunications industry. We are currently expanding our membership base to a broader community of Fibre to the Home stakeholders, to include content and applications providers (from media, entertainment, health and elderly care, etc.), as well as other associations, governmental and academic institutions. All our publications, articles, pictures, video clips and other information are available on our website: www.ftthcouncil.eu Join us on social media: Twitter: FTTHCouncilEU Facebook Pages: FTTHCouncilEurope & I want Fibre LinkedIn: FTTH Council Europe D/2013/12.345/3 Contact: info@ftthcouncil.eu FTTH Council Europe, Rue des Colonies 11, B-1000 Brussels, Belgium www.ftthcouncil.eu / info@ftthcouncil.eu
  • 3. What is Fibre to the Home, and why should you care? Fibre to the Home is the most advanced technology for building the next generation of communications networks around the world. Already today, fibre connections are available to more than 200 million homes – about one out of every ten homes on the planet. China alone expects to have 100 million fibre subscribers by 2015. European countries such as Lithuania, Norway, Denmark, Sweden and Latvia are approaching near universal access to fibre. has become synonymous with a slow or broken Internet connection. Everyone is aware that broadband over copper cables, whether telephone networks (DSL) or cable television networks, can be unreliable. And everyone knows that once a fault is experienced, it can be difficult and time-consuming to find the source of the problem. Installing new fibre all the way to peoples’ homes may cost more than continuing to use the existing copper telephone and cable networks. However, all-fibre access offers far greater reliability, lower operating costs, lower energy use to run the network and – perhaps most important of all – much greater bandwidth. Fibre is different. The rare problems in an all-fibre network are easily detected with equipment that can pinpoint the cause and even the location of the fault remotely, sometimes even before a customer knows there was a problem and usually without the need to send out a technician. There’s less to go wrong with the network in the first place – most fibre access networks require no or only few electrical components between the central communications office and the end user. Together, this results in lower operating costs in FTTH networks compared with copper. This is a critical issue for small municipal and private networks that cannot afford to keep technicians on standby to fix problems. Access to high bandwidth – and the fact that the bandwidth is high for both download (from the Internet) and upload (to the Internet) – creates opportunities to develop and exploit many new types of services and applications. These services can enhance our quality of life, while also providing more revenue streams for telecoms operators and helping to keep the cost affordable for basic communications services. We’ll talk more about new applications in the coming sections. But for now, just imagine being able to send family videos or detailed images as quickly as you can receive them, in the blink of an eye. Think of how much easier life would be if you had access to a reliable and secure connection that supported remote medical checkups, educational opportunities, or running an Internet business from home. And yes, playing computer games or watching television programmes on demand, precisely when you want to view them. more rugged and reliable than the copper wire they replace. They present no fire hazard. Glass does not corrode, either. Nothing hurts fibre except a physical cut or destruction of the building it is in. Fibre, unlike copper, can also carry a signal over long distances with minimal degradation – 60 kilometres or more in installed networks. In contrast, the signal in copper networks quickly starts to degrade after just a few hundred metres. How does optical fibre work? Fibre-optic cable is made up of thin strands of glass. Information is carried on the glass with pulses of light, usually created by lasers. The capacity of each strand – that is, its ability to carry information – can be increased to meet future needs almost without limit, simply by changing the lasers. The latest systems use lasers that emit more light pulses in less time, for instance, or use multiple wavelengths of light at the same time. Fibre is thus said to be “future-proof.” It is the only communications technology for which that claim can be made. Once fibre is installed, it may not have to be replaced for many decades. Hundreds of fibres can be installed next to each other, inside a thin cable. Unlike electrical signals in copper cable, each glass fibre emits no external signal. There is no interference between fibres, and the signal inside each strand is far more secure from outside detection. Because the glass strands are so flexible and thin (thinner than a human hair) and because they carry no electricity and are impervious to lightning and to water, they are actually far FTTH for reliability The spinning circle on the computer screen 3 In new construction, fibre costs about the same as copper, so why would an operator or property developer install an old technology like copper, which is technologically obsolete? Why would they consider a wireless system, which is fundamentally limited in capacity? A single strand of fibre-optic cable can, in theory, carry more data than the entire radio frequency spectrum combined. Even in an existing network with good quality copper cables, the ability of fibre to meet our insatiable demand for bandwidth can push the economics towards fibre. For telecoms operators, building owners and national governments there are many compelling reasons to consider fibre, even though it may seem more expensive at first glance. This document explains why. www.ftthcouncil.eu
  • 4. Better broadband boosts the In the early nineteenth century the English market town of Marlborough was an important crossroad between London and the West of England, similar in size to the neighbouring town of Swindon. Then, the train arrived. Or rather, it didn’t for Marlborough. The first railroad between London and the West was routed via Swindon, which also became home to one of the largest railway repair works in the world. Today, Marlborough remains a small town of under 10,000 people, while Swindon’s population has grown to more than 200,000. Today it is ultra-high-speed broadband infrastructure that will become a determining factor in ensuring the economic fortune of cities and regions. In Europe, a number of cities have already recognised this and have encouraged investment by private companies. • n the UK, CityFibre aims to deploy FTTH at speeds of at I least 100 Mbps to one million homes and 50,000 businesses in second-tier cities, starting with Bournemouth and York. • n Munich, the utilities company SWM in conjunction with I telecom operator M-net is investing €250 million (£205 million) to build FTTH networks. Munich officials expect 350,000 dwellings, corresponding to half of all homes in the city, to be connected by 2013. • Stockholm, the municipal government created a body, In almost entirely funded by commercial organisations, to build a wholesale FTTH network and lease the fibre to private service providers. • n the Netherlands, private investors have teamed with the I incumbent KPN to offer FTTH to the vast majority of the population within five to ten years, resulting in one million homes already covered, of which 40% are subscribers. While it can be argued that governments have more pressing priorities than FTTH, it can also be said that FTTH is a key to solving all of them: conomic downturn and global competition e ducation and unemployment e ustainability and environment s he digital divide t geing populations a It is specifically when the economy is in a downturn that we should invest in our future and deploy FTTH. Indeed, improved telecom infrastructure could make a key contribution to Europe’s economic recovery. A 10% increase in broadband household penetration helps boost a country’s gross domestic product between 0.9% and 1.5%, says global management consulting firm McKinsey Company. Doubling broadband speeds produces a 0.3% increase in GDP, according to a 2011 study by Ericsson, Arthur D. Little and Chalmers University. Strategic Networks Group, a broadband consultancy in the US, has also investigated how better broadband leads to higher productivity. In a nutshell: for a business or organisation in the US, 10% greater utilisation of the Internet will increase revenues by 24% and reduce business costs by 7%. Furthermore, the positive return on investment on Internet-based solutions for improving productivity is 8.9% higher for fibre users than for cable users, and 14.2% higher for fibre users than for DSL users. Taylor Reynolds Even more interesting, Taylor Reynolds at the OECD has shown that “on average, cost savings of between 0.5% and 1.5% in each of four sectors (electricity, transport, energy, health) over ten years resulting directly from the new broadband network platform could justify the cost of building a national point-topoint, fibre-to-the-home network.” FTTH creates jobs Neelie Kroes, Vice-President of the European Commission responsible for the Digital Agenda, said last year: “Europe needs to focus efforts in sectors that provide direct sources of growth, now and in the future. It is clear, more than ever, that information and communication technology is one of the sectors with the greatest potential to create jobs, increase productivity growth and boost our competitiveness. Studies 4 show that the productivity leaders in Europe are those countries that have invested in, and made best use of, ICT. Already, the sector contributes half of Europe’s productivity growth.” In the UK, it is estimated that an investment of £15 billion (approximately €25 billion) in information and communications technology (including smart grid and broadband) would create or retain 700,000 jobs, of which 360,000 would be small business jobs, according to a report by the Information, Technology and Innovation Foundation (ITIF), a Washington-based think tank. Fast broadband access also enables substantial productivity gains for the millions of small and medium enterprises across the country, giving them access to, for example, cloud computing benefits. As the UK – like the rest of Europe – continues to outsource manufacturing and becomes more and more of a service economy, we have to offer people the tools they will need to change and embrace new opportunities. Access to FTTH is one of those tools. Focus on finance Many observers criticise, what they see as the high upfront cost of installing fibre-optic networks. And it’s fair to say that where cables need to be buried in the ground, the cost can be high. Some say that wireless can do the job just as well. But their arguments crumble under close examination. Although FTTH costs more initially, it offers much greater revenue potential over a longer period and has lower running expenses. However, because FTTH is a futureproof infrastructure, one that will fulfil our broadband needs for generations, it requires a long-term business case. The FTTH Council Europe suggests a “layer by layer” approach to calculating the business case and return on investment, as described in our FTTH Business Guide (www.ftthcouncil.eu/
  • 5. economy discover FTTH with another operator, they become lost customers. The Digital Agenda Europe’s Digital Agenda is a multifaceted project to create a single European market for digital services. The European Commission has put targets in place and Member States are being encouraged to implement plans in order to reach those targets. The targets relating to broadband require universal availability of fast broadband at speeds of 30 Mbps or more, and at least 50% take-up of ultra-high-speed broadband services at speeds of at least 100 Mbps. National governments in many European countries have allocated funding to help meet these targets, particularly for rural and low-income areas where it is less attractive for private players to deploy new broadband infrastructure. But really, common sense should point toward the obvious: where public money is invested, it should be on future-proof solutions, namely FTTH. Neelie Kroes home/form-business-guide). The “passive layer” – ducts, poles, cables and the installation works or “civils” – takes the longest to generate a return on investment, possibly as much as 15 years. For the “active components” – the electronic hardware to transmit data over the network – the investment period is much shorter, typically five to seven years. For developing new services and applications to run over the network, the payback period could be less than three years. Operating costs with FTTH are far lower than for copper, thanks to easier maintenance, lower electricity consumption, and higher network reliability. Utilities in the US and Europe have reported savings of between 40 and 90% per year compared to the cost of running a copper network, before bookkeeping and accounting adjustments. There is an undeniable, growing demand for fibre access, offering operators an opportunity to boost average revenues per user (ARPU) significantly. It has been shown that with FTTH, an operator can generate ARPUs that are, on average, 46% higher, by offering unique services that copper cannot match, and offering them in a more reliable manner. Take-up rates as high as 93% have been recorded, according to a study carried out by Diffraction Analysis (Successful Services Strategies for FTTH operators, 2012). Definition of terms Fibre-to-the-Home (FTTH) is defined as an access network architecture in which the final connection to the subscriber’s premises is optical fibre. The fibre-optic cable is terminated on or inside the premises boundary for the purpose of carrying communication services to a single subscriber. Surveys also show that FTTH customers are more satisfied customers, who are more likely to remain loyal to their service provider, rather than switch to another in search of a better deal. This is great news for service providers because it reduces the cost of recruiting new customers, and raises revenues by reducing the proportion of customers enjoying introductory or promotional pricing. Typically, profits rise 7% or more after 18 months, according to financial models developed by Broadband Communities magazine. The first operator to deploy FTTH in a particular area enjoys a competitive advantage. Once end users Fibre-to-the-Building (FTTB) is defined as an access network architecture in which the connection to the subscriber’s building is optical fibre, but the connections to individual subscriber premises inside the building use a physical medium other than optical fibre. This approach is typically used where a single building houses multiple subscribers. The fibre-optic cable is terminated somewhere on or near the building boundary, such as the basement, and then the building’s existing cabling is used to provide connections to individual apartments. 5 www.ftthcouncil.eu
  • 6. FTTH around the world Is Europe in danger of being left behind in the digital economy? The latest figures from the global alliance of FTTH Councils show that about three out of every four FTTH/B subscribers are located in the Asia Pacific region. Only one in 20 fibre subscribers reside in the European Union’s 27 Member States (collectively known as the EU27) and another one in 20 in Russia and the Commonwealth of Independent States (CIS). The UK represents an extreme case, even for Europe. Even though the country was quick to embrace copper-based broadband services, FTTH adoption is extremely low. As of June 2012 only about 125,000 FTTH subscribers were found in the UK, according to data prepared by analyst firm IDATE for the FTTH Council Europe. In fact the UK has the lowest FTTH penetration in the whole of Europe: just 0.05% of households in the country take a fibre subscription. However, Europe as a whole is making steady progress rolling out FTTH networks. In spite of the economic recession, the overall number of FTTH/B subscribers in Europe (EU27+91) has continued to grow, with a solid 16.4% increase during the first six months of 2012. (The nine other countries in the study are Andorra, Croatia, Iceland, Israel, FYR Macedonia, Norway, Serbia, Switzerland and Turkey). The number of homes passed by fibre (homes where services are available to order) also grew, at about the same rate (16%). By mid-2012, Europe (EU27+9) counted some 5.95 million FTTH/B subscribers with 32 million homes passed. In addition, Russia alone had 5.2 million FTTH/B subscribers for 15.8 million homes passed, and the Ukraine had more than one million FTTH/B subscribers – an increase of more than 85% during the first six months of 2012. New players are expected to deploy FTTH/B in other CIS countries soon. six months earlier. Leader Lithuania has now exceeded 30% household penetration (subscribers taking FTTH/B services where they are available), followed by Norway with 18% and Sweden at 14.5%. Scandinavia has traditionally been strong in FTTH, with more than 250 municipal open access networks in Sweden alone. Networks in Sweden, Norway and Denmark are often built by municipal electric utilities, which have the experience and resources to run an infrastructure business. Among the larger European economies, France and Spain are doing comparatively well, while the UK and Germany do not
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