NGA coverage: what is affordable?

Transcription

1 Analysys Mason event The Next Generation of European Regulation NGA coverage: what is affordable? 21 October 2014 Rupert Wood

2 Are the old assumptions about coverage and costs flawed? Old model for FTTx deployment New model for FTTx deployment 2 Wireless Mid-density SDUs: FTTC Dense urban MDUs: FTTP FTTP FTTH/dp for SDUs, FTTB for the rest FTTB + copper/ coax for MDUs Economies of scale made FTTH viable only in densely populated areas Less dense areas would have to make do with FTTC or wireless access Reality versus expectation: urban fibre demand and costs worse rural fibre costs better rural wireless performance and costs worse than assumed copper performance continues to improve

3 Cost per premises passed Maximising coverage for given service needs within fixed budget constraints Save money in urban areas and redeploy outside those areas fibre to (almost) every building no or very limited role for terrestrial wireless in residential broadband use of FTTx + copper/coax for very dense areas. Still get n*100mbps aerial fibre where possible outside urban areas, and fibre aerial drops unless access to buildings is problematic Asia Pacific fixed operators often already use this approach Save on urban, spend on rural Point at which FTTx matches FTTP Save with FTTB/G.fast etc Centile New costs Redeploy savings Old costs 3

4 Consumer choice of broadband is often not based on strict service needs DAE targets related to old forecasts of real service needs of the masses Competition still based largely on headline speed, apparently. DOCSIS3.0 bonding is cheap for cablecos, DOCSIS3.1 less so Entry-level cable is sometimes now 100Mbps in Europe, and 1Gbps is only months away Mass-market new-entrant FTTP now appearing, often 1Gbps Consumers do not decide on the basis of service needs service needs is telco-think anyway Cable gain in broadband market share, last 12 months (% points) Poland Germany Belgium Netherlands Denmark Ireland Norway Hungary Switzerland USA Canada France Austria Sweden Finland Romania UK Portugal Spain Czech Republic Mainly FTTC Mixed Mainly FTTH

5 France Romania Finland Ireland Netherlands UK Czech Rep Belgium Denmark Spain Switzerland Hungary Portugal Austria Germany Poland Sweden USA Canada Norway Mbps Minimum marketed cable broadband speeds can be as high as 100Mbps Highest and lowest marketed cable downlink speeds in selected markets, April Mbps entry level (Numericable, UPC Romania) 500Mbps fastest access (Com Hem) (16-channel-bond) Minimum marketed dl speed Note: Excludes GPON offers by cable operators Maximum marketed dl speed

6 Third infrastructures might appear in Europe 6 Other US FTTC operators are following Google Fiber with gigabit roll-out: AT&T, CenturyLink FTTH new entrants in Europe with mass-market ambitions. Google reportedly looked at CityFibre in York. Vodafone + utility (as in Ireland)? De-skilling labour, pre-connectorisation, infrastructure access reducing connection costs by 30%. Access to non-commercial assets often critical Interestingly, Google Fiber will not offer dedicated access for content providers

7 Copper-based telcos are being forced to think beyond FTTC / VDSL2 vectoring 7 FTTC / VDSL2 vectoring FTT beyond FTTP overlay FTTP replacement Time to market, rapid coverage Lower capex Lower risk than fibre from replicating LLU Ability to compete against cable and third infrastructure entrants Opex considerations Decommissioning benefits 5G will be starting to affect planning

8 Future options are not just a matter of matching architecture to technology options Physical fibre architectures Technology options 8 FTT last legacy node FTTC Some intermediate point Distribution point (dp) Basement (dp) Single line node (garden gate) Illustrative VDSL2 17a vectoring Modified 30MHz G.fast Dual mode ( FD vectoring ) G.hn Bonding FTTP PON, PTP

9 Co-existence and customer migration paths are vital parts of the roadmap Physical fibre architectures Technology options 9 FTT last legacy node FTTC Some intermediate point Distribution point (dp) Basement (dp) Single line node (garden gate) Illustrative VDSL2 17a vectoring Modified 30MHz G.fast Dual mode ( FD vectoring ) G.hn Bonding FTTP PON, PTP

10 Mbps (aggregate) 10 G.fast will probably have to co-exist with VDSL2 106MHz G.fast aggregate target and achieved bitrates Metres Target BT A1 G.fast targets are for up to gigabit speeds over what are essentially final drops (FTTdp or FTTB) Operators do not necessarily face a choice between deploying only G.fast or only VDSL2 G.fast does not offer any better performance than VDSL2 vectoring at loop lengths of 250m or so. In some respects the technologies are targeting different geotypes Demand-led approach (no costly forced migration) makes some level of coexistence likely

11 Aggregate bitrate (Mbps) G.fast/VDSL2 coexistence means lower headline speeds and higher cost and complexity Coexistence of G.fast with VDSL2 requires notching of the 17MHz of bandwidth used for VDSL2. This means lower bitrates than if VDSL2 had not already been deployed Needs a single chipset, otherwise increased cost and complexity. A single chipset still has significant negative impact on the performance of VDSL2 lines Achievable aggregate bitrates for VDSL2 vectoring, full and notched G.fast Metres VDSL2 VDSL2 vectoring G.fast notched G.fast full 11

12 Cost Cost is not the only (and perhaps not even the main) advantage of G.fast G.fast suitable for FTTdp, FTTB and single-line nodes G.fast is meant to be self-install but prudent to expect high failure rates Lower CPPC has to be offset against potentially higher CPPP than for FTTP/GPON Higher proportionate cost savings on SDUs FTTP will have lower opex Time to market is also a critical factor (arguably the main advantage for G.fast) Indicative costs for GPON and G.fast FTTP/ GPON Connection G.fast 16 port Equipment at node G.fast 48 port Fibre 12

13 Aggregate bitrate (Mbps) Intermediate solutions are being developed 13 Modified 30MHz Leverages existing 30a band plans (rarely used outside APAC) while allowing vectored 17a and 30a VDSL2 to coexist in the same binder No bitrate loss on longer loops, but 30a bitrates on shorter loops Can be used anywhere with FTTC/VDSL2 vectoring now i.e. any cabinet Improvements out to 550m loops Tone spacing would need to be changed. ITU would need to standardise, changes to local ANFPs. Mid to late 2015 for commercial products Approximate achievable speeds of modified 30MHz and VDSL Metres VDSL2 VDSL2 vectoring Modified 30MHz Dual-mode ( FD vectoring ) Like a mobile FD-TD hybrid, notched G.fast bonds with existing VDSL2 vectoring No new standards required More expensive, less scalable (for now) than modified 30MHz, but potentially superior performance

14 Superfast Cornwall Vodafone/ESB NBP CityFibre York EUR But FTTP costs are falling too (or perhaps were never so high) Superfast Cornwall claims GBP380 per premises passed in a final 5% area low pole replacements (3%) claims suck it and see approach shows cost models overstate costs low planning and disruption costs CPPC for urban aerial FTTP can be as low as GBP100; many rural connections are similar however, individual aerial drop properties can be difficult (some drops up to 500m). Urban non-aerial costs much more Low CPPC costs call G.fast advantages into question Selected FTTP costs in UK/Ireland CPPP CPPC

15 Early examples of FDD-LTE fixed wireless fall a long way short of DAE targets 700MHz or 800MHz paired spectrum Higher retail prices than for ADSL Low attainable speeds in rural areas (3 12Mbps DL) Data caps well below average FBB usage in territory Often requires external antenna to provide basic service: customer pays or self-install Verizon cantenna Vodafone self-install ( kinderleicht ) 15

16 Active network sharing is becoming common but spectrum pooling is not Very few examples of full spectrum pooling in the world (PCCW/3 in Hong Kong), and none for rural areas Carrier aggregation with pooled spectrum improves spectral efficiency a little Spectrum sharing will in any case happen when MNOs are ready to use licence-exempt secondary-use spectrum Desirability of maintaining service differentiation Pooling for rural fixed wireless There is no spectrum quick fix for deep rural broadband Suitability of pooled spectrum bands for FWA is critical. 800MHz bands alone are insufficient for fixed wireless. 700MHz bands are critical, but will probably not be enough Fixed-line usage is still vastly higher than mobile (96% of consumer data traffic in Europe) If only higher frequency bands are available, then infrastructure and CPE costs (outdoor antennas) rise sharply towards fixed-line levels 16

17 NBN Co fixed wireless TD-LTE has many similar features to fibre, but has a high cost To pass 520K premises: light suburban, but not outback. Recent review suggested demand would be 2-3 times higher than originally planned. USD2000 per premises passed on original plan, subsequently more needed Would a wired FTTx solution have been cheaper in retrospect? Currently uses 2.3GHz; also has unused 3.4GHz holdings. Spectrum holdings for rural use create a gap between fringe urban and rural. Wholesale pricing equivalent to FTTP. Maximum speed: 25/5Mbps. Outdoor antenna mandatory but free to end users NBN Co fixed wireless mast and customer antenna 17

18 Annualised incremental cost of network Operators must weigh the long-term costs of wireless against FTTx for rural broadband LTE has lower up-front costs than FTTC, especially where existing mobile infrastructure is used Adding capacity on LTE is more expensive than on fixed networks Adding microcells to boost capacity and coverage brings cost profile closer to fixed Re-use of towers and other infrastructure makes a major difference to cost of additional capacity Decommissioning copper altogether implies one-off revenue opportunity plus opex savings FTTH more viable in markets with low labour costs Illustrative annualised cost base of fixed and wireless rural broadband This is where NBN Co is now Macro only Data volume (growing over time) 18 Macro plus micro FTTC Cost saving from decommissioning copper

19 Conclusions 19 Operators could refocus away from urban to deliver a more-even, and quicker-to-market, high bandwidth experience Improving service coverage of >100Mbps is achievable without additional costs FTTP may cost less in deep rural areas than imagined Fixed wireless is not a cheap option in fact it will probably cost more in the long run

20 20 Contact details Rupert Wood Principal Analyst Analysys Mason Limited St Giles Court, 24 Castle Street Cambridge CB3 0AJ, UK Tel: +44 (0) Fax: +44 (0) Registered in England No