Fibre to...wherever makes best economic sense

In addition, community-based networks will also play a major role in driving bandwidth demand. Not a single major European government has failed to detail a roadmap for delivering advanced public "e-services", such as online health consultations, benefit payment authorizations, distance learning, community relations and so on. Yet all will suffer delays to their implementation without continued investment into a national broadband infrastructure.

Local-loop disparities

All operators are planning for future bandwidth demands to minimize the disruption caused to their fixed and wireless infrastructures. Anticipating this demand clearly involves a greater reliance on fibre within the access network. The burning question now is how far to take the fibre? Ultimately, the specific fibre-to-the-home (FTTH) versus fibre-to-the-node (FTTN) business case that each operator creates will depend on the careful evaluation of three core factors: service portfolio, network topology and cost.

Tailored services

Every operator offers its own portfolio of broadband services, developed and positioned according to a comprehensive appreciation of the target market. The next challenge is to evolve these service portfolios in accordance with competitive factors and nascent customer demand, while trying to pre-empt an uncertain, though gradually developing, regulatory climate.

Future development of service portfolios will rely on detailed market research among residential and business subscribers – to garner impressions of their current broadband experiences, establish demand for new entertainment or community services and determine users' propensity to pay additional charges for these services. As a result, each operator will determine its fibre-to-the-x (FTTx) strategy according to totally unique market circumstances.

In some cases, operators may need to account for more than one set of market characteristics to safely apportion the correct fibre strategy. Some choose to adopt a two-speed service portfolio: pursuing an advanced fibre strategy (such as FTTH) to accommodate a source of particularly high demand, while elsewhere pursuing another strategy (e.g. FTTN) or simply maintaining the status quo.

One aspect that all operators share on this issue is their understanding of the need to anticipate future demand, and a belief that the long-term reality will be an essential and ubiquitous 30–50 Mbit/s by 2020.

Topology survey

Before committing resources to network build outs, it's important that broadband operators consider precisely where their assets lie in relation to their targets, what they can realistically achieve and which unexpected factors could emerge.

Most existing network assets comprise central offices (COs, or local exchanges) or other points where the fibre terminates, followed by copper plant that extends to individual homes, businesses or multi-tenant units (MTUs). Leveraging copper assets with advanced DSL technologies seems an obvious opportunity for all incumbent operators looking to deliver faster data rates. But this approach clearly makes most sense to those with population densities close to the CO.

Population patterns differ markedly from country to country, as the table demonstrates. Even within the same national market, population densities can differ hugely. With a CO distance of 1.5 km or less needed to deliver speeds of 18 Mbit/s via asymmetric DSL technology (ADSL2+), or 25 Mbit/s via very high-data-rate DSL (VDSL2), the limits of a non-fibre approach in reaching large proportions of a potentially lucrative market start to become clear.

Roadside cabinets, which are used as termination points for an FTTN/VDSL2 deployment strategy, do, however, offer closer proximity to all but the most rural populations. It is notable that around 80% of the European population resides within 1 km of a roadside cabinet – not quite as many as the distance-agnostic FTTH can reach, but a realistic strategy for many operators in many of their markets.

Furthermore, some nations are more predisposed to occupying easily fibre-accessible MTUs than others. The large proportion (60%) of the Spanish population that live in MTUs, for example, gives them high potential access to short-drop fibre. The more dispersed residents of Ireland, on the other hand, with 95% residing in non-MTU dwellings, present a completely different challenge.

To resolve the "network topology" strand of the FTTH versus FTTN business case, operators must consider the distances between users and COs (and roadside cabinets), the quality of the installed copper and its ability to support high bandwidths over the medium to long term, and the viability/existence of available ducting for fibre. Critically, operators must conduct an inventory of the local-loop environment and map their topologies against their service portfolios.

Cost counts

For operators or service providers that aren't concerned with primary infrastructure costs, there is little argument against the implementation of FTTH (or fibre-to-the-basement for MTUs). But in reality, cost is a big issue, and there have been numerous successful attempts at navigating this while adhering to a sensible business case.

In simple terms, the cost for FTTN deployment comes in at five times the capital cost of upgrading CO-based DSLAM and customer-premises equipment to advanced ADSL2+/VDSL. For FTTH, this figure doubles again. However, a lot of the FTTH capex is related to primary/civil infrastructure (mainly excavated ducts). In cases where such infrastructure is already in place, FTTH deployment costs are broadly reduced to those of FTTN.

Some FTTx financial illustrations stop at this point. But that fails to account for another absolutely critical cost factor: the time to market. In a highly aggressive market environment, time to market represents an "opportunity cost" to a service provider's business. It's difficult to place a value upon any delay to the provision of socially important community services.

In instances where capex and opex costs for FTTN and FTTH level out, time-to-market considerations need careful thought. Which markets will benefit from faster, full-coverage FTTH that will take a long period to deploy? And which demand faster data rates urgently, but may require further upgrading to the ultimate broadband technology – FTTH – at some point in the future?

Clearly, operators and service providers need a flexible approach, as well as a flexible technology platform. New network architectures and topologies will need to seamlessly evolve over time across the various operator localities, while maintaining consistent subscriber management and service delivery.

A local look

Operators that are anticipating broadband subscribers' present and future demands are already mapping their service portfolios against network topologies and evaluating costed business cases for FTTx rollouts. However, broadband has already proved that it's not the kind of service that can be painted in broad brushstrokes. Instead, it commands a highly localized approach – responding to pockets of demand, addressing different types of population density and encountering different primary infrastructure circumstances in each case.

Indeed, numerous incumbent operators (notably BT in the UK) have already set a precedent for a microeconomic view of national broadband strategy. Starting in 2001, BT responded to calls to answer disparate pockets of emergent broadband demand with a "local exchange activation programme". This scheme identified and aggregated demand on a town-by-town basis across the UK, enabling BT to determine and prioritize its DSLAM installations.

The campaign guaranteed BT's ability to meet the bandwidth demands of services that did not yet exist. It also mobilized enormous consumer goodwill towards the operator, which was seen as the key source of abundant Internet connectivity at a time when it seemed likely to lose substantial market share to competitive local-loop unbundlers.

In the FTTx arena, Swisscom of Switzerland and AT&T in the US serve as excellent examples of operators that have adopted this type of localized approach to economically apply fibre strategies to widely varying circumstances. And they're not alone. With the catalyst for many fibre deployments coming from public–private municipality projects it's hard to ignore the manner in which these new players have enjoyed success by pursuing a range of FTTx strategies to meet their specific interests. Examples from many major European capital cities, as well as municipalities such as Asturias in Northern Spain, all promise to meet specific local and regional demands, and benefit from localized investments and market knowledge.

Infrastructure costs, evolving service portfolios and network topologies form the building blocks of the FTTN versus FTTH rationale. Both approaches meet different needs and boast distinct compelling advantages. FTTN will prove most economically viable in the majority of cases and will be faster to deploy. But FTTH undoubtedly represents the end-game for any operator's broadband strategy, particularly if and when civil infrastructure pressures are relieved.

To fully support the promise of FTTH, European broadband needs primary infrastructure in the ground more than it needs fibre to be laid within it. In the ensuing five to seven years, operators and service providers must establish which is the most economic point to which to deploy fibre, and determine this according to the circumstances and demands of individual local markets.