Erzsébet Fitori, Director GeneralFTTH Council Europe

The State of Fibre and key market trends

UK Fibre Connectivity Forum3 June 2019, London

Overview

The State of Fibre: FTTH/B Market Panorama

Fibre for 5G: a Story of Convergence

Copper Switch-Off and Migration to Fibre

The State of Fibre: FTTH/B Market Panorama

FTTH/B figures – September 2018

As of September 2018 in Europe39*: • 59.6 million FTTH/B subscribers• Almost 160 million FTTH/B Homes Passed

Source: IDATE for FTTH Council Europe

Historical data and growing trends (EU28 / EU39)

• EU28 has a stronger position in the whole European region (EU39) • By Sept. 2018, half of FTTH/B deployments took place inside the EU28 countries:

increasing trend compared to previous years

Source: IDATE for FTTH Council Europe

General Ranking: FTTH/B Homes passed

European ranking in terms of FTTH/B Homes passed over time (in million homes)Data comparison between Sept. 2015 and Sept. 2018

+ 43.1 %

+ 40.5 %

+ 22.8 %

+ 17.4 %

+ 15.1 %

Italy

Poland

UK

Portugal

Germany

17 countries with more than 2m.

HP

EU28 : 11 countries in the

Ranking

Top 5 annual growth rates –Sept 2017-Sept 2018

General ranking: FTTH/B Homes Passed

General ranking – FTTH/B Subscribers

Source: IDATE for FTTH Council Europe

European ranking in terms of FTTH/B Subscriptions Data comparison between Sept. 2015 and Sept. 2018

European Ranking as of September 2018

• Penetration rates of European countries at September 2018 (FTTH/B Subscriptions / Households)

• Includes countries of +200k Households in which FTTH/B subscribers represent at least 1% of total households

• Analysis of around 400 FTTH/B projects in Europe39 at September 2018

• Around 55% of total Homes in the region have been passed by Alternative ISPs, and approx.41% by incumbents (as compared to 21% by incumbents in 2011)

• Municipalities/Local Authorities, along with utilities when appropriate, will remain those ones thatwill help ensure an exhaustive coverage at term

Breakdown of FTTH/B Sockets deployed by type of player (%)Data comparison between Dec. 2011 and Sept. 2018

Top European countries –Breakdown in terms of Sockets deployed

Russia1

Spain2

France3

Ukraine4

Total Sockets deployed: 71,435,000 Incumbents: 33,200,000 Alternative ISPs: 38,235,000

Total Sockets deployed: 43,234,160 Incumbents: 20,800,000 Alternative ISPs: 22,375,000 Municip./Utilities: 59,160

Total Sockets deployed: 39,201,000 Incumbents: 10,906,000 Alternative ISPs: 26,565,000 Municip./Utilities: 1,730,000

Total Sockets deployed: 10,765,000 Alternative ISPs: 10,765,000

5Romania

Total Sockets deployed: 9,124,750 Incumbents: 2,107,000 Alternative ISPs: 7,017,750

FTTH/B growth by players

Source: IDATE for FTTH Council Europe

Drivers promoting FTTH adoption

Regulatory framework and public incentives to promote FTTH deployments (ex. Gigabit Society targets set for 2025)

Governments have been revising their Digital Infrastructure strategy to focus on Fibre and 5G leading to higher availability of public funds dedicated to enhancing fibre-based networks

Progressive switch-off of copper-based infrastructure and migration to FTTH networks

Data demands and video content continue to growth leading to higher bandwidth and lower latency needs (Resilience, symmetricity of Bandwidth)

Both incumbents and alternative ISPs shifting their core business towards FTTH

Municipalities/Utilities pushing to expand fibre networks in remote areas not always economically viable for private players

Fibre densification driven by 5G deployment & cost savings from fibre-5G convergence

Hurdles affecting FTTH adoption

Copper-based DSL & Cable improvements with new emerging variants could delay FTTH enhancement

Potential risk of mobile 5G broadband technology delaying FTTH in economically non-viable areas

Deployment costs are still very high for FTTH technologies (however costs are following a downward trend YoY)

Non-feasible business model for isolated areas

Some initiatives are facing administrative barriers that are delaying fibre expansion in areas not yet covered (right of ways)

Fibre for 5G: a Story of Convergence

Fibre for 5G: Study background

Objectives of the project:

• Demonstrate the potential cost savings of convergence between 5G and FTTH/B

• Illustrate the differences between various scenarios:1. Area Density: Urban (high-dense) / suburban (medium-dense) / rural (low-

dense)2. Cell Density: conservative / medium / high3. Fibre count: high / low4. Cable deployment: underground / overhead5. Timing: separate FTTH and FTT5G / fully convergent FTTH + FTT5G

• Illustrate the impact of key factors on the total cost savings of a converged network

Assumptions: 9 Scenarios

Assumptions: Areas

Costs

INCLUDED

• OSP Fiber Network• Trenching• Ducts• Cables• Closures• Poles

• ISP Central Office• ODF• Racks

EXCLUDED

• Fiber ActiveEquipment

• 5G Active Equipment• 5G Site Acquisition• 5G Spectrum

Assumptions: Costs

Study Results

High Cell Density Medium Cell Density Low Cell Density

High Dense Area 74% -- 5,6% 75% -- 3,8% 96% -- 0,4%

Medium Dense Area 75% -- 7,2% 83% -- 3,2% 93% -- 0,8%

Low Dense Area 65% -- 6,6% 81% -- 2,7% 85% -- 1,9%

% of FTT5G saved by convergence -- % of extra investment to make FTTH 5G-ready

Copper Switch-Off &Migration to Fibre

Copper Switch-Off: Study background

Analysis focusing on status of switch-off process of PSTN and copper network

Focus on 10 selected countries: Estonia, Sweden, Spain, Portugal, Italy, Netherlands, France, Poland, Germany, UK

Overview of benefits of switch-off process for operators & consumers

Overview of enablers & incentives of switch-off process

Overview of regulatory barriers/barriers

Source: WIK for FTTH Council Europe

Copper Switch-Off Progress

Limited progress towards copper switch-off in the 10 countries studied

Estonia and Sweden are clear leaders, more gradual process Spain, Portugal

Focus on migration to FTTC in Italy (partial switch-off)

Pilots in NL

No concrete plans in remaining 4 countries (FR, DE, UK, PL)

Source: WIK for FTTH Council Europe

Copper Switch-Off: Key Conclusions

Switching from copper to FTTH delivers benefits to both consumers and operators and improves the business case for FTTH

Limited progress towards copper switch-off in Europe so far

From the countries studied, only EE has made major steps to switch customers from copper to FTTH, while switch-off from copper to wireless has progressed in SE

More progress has been made towards PSTN switch-off (a prerequisite for copper switch-off). PT, EE, NL and DE should achieve all-IP by 2020, but other countries such as FR, PL and UK are not set to achieve all-IP until 2025

The reasons for the limited switch-off plans are diverse. In some countries FTTH has yet to be widely deployed. In others strict controls on exchange closure may be delaying switch-off. A lack of understanding of the benefits of fibre and challenges in switching to a fibre operator may also be hampering consumers from migrating in other cases.

Source: WIK for FTTH Council Europe

Copper Switch-Off: Key Recommendations

Member states and regulators could usefully act to enable copper and PSTN switch-off, and support consumer migration to FTTH:

• Facilitate PSTN switch-off as a precursor inter alia by encouraging operators to find solutions that support legacy equipment or inform consumers of alternatives

• Incentivise FTTH deployment and/or use of FTTH access by incumbents and avoid promoting continued reliance on copper and copper upgrades such as FTTC

• Review conditions (notice periods and wholesale obligations) for copper exchange closure

• Improve customer awareness by clearly distinguishing FTTH from FTTC in advertising

• Improve processes for switching between the incumbent and alternative FTTH platforms

Source: WIK for FTTH Council Europe

www.ftthconference.eu

Thank you for your attention!

Erzsébet FitoriDirector General

FTTH Council Europeerzsebet.fitori@ftthcouncil.eu

Background slides

General ranking - FTTH/B Coverage

Source: IDATE for FTTH Council Europe

General ranking - FTTH/B Takeup

Source: IDATE for FTTH Council Europe

High Dense Area – High Dense Cells

Cost FTTH

8,51M€

Cost FTT5G1,85M€

Cost FTTAll converged

8,99M€

Value of convergence

Extra FTTH investment to be 5G ready

0,48 M€

8,51 M€

=

Extra Investment on top of FTTH to make it 5G ready

5,6 %

1,37 M€

1,85 M€

Percentage of the FTT5G cost that could

be saved through convergence

= 74 %

Inputs: 5G Parameters

Assumptions and Objectives

• Heterogeneous 5G Network: Macro Cells [MC] (on dominant rooftops): current 4G Macro Sites considered

if availableSmall-Cells [SC] (on lamp posts)In High-dense area: additional indoor hotspots in train station, university

campus, cultural centre, ..• Carrier frequency:

3,5 GHz (MC and SC)26 GHz (SC*)

Two sectors, pointing in opposite directions• Beamforming

Beam-switching technique• Target:

Minimum data rate in streets (& optionally indoor)For different target outdoor coverage percentages

* not in low-dense area

Inputs: 5G Parameters

Assumptions and ObjectivesHigh Cell Density Medium Cell Density Low Cell Density

High Dense AreaMC+SC @ 3,5GHz: 100%

SC @ 26GHz: 95%+ indoor hotspots

MC+SC @ 3,5GHz: 100%SC @ 26GHz: 50%+ indoor hotspots

MC+SC @ 3,5GHz: 100%SC @ 26GHz: indoor

hotspots only

Medium Dense Area MC+SC @ 3,5GHz: 100%SC @ 26GHz: 95%

MC+SC @ 3,5GHz: 100%SC @ 26GHz: 50%

MC+SC @ 3,5GHz: 100%SC @ 26GHz: 25%

Low Dense AreaMC+SC @ 3,5GHz: 70%*

(indoor: 30%)no SC at 26GHz

MC+SC @ 3,5GHz: 98%*(indoor: 55%)

no SC at 26GHz

MC+SC @ 3,5GHz: 100%*

(indoor: 92%)no SC at 26GHz

(*) % of “populated” area / villages

FTTX Parameters

Architectural and Material Assumptions• FTTH (Fiber to the Home / Residential)

P2MP / GPON with 1:32 splitter in Distribution Points2 fiber per Home (1 active, 1 spare)Distribution Points / Cabinets per 60 to 96 HomesUndergound network, with Microducts and Air Blown Fiber cablesMid span access Feeder cables of 96 or 48 fibers, dropping bundles of 8 fibers

per cabinet• FTT5G (Fiber to the Antenna for 5G)

Fibers per site: 3 scenariosHigh fiber count – P2P: 12 active + 12 spare fibers Low fiber count – P2P: 4 active + 4 spare fibersHigh fiber count – P2MP: 12 active + 12 spare fibers, grouped per 4 antennas on an aggregation point with 1:4 splitters

• FTTAll (Converged)Hybrid GPON and P2P / Share Distribution Ducts, Cabinets, Feeder

Cables&Ducts