OVUM - FTTH Future Proofed Services and Monetization of Fiber

15/9/2014
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Future-proofed services and the

monetization of fiber
FTTH Council Asia Pacific Conference - Penang
FTTH Monetization Track
4th June 2014
Julie Kunstler
julie.kunstler@ovum.com
1
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reserved.
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Introduction
1G symmetrical wireline access is happening in the USA:

Google changed the game.
Traditional service providers are following.
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Some residential subscribers are moving to higher-bandwidth offerings:

Even if the bandwidth is not needed today, subscribers want top-tier.
Some subscribers truly understand bandwidth and latency.
Service providers continue to look for monetization strategies:

Voice revenues continue to decline.
Data services are commodity-priced.
OTTs consume expensive bandwidth.
Many governments prohibit traffic discrimination.
Copyright Ovum. All rights reserved. Ovum is an Informa busin
Page 3
Residential - modeling bandwidth consumption

approaches and limitations
Many approaches look at one person or one application at a time, but:
Many people run multiple applications on multiple devices.
Many people live with other people.
Some approaches look at global/regional/national consumption today versus

yesterday and then extrapolate to the future.
In reality, there is a step-function approach to bandwidth consumption.
No one uses of a TV.
Networking side is often focused on protecting the consumer:

It is important to ensure that consumers receive what they are paying for.
But does not help with understanding future bandwidth requirements.
Google Fiber approach - dont base tomorrow on todays consumption.
Page 4
Residential bandwidth model

What are you trying to prove?
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Many ways to build a model.

Key issue is around video.
2012
Mb/s
# of
devices per
estimated
home
1
Assuming simultaneous usage of multiple

devices within home
2017
2022
Bandwidth
# of
devices
Bandwidth
# of
devices per
usage
per home
usage
home
12
1
1
SD TV (standard definition)
3D HD (high defintion) 1080p/60fps
12
HD TV 720p/60fps
UHD (ultra high defintion) 3840p/2160fps
3D UHD 3840p/2160fps
8
48
?
PC Hi Perf
Laptop - video streaming
16
Tablet - video streaming

Smart Phone - video streaming
4
1
2
4
8
4
4
4
16
4
4
4
Game - internet gaming through console
DVR - recording
Total bandwidth per household
30
30
67
30
97
Source: Ovum and IEEE Communications Nov 2012 article by Alcatel-Lucent Future Fiber-To-The-Home bandwidth demands
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Residential bandwidth is just one parameter

what about latency?
Latency is a key issue for certain applications, such as online, high-end,
multiplayer gaming.
True internet speeds comes down to a combination of bandwidth and latency.
Latency = delay. Its the amount of delay (or time) it takes to send information from
one point to the next.
Latency is usually measured in milliseconds or ms. Its also referred to (during
speed tests) as a ping rate.
How is latency different from bandwidth?

Latency is actually measured in a unit of speed.
Bandwidth isnt, despite the fact that everyone refers to bandwidth as speed.
Using a pipe as an example:
Bandwidth has to do with the width of the pipe.

Latency has to do with the contents of the pipe; how fast it moves from one end to
the next.
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Residential network QoE is limited

lack of end-to-end network investment
Service providers are dealing with
multiple pressures:
Handling increased bandwidth
demands from residential customers
while customers pay less per Mb/s of
bandwidth (bandwidth commodization).
Customers expect QoE even though
video is coming from OTT providers.
Regulators are pushing for fair
throttling of traffic nondiscriminatory
approach.
Service providers are struggling to

maintain sufficient investments in
networks.
Lack of network investment leaves
residential subscribers without QoE
today, let alone tomorrow.
Source:
Ovum
Source: Ovum
Page 7
Google Fiber with 1G - no bandwidth constraint

Google Fiber was announced in early 2010, launched in July 2012 with
symmetrical 1Gbps FTTHservice in Kansas City, Missouri and Kansas City,
Kansas.
Google Fiber announced expansion plans in February 2014 - nine urban areas.
Google Fiber is not a regulated telco:
No voice services saves on equipment, software and customer support.
Demand aggregation neighborhoods to be served based on pre-registration.
Equipment approach one solution for the home (high-end CPE).
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Service fees - video and Internet bundle for $120/month, data only $70/month,
free basic Internet service with $300 construction fee.
Google Fiber is creating competition in the US.
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Google Fiber - its role, its impact
Service providers are trying to understand Google Fibers strategy.

Nationwide FTTH communications service provider?
Encourage competition to build 1G symmetrical networks?
Use FTTH to deliver more advertising? No need for Google Fiber to
become profitable.
Use the home to launch new applications and services?
Acquired connected device maker NestLabs in January 2014.

Rumored to buy connected camera maker Dropcam in May/June 2014.
Google Fiber is creating major changes in the optics and equipment
market:
Cisco - recently announced availability of PON central office equipment.
Bypassing large communications equipment vendors for CPEs.
8
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Selected updates: fixed - mobile service offerings
China - China Mobile pushing forward with FTTH:

More subscribers than China Telecom in Zhejiang Province.
Need to own the home and LTE cannot replace fixed broadband.
Importance of wireline - wireless service bundles.
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WiFi - fixed operators are deploying hotspots to help extend their services
and brands outside the home and their primary geographic markets.
Fixed - mobile operator mergers:
Vodafone acquired:
CWW (UK)
Kabel Deutschland (Germany)
ONO (Spain)
Zon-Optimus merger in Portugal.
Page 10
Bundled service offerings: forecast
Total number of bundle connections will grow at a CAGR of 9% from 2012 to 2018.
The fast-growing combination will be quad play (triple-play plus mobile) with a
CAGR of 47% between 2012 and 2018.
Source: Ovum
10
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Selected updates: the smart home

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Many service providers are upgrading the ONT (CPE) in the home:
Service differentiation requires a smart box.
Smart home applications requires home-gateway functionalities.
Smart home services - home monitoring, home security, home networking.
Source: Verizon
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Selected updates: M2M
Total global M2M connections will increase from over 106 million in 2012 to almost 361
million in 2018; CAGR of 22.6%. Fastest growing region is Asia Pacific.
Telcos benefit
directly and
indirectly from
M2M.
- Networkingrelated
revenue tariffs
- Value-added
support and
services.
Source: Ovum
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Page 13
Thank you
13
CopyrightOvum.
Copyright
All rights
Ovum.
reserved.
All rights
Ovum
reserved.
is partOvum
of theisDatamonitor
an Informa Grou
busin
Page 14
Disclaimer
All Rights Reserved.

No part of this publication may be reproduced, stored in a retrieval
system or transmitted in any form by any means, electronic, mechanical,
photocopying, recording or otherwise, without the prior permission of the
publisher, Ovum
(an Informa business).
The facts of this report are believed to be correct at the time of publication
but cannot be guaranteed. Please note that the findings, conclusions and
recommendations that Ovum delivers will be based on information
gathered in good faith from both primary and secondary sources, whose
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accuracy we are not always in a position to guarantee. As such Ovum

can accept no liability whatever for actions taken based on any
information that may subsequently prove to be incorrect.
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Esta es la versin html del archivo http://asiabiotechinvest.com/wp-content/uploads/sites/32/2014/06/4Jun14_Stream-B_1410_Julie-Kunstler_-FTTH-Council-AP-Conf_futureproofed-services-and-monetization-of-fiber.pdf.

Future-proofed services and the

1G symmetrical wireline access is happening in the USA:

Some residential subscribers are moving to higher-bandwidth offerings:

Service providers continue to look for monetization strategies:

Copyright Ovum. All rights reserved. Ovum is an Informa busin

Residential - modeling bandwidth consumption

Some approaches look at global/regional/national consumption today versus

Networking side is often focused on protecting the consumer:

Google Fiber approach - dont base tomorrow on todays consumption.

Copyright Ovum. All rights reserved. Ovum is an Informa busin

Residential bandwidth model

Many ways to build a model.

Assuming simultaneous usage of multiple

3D HD (high defintion) 1080p/60fps

Laptop - video streaming

Tablet - video streaming

Game - internet gaming through console

Copyright Ovum. All rights reserved. Ovum is an Informa busin

Residential bandwidth is just one parameter

How is latency different from bandwidth?

Bandwidth has to do with the width of the pipe.

Copyright Ovum. All rights reserved. Ovum is an Informa busin

Residential network QoE is limited

Service providers are struggling to

Copyright Ovum. All rights reserved. Ovum is an Informa busin

Google Fiber with 1G - no bandwidth constraint

Copyright Ovum. All rights reserved. Ovum is an Informa busin

Google Fiber - its role, its impact

Service providers are trying to understand Google Fibers strategy.

Acquired connected device maker NestLabs in January 2014.

Copyright Ovum. All rights reserved. Ovum is an Informa busin

Selected updates: fixed - mobile service offerings

China - China Mobile pushing forward with FTTH:

Copyright Ovum. All rights reserved. Ovum is an Informa busin

Bundled service offerings: forecast

Copyright Ovum. All rights reserved. Ovum is an Informa busin

Selected updates: the smart home

Smart home services - home monitoring, home security, home networking.

Copyright Ovum. All rights reserved. Ovum is an Informa busin

Selected updates: M2M

Copyright Ovum. All rights reserved. Ovum is an Informa busin

All Rights Reserved.

accuracy we are not always in a position to guarantee. As such Ovum

Copyright Ovum. All rights reserved. Ovum is an Informa busin

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