North American FTTH Status – March 31, 2011

NORTH AMERICAN FTTH STATUS - MARCH 31, 2011

I. INTRODUCTION AND METHODOLOGY
Since 2001, RVA LLC has surveyed North American
communications providers in order to determine the
growth in fiber-to-the-home. Partnering with the
FTTH Council North America, RVA releases two
market estimates annually (Q1 in March and Q3 in
September).
primary research. While FTTH vendors were also
interviewed, the research primarily relied on a bottom-
up methodology based on interviews with
representatives of many FTTH providers. To date in
2011, RVA has surveyed more than 360 North
American providers and potential providers via
Internet, telephone, and mail surveying methods.
(Published data from large public providers has also
been utilized.)

Fiber-to-the-home (FTTH), sometimes called fiber-to-

the-premises (FTTP), refers to a type of
communications network where fiber-optic cable is II. REVIEW OF FINDINGS
installed all the way to the individual living unit. Other
systems using fiber optics for only part of the A. FTTH MARKET SIZE
network, such as fiber to the curb (FTTC), fiber to the Homes Passed
node (FTTN), fiber to the last amplifier (FTTLA), fiber
FTTH became commercially viable in about 1998.
to the building (FTTB), hybrid fiber coax (HFC), etc.,
RVA’s first survey of the market estimated just over
are not included in the data for this report. Such
19,000 homes passed with FTTH in September 2001.
partial systems contain a final leg of the broadband
The number of homes passed has multiplied more
journey via another type of media, typically copper
than 1,000 times since that point, and as of March 30,
wire or coaxial cable, which greatly limits the
2011, there are now approximately 20.9 million
bandwidth possible over the system. Because fiber-
homes passed in North America.
optic cables allow much faster and more efficient
transfer of data than copper does, end-to-end fiber-
optic systems facilitate much higher bandwidth
capacity in both directions.

It is important to note that FTTH does not refer solely

to Internet connections. Active fiber can also serve
voice services, paid video services, and even meter
reading connections, and can be delivered either as a
single service, or more commonly, in multiple services
to fiber-optic lit homes.

The methodology utilized for this study involved a

multi-faceted review of the market using extensive

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The term “homes passed” in this report means the North American FTTH Video Homes
actual number of homes where a fiber connection is
Cumulative
technically available. About 97% of this North
6
American activity has been in the United States to
5
date.
4

Millions
Homes Marketed 2
The estimated number of actual FTTH homes 1

marketed to consumers is approximately 19.3 million 0

Sep '01
Mar '02
Sep '02
Mar '03
Sep '03
Mar '04
Sep '04
Mar '05
Sep '05
Mar '06
Sep '06
Mar '07
Sep '07
Mar '08
Sep '08
Mar '09
Sep '09
Mar '10
Sep '10
Mar '11
as of March 30, 2011. The term “homes marketed”
refers to the number of homes that are actively being
marketed with FTTH. There is sometimes a delay
between technically being able to serve consumers
and tangibly marketing to them. This is especially
true for large builds. In certain instances, providers
FTTH Growth
may choose to avoid marketing to a specific area until
the entire area is ready for service. While still relatively strong, FTTH growth has slowed
somewhat since 2008.
Homes Connected
The number of homes actually connected with lit fiber FTTH Homes Passed & Connected
now exceeds 7 million. Annual Change – North America
Homes Passed Homes Connected

North American FTTH Homes 4,500,000

4,000,000
March 30, 2011 3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
Homes Passed 1,000,000
500,000
Forecast
0
Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep
Homes Marketed
'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11

Homes Connected

- 5,000,000 10,000,000 15,000,000 20,000,000

Slower growth in the number of homes passed over

See Appendix for actual numbers by year.
Video Homes Connected
The number of homes serviced with traditional paid
video channels over end-to-end fiber has now
reached 5 million.
Verizon and many smaller FTTH providers offer
television via fiber. In some cases this is via a
channel lineup of RF video. More often, it is via an
“IPTV” methodology.
the past two years is primarily due to Verizon slowing
their network build and turning attention to marketing
connections as they get closer to their first FTTH
project targets.
Other factors include general economic conditions,
and the fact that the federal stimulus legislation may
have had unintended negative consequences in 2009
and 2010. Many interviewed in those years felt the
stimulus program caused some projects to be put on
hold while the providers evaluated the possibility of
public funding.
Annual build rates are expected to stabilize and
grow slightly in 2011 as U.S. projects from non RBOC

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providers accelerate, and fairly large projects in
Canada continue to build out.
U.S. growth in 2011 is a result, in part, of stimulus
money now starting to flow to FTTH projects. Based
on data collected from more than 50 random surveys
with FTTH ARRA stimulus award recipients, RVA
estimates that a total of 38% of FTTH stimulus
projects are currently underway, and another 36% are
preparing to start. The remainder of the ARRA
projects are in various stages of engineering and
environmental approval. (A small percentage of
those interviewed have actually declined funding due
to unexpected factors, such as the high wage rates
ed competitive or CLEC activity. True facilities-based
competitive providers (CLECs) and publicly owned
systems (MUNIs) together account for 24% of the
total. The remaining builds are from integrators
working with developers, MSO/cable TV companies,
and electric utilities and coops.
FTTH Non RBOC Deployments by Provider Type
ILEC
CLEC
Municipality/PUD
Developer/Integrator

required under regulations for such Federal grants.) MSO/Cable

Electric Utility/Co-op

Status of ARRA FTTH Stimulus Grants 0% 10% 20% 30% 40% 50% 60% 70%

In Construction

Preparing to Start Construction

Awaiting RUS Approval

Environmental Assessment
C. OVERALL PENETRATION
Engineering

Construction Planned in Future FTTH has now reached over 18% penetration of U.S.
Declined Funding households in terms of homes passed and 6% in
0% 5% 10% 15% 20% 25% 30% 35% 40%
terms of homes connected.

FTTH Penetration
B. DEPLOYMENTS BY TYPE OF PROVIDER
Cumulative – United States
Regional Bell operating companies (primarily Verizon) Homes Passed Homes Connected
20.00%
represent over 73% of all North American FTTH
16.00%
connections. (It should be noted that total FTTH
12.00%
connections estimated for Verizon includes reported
8.00%
FioS Internet connections, plus an estimate of FioS 4.00%
television-only connections.) 0.00%
Mar '02
Sep '02
Mar '03
Sep '03
Mar '04
Sep '04
Mar '05
Sep '05
Mar '06
Sep '06
Mar '07
Sep '07
Mar '08
Sep '08
Mar '09
Sep '09
Mar '10
Sep '10
Mar '11

While Verizon is the largest U.S. FTTH provider by a

very large margin, there is actually a very long tail of
other providers. As of March 30, 2011, RVA
estimates that there are more than 770 providers of
FTTH in North America.

Of these non RBOC suppliers, smaller incumbent

telephone suppliers (ILECs) account for 61% of the
primary base. Most of these are classified as “Tier 3”
ILECs with a market concentration in one limited
geographic area. Some of these also have
associat
D. FTTH TAKE-RATES
The overall take-rate for FTTH services continues to
increase. (Rates declined in a period from March

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2004 to September 2005 due to the heavy For RBOCs (especially Verizon FioS), take-rates
infrastructure build by Verizon with few initial continue to increase. This is true despite the fact
connections. After Verizon began connecting that their service territories generally involve
customers at a good pace, overall take-rates turned competition from large MSOs with reasonably good
upwards again.) The overall take-rate for FTTH has product, and a continuing FTTH build which
now passed 36%. suppresses net take-rates. (Verizon’s take-rate in
areas where FTTH has been available for two to
FTTH Overall Take Rates three years is higher than its average net take-rate.)
Homes Connected vs. Homes Marketed
50%
FTTH RBOC Take Rates
45%
40%
Homes Connected vs. Homes Marketed
35%
35%
30%
25% 30%
20% 25%
15%
10% 20%
5% 15%
0%
10%
Sep '01
Mar '02
Sep '02
Mar '03
Sep '03
Mar '04
Sep '04
Mar '05
Sep '05
Mar '06
Sep '06
Mar '07
Sep '07
Mar '08
Sep '08
Mar '09
Sep '09
Mar '10
Sep '10
Mar '11
5%
0%

Sep '01
Mar '02
Sep '02
Mar '03
Sep '03
Mar '04
Sep '04
Mar '05
Sep '05
Mar '06
Sep '06
Mar '07
Sep '07
Mar '08
Sep '08
Mar '09
Sep '09
Mar '10
Sep '10
Mar '11
For non-RBOC FTTH customers, take-rates have
been fairly steady at near 50%. Take-rates dropped
slightly in the past year reflecting the transfer of In terms of penetration by provider type, Verizon and
some Verizon customers to Frontier. Tier 3 ILECs have actually penetrated a relatively high
percentage of their customer base. These providers
FTTH Non RBOC Take Rates – who we may call aggressive ILECs – address
roughly one-third of the total U.S. population.
Homes Connected vs. Homes Marketed
60%
Verizon recognized early a need for a new business
50%
model, and their strategy appears to have been driven
40%
by accurate predictions of how things would play out.
30%

20%
Regulatory changes, such as the 2004 FCC Triennial
10%
Review and later video franchise rulings, have also
0% played a key role in their decision to move forward.
Sep '01
Mar '02
Sep '02
Mar '03
Sep '03
Mar '04
Sep '04
Mar '05
Sep '05
Mar '06
Sep '06
Mar '07
Sep '07
Mar '08
Sep '08
Mar '09
Sep '09
Mar '10
Sep '10
Mar '11

Drivers for FTTH upgrades in the rural independent

telco segment include aging copper lines in need of
replacement, the opportunity to deliver video given a
more robust platform, and a pioneering tradition. In
While these rates include some cases where the
some cases these providers have also been aided by
network have been upgraded with fiber for all
loans and subsidies, such as rural broadband loan
customers, including voice-only customers (which
programs and universal service funds.
means essentially 100% take rates), it is important to
note that even voluntary take-rates for some
Other parts of the U.S. have had more spotty FTTH
individual FTTH projects exceed 70%. This is deployment – mostly from facilities-based CLECs,
especially true in more rural areas that were real estate developers, and public entities such as
previously underserved by both Internet and video
municipalities and groups of municipalities. (In these
product.
other areas, the incumbent telcos, such as AT&T,
Qwest, and Tier 2 ILECs, have completed some

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 5

builds of FTTH in new housing developments, but moving quickly to FTTH to better compete with cable
have conducted only limited overbuilding of their TV MSOs that are introducing higher bandwidths
existing copper network to date.) Some FTTH builds using DOCSIS 3.
by cable TV providers in new developments are also
now beginning. F. INTERNET SPEEDS

E. FUTURE FTTH GROWTH PROSPECTS
Growth in FTTH after 2011 looks positive. As just
one example, non RBOC incumbent telephone
companies are already very bullish on FTTH. Most
ILECs that have already deployed FTTH plan
continued deployment, and those who have not
deployed any FTTH are now planning future
deployment.
Likelihood of Adding FTTH Lines
by Current Non RBOC FTTH Providers
FTTH providers are more aggressively differentiating
their service offerings from the competition. Some
providers are now offering as much as Gigabit (1,000
Mbps) symmetrical service. Municipal providers are
leading the charge here, and now average a top
residential offering of over 100 Mbps (influenced by a
few offering 1,000 Mbps).
Higher bandwidth symmetrical services should
continue to fuel growth – especially as new
applications increase consumer demand for faster
connection speeds.

Very Unlikely
Highest Average Internet Speeds Offered
Somewhat Unlikely by Non RBOC Provider Type
Somewhat Likely 2010 2011
70%
Very Likely ILEC
Upload CLEC
All Customers have
Muni
FTTH

ILEC
Download CLEC
Muni
North American countries outside of the United States
0 20 40 60 80 100 120 140
also report increasing activity in the next five years. Mbps

Canada is currently experiencing growth as

incumbent telephone companies in some areas are

APPENDIX

NORTH AMERICAN FTTH STATUS (AS OF THE END OF THE FIRST QUARTER OF EACH YEAR)

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Homes passed 35,700 110,000 189,000 1,619,500 4,089,000 8,003,000 11,763,000 15,170,900 18,249,900 20,914,500
Homes marketed 35,700 110,000 189,000 829,700 3,218,600 6,643,000 10,082,000 13,875,600 16,992,600 19,344,700
Homes connected 10,350 38,000 78,000 213,000 671,000 1,478,600 2,912,500 4,422,000 5,804,800 7,094,800

www.ftthcouncil.org