As demand for higher bandwidths continues to grow due to the proliferation of data-intensive applications, fibre-to-the-home (FTTH) is emerging as a key contender to wireless technologies for providing high-speed and reliable broadband. FTTH provides operators with an alternative growth strategy to diversify their revenue streams by bundling FTTH services with other service and content offerings, thereby enabling them to deliver a comprehensive customer experience.
Although the deployment of FTTH networks is gaining momentum, there are still significant challenges, such as right-of-way (RoW) issues and high initial costs of deployment, which are impeding their expansion. Addressing these RoW-related concerns and exploring alternative business models that present a financially viable business proposition for all stakeholders is critical to ensuring the swift deployment of fibre networks.
A look at the key growth drivers of FTTH, the global and Indian FTTH markets, major challenges that are hindering the expansion of fibre networks and the future outlook…
Demand drivers
The increasing demand for FTTH networks can be attributed primarily to the growing popularity of data-intensive applications such as video streaming and online gaming. This trend has intensified since the onset of the Covid-19 pandemic, with the surge in remote work and online learning increasing the need for fast and dependable internet connectivity at home that FTTH networks can provide. Additionally, the growing number of internet-connected devices in households, such as smart speakers and security systems, is contributing to the demand for dependable and high-speed connectivity, which can be met through FTTH networks.
The rapid proliferation of 5G services is also contributing to the increase in the need for fibre-based networks. 5G promises to deliver up to 100 times faster speed than 4G, and ultra-reliable low-latency communication services. However, to achieve near zero latency and high throughput, the 5G network infrastructure requires up to ten times more bandwidth than what the current 4G infrastructure supports. Therefore, to support the roll-out of 5G services, a significant ramp-up of the fibre network is necessary to achieve low latency, low interference, and high network capacity. Industry experts contend that by 2024, at least 70 per cent of towers will need to be fiberised to support a full-scale launch of 5G services. With the increase in investments by telecom operators towards fibre-based networks to support 5G services, multiple paths for monetisation are also being generated. As a result, fibre design is evolving from constructing a network for a single use case to establishing a route for multiple uses, especially FTTH for consumers.
Moreover, the expansion of smart cities is driving up the requirement for FTTH networks. The extensive collection, management and interpretation of large volumes of data in smart cities necessitate a robust, scalable and extensive communication infrastructure. Fibre cables with their nearly limitless capacity offer an ideal foundation for supporting the bandwidth-intensive applications required in smart cities. Fibre also enables the installation of sensors, which are critical to the development of intelligent solutions for smart cities. As part of the government’s Smart Cities Mission, several cities are planning to expand their fibre cables infrastructure.
Market overview
The global FTTH market has been growing at a brisk pace in recent years, offering several opportunities to telecom operators, infrastructure companies and other stakeholders. The Asia-Pacific region is currently the largest market for FTTH services, with countries such as China, Japan and South Korea leading the way in terms of the adoption of and investment in FTTH infrastructure.
According to a recent research report, the number of fixed broadband connections worldwide is projected to reach 1.6 billion by end 2030, up from 1.27 billion in 2021. Of this, approximately 75 per cent, or 1.2 billion connections, are expected to be linked to fibre broadband, including FTTH, fibre-to-the-premises (FTTP), or fibre-to-the-building (FFTB). Further, in 2030, China is expected to retain its position as the largest fibre broadband market, with an estimated 523 million subscribers accounting for nearly one-third of the global total.
The Indian telecom market is also experiencing a substantial increase in the adoption of FTTH networks. Several internet service providers, cable TV operators and telecom companies are offering FTTH services in the country. Reliance Jio Infocomm Limited is currently leading the pack, with its JioFibre service accounting for 50 per cent of the market share in the overall broadband segment. Additionally, Jio continues to lead the industry in terms of net subscriber additions in the home broadband category. Meanwhile, Bharti Airtel and Bharat Sanchar Nigam Limited are planning a massive expansion in their FTTH service offerings and looking to unveil several attractive tariff plans to shore up their fixed broadband subscriber base.
Key challenges in FTTH deployment
Although the recent trends in the FTTH segment seem encouraging, certain challenges are limiting the uptake. The high cost of deployment is one of the major hurdles in deploying FTTH infrastructure. The costs of excavating roads and laying down fibre optic cables can often be a deterrent, particularly in areas with high population densities. Additionally, the installation of these cables is intricate and demands specialised skills. Furthermore, the installation process can be time-consuming, leading to inconvenience to the general public during the installation process.
Securing RoW-related approvals continues to remain a considerable challenge in expanding the fibre network. In August 2022, the central government introduced new amendments to the Indian Telegraph RoW Rules 2016 to accelerate the deployment of fibre infrastructure. The revised regulations have simplified the application process for obtaining RoW and permitted telecom licensees to utilise street infrastructure for laying down fibre at affordable rates. However, the industry still faces several obstacles, including the lack of compliance with the Central RoW rules by local authorities and the involvement of multiple players, hindering the laying of underground and overground fibre.
Ensuring a fibre network’s proper testing during installation, activation, and maintenance poses another major challenge. Although the components of an FTTH network are typically tested during the manufacturing process, additional testing is necessary after splicing and installing splitters and access terminals. Additionally, field testing is essential to ensure that the installed fibre does not have excess loss or reflectance due to micro-bends and that connectors are properly aligned. Failure to address these issues may result in suboptimal network performance.
Outlook
As consumers continue to demand faster and more reliable internet connections, FTTH networks are increasingly becoming popular due to their ability to provide faster internet speeds and reliable connectivity. FTTH allows users to seamlessly access a range of applications, especially indoors where wireless networks often encounter penetration loss issues. By offloading data traffic onto a medium that is available inside the homes, fibre can ensure a high-speed and reliable broadband experience.
Meanwhile, for some operators, the standalone FTTH model may not be viable due to the high investments required and low revenue potential. Therefore, operators can consider exploring alternative business models to provide telecom services through fibre networks. One option is the build-your-own-infrastructure model, where cable and network operators can construct their infrastructure and lease the capacities to operators/users. The infrastructure could be in the form of an outright duct or a dark fibre lease on an indefeasible right-of-use basis. Another alternative is the build-operate-transfer model, where a specialist can build and manage the capacities and decide on revenue sharing based on per-byte bandwidth delivered or a per-home connect basis. Another model is the fibre grid, where the fibre assets of all owners are aggregated to build a one-stop shop for dark fibre on a pan-India basis, allowing for joint operations and maintenance of the entire pool of fibre assets and planned expansions.
The Indian telecom market is also witnessing a considerable increase in the demand for FTTH services. Challenges notwithstanding, India is poised to become the second-largest fibre broadband market by 2030 with an active subscriber base of 110 million. Going forward, a greater emphasis on fibre infrastructure sharing, the establishment of financially sustainable business models, and increased government policy support at both the central and state levels will be crucial for sustaining growth in the FTTH market.
