Competition, not consumer demand, is driving full-fibre roll-out

Telecoms operators and network builders in mature European markets, including the UK, are building fibre-to-the-premises (FTTP) or full-fibre broadband networks not because consumers are clamouring for ultrafast services, but because market conditions and competitive pressure demand that they do, according to a new report.

This is one of a number of findings in the report Gigabit reality, published by the organisers of the Broadband World Forum (BBWF) ahead of their annual conference on 23 October 2018 in Berlin.

According to the report, the gigabit society is fast becoming a reality, as the debate around broadband access technologies moves away from the relative merits of copper and fibre to the practical realities of how to deliver ultrafast gigabit connections at scale.

Operators in the most mature economies are increasingly finding fixed broadband revenues under pressure because of slower growth and market saturation, said the BBWF. Hence, upgrading networks to full-fibre in support of ultrafast services “offers the opportunity to appeal to the tech-savvy, high-spending customer and earn a premium over lower-speed tiers”, it said.

But while European Union (EU) objectives call for full 100Mbps connectivity by 2025, the BBWF found that no consumer application had really emerged that was bandwidth-hungry enough to drive customer demand for gigabit services, although there were a couple of potential niches around augmented and virtual reality gaming, or home workers in jobs related to design, who need to send and receive extremely large files.

Nevertheless, this should not be a cause for despondency, said the BBWF. “The combination of survey and audience data paints a great picture of the broadband market,” said BBWF digital content lead Niall Hunt.

“Despite the apparent disruption, the market is robust,” he said. “In an environment of high investment in networks, as we push towards the gigabit society and 5G, as well as the increasingly fickle nature of customers, operators across the globe are painting a rosy picture.”

Preparations for 5G and fear of missing out on possible revenues from network convergence also seemed to be driving operator investment in fixed networks to some extent, said the BBWF, even though 60% of the operators that responded to the initial survey said they were agnostic about 5G’s impact.

Broadband Forum CEO Robin Mersh said: “While 5G is usually thought of as a phenomenon in mobile broadband, it also presents a huge opportunity for fixed operators, as the fixed network will need to be integrated seamlessly.”

Stefaan Vanhastel, head of fixed network marketing for Nokia, added: “Operators are starting to realise that having a fixed access network is a competitive advantage when deploying 5G. They can use that access network to connect consumers and business.

“If you can use an existing network to transport 5G from the base station, it means you can accelerate the roll-out of 5G because you don’t have to do the time-consuming work of plumbing fibre to every small cell.”