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Asian carriers are up to the FTTP foray
Fiber Optics Weekly Update, Oct 22, 2004

According to the Yankee Group, as the broadband market continues to evolve, a number of service providers are eyeing the market potentials of FTTP.

Fiber had long been in Asia's broadband market spotlight with a number of active broadband players vowing to showcase their all-optical strategies to corporate and home users. Fiber has finally made its way to the very "last mile" of the access networks in individual countries, encompassing Asian broadband users with reliable and ultra high-speed broadband experience. Japan is clearly the leader in the fiber-enabled broadband revolution, with more than 1.5 million FTTH subscribers.

Aside from the government's intent to populate the country with fiber networks through a combination of incentive programs and supportive regulatory measures, the proliferation of FTTH won't be a success without the strong aspiration of service providers. NTT, the incumbent, was reluctant to move to FTTH, given its over-investment in ISDN, but now it is competing relentlessly with pioneer operator Usen Broad Networks and a number of utility companies. NTT has made real progress improving in-house installation, which used to be a deployment setback because the provisioning of FTTH is fairly labor intensive and all work has to be done manually. NTT believes that the company is on track to achieve its target of 2 million FTTH subscribers by 2005.

Although Japan is comfortably leading the FTTH foray, carriers in Australia, China, and Korea are charting their FTTP game plans. The bottom line for operators: enhance broadband performance, functionality, and security while containing CapEx and OpEx.

It remains to be seen whether fiber will become the primary access mode in Asia's broadband market, but it has proven to be the key force driving the next wave of broadband diffusion. Among a quarterly net increase of 1.2 million broadband subscribers in Japan, some 20 percent are FTTH subscribers. Japan had a broadband penetration rate of 26 percent in 2003 and still has plenty of room for future broadband growth. As a conservative estimate, we expect the country to create a market size totaling 35 million-plus broadband subscribers by 2008. FTTH will continue to enjoy unprecedented growth for the next two to three years. Other countries with a solid FTTP deployment plan will--sooner or later--follow a similar growth path for fiber-based solutions.

More and more operators are opting for PON technologies since they offer greater features. KT used WDM-PON on a trial basis for optical connectivity to poles in late 2003. NTT currently uses BPON to provision FTTH for individual homes. Although fiber is being experimented with, we don't expect to see any large-scale FTTP deployment projects in the immediate future, since equipment costs still account for as much as 65 percent of the total cost for FTTP deployment. With that in mind, service providers would adopt a "wait and see" attitude. As the price gap closes, PON technology will be widely used in the fiber access arena. Within the host of PON technologies, including APON/BPON, EPON and the emerging GPON standards, BPON and EPON appear to gain an upper hand in the Asia-Pacific carrier market. BPON and EPON will find mainstream popularity in Asia-Pacific with aggressive marketing on the vendor side.

The availability of quality broadband multimedia content and applications will be instrumental in achieving mass FTTP deployment. A growing number of service providers in Asia-Pacific have started offering broadband applications such as IP telephony, videophone, and video conferencing--and these are just the tip of the iceberg. Broadband operators and content providers are increasingly aware of the pressing commercial issues and are working to bridge the service gap. Incumbents, such as NTT, PCCW, and Chunghwa Telecom, are important advocates for broadband media and are set to stake their claims in this emerging market.