FTTx is a relatively new development in the telecom industry, with relatively small technology & architecture dependences and no historic record. Therefore, many issues relating to FTTx deployments, namely implementation, business models, economic case, technology etc are still open and are going through heavy international dispute. The previous generation of broadband access (ADSL & cable) didn’t face similar cross-fires since copper (the physical medium to reach the end customer) was already deployed and owned by the incumbent. Therefore, many of the issues were resolved by the incumbent’s choices, with the refinement of an ex-post and ex-ante regulation mix.
In an attempt to summarize the contemporary debates on FTTx here’s a short list depicting the most serious of them:
Technology Choice (PON vs. P2P technologies)
Incumbents, large telcos, and effective regional monopolies prefer to deploy PON instead of P2P. With PON, differentiation on speed is tough since the end-users served by the same optical coupler share equally the same CO link. PON however, provides a significant business advantage: It is difficult to regulate and makes the business case for the competitors requiring access to it harder. On the other hand, alternative operators prefer P2P for the exact same reasons. Societal concerns also push to the P2P end for the speed advantages and the ability to choose over more than one providers. NRAs don’t show a strong preference of one over another. Their preferences depend on how they approach another crucial issue, that of infrastructure-based competition or open access networks. See below. You can find some interesting pieces about this in fiberevolution.
Architecture (FTTH/B/C)
The same cyclical arguments surface the Architecture debate. Incumbents and regional monopolies want to build FTTC networks for two reasons: First, to continue capitalizing on their existing copper access network, by providing high-speed xDSL services (such as VDSL) over the last few hundreds meters of copper reaching from the intermediate node to the customer’s premises. Secondly, with an FTTC architecture unbundling is made more difficult and expensive for competitors (fiber can’t be unbundled, subloop unbundling requires large investments in fiber backhaul, space to keep active and passive equipment is required close to the intermediate node), thus leaving bit stream as the only realistic option for wholesale services.
Open Access vs. Infrastructure-based Competition
The choice of one option over the other is not an easy call and it has to be coordinated very carefully. None of them is the panacea to the investment debate and most likely the best solution can be found somewhere in the middle. Those who favor facilities-based competition prefer to let market dynamics to shape sustainable business models and market structure. By many economists, primarily US influenced, letting the market forces decide on the competition and market structure for NGANs is considered the most appropriate approach. On the other hand, those who favor open access public networks propose the establishment of one physical infrastructure operator (or equivalent schemes, i.e. one infrastructure owner and one communications operator) that will provide physical access services to all competing providers of the upper market layers. You can read more on a previous post “Facilities-based Competition vs. Open Access Networks“.
Separation of Incumbent’s Vertical Business
Incumbent is a vertical integrated firm and there is strong argumentation whether it should be split to 2 parts: A physical infrastructure owner/operator and a service provider. This would reduce incentives for discriminating over competitors. Those against vertical separation argue that separation reduces incentives for investments since a separated firm cannot leverage economies of scope. Tim, fellow fiber ring member has been writing a lot about it. Nevertheless, it is interesting to see how do European countries approach this dilemma. UK has created BT openreach giving it business rights over BT’s copper infrastructure. Sweden has also split Telia Sonera and have created TeliaSonera Skanova Access covering copper and fiber networks and multiplexing. The Netherlands however, have decided that the BT model is of limit relevnace to the Dutch market – KPN is in fact a forward-looking incumbent – but have reserved the right to change course in the future if required. Just last week, the European Parliament, by approving the report coordinated by Commissioner Reading endorsed a proposal requiring telecoms operators to split their network business from their retail services (Functional/Structural Separation). Nevertheless, they insisted that such a measure be only “exceptionally” applied, requiring approval by both the EU executive and the European regulatory body.
This reference list is not complete since criticality is a subjective preference. Debates not included in this list are Aerial vs. Buried FTTH Access, How many fiber by how many operators should enter a building, how these basement terminated fiber will be regulated, government funding of FTTx projects etc.
