Technology | Media | Telecommunications

Thursday, February 21, 2013

Why FTTH is about Advancing Economic Development

The global wired broadband market -- including DSL, cable, and fiber-optic services -- generated $188 billion service revenue in 2012, that's a 7 percent increase from 2011.

According to the latest market study by ABI Research, fixed broadband service revenue will grow to $251 billion by 2018.

Across the globe in 2012, fiber-optic broadband service revenue had its strongest year-over-year growth of 24 percent, while DSL and cable broadband grew 2 percent and 6 percent respectively.

Fiber to the home (FTTH) is expected to grow stronger than other platforms throughout the forecast period. In 2018, FTTH revenue should reach $81.6 billion, generating almost one-third of global broadband service revenue.

Globally, overall broadband average revenue per user (ARPU) has continued to decline across all broadband platforms over the past few years. In some nations, consumers are getting more and paying less.

"The trend is expected to endure as the majority of network operators are trying to offer lower prices to capture a larger market share. In some countries like Japan and South Korea, increasing competition from LTE services is expected to pressure fixed broadband operators to offer lower service pricing in the long-term," said Jake Saunders, VP and practice director of core forecasting at ABI Research.

The wireline broadband market in United States increased to $43 billion in 2012 -- that's up from $41 billion in 2011. However, fiber-optic broadband represents only 7 percent of the total broadband revenue in U.S. market.

The primary FTTH operator in America, Verizon, experienced just a 3.1 percent increase in broadband revenue -- particularly due to adoption of its FTTH service called FiOS. However, that growth rate will not enable the U.S. market to catch-up with the recognized leading global markets.

As more consumers gain access to super-fast broadband services, FTTH adoption will continue to grow. ABI Research forecasts that United States FTTH revenue will reach $4 billion at the end of 2013. Clearly, there's significant profit opportunities in providing these superior broadband offerings.

I believe that FTTH is going to be a compelling catalyst for tech start-up cluster development in the 21st Century. We only need to look at places like Kansas City and Chattanooga to realize that more savvy entrepreneurs will choose to relocate their emerging business to gain access to these gigabit super-fast broadband networks.

That being said, perhaps the key question is: how is the lack of world-class communication infrastructure depressing economic growth across the rest of the nation? When will all American entrepreneurs in large metro areas have access to a globally competitive super-fast broadband service?

How much longer must American entrepreneurs wait for infrastructure that delivers economic development parity with the world's leading innovators? Moreover, why isn't a meaningful gigabit broadband stimulus plan a higher priority on the agenda of U.S. economic policymakers?