States of play for FTTH

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How North and Latin America are faring when it comes to fibre deployment

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The attitude to, and understanding of the benefits of full-fibre has shifted dramatically over the years, with markets now rushing to adopt where perhaps they had not just a few years ago. As an example, a 2021 study by Kagan, a research group with S&P Global Market Intelligence, cited North America as being behind other regions when it comes to FTTP deployment, with only 14.6% of fixed broadband subscribers by the end of 2021.

In comparison, and following hot on the heels of what Gary Bolton, President and CEO of the Fiber Broadband Association describes as “the beginning of the largest investment cycle in the history of our industry,” more fibre was deployed in 2022 than ever before. 

This is according to the association’s latest Fiber Provider Survey, undertaken by RVA Market Research & Consulting (RVA). The study demonstrated that fibre providers passed 7.9 million additional homes in the USA in 2022, which is the highest annual deployment ever, and this was against a backdrop of challenges in materials supply chain and labour availability.

According to the survey, there is now a total of 68 million  premises passed by fibre broadband in the USA, which is an increase of 13% over the past 12 months and up 27% over the past 24 months. Excluding homes with two or more fibre passings, 63 million unique homes have now been passed. Fibre has passed nearly half of primary homes and more than 10% of second homes. Fibre broadband build-out is also expanding in Canada, according to the report, with around 66% of homes passed at the end of last year.  

Future funding

RVA noted that all of this growth also precedes the expected higher levels of annual FTTH deployments anticipated for the next five years, based on Federal funding programs such as BEAD, RDOF, ReConnect, and other programs focused on specific markets and demographics. The research firm also highlighted that, although deployment expectations from individual companies are in constant flux based on many factors, many service providers have announced network builds exceeding the fibre footprint they have built to-date with private funding.

Comments Bolton: “High-quality broadband has become more important to consumers every year. Fibre broadband exceeds all other types of delivery in every single measurement of broadband quality, including speeds, uptime, latency, jitter, and power consumption. For the consumer this has real-world impacts, like more productivity, better access to health care and education, more entrepreneurism, and the option of more rural living. For society, this means more sustainability and, ultimately, digital equity.”

Looking at how the market will fare throughout 2023, Bolton feels that we will see a strong year for fibre in the USA. He explains: “During the next five years, more than $100bn in public funding will be invested in broadband networks for unserved and underserved communities, with fibre making up the vast majority of new last-mile networks. Significant private capital is also being invested to replace or supplement ageing telecom and cable plants across the country in both rural and urban settings to enable incumbent operators to stay competitive with fibre.”

Bolton espouses that fibre is now the recognised choice in the USA for future-proof, easily up-gradable infrastructure to replace legacy copper and coax networks, and that it delivers long-term economic benefits for communities that have it. He continues: “All major American telcos are committed to fibre as a long-term solution while the cable industry recognises fibre as essential to delivering symmetrical broadband services on their path to 10Gb/s and beyond.”

But despite the recent investment and enthusiasm, fibre’s success in the USA still has a few hurdles to overcome, such as supply chain issues from the pandemic, which continue to be an area of concern. However, according to Bolton: “Fibre and equipment manufacturers are stepping up to increase production to meet the needs of the next five years, with forward-looking companies opening new facilities both in the USA and in other regions. More local U.S. production will alleviate short-term shortages and likely lower supply pricing over the long-term. In addition, fibre manufactures have announced new fibre manufacturing facilities in Europe, such as Corning’s new plant in Warsaw, so that all of the US domestic production can be directed to satisfy domestic demand.”

Skills shortage

Maintaining a skilled workforce in a time where there is still a shortage of experienced workers is another area of concern. But the association is playing its part to try to address this. Bolton reveals: “The fibre industry will need up to 850,000 new skilled technicians to plan, build, install, and maintain the networks being built over the next five years. FBA has created the OpTIC Path training curriculum to provide the needed hands-on skill training necessary for new fibre technicians to be ready to perform their duties when they show up for their first day of work. We and our industry partners are working to rapidly bring this much-needed curriculum to trade schools, community colleges, and other organisations to make sure the industry has the skilled labour necessary in the years to come.”

The association spent more than a year developing the OpTIC Path technician training programme. The pilot was successfully completed in May of last year and the programme itself consists of 144 hours of classroom and labs, with a Department of Labor registered 2,000-hour national apprenticeship. It is currently engaged with more than 39 States and 28+ community colleges and veterans training organisations across the country. The aim is to expand this training in all 56 states and territories. In a recent success story from the programme, one of the participating schools graduated 17 students with immediate post-graduation employment as fibre optic technicians. 

In addition, the National Telecommunications and Information Administration (NTIA), an agency of the United States Department of Commerce that serves as the President's principal adviser on telecommunications policies, cited FBA’s training efforts as a best practice in its NTIA Workforce Development Playbook, developed for the State Broadband Offices. The association has also entered into collaboration agreements with Wireless Infrastructure Association's (WIA) Telecommunications Industry Registered Apprenticeship Program (TIRAP) and with the Communications Workers of America (CWA) for its unionised apprenticeship program.

The FBA also continues to work with federal, state, and local officials to improve legislation and regulation for building and operating fibre networks as well as making sure communities are actively engaged in the process of delivering broadband to everyone. Bolton states: “The ultimate success of closing the national digital divide is dependent upon strong local community engagement and leadership to make sure no household is left behind.”

Looking at LATAM

But, how are fibre deployments faring in Latin America? According to the latest research from Kagan on the topic, it certainly seems to have started moving in the right direction. The research group states that fixed broadband services grew 6.8% to reach 96.4 million subscribers, or 48.2% of total Latin America and Caribbean households, by year-end 2021. One of the key drivers for this, according to the group, is the pandemic, which served to accelerate broadband adoption in the region, albeit at a slower rate than the previous year's 12.4% growth. Interestingly, the region's top 11 operator groups grew only 4% to 66.6 million broadband households, losing market share to new market entrants.

This is interesting because not all of the fixed broadband services referred to above were fibre. In fact, according to Kagan’s data, which was released via a blog by Georgia Jordan Associate Research Analyst at the firm, the top 11 operators actually lost subscribers in legacy technologies such as DSL and struggled to compete with small internet service providers' fibre offerings. These larger operators did, however, manage to recover ground as their share of FTTP households grew from 44.2% to 48.5% as they pushed to migrate existing subscriber bases to the new networks.

The research highlights Telefónica, the incumbent in many of Latin American markets, as largely leading the way on this strategy shift. Indeed, the operator recently reaffirmed its commitment to contribute to digital inclusion in Latin America during the celebration of Mobile 360 ​​Latin America in Mexico City, with the launch of a rural manifesto, which details its proposals to fully connect the rural areas of Latin America

According to José Juan Haro, Director of Wholesale Business and Public Affairs at Telefónica Hispanoaméric: “In Latin America, around 45 million people do not have access to the internet because they live in rural or remote areas. For this reason, we present the Telefónica Hispam rural manifesto, which brings a new proposal to fully connect the rural areas of Latin America, adding public and private efforts under a collaborative approach; and, focusing on a new model that revolves around three main axes: innovation, cooperation and sustainability.”

A new approach

During the event, the provider highlighted its sharing model in Latin America, giving examples of markets in which it is already in place. In Chile, for example, the operator entered into a $1bn agreement with investment firm KKR to create an open access wholesale company in Chile. The deal saw KKR acquire a majority stake in Telefónica Chile’s existing fibre optic network, with the aim of making that network open access through the newly established independent company and expanding broadband coverage in the market from two million households to a minimum of 3.5 million households by 2023. Speaking at the event, Haro confirmed that the market already has 3.5 million homes with the possibility of connecting to a fibre optic service.

This model was rolled out in Colombia in the same year, also with KKR receiving a majority stake in the existing fibre optic network, and creating a new company to deploy a neutral FTTH network. The objective was to bring the advantages of fibre to about 90 cities in the country over three years, with a network that will cover 4.3 million past real estate units. Currently, the market has two million homes with the possibility of connecting to fibre.

It is not just Telefónica, other operators in Latin America have looked to strengthen the deployment of fibre optics by sharing their infrastructures or creating alliances with financial companies and other business partners. Many have also adopted this kind of open wholesale model, as also highlighted in the Kagan research. TIM Brasil, for example, entered a similar agreement with IHS Holding in which the latter acquired a controlling interest in FiberCo, the subsidiary of the operator responsible for the implementation, operation and maintenance of its fibre infrastructure. 

The transaction included TIM’s secondary fibre network and assets as well as the provision of fibre optic infrastructure services as an open fibre network service provider. The difference here is that, instead of creating a new deployment company, this agreement saw FiberCo rebranded to operate under the name of I-Systems.

I-Systems is responsible for the deployment of new secondary fibre infrastructure for TIM, and the operation and maintenance of all that infrastructure. TIM remained the anchor tenant across the network, which operates in 41 of the largest cities across nine Brazilian states, including the Greater São Paulo region, with approximately seven million homes passed.

At around the same time, and in a similar way, Brazil’s Oi SA sold a majority stake of its fibre optic business, to funds managed by investment company, BTG Pactual. More recently Canada Pension Plan Investment Board (CPP Investments) joined the investment team, putting in R$2.5bn for a 9.5% stake in the network provider, now named V.tal, which currently accounts for around 14% of Brazil’s fibre network and reaches nearly 20 million households across the country. The aim is to expand the network footprint in the market. 

Investments such as those detailed above have clearly had a big impact, with fibre reaching a 39% market share in the region in 2021, the same year as many of the aforementioned developments. This is according to market intelligence firm, Dataxis, which also found that, for the first time, fibre became the option with the greatest diffusion rate in the region. Looking to the future, the company predicts that by 2026, fibre will concentrate 83.2 million accesses in Latin America; 63% of the total predicted broadband connections. In addition, according to its predictions, the total broadband market will jump by 31.9%, while fibre's growth will be 3.5 times faster, reaching 113.2%.

Interestingly, the move towards partnerships and shared infrastructure seen in Latin America over the past two years is now also becoming more widely adopted in North America. North American giant, AT&T, for example, recently signed an agreement with BlackRock Alternatives to form a joint venture that will operate a commercial fibre platform, known as Gigapower, which will serve customers outside of AT&T’s traditional 21-state wireline service footprint with fibre access technologies. AT&T will leverage its nationwide wireless sales capabilities to sell fibre to customers in Gigapower territories.

Via Gigapower, the companies aim to deploy a multi-gigabit fibre network to 1.5 million customer locations initially using an open access platform. The deployment will be incremental to AT&T’s existing target of 30 million-plus fibre locations, by the end of 2025. John Stankey, CEO of AT&T explains: “More customers and communities outside of our traditional service areas will receive the social and economic benefits of the world’s most durable and capable technology to access all the internet has to offer.”                      

There is clearly an appetite for fibre in the Americas, particularly as the huge increase in demand for bandwidth seen in past years continues to increase. But even with all the work that has already taken place, both North and Latin America still offer huge opportunities for FTTH deployment and expansion.

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