Fibre-to-the-premises is now mainstream, but varies widely across nations in market maturity, industry structure, telco versus altnet roles and government policy. We outline plausible end-state models for FTTP markets.

The current state of FTTP

Fibre is fast becoming the principal fixed access choice for both residential property and business sites worldwide. Fibre-to-the-premises (FTTP) forms the centrepiece of most national broadband strategies, and regional efforts by bodies such as the European Commission. This report examines the main market developments, policy/regulatory issues and structural trends occurring in the sector.

This report does not examine technological shifts in detail – our previous report on fixed network disaggregation covered much of that, while we separately cover fixed-wireless access and satellite broadband. In short, neither of those options competes with FTTP except for certain demographic niches and remote rural areas, although in some low-density markets such as the US there is more overlap.

Other background developments in 10G, 25G and higher-capacity passive optical network (PON) systems are important, but do not materially impact the market structure. On the software side, we expect to see greater use of automation and AI-enabled platforms, which will benefit all service provider (SP) types, but could prove especially beneficial to wholesalers, aggregators or those creating service platforms and APIs for different classes of user, developer or property owners. These themes will be covered by STL in other reports.

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Deployment is ongoing and has reached widely different levels of penetration across markets, but has already entrenched a wide range of new infrastructure owners, partnerships and investors in the telecoms landscape, as well as new wholesale and open-access business models. Utility companies, private equity firms, mobile operators, municipal and government agencies, multi-asset infrastructure companies and a range of others are all involved, directly or through joint ventures. Sometimes nudged by competitive factors, incumbent wireline and cable providers are fast switching to fibre as well – although in some countries this has been occurring for 10 years or more, with operators already switching off their old copper networks.

Main categories of FTTP network owners

Source: STL Partners

That said, until recently there has been less emphasis on connection and active sign-up than on network build and premises “passed”. This is now changing – partly because of macroeconomic concerns that are sharpening the need for cashflow from the new assets, irrespective of their long projected lifespan. But there remains an elephant in the room here: do consumers actually want and need gigabit broadband, given the current lack of applications that need anywhere close to those speeds? It is still unclear how best to nudge people from their current broadly-acceptable older broadband, onto a much better alternative – especially if it is more expensive.

To give some perspective, the leading countries – mostly in Asia and the Middle East, such as the UAE, Singapore and South Korea – now have over 90% penetration of fibre connections to households. In Europe, the highest is Spain at around 80%, but the majority of national markets are below 50%, with several still below 20% uptake.

Taking both supply and demand variables into consideration, in most countries the market is nowhere near stability, i.e. a “steady state” of use and monetisation. Many markets are likely to see consolidation in their fibre marketplaces – and horizontally across adjacent sectors. The technology development is not slowing down either – we can expect a stream of potential upgrades to the underlying connectivity fabric (for instance XGS-PON systems supporting 10Gbps or more), as well as extensions of the market in terms of both reach and value-added services.

Recent conferences have started talking about “fibre to everything” – not just residential property and commercial premises, but also individual rooms inside buildings, or even machinery and equipment – perhaps with end-to-end service provision by telecom operators.

Given that the usual benchmark for fibre networks making a return is a 30% take-rate among residential subscribers, having additional target audiences and potential revenue streams is critically important particularly in regions where there may be two, three or even more independent fibre networks built on top of each other. (In the FTTP industry lexicon, the normal term is “overbuilt”.)

The key themes covered in this report are:

• Driving uptake of FTTP services (i.e. going beyond rollout and “homes passed”). In many places the monetisation of fibre assets lags significantly behind its notional availability.
• Market structure and how it differs between markets, and is evolving in various ways.
• Regulatory and policy changes that are changing the landscape for FTTP, in terms of competition, funding, consolidation and many other areas.

In addition, the report acknowledges the important roles of two other sets of trends, which we plan to explore in greater depth in future reports.

• Value-add services for fibre including both B2C service options alongside FTTP access, and B2B connectivity for enterprise and other sectors such as mobile backhaul.
• Technology changes and evolution that may impact either revenue or costs for FTTP networks.

Table of contents

• Executive Summary
  • Recommendations for key stakeholders
• Introduction
  • Objectives of this report
  • Other background trends
• Driving uptake of fibre
  • Essential for operators, governments and investors
  • What counts as “uptake”?
  • Does it just take time?
  • Sales and marketing approaches to drive demand
  • Connection capex and reducing friction for final builds
  • Providing FTTP in MDUs is challenging
  • Copper network switch-offs to force FTTP uptake
• Evolving market structures
  • Current FTTP market structure
  • Key stakeholder groups/network owners
  • Future evolution paths: What is a “steady state” for FTTP?
• Regulatory and policy developments for fibre
  • The US
  • Other regions
• Index

Related research

• Telecoms 2030 Part 3: Pathways to servco, infraco and techco
• Fixed access network disaggregation and its relationship with telco cloud
• Selling full fibre services to consumers
• Network metrics and KPIs
• Consumer value from smart home Wi-Fi
• New types of telecom operators and network owner

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Dean Bubley

Dean Bubley

Associate Director

Dean is the founder of analyst and futurist firm, Disruptive Analysis and leader of the STL Partners Network Futures stream.