Opportunities for fibre network operators
4G/5G densification and the growth in edge end points will place fresh demands on telecoms network infrastructure to deliver high bandwidth connections to new locations. Many of these will be sites on the streets of urban centres without existing connections, where installation of new fibre cables is costly. This will require careful planning and optimum selection of existing infrastructure to minimise costs and strengthen the business cases for fibre deployment.
While much of the growth in deployment of small cells and edge end points will be on private sites, their deployment in public areas, in support of public network services, will pose specific challenges to providing the broad bandwidth connectivity required. This includes both backhaul from cell sites and edge end points to the fibre transport network, plus any fronthaul needs for new open RAN deployments, from baseband equipment to radio units and antennas. In almost all cases this will entail installing new fibre in areas where laying a new duct is at its most expensive, although in a few cases fixed point-to-point radio links could be deployed instead.
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Global deployments of small cells and non-telco edge end points
in public areas
Source: Small Cell Forum, STL research and analysis
In addition, operators of 5G small cells and public cloud edge sites will require access to fibre links for backhaul to their core networks to provide the high bandwidths required. In some cases, they may need multiple fibres, especially if diverse paths are needed for security and resilience purposes.
Many newer networks have been built for a specific purpose, such as residential or business FTTP. Others are trunk routes to connect large businesses and data centres, and may serve local, regional, national or international areas. In addition, changing regulations have encouraged the creation of new businesses such as neutral hosts (also called “open access” for wholesale fibre) and, as a result, the supply side of the market is composed of an increasing variety of players. If this pattern were to continue, then it would very likely prove uneconomic to build dedicated networks for some applications, such as small cell densification or some standalone edge applications.
However, provided build qualities meet the required standard and costs can be contained there is no reason why networks deployed to address one market cannot be extended and repurposed to serve others. For new fibre builds being planned, it is also important to consider these new FTTX opportunities upfront and in some detail, rather than as an afterthought or just a throw-away bullet point on investor slide-decks.
This report looks at the opportunities these developments offer to fibre network operators and considers the business cases that need to be made. It looks at the means and scope for minimising costs necessary to profitably satisfy the widest range of needs.
The fibre market is changing
FTTH/P has been largely satisfied in many countries, and even in slower markets such as the UK and Germany, the bulk of the network is expected to be in place by 2025/6 for most urban premises, at least on the basis of “homes passed”, if not actually connected.
By contrast the requirement of higher bandwidth connectivity for mobile base stations being upgraded from 3G to 4G and 5G is current and ongoing. Demand for links to small cells needed to support 5G densification, standalone edge, and smart city applications is only just beginning to appear and is likely to develop significantly over the next 10 years or more. In future high speed broadband links will be required to support an increasing range of applications for different organisations: for example, autonomous and semi-autonomous vehicle (V2X) applications operated by government or city authorities.
Both densification and edge will need local connections for fronthaul and backhaul as well as longer connections to provide backhaul to the core network. Building from scratch is expensive owing to the high costs associated with digging in the public highway, especially in urban centres. Digging can be complex, depending on the surfaces and buried services encountered, and extensions after the initial main build can be very expensive.
Laying fibre and ducts are a long-term investment and can usually be amortised over 15 to 20 years. Nevertheless, network operators need to be sure of a good return on their investment and therefore need to find ways to minimise costs while maximising revenues. In markets with multiple players, there will also be a desire by potential acquisition targets to underscore their valuations, by maximising their addressable market, while reducing any post-merger remedial or expansion costs. Good planning, including watching for new opportunities and trends and the smart use of existing assets to minimise costs, can help ensure this.
- Serving multiple markets through good forecasting and planning can help maximise revenues.
- Operators and others can make use of various infrastructure assets to reduce costs, including incumbents’ physical duct/pole infrastructure sewers, disused water and hydraulic pipes, neutral hosts’ networks, council ducts, and traffic management ducts. Obviously these will not extend everywhere that fibre is required, but can make a meaningful contribution in many situations.
The remaining sections of this report examine in more detail the specific opportunities offered to fixed network operators, by densification of mobile base stations and growth of edge computing. It covers:
- Market demand, including drivers of demand, and end users’ and the industry’s needs and options
- The changing supply side and regulation
- Technologies, build options and costs
- How to maximise revenues and returns on investment.
Table of Contents
- Executive Summary
- The fibre market is changing
- Small cell and edge: Demand
- Demand for small cells
- Demand for edge end points
- Small cell and edge: Supply
- The changing network supply structure
- Build options
- Pros and cons of seven building options
- How do they compare on costs?
- Impact of regulation and policy
- How to mitigate unforeseen costs
- The business case