World of opportunity

The roll out of fibre to the home looks set to provide operators with the ideal medium to fight the twin threats of falling revenues and subscriber churn

Tags: 3DCommunicationsFTTHMotorola IncorporationUnited Arab Emirates
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World of opportunity Steve Hersey stresses the importance of new services for cutting churn.
By  Roger Field Published  December 14, 2009 Communications Middle East & Africa Logo

While many telecom operators have become accustomed to some fairly negative analysis of their sector, with so much talk of the need to reduce churn and limit falling ARPU, the deployment of fibre to the home looks set to create a sea change in the fortunes of operators that pursue the right strategy.

This was certainly the view of many delegates speaking at the recent FTTX Megna event in Dubai, which saw executives from some of the region's leading vendors and telecom operators give an upbeat appraisal of how the deployment of fibre optic cable - and particularly FTTH - can fundamentally change the way operators interact with their customers.

Steve Hersey, senior director, FTTH customer marketing for access networks solutions at Motorola Home & Networks Mobility, USA, said that FTTH will allow operators to move beyond offering the traditional triple play offering that they have become accustomed to, and allow them to offer a raft of new services.

"Triple play has become competitive table stakes for operators to be able to remain competitive in the market place today," he says. "Obviously there are varying degrees of that depending on what market you are looking at but certainly the ability to deliver voice, video and data services has become a fundamental expectation of customers as they make competitive choices.

"What we see developing next is the battle for the broadband consumer in the context of delivering personalised media experiences."

For Hersey, this is about taking the voice video and data services and enabling new applications and services to be delivered to the home, into the mobile network and into the internet, creating a "converged service environment that enables a new type of personalised media experience."

Beyond triple play

In this light, Hersey points to a new type of triple play where customers are able to access their choice of content and services when they want and where they want.

"We see that transition shaping up to the next triple play which is ‘what I want, when I want, where I want it' - it is the whole concept of time-shifted content, everything on demand and the ability to access that content wherever you are, whenever you want it," he says.

But for Hersey, the key aspect of the "beyond triple play" offering is video, mainly because it is IPTV and particularly video-on-demand that are the most bandwidth-hungry applications. "It has a fundamental impact on the access network, the access technologies and the types of services and solutions that carriers are going to need to put in place if they are going to be able to effectively compete in the long term," he says.

"That is one of the fundamental benefits of a fibre network, not only its ability to serve the services and bandwidth requirements that exist today but also providing a path to the evolution of these services over time."

Indeed, Hersey points to some of the services that could evolve from IPTV and video on demand, including ultra-high definition TV and 3DTV, which could only be deployed using an FTTH network.

Invest now

To this end, it is vital that when operators consider their level of network investment, they look at the type of services they might be offering in a few years time, and take into account the level of bandwidth capacity these services will require.

"We look forward to those things in the 2015 plus timeframe," Hersey says. "But for investment decisions that are being made today, we are actually in that investment window right now.

"If you are making investment access decisions today you are making a decision not just for today and tomorrow but for a seven year window which is where service providers are making their investment decisions. In that seven to 10 year window you are going to be talking about hundreds of megabits per second for a subscriber that will be needed."

Monetising fibre

But despite the broad range of services that operators can offer over FTTH networks, some doubts remain about the ability of operators to generate sufficient profits from such networks and monetise the huge bandwidth they are providing. This was also an issue addressed at the FTTX Megna event.

"One of the things that was represented here was what I call the operator's dilemma, which is that revenue is increasing on a certain slope as new services are offered but the real challenge is that the traffic demand is actually increasing exponentially," Hersey says. "The dilemma arises if the traffic demand exceeds the revenue generating opportunity that is being derived from that traffic.

"Where the carriers really need to focus their strategies is on making sure that the traffic extension curve and the revenue curve track so that the investment they are making in their network is returned to them in the monetisation of the traffic on the network."

However, Hersey is confident that there are plenty of opportunities for carriers to achieve this aim, not only by offering new on-demand services but also by forming more partnerships with other companies in the wider telecoms ecosystem.

"We will potentially see more partnerships among application providers and software developers and the carriers themselves to provide an overall value chain and monetization of the services and applications over the broadband connection," he says. "So there are a lot of challenges still to be faced there but I think that carriers are finding ways to innovate and ways to increase their competitiveness in delivering ultra broadband connections on a per subscriber basis."

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