Telcos on horn of dilemma in upgrading to fibre for IPTV, OTT video

Joseph O'Halloran ©RapidTVNews | 03-07-2012

A new report from ABI Research has concluded that telcos are facing cost to value proposition issues regarding upgrades to fibre infrastructures which can support advanced offerings such as IPTV and over-the-top (OTT) video.

ABI’s investigation into telco network deployments, consumer adoption and service revenues for DSL and fibre broadband services stressed the business reality that copper networks continue to be a cash cow for telcos delivering broadband over DSL to more than 367 million subscribers worldwide in 2011. Even though Fibre to the Home (FTTH) technologies bring ten times the bandwidth compared with advanced DSL technologies, ideal for key cash-generating revenues such as IPTV and OTT and which will form the basis for proposition such as BT Vision, the analyst feels that upgrades to advanced forms of DSL require a fraction of the investment of upgrades to FTTH.

“Financial instability in the advanced economies of Western Europe and lack of innovative internet video services force telcos to look into the cost to value proposition delivered by making large scale investments into FTTH,” explained Adarsh Krishnan, senior analyst of TV & Video at ABI Research.

The analyst firm also observed that what it described as ‘innovative’ internet video services— including IPTV and OTT, especially those at HD resolutions—will provide telcos a necessary competitive edge for triple play and quad play services that have been lacking against competing cable operators. It pointed to the fact that even without fibre, and in stark contrast to main rival Verizon, AT&T U-verse can deliver IPTV services to its US customers over ADSL2 at 15 Mbps bandwidth.

The analyst also noted that worldwide, FTTH/B service revenues reached $29.6 billion in 2011 while global revenues from DSL broadband services have seen incremental growth in service revenue to reach $106 billion with a CAGR growth of 14% in the last 5 years up until 2011. the report highlighted Asia-Pacific as a critical growth region for DSL broadband with China already accounting for a third of worldwide subscribers at the end of 2011.

“Strong government initiatives to develop fibre infrastructure have in most cases been a necessary prerequisite to fund FTTH or fibre to the building (FTTB) deployments. These incentives have been strongest in Western Europe and Asia-Pacific.”, added Sam Rosen, practice director of TV & Video at ABI Research.