Building a business value case for FTTH

By Albert Grooten

Albert Grooten outlines some of the practical arguments why Fibre To The Home (FTTH) has a solid business case to reassure investors and stakeholders alike.

Can you explain why you feel there is the need to make the business case for Fiber to the Home?

Albert Grooten. Over the last few years next generation access services have continued to be made available to more end users as next generation networks of all dimensions are being planned, begin and continue their rollouts. Over the last two years FTTH subscribers grew by 29 per cent in 2008 to reach 33.6 million subscribers, while in 2009 a further 5.5 million subscribers were added (FTTH Council figures). Today FTTH is being deployed by a greater diversity of organizations. Not only the incumbents but also alternative operators, governments and local authorities, real estate developers, residential associations, utility companies and municipalities. Despite the global downturn of 2009, this growth shows little sign of slowing down, but there is an understandable necessity to explain the business value of FTTH in more detail, especially in these uncertain economic times.

How do you explain in simple terms the FTTH business model?

AG. The FTTH business model is quite straightforward. First you have to put in place a fibre optic infrastructure at a sensible cost, then lease out the fibre to service providers, or take on the responsibility and added complexity of providing your own services. Exactly the same as in real estate, where a long term approach is needed..  Although the concept appears simple, the detail and execution can be full of surprises. As many of the organizations now planning or building FTTH networks do not have traditional telecoms backgrounds, this could result in an expensive learning curve.

So how do you convince a potential investor that there is a strong business case for FTTH ?

AG. Of course, as for any business opportunity, it is possible to build a strong business value case for FTTH. But there are specific fundamentals about fibre networks  that are not applicable to other business environments. Putting together a successful FTTH project requires many different inputs. Each individual project has a  uniqueness, depending on geography, the history of the market, national and local regulation and a multitude of other factors. Many of the variables involved are interconnected; improve one variable and you must compromise on another. The main point is to have an awareness of some of these situations, have an in-depth understanding of the key considerations and to learn from the experience of real-world fibre installations.

What experience have you accumulated in Draka over the years that you have been refining your fiber infrastructure business and has this given a broader perspective?

AG. We do indeed have a much broader perspective driven by the current evolution of FTTH networks. Business value and cost of ownership are drivers. As well as telecoms companies, we have to address a broader range of  investors and stakeholders in  future FTTH networks to reply to some of the issues. We are drawing upon the practical experience accrued from large scale projects such as CityNet in Amsterdam with 40,000 FTTH subscribers, to smaller scale community networks such as of Berkel and Rodenrijs, a small town in the Netherlands. This suburb of Rotterdam completed a successful fiber rollout to 6,000 homes We also have the experience of  green field fiber projects, as we are doing for Energy City Qatar in the Middle East. Essential during this learning phase are the lessons learned from such a diversity of FTTH projects and the factors that contribute to success. Our  road show around small communities in the United Kingdom has generated considerable interest for our business value approach.

Biography

Albert Grooten is Director Technology FTTH for the Amsterdam-based optical fibre technology and network solutions specialist Draka Communications. Albert worked for Draka in R&D and was subsequently International Product manager for Optical Fibre Cables.