Posts tagged ‘fibre’

The Expert View: Cable investments through the eyes of HSBC

By Stephen Howard
Head of Telecoms Research
HSBC

Stephen Howard HSBCThe EC’s fresh direction in the regulation of fixed-line access networks is likely to prove, in our opinion, the most important driver of the sector this decade.

Regulation remains the most decisive driver for the telecoms sector, and no decision is more important than that on how pricing is to be determined on the fibre-based fixed-line networks of the future. We regard the EC’s new proposals in this area as very positive for any operators that invest in their own access infrastructure (rather than merely unbundling that of the relevant local incumbent).

This outcome will surprise many industry observers, with many having been very bearish on prospects for regulation. By contrast, however, we have long argued that regulation would need to improve in order to promote investment. In our Four Steps for Fibre thematic (February 2012), we highlighted four things needed to get investment going, and three of these are relevant specifically to this EC consultation – namely: first, pricing flexibility on wholesale fibre; second, a better copper ULL pricing environment; and, third, technology agnosticism (which translates in practical terms to the flexibility for incumbent telecoms operators to deploy FTTN, not just much more expensive FTTP).

The EC’s fibre statement should, in our view, underpin much more extensive NGA investment.

The EC has unveiled an approach that should give incumbents the necessary flexibility to justify upgrading to NGA (next generation access) platforms (ie those that are typically fibre-based). Firstly, national regulators will no longer be compelled to apply price regulation to wholesale NGA services – provided incumbents make these available on the basis of equivalence (ie on the same terms to third parties as to their own retail divisions) and subject to a margin squeeze test. Secondly, there is the assurance that there should be stable copper prices in future. And thirdly, the EC has The EC’s fresh direction in the regulation of fixed-line access networks is likely to prove, in our opinion, the most important driver of the sector this decade.

Regulation remains the most decisive driver for the telecoms sector, and no decision is more important than that on how pricing is to be determined on the fibre-based fixed-line networks of the future. We regard the EC’s new proposals in this area as very positive for any operators that invest in their own access infrastructure (rather than merely unbundling that of the relevant local incumbent).

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Global broadband penetration passes one-third of all homes

More than 1/3 of the world’s households will have a fixed broadband connection by the end of 2012.

According to US firm ABI Research, which is forecasting there will be 618.7mn subscribers to fixed broadband services by the end of 2012, up 7.3% from one year previously.

The growth is expected to come from all the fixed broadband platforms: DSL, cable, and fibre-optic broadband. DSL broadband subscriptions grew 1.2% on a sequential basis in the second quarter of this year (adding 4.3mn subscribers), compared to sequential growth of 1.5% for the first quarter, and suggesting that DSL subscribers are shifting to other alternative platforms such as fibre, according to ABI Research.

“Development of next-generation broadband networks is creating opportunities to upgrade customers to fibre optic,” said Jake Saunders, Vice President and practice director of core forecasting. “Fibre optic broadband’s market-share is expected to increase to 13.2% by end-2012 from 12% in 2011, while DSL market-share will decline nearly 1% point from 64% in 2011.”

North America is believed to have the highest fixed broadband penetration around the world, with 72.4% of households using broadband services, although Western Europe had nearly caught up by the end of June, adding 1.2mn subscribers in the preceding three months, resulting in a penetration rate of 72%.

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