2015: The Year The Gig Hit it Big

From a broadband perspective, 2015 proved to be a pivotal year as the number of operators announcing (and deploying) gigabit broadband services surged.

In North America, both Google Fiber and AT&T announced expansions of their current gigabit deployments; a large number of communities and municipalities announced plans to deploy their own gigabit networks; and cable operators finally decided that perhaps this gigabit thing was worthwhile after all.

In Europe, FTTH deployments have remained more fragmented, with many operators continuing to leverage their copper plant to deploy VDSL2 Vectoring and G.fast services to offer higher speeds – rather than investing in FTTH.  Why?  Regulatory rules – particularly the European Commission’s Digital Agenda which set milestones that do not encourage the deployment or the necessity of gigabit broadband. Instead they set a requirement for universal coverage with 30Mb/s broadband and half of all subscriptions to be for 100Mb/s connections or faster by 2020.

But that is not necessarily stopping everyone – alternative operators in the the UK – Hyperoptic, Gigaclear, B4RN – are doing what BT won’t do, at least for a while.  While, Swisscom, Jersey Telecom, POST (Luxembourg), Free, Lattlekom and Lyse Telecom are among the many others currently offering gigabit broadband.

Vodafone (offering or deploying Gigabit broadband in Portugal and Ireland) – has gone a step further – publishing a call to arms , calling for Europe to become a Gigabit Society by 2030 – encouraging the European Commission to amend its targets to include gigabit broadband.

In Asia Pacific, we continue to see explosive FTTH growth in China (although no gigabit deployments) – while other markets, such as Japan, Singapore, South Korea, Taiwan – expand their FTTH products to include gigabit(s) products.

Finally, it seems that offering 1-gigabit services isn’t enough for some operators, as 2015 brought us announcements of 2GBps, 5Gbps and 10Gbps service offerings.

Gigabit Reality Check

While the number of FTTH subscribers across the globe is expanding rapidly – it is hard to get a good sense of exactly how many are gigabit subscribers and exactly how many households have availability to gigabit broadband.

Why?  Because few operators are offering any information on (1) how many homes are passed with gigabit broadband and (2) take rates.

To put this in perspective, we did a high-level assessment on Google Fiber.   As shown, nearly 3 years after it started deployment, Google Fiber is currently available to less than 1 percent of both total population and households.  Even with expansion into all potential markets, Google Fiber would still only be available to less than 7 percent of U.S. households.

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AT&T also recently announced a major expansion of its GigaPower network – with plans to reach 56 metro markets.  It is already live in 18 of those markets – but how many households it is actually passing with GigaPower in each market remains unclear. Overall, AT&T  has passed 1 million homes (2 years after launch) with plans to double that number by the end of 2016.

Google Fiber has been at it longer and it is doubtful that it has passed more than 250,000 homes or about 23% of its live markets.

In fact, a launch of a gigabit service could range from city-wide to a neighborhood or even a single apartment building.  And that is part of the problem.  Not everyone in a launch city is getting access to these services.

Another disconcerting fact is the overlap in deployment.  In virtually, every Google Fiber market (and potential market) is another operator launching or planning to launch gigabit broadband.  While this is great for consumers in those markets – the gigabit chasm grows even wider.

Looking ahead to 2016

The good news is that the level of activity surrounding gigabit broadband continues to increase and operators are committed to its deployment.

For those operators not currently offering or planning to offer gigabit services – there is competitive pressure to at least upgrade their networks to offer significantly faster speeds – thanks to VDSL2 Vectoring and G.fast.  On the downside – if your competition is offering gigabit and you are not – you might want to rethink your business strategy.

In 2016, cable operators are expected to begin the  introduction of DOCSIS 3.1  which will rapidly increase the availability of near-gigabit broadband (perhaps even gigabit) as this technology leverages the  existing cable infrastructure.  Unfortunately, this puts further pressure on Telcos to move towards FTTH – and we already know about that time to market issue.

As such, it is expected that Telco consolidation – especially among the smaller operators  – will accelerate, as they look for the economies of scale to justify investment.

Finally, as subscriber adoption begins to scale, we should finally begin to see some real services and applications that leverage the full capabilities of gigabit broadband – which will also help to encourage adoption rates and accelerate deployments.

Happy New Year and Stay Tuned!

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