FTTN DT investment plans

network

The second week of December, Deutsche Telekom presented their investment plans to meet the EC Digital Agenda and be able to offer broadband services to the bast majority of end users in Germany.

The technological choice was somehow strange, as DT presented as very novel a mixed architecture using fibre and using the twisted pair for the last segment of the network, in order to reduce deployment costs and then, cover more areas.

I am a fan of FTTH because I believe that ultra broadband needs to provide a clear upgrade path to offer Gigabit services and therefore, my comments might be somehow biased but anyway, I believe that most of the statements that I will make are valid.

So…

Regulatory issues

DT plans are to substitute the twisted pair that at present connects the CO to the end user by a hybrid segment of fibre + twisted pair. This is a clever movement in order to offer better services than the competition and at the same time, makes unviable to connect again the subscriber to the CO by means of copper, limiting future competition, unless the German watchdow presents a solution to solve this technical issue.

Technical and Operational issues

At this point, I think everyone agrees that FTTH is technically superior than FTTN and allows higher bandwidths and better latencies. Although FTTN may meet the Digital Agenda, those solutions are unable to offer symmetry and low latency and their scalability will be reduced. To upgrade those infrastructures will also be very costly so maybe now they cost less, but in the long run, global deployment costs will be higher.

Another consideration is that to deploy active equipment in the field inherently increases OPEX. Additionally, this active equipment needs to be allocated in cabinets and this may be a problem, as has been demonstrated for instance in the BT deployment in Chelsea, London.

Also, from the energy consumption perspective, VDSL FTTN architectures require more power than FTTH, as a lot of DSP is required to deliver high bandwidth on twisted pairs, while the use of less complex modulation techniques in FTTH architectures reduces power consumption quite dramatically.

Economic issues

From the CAPEX perspective, it is obvious that a FTTN is less costly that a FTTH approach, but in the long run, I am unsure whether the increased OPEX and the continuos investment to upgrade the infrastructure will not make overall costs higher. I understand however, that incumbent operators are private companies that need to satisfy their investors, so I also understand their position to gradually invest and at the same time keep giving dividends to their shareholders.

However, if they have chosen this approach, is because the overall equation is positive to DT interests, so maybe I am missing something that justifies their election…

I wish you all Happy New Year 2013, full of FTTH deployment.

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