North American Telecom Services "Fiber in the Local Loop - Laying the Groundwork for the Triple-Play"

SUMMARY

Competitive "Triple-play" Compels Telecom Carriers to Revise their Local Loop Fiber Strategies

Carriers decision to deploy fiber optic capabilities in the local telecommunications access loop has become a moot point in the North American telecommunication service markets. Carriers are now trying to figure out the appropriate ways and time to invest significantly in upgrades of their local loops with fiber optics to enable them to make effective "triple-play" offerings. Telecom companies will have to settle on whether they will provide voice, the Internet, and video "triple-play" or not. Those that make the right decisions are likely to retain the most lucrative customers.

This Frost & Sullivan research examines the challenges that telecom carriers face in developing strategies for deploying fiber or alternative strategies in their local loop networks. It also discusses the driving and restraining factors for revenue generation and gives recommendations on how to proceed in this market. The research enables companies to align their positioning strategies to benefit from the changing markets and obtain maximum return on investment.

Increasing Requirement for Consumer Bandwidth Drives Demand for Greater Capacity

The symmetrical bandwidth requirements of current and future interactive and peer-to-peer applications are expected to drive the need for greater upstream as well as downstream bandwidths provided by fiber-to-the-x (FTTx) technology. However, this customer demand is dependent on the requirement for high definition TV (HDTV) and various new interactive applications. "The demand for more bandwidth than asymmetrical digital subscriber line 2 (ADSL2+) can deliver could be outstripped if unexpected demand for these services and applications increases dramatically," says the analyst of this research.

Similar synergies come into play when certain peer-to-peer file sharing applications or other interactive applications that need more symmetrical bandwidth become popular. Instead of a single incremental HDTV set consuming the entire x digital subscriber line (xDSL) capacity, a few new interactive applications are expected to overcome the practical limit of the fiber-to-the-node (FTTN) solution.

FTTx Deployments Could Result in Market Share Gains

As carriers focus on implementing the triple-play capable network elements, they have an opportunity to secure their eroding customer base and capturing market share from cable multiple service operators (MSOs). With increased capabilities, carriers will also be in a position to increase average revenue per user (ARPU) significantly, not only in conjunction with the triple-play bundle but also as future high bandwidth and converged applications gain in prominence.

The uptake rates for voice over Internet protocol (VoIP) are a prime driver of the need for broadband, creating another incentive for deploying more robust FTTx network elements. The decision regarding the type of FTTx architecture to deploy is likely to be based on the economics and the comparative adequacy. "The cheapest alternative that will give the carrier the adequate bandwidth to offer a competitive triple-play bundle of service is projected to be the winner," observes the analyst. "The solution that each carrier chooses depends on how they expect the market to shape up and how quickly the supporting technology is forecast to evolve in future."

TABLE OF CONTENTS

1 AN ANALYSIS OF FIBER IN THE LOCAL LOOP??

Executive Summary

Executive Summary

Market Overview

Introduction and Scope

Definitions

Challenges

Drivers

Restraints

Market Analysis

To Deploy or Not to deploy?

Uncertainty of Future Bandwidth Demand-

Architectural Strategy

Deployment Projections

Competitive Dynamics

Regulatory Considerations/Maintenance and Provisioning

Company Profiles

Verizon

SBC

BellSouth

SureWest

Summary Matrix of Selected Companies

Summary

Conclusions