Report Claims No Killer App Justifies the Need for Ultra Fast FTTH Broadband

Consultancy firm Analysys Mason, which was recently appointed by six French governmental and public bodies to conduct a prospective study on the services that would justify the need for ultra-fast fibre optic broadband technology (e.g. 100Mbps+ FTTH), has today published its conclusions. The results, which found that “no killer application justifies the need” for ultra-fast fibre (except perhaps IPTV), might also have some relevance for the UK market.

The report suggests that the “high performance” and “good quality of France’s legacy copper network“, which has resulted in a highly competitive market where affordable broadband products are available right across the country, could actually prove to be “obstacles to the development of ultra-fast broadband“. As a result users in France are said to “not see any clear incentives to switch to a faster service“, but crucially this is only perceived by the report as being a short term issue.

Extract from the Analysys Mason Report

Despite the fact that UFB is technologically superior to broadband, at this point its advantages in terms of new services and applications appear rather limited, and the ultra-fast products currently marketed by providers offer very few additional services over existing high-end broadband products.

As a result, at a time when information and communication technologies are playing an increasing role in all sectors of the economy, and in people’s daily lives, the advantages of UFB depend on chiefly on the scale of consumption. Consumption is rising swiftly, not least due to the development of (time-shifted) video services, to the increasingly high quality of video formats and to simultaneous usage which generates a strong demand for bandwidth. Ultra-fast broadband makes for easier consumption and enables the development of a number of existing services, including:

– over-the-top access to TV services through connected televisions;
– emerging formats such as ultra high definition and 3D, and those that are becoming ubiquitous (HD);
– cloud computing services and applications.

The situation in France is almost a mirror for the UK, with both sharing many of the same issues, although France is significantly further progressed with its deployment of related Fibre-to-the-Home (FTTH) services. In November last year the UK communications regulator, Ofcom, blamed low uptake of “superfast broadband” (25Mbps+) on the lack of a “killer app” and peoples questionable “willingness to pay” a premium for it (here).

Ofcom’s CEO, Ed Richards, said:

“Amid a cornucopia of entertainment and information services, and the promise of advanced telemetry, e-health and interactive education, it is interesting that the only ‘killer app’ we have so far is the presence of teenage children.

Social networking, streaming and sharing from the teenage bedroom, leading to local contention, the victim of which is the person typically paying the bill, seems to be among the strongest reasons for adopting superfast broadband.

But as an approach to promoting superfast broadband take up, ‘having more teenage children’ seems a little long term, and a little distant from reality.”

Interestingly the report also looks at IPTV / Over-the-Top TV (OTT) services and warns that these could actually “undermine” ISP revenues by turning UFB broadband providers into “mere content delivery pipes” and thus cutting them out of the loop. In the UK some ISPs, such as Sky Broadband, Virgin Media, BT and TalkTalk, are already working to merge superfast broadband and IPTV services but many others will continue to focus on a more standalone model that could hit problems further down the road.

Happily Analysys Mason sees a more positive outlook in the medium to long term, where new services will begin to take full advantage of ultra fast broadband performance (e.g. residential video calling, telemedicine and optimised care, telecommuting and teletraining, new educational services etc.) and coverage will have improved. The UK aims to bring superfast connectivity to 90% of the country by 2015 and the wider EU goal is for 100% to be within reach of 30Mbps+ services by 2020 (the UK will have to follow that too).

Likewise another benefit, which is not covered by the report, will surface when super/ultra-fast services finally reach rural and remote urban or poorly served sub-urban locations where the greatest demand for faster connectivity often exists. At present though most of the rollout has predominantly focused on serving areas where good connectivity is already present.

Analysys Mason Study in French Only (PDF)
http://www.arcep.fr/uploads/tx_gspublication/etude-Analysy-Mason-usages-THD-fev2012.pdf