FTTH: The EUR 100 Trillion Investment Opportunity

FTTH is a hot topic already and it is only a matter of time before investors start realizing the true potential by launching special products or investment funds. The only trouble is, there are few FTTH pure plays in the public realm (unless you count any telco as such, because FTTH is the inescapable way forward). However, direct investments may come into play.

The Swedish Ventura Team recently reported on usage, which provided some reassurance to anybody displaying scepticism over what to do with all that bandwidth. Here is a link to the presentation sans graphics, or mail me for the original PDF.

Their main findings:

• Nielsen's Law (available speed increases at a 50% CAGR) generally holds. The Ventura Team expects it to hold for at least another decade. This means that 100 Mb/s will be available in France in 2008, in Poland in 2012 and in the UK in 2015.
• The mass market lags the high-end user by 2-3 years.
• FTTH customers generate >3x more traffic. Surprisingly, the inbound/outbound traffic ratio seems to be similar to the one for ADSL networks (notwithstanding an expected P2P concentration on FTTH networks).
• P2P and video are the most important applications.
• Operators will need to invest and upgrade (a EUR 100 trillion wave of capital investment).

Here is a short overview of the elements of the FTTH market:

• Benefits: social, economic, environmental.
• Business models: PPP, separation, open access.
• Revenue models: pricing, revenue sharing, etc.
• Value-added services: ranging from P2P and internet video to e-health, teleworking, monitoring and IPTV/HD/3-D.
• Participants: network operators and service providers, vendors, construction companies, consultancies.
• Technology: active/passive, standards, performance, components, architecture etc.

The interesting thing to me is that the investment opportunities reach far beyond the traditional telco ecosystem of operators and vendors.

Even in the Netherlands, we have a very diverse range of (not all public) companies involved in what no doubt is the most important development for the next few years:

• Operators and service providers: KPN, Reggefiber, bbned (Telecom Italia).
• Vendors: Wavin, Draka, Daily Media.
• Construction companies: BAM, Volker Wessels Telecom (thanks Rudolf).
• Consultancies: Arcadis.