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March 07, 2014

Selling Fiber to Home Isn't as Easy as You Would Think



By Gary Kim
Contributing Editor



You might think fiber to the home is a sure winner, taking the majority of market share where it is offered, in preference to other access choices a consumer might make. That tends not to be true.

At least so far, where consumers have choices, they often choose not to buy a fiber to the home service.

Some six years after it introduced fiber to the home, NTT reached adoption of about 21 percent. Verizon (News - Alert) Communications, about two years into deployment, reached adoption of 23 percent of homes passed.

Granted, penetration tends to grow over time. In South Korea, fiber to home adoption is over 34 percent of all broadband connections; in Japan fiber to home represents 42 percent of all broadband connections.

But the point is that fiber tends not to “sell itself.”

The presence of a major facilities-based competitor (cable TV operator, for example) generally has a big impact on potential take rates for a new fiber to home service.

French high speed access connections operating at a minimum of 30 Mbps reached 2.1 million subscribers by the end of 2013, up 28 percent year over year. About  540,000 of the subscriptions used a fiber to home connection, up 72 percent, year over year,  according to French regulator ARCEP.

The 2.1 million subscriptions include VDSL2 connections as well. The Fiber to the Home Council estimates France already has over a million FTTH connections.

Total high speed access connections, including connections with speed less than 30 Mbps, is 24.9 million at the end of 2013.

Based on networks offering wholesale access of 11 million homes, about three million passings used fiber to home networks.  That suggests fiber to home adoption, where it is available to buy, ranges from a low of 18 percent to a high of perhaps 33 percent.

European adoption of fiber to the home connections is about 23 percent to 26 percent of homes passed, where FTTH is available, according to IDATE.

The point is that, contrary to some expectations, fiber to the home is not such a clearly-superior product that where it is offered, it quickly gains dominant market share. Consumers apparently make complex value-price evaluations, and often choose other products.




Edited by Cassandra Tucker
 
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