Building Fiber-to-the-Home
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2012 Consumer Research
Exploding Five Common Broadband Myths
D
Michael Render June 2012
Building Fiber-to-the-Home
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1,200 Random Internet
Users
U.S. & Canada
1,000 Additional
FTTH Users
U.S. & Canada
Data Sources For Study
450 North American FTTH Providers
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Myth #1. “Everything is going wireless”
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Besides Uneducated Assumptions, This Myth Originates From One Study
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Public Vision Of Wireless Industry Vision Of Wireless
Today’s Wireless/Mobile Is Really An End Point Technology
Wireless communications are driven underground and on to fiber as quickly as possible.
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Possible communication through the earth using sub atomic “neutrinos”
Someday… Probably Decades Away, True End-To-End Wireless Communication Might Be Possible
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• Wireless is constrained by the physics of energy dispersion
• Even a network of wireless antennas has great range reach but limited power
• Wireless using radio waves will never match direct fiber connection speeds
Today’s Wireless /Mobile, Even At The End Point, Has Huge Limitations
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“ The petition of a company for permission to set in the streets of Paris poles for wireless telegraph service, so the "the man in the street" can use it and that its waves can be brought into any household, is a suggestion of illimitable possibilities.” The Cosmopolitan 1902
Contrary To Public Opinion, Wireless/Mobile Is Not A New Vision
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Wireless/Mobile Is Very Important … But Not The Primary Way The Internet Is Utilized
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48%
40%
7%
5%
0% 20% 40% 60% 80% 100%
Desktop
Laptop
Handheld device
Tablet device
10
Most Online Time Is Spent On Large Screen Devices Percent Of Time Spent Online By Device Type (Average For All Ages)
88%
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48%
34%
14%
5%
0% 20% 40% 60% 80% 100%
Laptop
Desktop
Handheld device
Tablet device
11
Most Online Time Is Spent On Large Screen Devices Percent Of Time Spent Online By Device Type (Average For Under 35 Age)
82%
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Mobile Devices Are Not Generally Preferred At Home Percent Preferring Devices At Home For Online Tasks
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13
Each Device/Delivery Has Its Place
Wireless = Mobility Wireline = Richest Experience (Screen size, speed)
For example, only 18% of users are very satisfied with streaming video play on wireless services versus 28% on cable modem and 47% on FTTH.
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Myth #2: “Rural areas don’t want or need ‘gold plated broadband’ like FTTH”
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Rural Residents Have The Same Basic Needs – But Are More Physically Disconnected From Sources
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4.2
3.8
0 1 2 3 4 5 6
Rural
Suburban/Urban
16
Rural Internet Users Spend More Time Online At Home Hours Spent Online By Place (Average For All Ages)
2012 RVA Consumer Study
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51%
44%
34%
32%
51%
47%
35%
34%
0% 20% 40% 60% 80% 100%
Advanced online shopping
Advanced home medical
Advanced college
Home monitoring Suburban/Urban Rural
17
Rural Users Are More Interested In Many Services Percent Somewhat Or Very Interested In Future Services
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63%
54%
49%
46%
40%
31%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Rural ILEC
RuraL Electric Co-Op
Rural Competitive Prov/ CLEC
Muni Retail
RBOC Overbuild
Suburban CLEC
18
FTTH Take-Rates Are Higher In Rural Areas Take-Rates From Provider Data
It should be noted that competition is generally less robust in rural areas.
FTTH rural electric coop systems are new – some are achieving over 70% take rates.
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Rural Users Have Even More Need For Quality Broadband
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Myth # 3“DSL/FTTN is still the most practical solution for private telcos”
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61%
37%
33%
28%
0% 20% 40% 60% 80% 100%
FTTH
Cable modem
Wireless
DSL
21
DSL Has The Lowest Internet Satisfaction Satisfaction With DSL Download Speeds
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Higher Performance Is Critical To Telco Providers 2011 Broadband Net Additions Correlate To Broadband Performance
Average 2011 speeds from Speedtest.net . 2011 Net Broadband adds from Leichtman Research Group. Top 3 U.S. Telcos, Top 3 U.S. MSOs
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Speed and performance are winning in the United States. DSL is down versus Docsis3 Cable modem. FTTH continues to increase – constrained by availability.
Market Share: Broadband Use At Home By Type
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Telcos With DSL Should Change Strategy Quickly
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Myth #4: “Public FTTH Systems are failing and are unnecessarily redundant”
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There Is Little To Fear … But Much To Gain From Munis
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80.7%
66.4%
63.0%
55.1%
53.2%
48.7%
45.8%
40.1%
30.5%
28.9%
0% 20% 40% 60% 80% 100%
Real Estate Dev
Cable TV/ MSO
ILEC
ILEC/ Clec Div Ilec
Electric Co-Op
Competitive Prov/ CLEC
Muni Retail
RBOC Overbuild
Urban CLEC
Muni Wholesale
27
Muni FTTH Systems Have Been Generally Successful Even Many Systems Called “failures” In The Past Are Successful Today
Munis with wholesale systems required by state law have struggled more.
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In the Big Picture, Muni FTTH Systems Are Not A Serious Competitive Threat To Private Players
13%
87%
Muni electric subs
Muni FTTH systems will probably not exceed 5% of total FTTH homes served – and are very rare where private service exists or is anticipated. They require: - Utility experience (there are few
that are not electric utilities) - Telecom experience (must be
acquired) - Clear motivation (no private
FTTH System on the horizon) - A vote of the people
4%
96%
Muni FTTH subs
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Muni FTTH Systems Are Technology Incubators… Often Benefiting Private Players
Prior to 2004, the largest FTTH systems were Muni – helping to test and develop FTTH at scale.
Today … many Muni FTTH systems are helping to incubate high bandwidth FTTH applications.
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Muni FTTH Offers The Highest Average Bandwidth Highest FTTH Download Speeds By Type
ILECS tend to be rural with less speed demand, less competition, and higher wholesale bandwidth costs. There are approximately twenty-five providers of gigabit service in the U.S.
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Municipalities Provide Great Opportunities For Public/ Private Partnerships
Service/ System experience Marketing experience Back-end systems Head-end systems
Longer term loan paybacks Rights of way Interest in economic development Electric meter reading needs Trenching synergies
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Municipalities Have Important Assets… For All
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Myth # 5: “Advanced broadband isn’t yet impacting lives – and won’t without new ‘Killer Apps’ ”
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0% 20% 40% 60% 80% 100%
Shop online
Play single player games
Upload large files
Download or stream video to computer
Use VOIP for audio
Download/ stream video to television set
Upload video content to Internet
Use two-way video conferencing
2010
2012
34
The Use Of Apps Already Available Is Increasing Rapidly Internet Activities Completed At Least Once Per Month By FTTH Users
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61%
60%
55%
47%
65%
35%
34%
32%
24%
44%
0% 20% 40% 60% 80% 100%
Download speed
Upload Speed
Consistancy of speed
Streaming quality
Service uptime
FTTH
Other Broadband
35
Users Are Much More Satisfied With The FTTH Experience Percent Saying They Are “Very Satisfied” With Aspects Of Service
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• FTTH employed users say they work 1.2 extra day per month from home (on average). 67% of FTTH Users who are employed sometimes work at home.
• 11% of FTTH Users have a home based business.
FTTH Changes How We Work
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FTTH Has The Highest Tested Download Speeds Median Tested Download Speeds
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FTTH Is “Pulling Away” With Tested Upload Speeds Median Tested Upload Speeds
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1.1
1.6
2.5
3.2
0 1 2 3 4 5 6
FTTH
Cable Modem
DSL
Wireless
39
FTTH Is The Most Stable Platform Reported Reboots Required Each Month
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3.1%
6.2%
11.6%
16.9%
0% 10% 20% 30% 40%
FTTH
DSL
Cable Modem
Wireless
40
FTTH Has The Fewest Limitations On Usage Percent Aware Of Caps On Usage
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FTTH Adds Home Value
• Even non FTTH users say if they were considering two $300K homes of equal interest, a home that doesn’t already have FTTH and advanced wiring would have to be discounted $5,400 more to be considered.
• Within the past few years, 71% of those moving to homes with existing FTTH availability said it was important to their purchase decision.
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FTTH Is Already Changing Lives… In A Big Way
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Post Script: We Have FTTH Branding Work To Do!
21%
79%
Aware of FTTH terms before survey
Not Aware
Building Fiber-to-the-Home
CommunitiesTogether
2012 Consumer Research
Exploding Five Common Broadband Myths
D
Michael Render June, 2012