The Nordic Broadband Blog

Capacity has always been a key parameter and selling point for broadband access. The broadband downstream capacities have increased steadily since the eighties. Jacob Nielsen observed this already in 1998, and it lead to Nielsen’s law, which states that “a high-end user’s connection speed grows by 50% per year”, and that the low-end users will follow 2-3 years behind.

Updated in 2010, 12 years later, Nielsen’s broadband capacity observations still follow the exponential growth curve.

Jacob Nielsen's broadband capacity observations

Up until today, three access technologies have competed for the top capacity position.

• xDSL, technologies using telephone lines
• HFC, using former cable-TV networks
• FTTH, using dedicated or shared fiber networks all the way to the customer

As competition for customers has increased, operators have had several public fights over which technology is better or more future-proof. On the 16^th of February, the Norwegian FTTH operator Lyse announced a symmetrical 400 Mbit/s service.  Did FTTH win the race?

To answer this question, let’s have a look at the bottlenecks of the three technologies:

• DSL: The potential of further development of DSL is limited, in our opinion. DSL capacity is limited by the length of the telephone line from the user to the central. The different DSL technologies developed during the last 10-15 years has not changed this, and the major improvements like ADSL 2+ and VDSL primarily helps the shortest line lengths. This means that users very close to telephone centrals may be offered service capacities of 100 Mbit/s. The average Norwegian user, however, may expect to be offered a downstream capacity of maximum 20-30 Mbits/s.
• HFC: The available bandwidth of the coax access part of HFC networks is high, but the topology of these networks make users on the same access segment share it. The typical available downstream bandwidth of ~800 MHz gives a potential of ~5,5 Gbit/s shared downstream capacity with the latest standard, EuroDOCSIS 3.0. This capacity normally is shared among 100 to 250 users. In Norway, this has translated to services promising up to 70 Mbit/s downstream.
• FTTH PON: Passive optical networks, as built by the incumbent Telenor in Norway has the same topology as HFC networks. The main difference from HFC is the access cable, which is fiber rather than coax. The bandwidth and capacity of this fiber cable practically is unlimited. This make the equipment in both ends the bottleneck. In the current GPON implementations 2,5 Gbit/s of downstream capacity typically is shared among 32 to 64 users. Telenor is offering a maximum capacity of 25 Mbit/s downstream today. This may increase as end user equipment is improved, but that is not likely to happen in the near future.
• FTTH P2P: In the point-to-point FTTH networks often preferred by utilities, each user has a dedicated fiber cable to the operator central. This means that the equipment is the bottle neck here as well. Up until now, the interfaces of the operator central and the end user equipment has been limited to 100 Mbit/s. This capacity is shared between broadband and other services, like TV and IP telephony. In Norway, this has lead to broadband service offerings of 50 Mbit/s. Altibox recently announced a symmetrical 400 Mbit/s service to be launched within a few months. Similar services, with up to 1 Gbit/s capacity, may be found in Sweden. The switch from 100 Mbit/s to Gbit/s interfaces in the central and user equipment has made this possible. As for PONs, the interfaces and equipment may be replaced in the future, with 10 Gbit/s per user as the next natural step.

So, did FTTH win? Well, the race between different access technologies will continue, maybe forever. But FTTH has taken a solid lead with up to 1 Gbit/s symmetrical capacity, and will not be passed by any other technology any time soon. HFC will follow nicely behind with downstream capacities of several hundred Mbits/s.  DSL, however, more or less is parked and will be challenged by other technologies, with LTE as an example.

Having spent most of my life in Norway, I am used to high costs of goods and services. A beer in a bar? Easily 8 euros. A bus ticket? Normally 4 euros or so. And the same goes for the cost of broadband deployments. James Enck did a nice job in a recent paper where he looked at a number of deployments with a cost range from USD 1 400 (Verizon FTTH) to USD 3 300 per connected home. Most Norwegian FTTH deployments that I know of have a deployment cost per home connected of around USD 4 000. I can think of many reasons for this: Most Norwegian FTTH networks are built in suburban areas with single or two-family homes, and these are inherently more expensive to connect than apartment blocks. Also, the Norwegian FTTH networks are built by newly established operators without the incumbents’ cost advantages.

But a few weeks ago I came across a piece (Norwegian only) that I first found unbelievable and afterwards disappointing. Here’s the story: During the last couple of years, a new Digital Terrestrial Television network has been deployed across Norway. This network covers around 98% of the population. Households not covered by this network get a low-cost satellite subscription. But then there are some 5 200 households that cannot access any of these networks. So it was decided to build a “satellite shadow network” of 500 base stations to cover these people. The cost is 1 billion Norwegian kroner which works out to €23 500 or $32 500 per household. Whoa.

Let’s take a look at what you get for €23 500 per household:

• A one way network
• No internet, no telephony
• Three TV channels and 13 radio stations – all from Norway’s public broadcaster NRK

During the last years, we have worked with the rollout of fiber networks in some areas that could be described as: A most rural area in a very rural county in a rural province in a country that is mostly fjords and forests to begin with. And guess what – the deployment cost per subscriber in these projects hover around €10 000. Expensive? Christ – yes, but doable given the right circumstances (something which I hope to blog about next month).

And what do you get?

• A fiber-based two-way network with nearly unlimited capacity
• Up to 50 Mbit/s symmetric internet speed, easily upgradeable
• IP telephony
• 150 TV channels and video-on-demand services

And for €23 500 per sub I am convinced that we could’ve built all of the above and possibly thrown in a redundant connection as well.

The moral of the story?  Well – I think there are several:

• Media organizations, such as NRK, the Norwegian Public Broadcaster who is apparently funding the shadow network using public license revenues, should be very careful when making investments in telecom networks. Building and running a network is very different from their core competency in content creation and management. NRK plans to lay off 100 employees during 2010 due to higher costs than expected. No wonder given their distribution costs.
• Telecom networks built for one specific purpose tend to be hugely expensive and deliver limited value for money.