Fibre may be more future-proof, but cable can't be written off

Tuesday 11 September 2012 | 15:31 CET | Background

A battle is underway in the Netherlands between fibre and coax. The Netherlands is notable for nearly nationwide cable network coverage and the growing fibre footprint which is largely made up of point-to-point connections. This is an exceptional case from an international perspective, as almost nowhere else is cable so widely deployed, while most other fibre networks opt for GPON rather than a point-to-multipoint network.

The fibre versus coax set-up is good for competition, although there is the risk of a duopoly being created. We look briefly at an important point in the competitive battle: the speed of the broadband connection.

To start with, competition is emerging on a number of fronts:

  • Telephony: free on-net calls, but otherwise a fairly flat product. As in mobile, HD Voice can be deployed as a distinguishing factor here. And 'free' will also sell well.
  • Television: the question is whether one can really compete with linear channels, as the content producers are aiming for maximum distribution - so everyone has the same. Operators are currently focusing on the number of HD channels, apps for smartphones and tablets, an expansive VoD library and services such as 'connected TV' and 'TV everywhere'. See for example the new Horizon box from UPC or the cooperation between TeliaSonera and Samsung.
  • Broadband: the focus here is on speed, symmetry and delivering what you promise. Add-on services are also offered, such as back-up storage and security.

Fibre is more future-proof, coax has a road map

Fibre is the logical succesor to copper, once xDSL upgrades run out or become unprofitable. Cable has a completely different road map for upgrading the network, which can use a variety of techniques and technologies. Docsis 3.0 is the best known, but it's not the only one, while fibre is in theory the end of the line. Coax has been putting fibre off, as for the moment it can still compete fine on its own. Most cable operators are also highly leveraged, so upgrades are driven purely by customer demand. One could say that fibre (FTTH) is more future-proof than cable - an upgrade only requires replacing the equipment in the exchange and at the customer premises. Cable (HFC) has a more difficult task. However, for both technologies the backhaul needs to be upgraded. This may be simpler for a FTTH network though.

In any event it's too simple to say that FTTH is future-proof and HFC is not. The difference is that cable's evolution is driven by demand, while copper needs to make the move in one go to FTTH. One could say that cable's strategy is not very pro-active, with the risk that it could fall behind the competition, but common arguments such as cable upgrades are costly or a cable network is inefficient are in this case irrelevant. This is the cable operator's problem, not the subscriber's.

Fibre is faster, dedicated and symmetric

Let's focus next on speed. FTTH currently offers, in the Netherlands at least, up to 1 Gbps (local) and HFC up to 120 Mbps. Cable does not appear to be feeling any commercial pressure on the demand side to upgrade further to 240Mbps or higher.

These numbers refer to the maximum speeds advertised. In practice the speed is always somewhat lower, with fibre usually better than cable at getting close to the advertised maximum. Coax often slows down a bit in the evening, probably because the bandwidth is shared with the neighbours (see below). Practial research on this should still be taken with a grain of salt, as it usually measures the speed on the computer. This means the connection went through a few barriers first, such as the computer itself, walls and Wi-Fi routers of varying quality. A better measurement would be testing the speed to the building (as is currently underway in a EU study).

As noted above, cable means you're sharing your bandwidth with the neighbours. While all networks aggregate traffic at a certain point, the difference with cable is this occurs at a lower level, closer to the susbcriber. The splitters are located between the exchange and the subscriber, while with fibre (at least in the Netherlands), the entire length from the exchange to the subscriber is dedicated to that one customer. This is a point-to-point connection.

As the bandwidth is shared from the aggregation point, the operator can allow a certain level of overbooking, both on FTTH and on HFC networks. After all, not everyone is online at the same time. However, the amount of overbooking possible is shrinking. Usage is transitioning from downloading (web pages, documents, songs, films, even YouTube videos) to streaming video and audio (catch-up TV, Spotify and providers such as Netflix and Lovefilm which are expanding internationally). FTTH is probably better positioned to faciltate this transition, because the bandwidth is not shared from the aggregation point (in the case of fibre, the exchange) and because the backhaul can likely be more easily scaled up (fewer aggregation points than with cable). 'Shared' networks, such as cable but also GPON and mobile, have more problems accomodating the growth in streaming media than 'dedicated' netwoks such as point-to-point FTTH.

Another difference between FTTH and HFC is that FTTH (at least in the Netherlands) offers the same up- and download speeds, while the cable connection is not symmetric. However, given that there is usually much more download traffic than upload, this is only a problem when the user wants to upload large files.


FTTH is more future-proof than HFC, but you can't write off HFC. Cable is being forced by fibre to execute its roadmap. This path will end with FTTH, but when or at what point is uncertain and dependent on demand. FTTH is a step ahead of shared networks when it comes to the problems posed by streaming video. Symmetry is another strong point for FTTH, but that is only at play if the end-user is an active uploader.

FTTH networks in the Netherlands as per end of December 2012. The municipalities have been fully shaded. The networks however never reach all the houses in the municipalities and in some cases only a very small part.

Blue: Dutch municipalities in which FTTH is (being) rolled out
Green: Dutch municipalities with new building projects. New build houses are homes passed.
Red: Dutch municipalities in which FTTH roll out is being prepared. Demand aggregation takes place or was already successful.

Source: Telecompaper FTTH Monitor, 1 June 2012

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