Facilities-Based Competition Often Matters Quite a Lot

Though BT’s Openreach wholesale network has been designed to support an evolution to higher-speed internet access in the United Kingdom, but to this point most of the speed gains have been supplied by rival facilities-based providers, which might be a good argument for allowing facilities-based competition where it makes sense. 

In 2020, some 18 percent of U.K. homes could buy FTTH-based gigabit services. That equates to about five million lines. Somewhere more than two million lines were supplied by BT’s Openreach network in May 2021, though the pace of installation is increasing fast. 

That means three million lines--or about 60 percent--of U.K. FTTH accounts were supplied by facilities-based competitors to BT. 

However, in 2020, a total of eight million homes actually could buy gigabit service, the difference being Virgin Media’s gigabit service available to another three million homes. 

According to Ofcom there is about a two-percent overlap between the two different types of networks, in terms of supply.

 

source: Ofcom 

Supply is one thing, take rates another. In the U.S. market, for example, gigabit connections are purchased by about 10.5 percent of households, though available to more than 80 percent of homes passed by networks that can supply it. 

Over the last half decade, Virgin Media has had more “higher speed” customers than have all the competitors using BT’s wholesale network. Today, “altnets” have emerged as additional suppliers of gigabit speeds. 

Many might assume FTTH means gigabit speeds. It does not. Historically, FTTH might have meant speeds in the hundreds of megabits. Some U.S. FTTH networks installed in the mid-1990s to late 1990s offered speeds only up to 10 Mbps.    

Also common are price comparisons or tracking of “average” or “typical speeds experienced by consumer customers.  Less common are measurements of provisioned speeds. In other words, instead of looking at access technologies, what is the expected bandwidth a customer might obtain, on any network?

That matters for a simple reason. FTTH is not the only available access technology, and not the only possible fixed network platform. Looking only at the numbers of deployed lines, or take rates on those lines, tells us much. It does not tell us the whole story. 

In Germany, for example, Vodafone expects gigabit-per-second connections to be driven by rival hybrid fiber coax networks, not FTTH/B. By 2022, Vodafone expects 72 percent of all gigabit lines to be supplied by cable operators, not FTTH/B providers. 

source: Vodafone 

The point is that we get different pictures of where advanced fixed network internet access stands when we measure by access technology instead of available speed. 

FTTH available lines or provisioned lines alone does not necessarily tell us all we would like to know about user experience. What is the designed-for speed, upstream as well as downstream? A “mere” statistic on FTTH homes passed does not shed light on that question.

If one asks a different question, such as “what percentage of home passings offer downstream speeds of 1 Gbps,” we get a different answer. Or perhaps we cannot get a very good answer. Very few connections are capable of offering such speeds, even using FTTH. 

If we ask other questions, such as “what percentage of lines are symmetrical?” we would get yet another set of answers.  

Even when deploying FTTH, an internet service provider must yet decide what optoelectronics to use, and that of course affects network capabilities. So FTTH does not necessarily tell us much about available speeds.

Nor does the deployment of FTTH by one legacy provider necessarily tell us much about the actual state of gigabit per second or even “hundreds of megabits per second” service. Cable hybrid fiber coax is important in many markets. Rival overbuilders or altnets are important in some markets. 

Eventually, mobile networks will emerge as challenges in some instances. 

Methodology always matters when evaluating the quality of consumer broadband. FTTH is one measure of potential progress. But it is not the only important metric. We always need to know the designed-for speeds. And other platforms also compete. 

So, in many cases, the issue is not “FTTH.” The issue is “gigabit per second speeds.” FTTH is a matter of media, not commercially-available gigabit speeds.