Ronan Kelly, president of the FTTH Council Europe, talks to CRU Wire & Cable News about the organisation's upcoming conference to be held in Marseille, France from February 14-16, 2017. Kelly also talks about his view of the industry and the challenges that it still faces, reminding us that history has shown bandwidth precedes applications and warning that short sighted thinking could turn Europe into a digital loser.
1. What is the overall theme of the FTTH Council Europe's conference in Marseille?
As always the theme is anchored around driving further adoption of FTTH throughout Europe; however, the focus topics for 2017 are heavily influenced by the push for Gigabit Societies stemming from the EU commission, and the success stories we are witnessing in France, Spain and Portugal, where we have seen how appropriate Government policy can sweep away many of the touted barriers to broader FTTH rollouts. Ultimately the foundational theme is the future Digital competitiveness of Europe, and how, if we are to recover some of historic leadership in mobile, and if Europe is to spawn the next generation Digital giants like the Googles and Facebooks, it is critical that the infrastructures do not inhibit innovation in any way.
2. What are the major points that the FTTH conference will tackle this time?
The world is marching towards the 5th generation of access, which will see increasing levels of Gigabit access, symmetric access and sub millisecond latency for access being made available to businesses and consumers alike. It will also see mobile networks evolve to handle 100s of millions of connected devices, while also facilitating superior bandwidths for mobility, and the latency characteristics that will be necessary for the future automated and augmented world. It is vital that policy makers recognise that Europe must be at the very forefront of the necessary infrastructure builds, if we are to successfully compete on the future global digital stage. In order for this to happen, policies and regulations must provide the necessary guidance and stability needed to permit the large scale investments that will be required to lay the fibre foundations that will underpin Europe's success or failure in this next era of global competition.
3. What are the main challenges facing Europe today from a FTTH perspective?
There are a number of immediate challenges that must be addressed if Europe is to be a leader in the future digital world. At a foundational level, policy and regulatory certainty are critical to instilling the confidence needed to permit the investment community to provide operators with the capital needed to build the infrastructure. Similarly Governments have a substantial role to play in lowering the barriers to fibre deployment by streamlining the planning processes and cost structures. Additional to this, advertising standards authorities have a strong role to play in addressing potential apathy towards fibre, which is stemming from non-FTTH technical solutions being marketed by operators under the guise of fibre connectivity (Fibre powered etc.). This practice has served to dilute the perceived value of fibre, and only serves to quell consumer demand for real FTTH connections.
Finally, we must look backwards to understand one of the largest challenges. Despite all the lessons we have learned over the years, we still frequently hear people comment that "nobody needs a gigabit speed". This short sighted thinking will ensure that Europe is a digital loser in the new world. If we look back, only a few years, and consider the 1-Mbps broadband connections most of Europe endured. How many of the top 10 applications of today, could they use in a satisfactory fashion? Netflix, Facetime live, Periscope, Facetime, Pokemon Go, Google Maps? History has shown, the bandwidth always precedes the applications. It makes for a bad business model to develop applications that have bandwidth demands which are not available to your target customer base. If we want the digital natives of Europe to take a leading role on the global stage, it is absolutely critical that we arm them with infrastructures that do not impede their capability to innovate. We must not repeat the mistakes of the past by trying to predict future needs based on current consumption patterns.
4. What are the main opportunities for Europe?
Europe holds global leadership roles in many different industries. These industries will face digital disruption in the coming years due to increasing digitization, automation, and hyper connectivity. The time is now. There is a very real opportunity for Europe to not only retain its position in industries like the automobile industries, there are opportunities for it to recover its crown in industries like mobile communications, and to secure leading positions in software, digital services, and eHealth. Europe's population, like those of our competitors, is aging, whole new industries will emerge that provides telecare services to those sufficiently connected. Europe can lead the digital disruption that will impact almost every single industry. Europe can build the foundational infrastructure that will drive our future growth and secure the qualities that Europeans are proud of.
5. Which countries should we be looking out for in terms of fastest growing FTTH developments and why?
For me, I cannot help but watch in admiration France, Spain and Portugal. They have taken the plunge and put in place the environment that promotes large scale fibre build out. I believe we will read case studies in the coming decade that catalogue how these countries managed to leap several places in the global economic scale, and those studies will cite the critical role their early foresight in nationwide fibre infrastructures had to play. If one considers the broadband conditions that lend themselves to large scale fibre deployments, one has to take into account the government targets, coupled with the infrastructure based competitive landscape, followed by the purchasing power of the population.
Those countries that have fallen significantly behind the original EU2020 targets are the ones that will need to do something radical. I believe many of the countries which lack significant cable based competition will be amongst the next to announce Government supported FTTH buildouts. History has shown across Europe that without infrastructure based competition, investment by those with significant market power is always limited to the bare minimum necessary. For 2017 I would be watching Germany, Italy, the UK, Ireland (I am biased here), Poland. I think it could also be worth watching Belgium, as Government intervention to shake up that market could stimulate a rapid change.
6. Is Europe lagging behind Asia Pacific, and if yes, how can we catch up?
Substantially. Admittedly a lot of this stems from huge portions of young housing stock which equates to new build / green field FTTH in Asia, but also different approaches / standards for building out the FTTH infrastructure, some of which we have seen mirrored here with the likes of Romania. While far from the idealistic build standards, thanks to the robustness of fibre, these networks are built quickly, cheaply, and are operationally stable. As mentioned before, to really move the needle on FTTH connections throughout Europe, the right policies and regulations are a critical foundational element. There is no shortage of investment appetite, if the conditions are right. Supporting this, local government must also get behind initiatives to ensure planning rules and reinstatement conditions are not overly onerous.
7. FTTH Council Europe set out an initiative to drive the growth in the number of Operator Observer members this year. How has this grown and what has been achieved so far?
Indeed, the FTTH Council Europe begun this initiative this year, and we have also expanded the initiative to also target members of the investment community. Our aim is to ensure all of the key stakeholders are represented by the FTTH Council Europe, so that we can increase dialogue between them, but also so that we can speak with one voice, in order to increase awareness. We are early in this initiative, but we have already benefited from strong increase in our Operator membership base. One thing that became very clear throughout 2016 was that most operators were unaware that they could become members, so increasing that awareness has been a large focus. Additional to this, our organisation has been seeking to better align our efforts with the needs of the operator and investor communities, so that the outputs produced by the FTTH Council Europe's committees, and the content we have at our annual conference, is increasingly relevant.
8. In the overall connectivity picture of trying to attain faster speeds, where do FTTH, G.fast /vectoring, Docsis 3.1 and other alternatives stand in relation to each other?
The FTTH Council Europe has been very clear on this in the past. We believe firstly in full FTTH, and flag this as the ultimate target for all European households. Our organisation recognises that in MDU environments, re-cabling is not always possible or practical, so for FTTB (basement), the FTTH Council Europe is supportive of basement launched technologies like G.fast or DOCSIS 3.1. Outside of the basement environment, the copper based technologies are subject to signal attenuation, which makes it impossible to provide blanket support for these types of technologies, as frequently their deployment locations limit their capabilities to the range of 100-Mbps, which can hardly be considered fibre. The position remains simple, the only future proof access medium is fibre. We need to stop muddying the water by permitting non-fibre technologies to be marketed using fibre in their branding.
9. If we take a typical middle class family living in Europe: husband, wife, two teenage children, all of them pretty savvy with their use of technology. All have their own portable tablets, several desktops/laptops, and mobile phones. Should they be asking for 1-Gbps and if not, at which stage will they really need it and why?
I go back to my statement regarding the bandwidth preceding the applications. I assert that the applications used by most families today are designed around the broadband market of 2014. It takes time for the applications to take advantage of newer capacities, although thanks to the agile development environments of the web-scale companies, this time is getting less with each passing quarter.
For me there are a couple of key things we need to think about when answering this question. Firstly, what is being pushed by the consumer electronics manufacturers, as this fundamentally alters usage patterns without the user even choosing to do so. Think about the iPhone 6S. Those who bought it, by default started recording their videos in 4K, regardless of whether they wanted to or not. This impacted the file sizes they then uploaded. In a similar fashion, we now have a huge push on 4K TV screens, which are enjoying very rapid adoption. These will see streaming behaviour shift from HD to 4K.
In a similar fashion, screen manufacturers differentiate themselves on things like screen resolution, colour range, power consumption and price. Currently the latest iPad screens are over 2K in resolution. It is a timing issue before one of the screen manufacturers brings a 4K screen into the price range that can be borne by a tablet consumer, and then all the tablet devices will shift to 4K streaming. We also have VR going mainstream this Christmas and throughout 2017. At the moment the VR content is distributed on Blu-ray disk, but in order to make for a truly interactive multiplayer VR environment, the environment must be cloud hosted with the content streamed. This technology is all there today.
So how long before a full Gig is needed, for me is not the right question. For me, the focus needs to be on how much a Gig will improve the user experience as the technology continues to advance. Picture streaming a 4K Netflix movie on your nice shiny new 60 inch TV, on a 1-Mbps connection. 4K, 8K, it's all just a numbers game, eventually it will be a video wall, on which TV is just a sizable app that runs on that wall. Will 1-Gbps be enough then? If not, no problem, today fibre systems handle up to 18-Tbps per fibre, so we have plenty of headroom for upgrade, without ever changing the fibre.