FTTH Progress and Impact. Understanding the FTTH landscape to enable better business decisions

Transcription

1 FTTH Progress and Impact Understanding the FTTH landscape to enable better business decisions

2 Informational Objectives For Session Better FTTH planning The drivers for FTTH The direction of FTTH Better FTTH positioning / messaging Better FTTH marketing Better FTTH revenue per customer

3 The Research: North America (USA, Canada, Caribbean, Mexico*) 350 Provider/Vendor/ Expert Interviews: March May ,050 Consumer Interviews: May - June, 2014 *Mexico stats from IDATE

4 FTTH: Better Planning

5 Broadband Importance

6 Wireline Bandwidth Keeps Increasing Peak Bandwidth Demand From Average Unconstrained User The FTTH Revolution

7 Speed Increases Are Consistently Underestimated Broadband Was Expected To Reach An Amazing 720 Kbps by 2011 Bandwidth Per User Forecast The FTTH Revolution

8 Online Time At Home Is Becoming Very Important The average person reports spending 5.7 hours online at home per day. The FTTH Revolution

9 The Number Of In-Home Internet Devices Is Growing The average random broadband user is now aware of 5.5 Internet-ready devices in the home. The average random broadband home now has an estimated 2.9 HD televisions/ DVRs (many fed by IP). The FTTH Revolution

10 Large Screen Devices Continue To Drive Wireline Percent Preferring Devices At Home For Primary Online Tasks Handheld Tablet Desk/Lap Television All AGES: Watch a movie 1% 1% 7% 92% Communicate with a friend via text or 38% 8% 51% 2% Play on online game 7% 16% 66% 11% Work on a project for work or school 1% 4% 91% 5% AGE UNDER 35: Watch a movie 0% 2% 17% 82% Communicate with a friend via text or 64% 5% 29% 2% Play on online game 11% 10% 63% 15% Work on a project for work or school 0% 3% 96% 1% 2012 Data The FTTH Revolution

11 Multi Screen Use Is Increasing Tablet Devices Are Often Used While Watching TV On average, users report actively using a second device 23% of the time while watching television. The FTTH Revolution

12 Mobile Devices In The Home Are Increasingly Being Handed Off To Wireline A total of 67% of mobile users say they sometimes connect their devices to inhome WiFi to increase speed or avoid cellular charges. The FTTH Revolution

13 OTT Video Is Driving More Wireline Traffic ALL AGES: OTT only ("Cord cutter") OTT heavy (66%-99.9%) OTT medium (33%-65.9%) OTT light (1%-32.9%) Traditional TV only 9% 8% 10% 17% 39% 35% AGE UNDER 35: OTT only ("Cord cutter") OTT heavy (66%-99.9%) OTT medium (33%-65.9%) OTT light (1%-32.9%) Traditional TV only 10% 22% 25% 21% 21% 47% 0% 20% 40% 60% 80% 100% The FTTH Revolution 13

14 FTTH Progress

15 Building Fiber-to-the-Home Higher Capacity Broadband Is Winning

16 North American FTTH Connections Are Accelerating Homes Marketed Reaches 30 million (US, Canada, Mexico) Homes Passed Homes Marketed Homes Connected Official estimates due Sept 2014 US Rough estimates June 2014: 22.7 Marketed 10.4 Connected Mar '14 Sep'13 Mar '13 Sep '12 Mar '12 Sep '11 Mar '11 Sep '10 Mar '10 Sep '09 Mar '09 Sep '08 Mar '08 Sep '07 Mar '07 Sep '06 Mar '06 Sep '05 Mar '05 Sep '04 Mar '04 Sep '03 Mar '03 Sep '02 Mar '02 Sep '01 Homes passed = Homes that could be served / includes builds in progress etc. Home marketed = Homes actively marketed with FTTH Building Fiber-to-the-Home

17 Gigabit Providers Are increasing Rapidly US Gigabit Providers As of July 15, 2014 Municipal Private Competitive Tier 2/3 ILEC 7 Real Estate Development Private Cable Operator Electric Coop Tier 1 ILEC Total Building Fiber-to-the-Home 17

18 Attitude To Gigabit Internet Among Providers Not Currently Offering Gigabit Internet Plan to add 28% Not sure 48% Not likely to add 24% 0% 20% 40% 60% 80% 100% Building Fiber-to-the-Home 18

19 FTTH Take Rates

20 FTTH Results In High Take-Rates U.S. Take-Rates Reach 45.9% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Mar '14 Sep '13 Mar '13 Sep '12 Mar '12 Sep '11 Mar '11 Sep '10 Mar '10 Sep '09 Mar '09 Sep '08 Mar '08 Sep '07 Mar '07 Sep '06 Mar '06 Sep '05 Mar '05 Sep '04 Mar '04 Sep '03 Mar '03 Sep '02 Mar '02 Sep '01 Building Fiber-to-the-Home

21 Early Google Market Share Is High In Kansas City Share Among Random Broadband Users Google has already achieved a share of around 25% of all Internet homes in central Kansas City. Google s take-rate is likely considerably higher because not all areas are built-out. A regional average speed of 87 Mbps is indicated. (Ookla s Net Index shows 86 Mbps highest in the nation.) The FTTH Revolution 21

22 FTTH Forecast

23 FTTH Greenfield Is Increasing In the housing boom, relatively few lots were fiber fed so many overestimated the impact of Greenfield FTTH. In the coming housing increase or boom, more and more lots will be fiber fed. Based on their experience with the last housing boom, many underestimate the coming Greenfield FTTH. Building Fiber-to-the-Home

24 Existing FTTH Providers Plan To Build More Among Providers Offering At Least Some FTTH Plan to build more 36% Not sure 10% Not likely to build more 27% All have FTTH 27% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Building Fiber-to-the-Home 24

25 U.S. FTTH Growth Should Really Take Off After 2015 Actuals and Forecast Building Fiber-to-the-Home

27 FTTH: Better Positioning

28 Fiber Awareness

29 Fiber Optic Internet Is The Best Category Term Awareness Of Terms Among Random Broadband Users Broadband DSL Cable modem 98% 98% 98% Gigabit Internet FTTH/Fiber to the home 26% 24% Fiber optic Internet 81% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Building Fiber-to-the-Home 29

30 Most Don t Understand The Place Of Fiber In Wireless Public Perception New York Austin Many people mistakenly assume that all mobile calls, texts, s etc. are over the air Only 37% know that wireline networks are involved in the trip. Building Fiber-to-the-Home

31 FTTH Value Proposition

32 Customers Describe Diverse FTTH Advantages Categorization Of Open-End Responses Building Fiber-to-the-Home 32

33 Consumers Actually Rate Reliability Most Important Percent Perceiving Benefit Somewhat Or Very Important Reliability/Service 94% Clear picture quality 93% Faster Internet speeds 91% 0% 20% 40% 60% 80% 100% Building Fiber-to-the-Home 33

34 Providers Rate Reliability Most Important Percent Perceiving Benefit Single Most Important For FTTH Reliability 45% Customer service 39% Speed 23% 0% 20% 40% 60% 80% 100% Building Fiber-to-the-Home 34

35 FTTH Users Often Step Up From Other Broadband Previous Broadband Type Among FTTH Users Cable Modem 37% DSL 34% Other FTTH 14% None / Dial up 12% Other broadband 3% 0% 20% 40% 60% 80% 100% Building Fiber-to-the-Home 35

36 FTTH Performance

37 FTTH Has The Highest Tested Download Speeds Median Tested Download Speeds Building Fiber-to-the-Home

38 FTTH Is Pulling Away With Tested Upload Speeds Median Tested Upload Speeds Building Fiber-to-the-Home

39 FTTH Maximum Download Speeds Are Increasing Maximum Download Speed Tier By Provider Type Building Fiber-to-the-Home

40 FTTH Speeds Are By Far The Most Symmetrical Upload Speed As A Percent Of Download Speed FTTH 75% Wireless 27% Cable Modem 21% FTTN 17% DSL 16% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Building Fiber-to-the-Home 40

41 FTTH Is The Most Stable Platform Reported Reboots Required Each Month FTTH 1.1 Cable Modem 1.5 DSL 2.4 Wireless Building Fiber-to-the-Home 41

42 FTTH Is The Most Stable Platform (Cont.) Reported Customer Service Calls Per Year FTTH 1.3 DSL 2.0 Cable Modem 2.1 Wireless Building Fiber-to-the-Home 42

43 FTTH Offers The Best Value Reported Cost For Internet Service/ Median Blended Mbps* FTTH ($56) $3.80 Cable Modem ($51) $7.25 FTTN ($47) $10.63 DSL ($44) $22.51 Wireless ($53) $ * Average Downstream and Upstream Mbps Building Fiber-to-the-Home 43

44 FTTH Satisfaction

45 Users Are Much More Satisfied With FTTH Percent Very Satisfied With Aspects Of FTTH Service Reliability- Service uptime 30% 41% 58% Consistency of speed Broadband download speed Broadband upload speed 50% 35% 31% 49% 41% 32% 48% 33% 31% FTTH Cable DSL Streaming video 25% 26% 42% 0% 20% 40% 60% 80% 100% Building Fiber-to-the-Home 45

46 Users Are More Satisfied With The FTTH Experience Percent Very Satisfied With Aspects Of Video Quality of HD picture 56% 72% 73% Number of HD channels 45% 57% 61% FTTH Satellite Cable 46% VOD 0% 36% 0% 20% 40% 60% 80% 100% Building Fiber-to-the-Home 46

47 FTTH Increases General Satisfaction With A Residence Percent Satisfied With Home By Broadband Type FTTH 82% Cable Modem 74% DSL 71% 0% 20% 40% 60% 80% 100% Building Fiber-to-the-Home 47

48 Broadband Is Seen As A Prime New Housing Amenity Importance Of Area Amenities If Shopping For New Home Non FTTH Users: Internet from a direct fiber optic line Green space/ walking, jogging 24 hour neighborhood patrol Fitness center/ Club house Community pool/ park 54% 48% 46% 78% 77% Current FTTH Users: Internet from a direct fiber optic line Green space/ walking, jogging 24 hour neighborhood patrol Community pool/ park Fitness center/ Club house 49% 46% 46% 75% 84% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percent saying very or somewhat important Building Fiber-to-the-Home 48

49 FTTH Life Impacts

50 FTTH Improves Productivity Annual Hours Waiting On Apps To Load : Gears Turning FTTH 121 Cable modem hours Difference DSL 170 $0 $50 $100 $150 $200 Average file size attempted could also go up making real differences for similar apps even greater. Building Fiber-to-the-Home 50

51 FTTH Changes How We Work Employed FTTH users say they work 1.3 extra days per month from home (on average). A total of 13% of FTTH users have a home-based business with over $10,000 estimated incremental income from FTTH. Building Fiber-to-the-Home 2013 Data

52 FTTH Positively Influences Economic Development Percent Noticing Economic Development : Municipal FTTH Providers New employer attraction 88% Employer expansion 85% Employer retention 77% Home based business 58% 0% 20% 40% 60% 80% 100% The FTTH Revolution 52

53 FTTH Adds Home Value eported Discount Required To Consider Equal $300,000 Non FTTH Home Perception: those who don't have FTTH now $5,337 Perception: those who have FTTH now $6,451 $0 $2,000 $4,000 $6,000 $8,000 $10, Data The FTTH Revolution 53

55 Phases Of FTTH Introduction Year Consumer strategy Competitive strategy Extending Product availablity where none before Largely not applicable Competing Product choice Slightly superior offering Redefining Product is redefined Exploits inability to respond

56 FTTH: Better Marketing

57 Unpaid Media Is Powerful If You Can Get It Most Effective Marketing Methods From Consumer Viewpoint VERIZON FIOS: TV advertising Friends/neighbors/co-workers Internet/ Website Direct mail Door-to-door salesperson News stories LOCAL FTTH PROVIDERS: Friends/neighbors/co-workers Direct mail TV advertising News stories Events etc. Internet/ Website Newspaper advertising GOOGLE FIBER: Friends/neighbors/co-workers News stories Direct mail TV advertising Internet/ Website Community meeting Newspaper advertising Radio advertising 7% 6% 6% 9% 9% 15% 13% 11% 14% 22% 21% 19% 20% 19% 18% 18% 23% 28% 27% 0% 20% 40% 60% 36% 43% 35% unpaid 65% unpaid 61% unpaid Building Fiber-to-the-Home 57

58 Barriers Such As Hassle and Contracts Should Be Mitigated Important Concerns When Considering Switching Providers Time and Hassle 67.0% Concerns new contracts 67.0% Not big enough difference 60.0% Concerns current contracts 41.0% Subcontractors in home 30.0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Building Fiber-to-the-Home 58

59 Take-Rate Success Depends On Many Factors Competitive service levels/ Satisfaction Degree of competition (number and type) For municipal: Retail versus open access ADDRESSABLE: Product and service differentiation Local touch points/ Office Strategic deployment strategies Marketing effectiveness Customer service levels Building Fiber-to-the-Home

60 To Differentiate, Consider Improving Human Service - On Top Of FTTH Stability and Feedback Advantages Building Fiber-to-the-Home

61 Informational Objectives For Session Better FTTH planning The motivation for FTTH The direction of FTTH Better FTTH positioning / messaging Better FTTH marketing Better FTTH revenue per customer

62 FTTH: Better Net Revenue

63 FTTH Results In Higher ARPU Average Cost Of All Services Reported By Consumers By Broadband Type FTTH $142 Other Broadband $110 $0 $20 $40 $60 $80 $100 $120 $140 $160 Building Fiber-to-the-Home 63

64 FTTH Already Enables Many Applications Percent Using Applications At Least Monthly Shop online Participate in social media Play single player games Upload large files Stream/ download to TV device Stream/ download to computer Use two way video conferencing Use VoIP Upload to YouTube or similar Use offsite storage Stream download to mobile device Use remote software / "cloud" Play multi player games Participate in online education courses Use home security applications Remotely monitor home, pets, etc. Remotely monitor health indicators Energy management apps 4% 3% 1% 1% 36% 32% 28% 27% 22% 18% 18% 17% 16% 16% 16% 12% 54% 78% 0% 20% 40% 60% 80% 100% Building Fiber-to-the-Home 64

65 Many Emerging Uses Are On The Horizon Special Interest now: Young Men & Women Special Interest now: Seniors, Young mothers Special Interest now: Women Special Interest now: Young Males Building Fiber-to-the-Home

66 FTTH Reduces Operations Costs Estimated Opex Savings Among Those With Active FTTH Customers 0-9% 35% 10-19% 22% 20-29% 30+% 23% 20% Average Estimate: 18% (2013 Estimate 20%) 0% 20% 40% 60% 80% 100% Building Fiber-to-the-Home 66

68 Building Fiber-to-the-Home Conclusion

69 FTTH Is Positioned To Rapidly Consolidate Market Position Building Fiber-to-the-Home

70 FTTH Progress and Impact Understanding the FTTH landscape to enable better business decisions