While the UK patches together its next-generation access network using a variety of technologies, Portugal has opted for fibre to the home
Portugal's fixed telecommunications network didn't change much in the last three decades of the last century. But as broadband services started emerging, and given the limitations of copper-pair networks in terms of bandwidth and reach, it became obvious that the country would soon need a new, higher-bandwidth infrastructure in order to offer services such as 'triple-play' phone, TV and Internet access packages.
The answer was to build a coaxial-cable network. The Portuguese proved to be early adopters of triple-play packages, quickly giving Portugal the second-highest penetration rate for high-bandwidth services in Europe after Belgium. Operators were forced to invest in new networks to keep up.
The first to do so was ZON Multimedia, which started out with a coaxial network developed by cable TV company TV Cabo, and then updated it using fibre to the cabinet (FTTC) technology, enabling it to carry more data to each home. Other operators opted to stick with DSL networks running over the copper pair network – a decision that allowed ZON to mop up around three-quarters of the Portuguese triple-play market.
Continuing strong demand has seen operators, including PT, Vodafone and Sonaecom, introducing fibre to the home (FTTH) systems using a Gigabit passive optical network (GPON) architecture. This has eroded ZON's market share, forcing it to invest in its FTTC network and DOCSIS 3.0 cable modems to keep up with current demands. ZON is now considering investing in FTTH to maintain its competitiveness.
Portugal's operators have the same technology options available for next-generation broadband access as most operators worldwide.
Fibre to the node (FTTN) takes a high-capacity fibre connection to the exchange and then carries the signal to the home over the existing copper or coaxial-cable network, using active equipment in the primary network.
The FTTC option carries the high-bandwidth signal closer to each home by routing the fibre to the kerbside cabinet, and then uses active equipment in the cabinet, such as DOCSIS 3.0 cable modems or advanced DSL modems, to drive the coaxial cables or copper wires linked to each home.
For commercial buildings or residential apartment blocks, the fibre to the building (FTTB) approach is similar to FTTC, except that the cabinet of active equipment driving the existing copper or coaxial lines is inside the building.
The ultimate approach to bringing high bandwidth to the public is FTTH, taking a high-capacity fibre-optic cable into each household, where an optical network unit can decode the light signal and deliver it to the rest of the house as electrical signals flowing over copper or coaxial lines. The highest-capacity version of FTTH is direct FTTH, in which a dedicated point-to-point fibre connection is made between the central office and each home. Unfortunately this approach is expensive since it demands more fibre and more active equipment in the network for each connection. The result is that this approach is mainly used for business or government premises.
Many operators are now settling on using a GPON version of FTTH to deliver high bandwidths to their customers. This approach offers download speeds of up to 2.5Gbit/s and upload speeds of 1.25Gbit/s per optical port in the central office, capacity that is then shared between up to 64 clients on the same passive optical network. Such networks can run over a distance of up to 25km without signal amplification or repetition, are immune to electromagnetic interference and backed by an internationally recognised standard (ITU-T G.984).
Other technology options include the WiMax microwave access system, which theoretically offers high bandwidth, but can be affected by rain and physical barriers. For copper lines, VDSL2 modems, the latest evolution of DSL, can carry up to about 50Mbit/s over distances of up to 1km but signal deterioration over longer distances limits their usefulness.
Investing in FTTH
The first graph on p40 shows the value of FTTH to end customers, in terms of the convenience that fast download speeds bring. The increasing popularity of HD TV channels and the declining cost of the relevant equipment is driving demand for higher bandwidths at home.
For operators, however, the installation of FTTH networks involves making a complex decision about the cost of implementation versus the likely payback period. The advantage of the FTTH/GPON approach is that it is a passive network, which means that it doesn't require a power supply or the use of cabinets and equipment in the distribution network, which cuts operation and maintenance budgets.
Delivering national FTTH coverage, however, requires a major investment and acceptance that returns will most likely come over the medium and long term. It costs on average €250, including materials, licensing, manpower, advertising and market research to reach each home. With an average monthly spend per customer of €50, operators risk investing large sums of money without any certainty that customer loyalty will ensure their investment delivers the expected return.
As an example, the second graph (above) shows that it would cost around €1.25m to introduce FTTH to 5,000 homes. If the uptake of services is about 30 per cent of homes built, the investment will start making a positive return after about 16 months, not counting operation and maintenance costs.
FTTH in Portugal
FTTH has taken off rapidly in Portugal, with subscriber numbers increasing from 14,500 in 2008 to about 300,000 in June 2010. The Portuguese government has also announced a plan to wire all of the 3.9 million homes in Portugal with a fibre-optic connection by the end of 2017. The investment to achieve this, which amounts to €3bn over three to five years, is expected to add 1.8 per cent to Portugal's GDP.
There are currently four major FFTH/GPON operators in Portugal. PT (Portugal Telecom) has the largest current network, having wired one million homes using about 500,000km of fibre. In 2011, PT plans to wire a further 600,000 homes, reaching a total of more than 40 per cent of Portugal's homes.
Vodafone Portugal has already invested in an ADSL network but now is building an FTTH network, especially in areas of greater population density such as Lisbon and Porto. It is expected to wire about 450,000 homes in two years.
Sonaecom, which began building Portugal's first large FTTH network in the third quarter of 2008, now reaches about 200,000 homes, in areas of Greater Lisbon and Porto. ZON Multimedia is adopting a different strategy, using FTTB and FTTC in the cities where it already has a coaxial infrastructure and then building FTTH networks where it doesn't have a coaxial infrastructure.
Building the networks
There are several companies that can build FTTH networks, including CME and Viatel.
CME, part of a Portuguese multinational called ProCME, is the leading provider of FTTH services in Portugal, working for all four major operators as well as having FTTH projects abroad. The company is accredited by the FTTH Council Europe and can offer turnkey FTTH projects, from initial survey through project preparation and implementation, acceptance and the registration of network elements. The company has wired more than 350,000 houses from the 500,000 specified in all of their FTTH projects.
Viatel, part of Group Visabeira SGPS, is the largest provider of services to PT's FTTH network and has a presence in Angola and Mozambique. It has already brought FTTH to 280,000 homes for PT, approximately 28 per cent of its network.
Portugal's FTTH roll-out relies on four major suppliers. Draka, a cable supplier, is the leading supplier of optical fibre cables to Portugal's FTTH projects.
Nokia Siemens Network is providing FTTH technology, including several key passive devices. Corning helped pioneer PT's FTTH project, and has products for all the network elements of FTTH. CME is the last major supplier into the Portuguese market, but is gaining market share.
Having chosen a next-generation access technology and implemented it, what services are operators offering customers over their FTTH connections?
PT's Meo Fibra offering includes a range of triple-play packages with between 12Mbit/s and 200Mbit/s of granted bandwidth, 70 to 100 TV channels (some in HD) and unlimited voice service for national fixed network and international calls to 30 countries, at prices of between €40 and €100 per month.
Sonaecom's Clix Fibra offering includes triple-play packages with between 30Mbit/s and 100Mbit/s of granted bandwidth, 30 to 120 TV channels (some in HD) and voice service charges ranging from €0.50 per minute for national landline calls to 24h/day unlimited calls to the national fixed network and international calls to 16 countries, at package prices of €40 and €65 per month.
Vodafone's Casa service provides triple play packages offering between 50Mbit/s and 300Mbit/s of granted bandwidth, with 71 to 101 TV channels (some in HD) and unlimited voice service 24h/day for national landline calls, at prices between €40 and €90 per month.
Finally, ZON Multimédia's Zon Fibra service provides triple-play packages between 30Mbit/s and 360Mbit/s of granted bandwidth, with 72 to 124 channels (some in HD), and voice options ranging from an unlimited service of 12 to 24 hours a day for national landline calls, with prices between €44 and €105 per month.
Portugal is moving quickly to bring fibre optic connections to every home, using a passive network to control costs. Despite the large initial investment needed to build an FTTH network from scratch, it appears possible to get a return on that investment in the short or medium term in areas where there is a high population density and uptake is strong.
João Baeta and Nuno Mendes are FTTH project managers at CME