FTTH malformation development: the disconnect between goal and reality

9/4/2012, as the ultimate mode of broadband access, FTTH has become a sword for current operators to develop broadband strategies.

FTTH can provide each access user with access bandwidth of 20M ~ 50M, or even 100M, which can fully meet the needs of the entire broadband popularization speed project; replace the original copper cable with optical cable, replace the electrical signal with optical signal, greatly reduce the network The failure rate also saves the operator's maintenance costs and energy consumption. In addition, its long-distance coverage, 20-year lifespan, safety performance and other factors make no operator dare to underestimate the changes brought about by FTTH.

From Wuhan and Chengdu, the first FTTH pilot was launched in China, and the optical network cities in the province were launched in 2010, Shanghai and Jiangsu. In 2011, China Telecom promoted the “Broadband China·Optical Network City” strategy in China, and now China Unicom also Launched the "Light Network World · Wo Kuan World" project. The butterfly effect of FTTH has swept across the country.

However, the FTTH that opens up the road of broadband is actually a double-edged sword. The rapid start of the FTTH project to operators has also brought great hidden dangers to the industry chain.

Challenge habit

The change from copper to light challenges the habits of everyone.

At present, the main engineering sections of FTTH are concentrated on the transformation of existing users. Fiber-optic installation will damage the decoration environment in the house to some extent, and change the original wiring habits. Some users therefore refuse FTTH. In addition, FTTH transmits telephone and broadband through a single optical fiber, which changes the pattern of broadband and telephone independence in the past, and also changes the habit of using telephones without power supply. Now the telephone connected through FTTH must maintain the continuous power supply of the terminal. To work. Many older users are extremely difficult to accept this change. The shortcomings of "FTTH power failure can't make a call" have made FTTH questionable. According to the reporter, this is also the problem that operators in various provinces across the country have been complained more.

At the same time, China's broadband penetration rate is low, many users within the coverage of FTTH do not have access to bandwidth requirements, FTTH is difficult to truly take advantage of its long-distance coverage.

The most direct impact of these problems is the low FTTH mounting rate.

Wei Leping, director of the China Telecommunications Science and Technology Commission, pointed out that the low level of economic education and informatization has caused this situation. He said that even in Shanghai, where the fastest broadband development in the country, there are still at least 3 million users who only use telephones and do not use broadband. This is the most important factor restricting broadband development.

The latest data shows that Shanghai FTTH has covered a total of 6.28 million users, with nearly 2 million actual users, and the installed rate has just exceeded 30%. However, the installation rates of other provinces in the country are basically below 10%. The Shanghai Municipal Government has issued two important policies to promote the level of broadband construction, and provided a lot of image support when operators promoted FTTH, but no specific policies were introduced in other provinces.

But many provinces seem to ignore the difficulty of FTTH. In a recent meeting, Wei Leping pointed out: "Looking at the FTTH plans reported by the provinces, the figures are high and outrageous. Some provinces plan to complete all FTTH projects within three years, which is basically impossible."

According to the reporter's understanding, the coastal provinces have basically stopped the broadband mode such as DSL and FTTB, and comprehensively carried out FTTH construction. The construction mode except FTTH is not included in the performance appraisal; in other provinces, the performance indicators of FTTH are much higher than others. mode.

 Malformation

It is possible to judge whether the FTTH target is too high from the FTTH work of some operators.

According to the reporter's understanding, some grassroots operators have made some unreasonable means to promote FTTH deployment in order to fulfill the prescribed objectives. For example, in order to reduce the user's blocking, only the advantages of FTTH are promoted, and some changes brought about by the FTTH renovation construction are deliberately concealed; Some users who do not have broadband demand, as long as the fixed-telephone service is also forced to carry out FTTH transformation, resulting in users unable to make calls after power failure, greatly reducing user satisfaction......

“The provincial market department signed the order in various ways in order to complete the assessment indicators, and then transferred the pressure to our construction department.” A local operator construction department told reporters: “On the one hand, the FTTH renovation project is difficult and difficult to enter. The problem affects the speed of user development. On the other hand, FTTH has a lot of pressure on new construction and renovation funds."

According to the reporter's understanding, the current FTTH is a serious problem. However, the broadband environment varies from place to place. Operators around the world need to consider reasonable factors such as existing network resources, ARPU value, operation and maintenance configuration, and user acceptance to develop a reasonable broadband construction plan. Many broadband experts pointed out in the public speech that the development of the operator market should be developed with "speed increase" to avoid competition in the end medium form. FTTCBH multiple network construction modes should coexist and complement each other for a long time.

In fact, in different networking modes such as FTTH, FTTB, and FTTC, mature technologies can achieve more than 100 megabits of access bandwidth on different transmission media such as optical fiber, twisted pair, Category 5 cable, and Cable.

Tang Xiongyan, deputy chief engineer of China Unicom Research Institute, said in an interview: "It is still to be studied whether FTTH should be fully adopted at present. In many places, there is no need to withdraw from 'copper', which will result in waste of resources; 'light' and ' Copper's need to be the most effective combination in the operator's planning. And the full adoption of FTTH will bring high construction costs."

At the same time, due to the low installation rate of FTTH, it is difficult for operators to recover FTTH costs in the short term by increasing user scale. According to statistics: in the eastern region, FTTH cost recovery takes 5 to 7 years, while the central and western regions have a payback period of more than 11 years. During this period, operators are solely responsible for construction costs and pressure risks.

Considering the low installation rate, operators generally adopt a “thin coverage mode” when deploying FTTH. They first calculate the size of the community broadband users, reserve enough fiber ports in the cell, and later open the fiber according to the user's application request. Broadband. However, only the FTTH installation rate in Shanghai and Beijing is relatively high. The FTTH installation rate in other regions is generally low, and the FTTH coverage is rapidly rising, and the installation rate can only continue to decline.

Industry experts pointed out: As the proportion of FTTH construction increases, the utilization rate of broadband ports will inevitably continue to decline. And with the decline of broadband ARPU, the phenomenon that broadband growth does not increase is already very obvious. From the perspective of investment efficiency improvement, revitalizing existing network resources is the key to alleviating the investment pressure of operators.

Negative effects of financial pressure

In order to reduce the construction cost, operators reduce the price of equipment through collection and collection. In recent years, the price of PON has dropped by about 15% to 20% per year. However, even if the price of such a scale declines, it will not be able to fill the vacancy of the operator's broadband construction.

In 2011, some province operators spent the entire year's broadband construction budget in the first half of the year, and this year, this case is still growing. It is reported that some province operators have begun to ease the pressure of funds by self-financing funds, extending equipment payment periods, and purchasing low-cost equipment. Some operators have proposed to build broadband with equipment manufacturers and share broadband revenues in the later period. However, it is difficult to change the shortage of funds due to various measures.

However, the negative effects of purchasing low-cost equipment are gradually emerging. The network failure rate caused by low-cost ODN equipment remains high, even higher than that of DSL networks. Wei Leping said that Verizon can save $1 billion in operation and maintenance costs per year through FTTH. However, since China Telecom launched FTTH, broadband maintenance costs have not risen. He pointed out that this is mainly because the quality of the splitter and connector in the network is not qualified.

“The rapid development of FTTH projects requires the purchase of large quantities of ODN equipment. It is difficult to guarantee high quality while ensuring low cost, and operators do not have enough time and energy to do quality inspection. This can only be achieved through the development of construction specifications and procurement. Quality to solve." A manufacturer told reporters.

In addition, under the “low price bid” rule, some manufacturers can obtain shares at an unreasonably low price. After the cumulative effect of multiple collections, this will sacrifice the health of the industrial chain, and the cost reduction expectations of overdraft equipment manufacturers, chip manufacturers, and device manufacturers for several years. Excessive competition in price wars and a decline in the profitability of manufacturers have led to a decline in funding for research and development, which has a direct impact on innovation and is not conducive to a virtuous circle of the entire industry chain.

However, operators have realized the problem of this collection mode. In the recent collection, some operators have begun to optimize the bidding rules, using the best price model instead of the lowest price, which is conducive to improving the quality of the winning bidders.

On the other hand, the operator's focus on FTTH construction is difficult to take into account the FTTH's maintenance capabilities, and it is difficult for operators in many provinces to respond to faulty services. At the same time as the scale deployment, operators still need to improve FTTH maintenance capabilities.

In addition, in this low-cost mode, operators pay less attention to some new functions and features. Some high-priced but cost-effective technical solutions are difficult to use in China. This is why many technologies and solutions are used first in foreign countries, while domestic ones lag behind 2 to 3 years.

Considering the construction fund pressure of operators and the low installation rate of domestic FTTH, the current FTTH construction model and construction goals still need to be rationally considered.