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China Flexes Its FTTx Muscle 2013-11-13

“China will be the center of FTTx construction around the world in the near future,” Lightreading reported recently. The summary of this report is as follows:
  China Telecom Corp. Ltd. (NYSE: CHA) and China Unicom Ltd. (NYSE: CHU), are engaged in massive rollouts. Unicom has just completed the country's largest fixed-network tender this year, for 25 million GPON and EPON lines at an expected cost of 4 billion yuan renminbi. China Telecom has just tendered for more than 16 million optical access lines.
  The two began building out fiber access networks as early as 2007, but did not begin large-scale deployment until 2010, when they rolled out between 5 million and 6 million fiber-to-the-home (FTTH) ports, compared with fewer than 2 million in 2009, says analyst Fang Meiqin from Beijing-based K-Island Consulting.
  As investment and customer acquisition gathers speed, Fang expects China to have a total of 50 million to 60 million fiber access ports by 2013.
  China is expected to account for a third of all FTTx subs this year, and the rollout is already weighing on global optical supply. According to Ovum Ltd. , China is the world's biggest consumer of fiber access equipment and bought 80 percent of all optical line terminal (OLT) equipment (which sits in the operators' local exchanges) during the first quarter of this year.
  The bulk of the deployments are EPON because it was the first to be ready for mass deployment and to be interoperable, says Ovum Principal Analyst Julie Kunstler. Many of the Chinese provinces that started with EPON are continuing with it, but a number are also ordering significant amounts of GPON gear, making China one of the few markets where both technologies are being deployed.
  China Telecom is the more aggressive of the two state-controlled carriers. Pyramid Research believes it passed 10 million homes with its fiber access infrastructure by the end of 2010 and is on course to pass 30 million by the end of 2011, with the aim of reaching 100 million by 2015.
  Actual customer takeup is less clear, however. Neither carrier has released numbers either for FTTx -- including fiber-to-the-building (FTTB) as well as PON-based fiber-to-the-home -- or FTTH specifically.
  Kunstler estimates China's consumer FTTx subscriber base will grow to more than 110 million by 2016 from less than 10 million in 2009 and around 18 million at the end of 2010.
  Commercial FTTH customer takeup is well short of that. Fang estimates Telecom and Unicom had racked up just 800,000 and 400,000 FTTH subscribers respectively by the end of 2010.
  But adoption of all fiber-based services is accelerating thanks to aggressive pricing by the carriers. "Most service providers are charging the same as for DSL," Kunstler notes. The two biggest operators at provincial level, Beijing Unicom and Shanghai Telecom, have just announced free upgrades to fiber for broadband customers.