FTTH Business Guide - AWT.be

Market size: Any business will have some fixed costs. In the case of an FTTH
organisation there will be a substantial fixed element relating to central systems
for provisioning new customers, billing, customer care centres and so on. Where
the potential number of customers is low, the disproportionately high level of
fixed costs can make it difficult to make a sensible business case. On the other
hand, as one of the case studies shows, it is possible to build a successful FTTH
network to single apartment block.
Market Prices: Broadband is the foundation service on a fibre network, although it
may be bundled with additional services, such as voice telephony, TV, or even a
mobile phone contract. However, for the purposes of the initial assessment, it is
useful to consider the current pricing of the broadband element alone because
this provides an important indicator of the financial feasibility of the project.
Chapter 4 contains a more detailed discussion on services and pricing.
Competition: The competitive environment will determine the market share that
you can expect to achieve. Places that are not served by broadband clearly offer
the best prospects; however, broadband black spots – locations too far from the
telephone exchange to receive DSL services – tend to be geographically diverse,
and therefore more expensive to connect with fibre.
Market maturity: The maturity of broadband and triple-play local markets varies
greatly across Europe. On the one hand, in Greece there is no cable television and
ADSL only became widely available and affordable in 2008. On the other hand in
Sweden there are many areas where FTTH and cable compete and ADSL has been
more or less squeezed out of the market. In general, it is easier to gain traction in
a growing market, although it is also entirely possible to convert a local market
from lower broadband speeds to high-speed broadband.
Management team: As in any business, there will be a great difference between
the achievements of a good team compared to a weak team. A classic problem is
that the team focuses on technology or construction, and initial marketing is poor,
which then takes a long time and considerable effort to overcome.
Existing channels: A company that has an existing customer base has a two-fold
advantage over a completely new brand in that they have a reputation already,
and can use existing channels to publicise the fibre services. These advantages can
result in lower costs to inform potential new customers, higher take-up rates and
improved margins.
30 www.ftthcouncil.eu