During the recent months, there has been an intensive debate in Finland about broadband services and technologies. Unfortunately the discussion has turned out to be rather polarized. To simplify, one could say that the views are divided in two camps: the first side claims that without deploying Fibre to the Home (FttH) people will face the danger of being left outside of the digitalized society while the opposite side simply states that with LTE services in place, fixed broadband connections are no longer needed.

The reality is more complex than the views stated above. The discussion in Finland fails to recognize that already for several years, high speed broadband connections have been offered through cable TV networks by using the DOCSIS® 3.0 technology. The highest commercially available speeds in Finland offered by using the DOCSIS technology are 350 Mbit/s and as such, the standard allows data rates even higher than that. On European scale, DOCSIS 3.0 is the widest used technology for broadband speeds exceeding 30 Mbit/s. (Source: EU Digital Agenda).

The new DOCSIS 3.1 standard offers significantly higher, fibre like speeds with even up to 10 Gbit/s to each subscriber. We can safely expect to see many operators seizing the opportunity, and thus very high speeds will be widely offered to the subscribers in not so distant future.

Let’s leave the technology aside and do a cost comparison between two scenarios: FttH construction and upgrading a unidirectional, legacy cable TV network.

 

 Scenario 1: Cost of FttH construction per subscriber

Let’s look at an area of 2500 subscribers, predominantly in one family houses. When fibre networks have been constructed in Finland, the connection fee charged from a single subscriber has typically been between 1600-3000 euros. For the contracting operator, the true cost of the network construction varies depending, for example, on the population density, competitive position, targeted profit margin, and also on the subsidies available. Based on general market knowledge, we can estimate that the cost for the operator totals around 2500 euros per subscriber.

 

Scenario 2: Upgrading an existing legacy cable TV network to DOCSIS 3.1

Let us look at the same area as in scenario 1, but this time calculating what it would cost to upgrade the existing unidirectional cable TV network to carry DOCSIS 3.1. (Yes, there are still networks like this, which are just for TV services).

The costs in this scenario add up as follows:

  • Number of subscribers: 2500
  • Number of existing street cabinets: ~ 300, that is roughly 8 subscribers per street cabinet
  • Cost for upgrading the active and passive equipment in the street cabinets, including network design, material and installation, and some civil works for segment size reduction: around 550.000 euros, which is about 220 euros per subscriber
  • The CMTS (router for the Cable modems, “Cable Modem Termination System”) cost for this size of a network: estimated to be around 200.000 euros, about 80 euros per subscriber based on the figures above
  • The combined cost of the upgrade: about 300 euros per subscriber, without subscriber modem costs (which is similar in both scenarios)

Notes for the scenario 2:

  • In real calculations, the cost of the network upgrade only (without CMTS) has often turned out to be significantly lower than the sums used in this calculation. Reason for this is that here, we have made also a reservation for the segmentation costs, including some civil works and some fibre installation
  • If there are MDUs (Multidwelling units) in the area, the network upgrade is likely to cost considerably less per subscriber
  • Using a micro-CMTS solution would lower the CMTS investment costs remarkably

When comparing the scenarios, we have a cost of 2500 euros for the full FttH construction, or 300 euros for a DOCSIS 3.1 upgrade. Both options offer the subscribers a high speed Internet connection. The opportunities that DOCSIS offers have been left largely without attention in the public debate in Finland, despite the fact that the technology has been deployed widely by the largest operators in Finland and in other EU countries.

The investment payback periods differ greatly between the scenarios, but the vital question is, will the subscriber, who ultimately pays for the broadband connection, be interested in the technology choices, or do they simply want a reliable, fast connection at reasonable cost?

What is your stand in the broadband debate?

In my opinion, upgrading a unidirectional legacy cable TV network to DOCSIS 3.1, is a low hanging fruit waiting to be picked up!

Matti