During Q4 2006, FTTx continued to out-perform DSL and cable modem in terms of quarterly growth. By the end of Q4 2006, the world FTTx subscriber base had reached 30 mln lines, with a year-on-year growth of 54.8%. Although the overall market share of FTTx is still very low (10.7%), compared to DSL (65.7%) and cable modem (22.3%), FTTx is gradually gaining ground in market share terms. Since the beginning of 2005, FTTx subscribers have been growing at a rate of over 10% every quarter. Of the seven regions, North America (primarily the USA) and Asia-Pacific showed growth rates above the average of 18.8% and 14.5% respectively during Q4 2006. One of the drivers for this continuous growth is the increasing popularity and demand of Value-added-Services (VAS) such as IPTV and, in Japan, Video-Conferencing. They consume a large amount of bandwidth for delivering video content and TV channels over broadband connections. As a general requirement, TV-over-Broadband (TVoBB) needs at least 3Mbps bandwidth in order to deliver seamless services. High-Definition (HD) TV can require up to 8Mbps of bandwidth, so conventional ADSL service is unlikely to be able to accommodate this bandwidth hungry service, Point Topic says.
An example of this can be seen with the launch of IPTV services in Japan. The service was first launched in April 2005, by the incumbent NTT, as a bundle with its high speed internet service. As a result, a drop in DSL growth from 4.4% to 2.5% was reported between Q2 and Q3 2005. The decline continued and reached sub-zero (-0.18%) in Q2 2006, which suggests possible churning in DSL subscriber base and migration to FTTx. Countries like South Korea and Taiwan experience very similar DSL market trends. In South Korea’s case, the slowing down in DSL growth started as early as Q4 2004, reinforced in later quarters by a large scale-migration of customers onto faster FTTx networks. At the end of 2006, the world’s DSL subscriber total reached 185 mln, whereas cable-modem and FTTx was used to deliver services to 62.8 mln and 30 mln respectively. Unsurprisingly, with the growth in FTTx, the market shares of DSL and cable modem have gone down by 0.07% and 0.43% over the Q. The difference in subscriber numbers between DSL and FTTx has further widened to 122 mln, whereas the gap between cable modem and FTTx has narrowed to 32.7 mln, Point Topic says.