Study: Fixed broadband expansion presents a challenge for carriers

Infonetics Research sees mobile costs 'eating into' available capital
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Carriers are still making good money on their fixed broadband networks and services, but they're in a financial bind when it comes time to spend money to upgrade and/or improve those networks.

Infonetics GPON 2.5G deploymentsAmong other things, the need to invest in next-generation wireless networks is cutting into available funding for broadband wireless networks, Infonetics Research says in its "Next Gen PON, FTTH and VDSL Deployment Strategies and Vendor Leadership: Global Service Provider Survey."

"It's become a challenge for operators to know how much to invest in fixed broadband networks and services," Jeff Heynen, directing analyst for broadband access and pay TV at Infonetics said in a news release. "On one hand, fixed broadband is among the most profitable services a provider can offer. On the other hand, the investment required to roll out or upgrade mobile networks is eating into their available capital."

The survey's results were contradictory in many respects, including the fact that 40 percent of operators said they plan to offer 100-plus Mbps connections by 2015 but "there isn't a corresponding interest now in investing in the next-gen technologies that enable those speeds," the news release said.

The operators are not dismissing FTTH as a next-generation technology, and 70 percent said that Alcatel-Lucent (NYSE: ALU) was the top FTTH vendor and that both ALU and Calix (NYSE: CALX) were worthy of high marks for "technology innovation, product reliability and management software," Infonetics revealed.

Still, liking a technology and rolling it out are two different things, the report suggests.

"What our latest broadband access survey reveals is that the transition to next-generation fixed access technologies (such as 10G EPON, XGPON1 and variants of WDM-PON) will take longer than many in the industry had hoped," Heynen continued. "The fundamental drivers are there but they aren't pressing enough to force a wholesale shift in deployment timelines and they don't outweigh the higher costs of next-gen equipment."

The delay is partially caused by the desire of most operators to "wait until next-generation pricing achieves parity with current generation technologies before investing heavily," Heynen said.

And this attitude, he said, should "prove interesting to any player in this space."

For more:
- see this news release

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