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Portuguese incumbent plans to start ripping out its legacy network next year with a view to going copper-free by 2020.
The economics of rolling out fibre-to-the-home (FTTH) vary considerably by market, but in one major European market the picture looks rosy enough that the incumbent plans to rip out its legacy copper access network within the next few years and concentrate solely on fibre.
"By 2020 we want to be copper-free," Portugal Telecom’s chief technology officer Alexandre Fonseca declared at Total Telecom’s Gigabit Copper event in Brussels on Tuesday.
"We are killing all the legacy technologies," like ATM and frame relay, he said.
"[In 2017] we will start shutting down the digital switches, taking out the copper, selling the copper," Fonseca said.
"In three to four years we will be almost, if not totally, copper-free," he said. "We have a team that is working intensively on this."
Portugal Telecom has been investing in FTTH since 2008 and had passed 2.5 million homes by the end of last year, Fonseca explained. It is currently passing premises with fibre at a rate of 60,000 per month.
The telco’s main driver for becoming a fibre-only operator is the service potential the technology offers, particularly in a highly competitive market.
"There is very intense competition, especially on cable," Fonseca said, adding that when it comes to competing with cablecos, fibre is "the way to go."
The operator is working on the launch of 4K TV, for example, which will put pressure on the network, he said.
But there are financial reasons too.
"The investments are acceptable," Fonseca said.
Indeed, Portugal Telecom puts its cost per household of rolling out FTTH at less than €100, which is significantly lower than many operators can hope to achieve. Earlier in the day, Colin Shea, strategy director at Czech network operator CETIN estimated the cost at €600-€700.
Cost-effective labour means "very low cost for deployment," Fonseca said. Furthermore, "we own our own ducts, we own our own poles, we own our own manholes," he added, and the telco has developed its own CPE equipment via Altice Labs.
"There are also the operational savings," Fonseca said. These come from energy savings, concentration of PoPs, fewer network faults, and an overall more resilient network, he explained.
The ‘why’ clearly stacks up, but what about the ‘how’?
There will be challenges, two key ones being the fact that Portugal Telecom offers Internet access on its legacy network on a wholesale basis, and the potential reluctance of some customers to move to fibre broadband. But Fonseca insists these hurdles can be overcome.
When it comes to LLU customers, Portugal Telecom recently launched a new wholesale offer on fibre. "We provide them the alternatives," Fonseca said. "This is also a way to monetise the service."
From a regulatory point of view, the telco is permitted to close down legacy PoPs provided it informs the regulator of its intentions three years in advance. It has already begun doing this.
The company also believes it will win over the bulk of its customers to the benefits of fibre. It has started proactively approaching customers several months before the end of their broadband contract to promote the upgrade to a fibre service.
"The fibre buzz, the services buzz is getting to each and every person," Fonseca said.
But for the few who will doubtless fail to be convinced, there is a solution: "We are confident we can offer it for free," in households that just take one product, Fonseca said. In addition, the operator will create a low-cost solution to attract those who also take a basic TV service. "People will move," the CTO said.
