Fiber-to-the-premise seen as $3.2 billion U.S. market by 2009

Fiber Optics Weekly Update, Sept 3, 2004

For more than fifteen years, fiber-to-the-premise (FTTP) deployments have been punctuated by various trials but have never gained traction--until now. In its new report, Fiber To The Premises in The United States: The Promise of Universal Broadband Access, KMI Research forecasts that the total FTTP market for equipment, cable, and apparatus will reach $3.2 billion in 2009. This represents a 54 percent compound annual growth rate (CAGR) for the forecast period. Verizon's announcement and commitment to pass 1 million homes in 2004 has made FTTP the fiber optics industry's most exciting development since the late 1990s.

The amount of cabled-fiber demand used in FTTP and fiber in the loop (FITL) applications in the United States will contribute to a 19 percent CAGR for the total U.S. single-mode cable market from 2003 through 2009. FITL-related fiber deployments in 2003 were less than 10 percent of total U.S. single-mode cabled-fiber demand but will account for more than 40 percent in 2009.

In 2003, there was a fledgling FTTP market underway, consisting of approximately 100 different projects--the majority of which were undertaken by municipalities, utility companies, real-estate developers, and other "non-telco" organizations. In 2003, the telcos contributed only 3 percent to the FTTP market for cable and equipment. But with the ramp-up in KMI's forecast, the telcos' deployments will grow much faster than the non-telcos' deployments. Telcos will represent 70 percent of this market in 2009.

One factor affecting the FTTP market's development is the distinction between homes passed and homes subscribing. KMI's report discusses the "take rate" (the percentage of homes passed that become subscribers) with the understanding that FTTP is one of several competing technologies; CATV and DSL also compete for broadband access services. KMI's forecast is based on a conservative take rate in the initial years, but it ramps up to higher levels towards the end of the five-year forecast period. These high-volume deployments, led by Verizon and other LECs, affect the market for equipment, cable, and apparatus.