Which Internet Access Channel Will Prevail, ADSL or FTTH?

Since its debut in 1999 in Japan, the asymmetric digital subscriber line (ADSL) technology has been steadily gaining popularity as a broadband Internet access channel.

Yohei Ichijima, Staff Editor, Nikkei Communications

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In April 2002, the number of ADSL subscribers exceeded that of cable television (CATV) Internet users of 2.5 million, which had been the largest channel for accessing the Internet. The ADSL number has grown to more than 6 million as of February 2003 (refer to the graph 1). If this growth rate continues, the ADSL users will reach as many as 10 million in 2003.

In contrast to the ADSL’s rapid prevalence, the number of the fiber-to-the-home (FTTH) users has been showing a stagnant trend in spite of the fact that the FTTH technology has far better access circuit capabilities than ADSL in data rate, reach performance, upstream communication speed, and other factors.

Will the ADSL championship continue, or will the FTTH with better capabilities reverse its position? Here is an outlook for Internet access in Japan.

Ever Increasing ADSL Popularity

Several reasons support the rapid ADSL growth. At first, the service coverage has greatly expanded for the past three years. For instance, the Flet’s ADSL service offered by the regional companies of Nippon Telegraph and Telephone Corp (NTT) could cover more than 90% of the population in their respective service areas. Also, the service fees have reached an affordable level, due to intense competition among ADSL service providers. When the ADSL service was first introduced, the monthly fee ranged from 5,000 to 7,000 yen, but it went down to approximately 3,000 yen in the latter half of 2001 (refer to the graph 2).

After the price competition stabilized, the providers began a new race of communication speed to differentiate their services.

In 2000, most of the services were for up to 1.5Mbps; in 2001, up to 8Mbps; and in 2002, up to 12Mbps. Thus the speed was made faster every year.

In 2003, 24Mbps service will become a reality. Also, the 40Mbps ADSL technology has been proposed at the International Telecommunication Union-Telecommunication Standardization Sector (ITU-T).

This trend toward accelerating communication speeds has been realized by extending the transmission frequency bandwidth. The metal lines for ADSL, however, sometimes cause signal interferences with each other, and the signal will be degraded at high frequency bands. In order for ADSL to continue spreading, these two issues need to be resolved.

FTTH Not Yet a Major Player

FTTH technology, on the other hand, has not yet achieved a major player status of a broadband connection. The primary reasons are that its service area and the pricing are not competitive against those of ADSL.

FTTH needs optical fiber cables that require a long building period, which will limit the service coverage as a result.

For instance, an official at NTT East Corp said, "The Flet’s ADSL service can cover over 95 percent of the population, whereas the B Flet’s covers only 64%."

The NTT regional companies, nonetheless, enjoy the largest FTTH service areas in Japan. Most of the other FTTH service providers only offer their services in selected big cities.

Due to the relatively higher fees for FTTH, there have been quite a few cases where FTTH users have switched to ADSL services. The FTTH fees, however, are beginning to decline.

For example, NTT West Corp, which initially charged 10,100 yen per month for its 100Mbps service, added a new service menu in September 2002 that lists approximately half the initial price, 5,400 yen a month, which, the company said, is accepted favorably by customers. Also, telecom carriers owned by electric power companies began to offer low-cost menus for some 5,000 yen a month. Some providers offer a discount for the initial fee, or even a free initial charge.

To begin with, FTTH is potentially superior to ADSL in terms of access circuit capability, because the 1Gbps speed is already a reality for FTTH while even the latest ADSL technology is only capable of just over 20Mbps. In addition, FTTH has such advantages as a very long reach capability, equally high-speed upstream and downstream data rates and no concerns about the signal interference issue that ADSL would experience.

Two Scenerios in 2005

Will the ADSL championship continue, or will FTTH with superior capabilities reverse its position? Two scenarios are likely to happen by 2005.

One is that FTTH will be in its prime time in two years.

ADSL will see a halt in its progress due to the signal interference issue and degraded metal lines, and FTTH will be at its best in turn. One optical fiber cable with a 1Gbps speed can be branched off to several customers using a splitter, or distributed to an individual household in an apartment house via the VDSL technology, thus lowering the circuit cost per user down to about 2,000 yen a month. The circuit will then transport Internet data as well as voice, IP telephone and broadcasting data. A regional intranet will leverage 10Gbps optical fiber cables to connect offices and homes, or offices and administrative institutions, which will enable a specific area to use an optical capability on a pinpoint basis.

The other scenario will be that FTTH service areas will remain limited to selected cities only, and ADSL will retain its dominance.

The ADSL quad technology, which extends the downstream bandwidth four times, will increase the speed to almost 50Mbps for users residing close to the telephone exchange. It will also become possible for users living more than 10km away from the telephone exchange to enjoy ADSL service by powered-up output signal levels in the low-frequency band and the use of READSL and ReachDSL technologies at the same time. For those who use peer-to-peer communications or operate servers, the Extended Upstream technology will be provided, which will double the upstream bandwidth.

Also, a possibility exists that an ADSL3 specification will become available, which will be capable of performing at a high data rate regardless of transmission distances and immune to the signal interference problem as well. Thus, ADSL with speed and reach performance comparable to FTTH will survive.

(Yohei Ichijima, Staff Editor, Nikkei Communications)

http://neasia.nikkeibp.com/wcs/leaf?CID=onair/asabt/fw/239289