European FTTH: A matter of perception
by Stephen M. Hardy
The global optical communications industry will meet next month in Brussels for the annual European Conference on Optical Communications (ECOC). As our "Analyst Corner" this month indicates, 2007 was a banner year for fiber-optic technology in Europe, the Middle East, and Africa (EMEA). The region accounted for 36% of a global market that had its best year since 2001, the last year of the infamous bubble.
Granted, by the time ECOC rolls around, the EMEA market may have succumbed to global economic slowdown. However, it seems to me that attendees at ECOC should still be buoyed by the market's recent success. This may mean that while executives at component/subsystem houses were downright grumpy at OFC/NFOEC, their ECOC counterparts with a large pull-through from EMEA will be merely rueful. Still, there's a lot of good news to be found in the region for proponents of optical communications.
That includes fiber to the home and fiber to the building or multiple dwelling unit (FTTH/B). Those of you hoping to catch up with EMEA's FTTH/B market at ECOC will no doubt find conflicting opinions about how well the region is doing in this area. That's because it seems that every positive step comes with a caveat.
For example, of the 14 markets where FTTH/B technology enjoys greater than 1% penetration rates, half are in Europe. However, no market enjoys a greater than 7.5% percent penetration rate, and each of these markets is small compared to the U.S. and many countries in Asia. Meanwhile, competitive pressures have led incumbents such as France Telecom to announce FTTH/B roll-outs—yet the planned deployments pale in comparison to those of Verizon and NTT. BT has announced its own FTTH plans. But these look more like AT&T's greenfield-only approach and won't be implemented unless there is "a supportive and enduring regulatory environment."
In short, proponents will no doubt tell attendees that FTTH/B progress is being made, but not fast enough to suit them.
If you're coming to ECOC from the United States, you'll probably decide that a lot of what is going on in EMEA FTTH/B, particularly in Europe, reminds you of home. Most of the early FTTH deployments in Europe have come from utilities, rural carriers, and municipalities. Like a lot of the high-profile municipal deployments in the United States—particularly iProvo and UTOPIA—city-sponsored FTTH/B models tend to favor open access. And while Active Ethernet and EPON support many of these municipal and rural deployments, incumbents have preferred GPON technology.
However, a closer look will reveal some telling differences. In particular, whereas the Federal Communications Commission (FCC) cleared the decks for U.S. incumbents by ruling that they wouldn't have to share FTTH/B infrastructure, sentiment in EMEA, particularly in Europe, appears to be running in the opposite direction. I say "appears" because while we're discussing the European market as if it were a single entity, it of course comprises multiple countries, each of which has its own regulatory authority. France's regulator appears set on equal access for all competitors when it comes to FTTH/B; meanwhile, regulatory authorities in Germany gave their support to Deutsche Telekom when the European Commission pressured the carrier to open its lines to competitors. BT, as its demand for favorable conditions indicates, has now put pressure on the UK's regulators to play along or risk the impression that it will stand in the way of high-speed broadband reaching more of the nation's consumers.
The failure of European Commissioner Viviane Reding to push through her vision of a pan-European regulatory authority similar to the FCC means that, for now anyway, the regulatory climate for FTTH/B in Europe will remain checkered. Alternative plans to reform European Union telecom regulations are expected to be voted on in September. These involve the adoption of the concept of "functional separation," in which services are treated separately from the infrastructure on which they ride—to the point of forcing carriers to set up separate business units for each. The idea, proponents say, is to create a climate where the infrastructure business units don't have an economic incentive to discriminate against their wholesale customers, even if they compete against the business unit's services sibling.
Whether this plan goes through—and how the plan will be implemented in each country—is the biggest question mark that hangs over FTTH/B in EMEA. So, in the end, when you ask a local attendee at ECOC how FTTH/B is going in the region, how they feel about this plan may be the most influential factor coloring their perception.
Stephen M. Hardy
Editorial Director & Associate Publisher