Cable-TV fiber deployment in Europe moves timidly toward the next century
Although cable TV might not yet be a major driver of fiber deployment in Europe, the time appears ripe for manufacturers to be positioning themselves.
The situation varies considerably among countries, however. Deregulation laws for the telecommunications companies and multimedia/interactive services could eventually account for increases in fiber deployment. These are potentially pro-cable laws on a European level.
Except in the United Kingdom--where early deregulation drove fiber deployment--and according to figures from Siecor GmbH in Neustadt/Coburg, Germany--where cable TV accounts for as much as 40% of all fiber deployment-- most of Europe is still in the trial phase. The trials for interactive multimedia services are widespread, however. Although cable-TV operators still long for the right to carry telephony services, they and their telecommunications counterparts are poised to position themselves for future services.
Many European analysts are not optimistic about the designation of cable TV as a fiber driver--at least in the near future. Jeremy Ledger, research analyst at Dataquest`s local loop/broadband European telecommunications grou¥in High Wycombe, Bucks, England, points out a major difference between U.S. and European network plans.
In the United States, the regional Bell operating companies are concentrating on building hybrid fiber/coaxial-cable networks. This networking is not happening in Europe, except for the United Kingdom (see "British cable-TV operators resist the installation of fiber to the home," page 16), according to Ledger. Although trials for video-on-demand and other interactive services are underway, no company knows what the customer demand will be, or the best way to implement systems to satisfy these demands.
Dataquest`s 1992 fiber-in-the-loo¥figures indicate cable TV accounted for less than 10% of the total market of more than $50 million. But big increases took place during the last few years. Fiber-loo¥growth tripled during 1993 and expanded by approximately 35% in 1994. Proportionally, however, cable TV did not get a bigger piece of the pie. On the down side, Dataquest figures indicate the fiber-in-the-loo¥market will fall by 50% next year, and it is not expected to reach current levels again until the turn of the century.
Penetration rates vary
Looking around continental Europe, Ledger notes that while the Netherlands has cable-TV penetration close to 90%, this success is based on old technology, driven originally by a law that prohibits aerial antennas on rooftops. Growth in Germany generally results from its Optical Access Line project`s drive to upgrade telephony in the eastern sector. But because the eastern part of the country is substantially less affluent than its western counterpart, penetration rates there should be slow.
In France, cable-TV growth is high, but the network is relatively small in size (only 1.6 million subscribers in 1994). In Spain, Italy, Portugal and Greece, cable TV is almost nonexistent. In Scandinavia, cable-TV networks are primarily coaxial-cable based.
Simon Norris, consultant with Analysys in Cambridge, England, agrees. Cable TV is not driving fiber deployment because the potential revenues per household are lower than for telephony. The problem is that cable operators need to attract users by integrating as many services as possible, which potentially demands substantial investment in bandwidth.
Legislation in almost all European countries except the United Kingdom, however, prohibit cable operators from providing telephony--the major way they could accumulate the investment needed for other services. The telephone companies take the opposite stance; although some are future-proofing services with hybrid fiber networks, many are not legally able to provide cable-TV services.
Norris also sees potential competition from the satellite market with their upgrading to digital broadcasting. Al though it is an inexpensive solution, the satellite potential for services is limited. Norris estimates that by 2004, the annual revenues for interactive multimedia services will reach $32.5 billion to $39 billion for the 12 original European states. Of this amount, network operators will receive approximately $6 billion--not impressive when compared to current telephony revenues of $110.5 billion.
"It is not that the opportunity is small," Norris adds, "but it is long term. [Cable operators] are looking at 15 to 20 years before [they] see revenues comparable to telephony [including mobile]. Cable TV has a lot of bandwidth available that is not generating much revenue. That ga¥needs to be filled."
An additional problem for the current state of fiber deployment in Europe, as pointed out by Hans-Peter Reibnitz, general manager at Siecor, is that standards vary considerably from country to country. He states, "All the cable users in Europe usually have individual specifications for cable design and optical fiber. Everyone requires approval for such material. For many suppliers, approval is not easy to get. In many cases, it is impossible to get even if a network operator has approved the number of fiber suppliers required. This situation, together with small regional markets, large numbers of end users, and numerous cable and fiber manufacturers, indicates that Europe is a complex and difficult market." He notes, however, that work done by such standards organizations as the European Telecommunications Standards Institute and the European Committee for Electrotechnical Standardization has moved the European Union toward the elimination of national standards; and this should hel¥deployment.
Reibnit¥is not too gloomy about the cable-TV market, however. "Cable TV is an emerging new market sector in Europe," he claims, "and compensates for some of the market dynamics that we lost at the postal, telegraph and telephone organizations. Their networks are fiber to a great extent."
Some new cable-TV territory may soon be conquered in Italy. Multimedia trials scheduled to begin shortly will veer away from the originally planned asymmetric digital subscriber line copper solution in favor of fiber. As bidding is underway, Telecom Italia in Rome is not saying much, but transmission specialist Paolo Lazzaro confirmed the company was looking at hybrid fiber networks. He explains that while the company is widely deploying fiber for telephony, two factors are currently preventing the spread of cable TV. First, the law effectively prohibits it. Although the law was originally scheduled to be lifted next month, the change has now been postponed until the end of 1996. Second, the concerned companies are waiting for a stable government.
In Germany, Helmut Feilhauer, manager of product planning and broadband communications at ANT Nachrichtentechnik in Stuttgart, a subsidiary of Bosch Telecom, is bullish on cable TV. His company is an important player in the Optical Access Line project, which is running fiber throughout the former East Germany. Deutsche Telekom in Bonn will test the company`s Diamant systems in Frankfurt and Mannheim. The system is designed to feed digital channels to the headends via existing synchronous digital hierarchy rings, he explains.
Bosch is also participating in the Multimedia Baden-Wurttemberg project, which will involve 4000 cable-TV subscribers in Germany`s biggest pilot undertaking. "These trials should determine how much fiber-optic cable is going to be used in the future," Feilhauer explains. He says the size of the trials will enable the company to determine whether customers want new multimedia services. q
Adele Hars writes from Paris.