Pyramid: Fiber a necessity for European telcos

SEPTEMBER 10, 2009 -- At the dawn of post-recession growth in Europe, it is time for large telcos to revise capex cuts and resume fiber rollout plans, according to a new report from Pyramid Research.

SEPTEMBER 10, 2009 -- At the dawn of post-recession growth in Europe, it is time for large telcos to revise capex cuts and resume fiber rollout plans, according to a new report from Pyramid Research.

Fiber Buildouts in Europe: A Competitive Necessity for Telcos examines the potential of fiber developments in Europe and the factors that increasingly push incumbents and other DSL operators toward fiber. It contains an analysis of the competitive technology and fiber developments in selected countries: the Netherlands, Romania, Russia, and Spain. The 16-page report also provides Pyramid Research's five-year forecast on FTTH and FTTB in the four selected markets and in Europe overall.

In the past year, competition in the broadband and multiplay markets has become extremely tough as operators have had to fight for customers' shrinking budgets, notes Bakhyt Weeks, analyst at Pyramid Research and author of the report. "Higher speeds and more extensive bundles were introduced, often for less money," Weeks says.

Looking to 2010 and beyond, as customers begin to loosen their budget strings, they will want higher speeds and more services. "As European economies start to show progress, fiber could shield telcos from mounting competition and provide opportunity for further growth," Weeks suggests. "Telcos are racing against cable companies -- and against time."

DSL has managed to gain the dominant position among broadband access technologies in some markets thanks to its historically vast network coverage; however, the pressure from other technologies is mounting. "In CEE, where DSL is growing simultaneously with other broadband technologies, the pressure is the strongest," comments Weeks. Incumbents are missing out on broadband coverage opportunities by focusing only on DSL-covered areas all across Europe. "DSL is struggling to compete with cable and particularly fiber in terms of capacity, which is becoming increasingly important especially in multiplay offerings while mobile broadband is also a threat in the up to 5-Mbps speed range," Weeks explains.

"Fiber would shield telcos from mobile broadband, as its speed provides it with a strong competitive advantage even against LTE," concludes Weeks. Mobile broadband is positioned as a substitute to basic DSL, and telcos are being increasingly pushed to provide higher speeds to differentiate their offers. "As mobile broadband speeds are expected to reach at least 100 Mbps, DSL will continue to lose ground," she says. "The only efficient way forward is, again, fiber."

Fiber Buildouts in Europe: A Competitive Necessity for Telcos is part of Pyramid Research's Europe Telecom Insider report series. This report is priced at $595.

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