Competition spurs Portuguese FTTx initiatives

by Kurt Ruderman

FTTx projects are happening faster than expected in Portugal, where a high level of competition, government broadband goals, and an effective duct–sharing policy have helped set off a wave of deployments.

Portugal's communication companies could easily exceed the government's goal of 1 million FTTx subscribers by 2010. Sonaecom, a leading alternative carrier, began deploying FTTH networks early this year and says it will pass more than 1 million homes over the next three years. The aggressive rollout follows Sonaecom's attempt last year to acquire the country's incumbent Portugal Telecom (PT).

Another strong player is ZON Multimedia, a PT spinoff. Two cable companies recently acquired by ZON have passed more than 100,000 homes with FTTH. PT has not yet announced FTTH plans, but has told IDATE and other consulting firms that it expects to pass 1 million households by 2009. PT's FTTH project would require government approval.

The government announced the 1 million goal in July, and in August, opened a consultation that could lead to regulation for the cabling of apartment buildings. Currently there is no regulation for apartment buildings. Many buildings have multiple networks.

A decision on building cabling and access networks would add the clarity that investors need before making bigger deployments.

"The next 12 months will be a crucial period for FTTH in Portugal," says Carlos Barroqueiro, a Lisbon–based telecom consultant who has been working with Sonaecom. "Vertical networks are a big issue. We already have rules for sharing for horizontal network. This was done two years ago with the ORAC ruling by Anacom [Portugal's telecom regulator]."

The duct sharing regulation requires Portugal Telecom to share its metro ducts with competitors. This has helped communication companies like Sonaecom cut capital costs.

But increasing cable–television competition has become an important catalyst. "Pressure from cable–television competition is a big driver in Portugal," says IDATE analyst Roland Montagne. "When there is a lot of competition, there is FTTH."

The number of wireline and wireless broadband subscribers is increasing. Today, there are 1.5 million broadband subscribers in Portugal and 1.7 million mobile broadband subscribers. ZON alone has 2.8 million homes passed with a hybrid fiber/coax (HFC) network and 1 million CATV subscribers in Portugal's major cities. These networks have been upgraded to deliver broadband services.

In rural areas, the company serves another 500,000 subscribers with satellite. TVTEL, ZON's partly owned subsidiary, raised the stakes last year when it began building FTTH/FTTB networks.

In January 2008, Sonaecom announced a three–year, EUR240 million (~US$331 million) FTTH plan to pass 1 million households over the next three years. The deployment will cover 25% of the population. Sonaecom has connected subscribers in Lisbon and Porto. Today, on its traditional networks, the company has more than 800,000 wholesale and retail wireline subscribers and about 240,000 DSL subscribers.

Sonaecom, which is partly owned by France Telecom, is using GPON supplied by Huawei (www.huawei.com) and fiber–optic cable from Acome (www.acome.fr) of France for its initial deployments.

"GPON, in our opinion, is cheaper and the most future–proof technology," says Daniel de Queiroz Antunes, the head of Sonaecom FTTH project. "In Portugal, we have an offer to use the ducts of Portugal Telecom when they are available, but space in ducts is limited. GPON allows us to use thinner cables."

Speaking on the eve of the government consultation on the sharing of vertical networks, de Queiroz Antunes said Sonaecom would be willing to share its building networks.

In the meantime, Portuguese communications companies are playing a game of wait–and–see. ZON Multimedia will not likely announce any FTTH plans before the outcome of the government consultation and an announcement of FTTH plans by PT, says ZON's CTO, Manuel Sequeira.

Before the spinoff that created ZON, PT Multimedia had acquired 20% stakes in two regional cable–TV operators: Pluricanal and Bragatel. Pluricanal has a small FTTH pilot in a Lisbon suburb that passes 2,000 homes using GEPON equipment supplied by UTStarcom (www.utstarcom.com).

In January 2008, ZON raised the level competition in Portugal by taking a 20% stake in TVTEL, a cable–television operator that launched Portugal's first FTTH networks. In 2007, TVTEL, which has HFC networks in Porto that pass more than 200,000 homes, began building an FTTH network in Lisbon, using UTStarcom GEPON equipment. At the end of July 2008, TVTEL had passed 100,000 households.

Sequeira says TVTEL's future FTTH rollouts in Lisbon and other cities will depend partly on how fast ZON can buy up the remaining 80% of TVTEL. Because of government regulations, ZON cannot for the moment own more than 20% of Pluricanal, Bragatel, and TVTEL. Caixa BPI, a bank, owns the remaining share of TVTEL.

As for the FTTH plans of ZON's 100% owned operations, Sequeira says, "It will depend on the market and what our competitors do. In meantime we have a powerful HFC network. We can beat any DSL offer."

Kurt Rudernam is the European Editor for Lightwave Europe.

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