Europe’s lagging FTTH market a hot topic at ECOC
Fiber to the home was the topic of discussion at this year’s European Conference on Optical Communications (ECOC), held in Cannes, France, from September 24-28, in part because of an announcement made two weeks earlier by French alternative provider Free, which has pledged to invest €1 billion to pass 4 million homes in Paris through 2012. The incumbent France Telecom also has publicly acknowledged its preference for FTTH and began a GPON trial-also in Paris-in June. These projects could result in the kind of competitive environment Europe has been lacking in its drive toward FTTH. But while most conference attendees agreed that competition is a critical first step, many wondered whether Free’s announcement will prove to be the catalyst Europe needs to accelerate its FTTH adoption.
In his keynote address, “Why a Competitive Europe Needs FTTH,” FTTH Council Europe (www.europeftthcouncil.com) president Hartwig Tauber urged Europeans to adopt a new attitude about FTTH. Part of the problem is social, he said, noting that Europeans, in general, lack the passion that is spurring FTTH growth in the United States and Japan. “The European mentality is, ‘Do we need it?’” he explained. For Tauber and the FTTH Council Europe, the answer is a resounding “yes.”
Europe currently has 650,000 FTTH subscribers, a whopping 80% of which reside in just three countries-Italy, Sweden, and Denmark-resulting in what he called “an alarming digital divide.” To accelerate FTTH deployment, he argued, Europe needs to create a vision for real broadband; set up a clear regulatory framework; adopt clear guidelines for how state aid rules apply to publicly funded broadband infrastructure; and support the development of new services.
“For us, fiber is not just broadband,” he maintained. “It is the utility of the 21st century to enhance our quality of life.”
Tauber wasn’t the only ECOC presenter concerned about Europe’s broadband future. In his presentation, “FTTH: When, Where, Why, and How Much?” delivered during the Optical Network Europe (ONE’06) conference held in parallel with ECOC, FTTH Council Europe founding member Rami Houbby stressed Europe’s lack of FTTH activity relative to other regions. By 2009, Europe still will have fewer subscribers than Japan had last year, he noted.
Fellow ONE’06 presenter Roy Rubenstein, contributing editor of FibreSystems Europe, offered an even more telling statistic. In the last three months, Verizon alone passed the same number of homes that will be passed in all of Europe this year-or the same number of homes Japan currently passes in just two weeks.
So why is Europe lagging? First and foremost, regulatory uncertainty presents a formidable obstacle to FTTH deployment in Europe, precluding carriers from making large investments in FTTH, Rubenstein explained. He argued that the incumbents will continue to hold back from making those investments as long as FTTH remains part of the unbundling framework. While the EU is set to address the regulatory issue by year-end, Rubenstein believes those discussions will continue through 2007. “And even with regulation solved by 2007, services and competition shortfalls will remain,” he cautioned.
A lack of competition in the access has proven to be another big barrier to FTTH deployment in Europe. For example, where there is strong competition from the cable companies, such as in Belgium, the Netherlands, and Austria, there tends to be a greater penetration of FTTH, reported Roland Montagne, head of the broadband practice at IDATE (www.idate.org). By contrast, there is little competition among the telcos and cable companies in France and Germany, and no competition in Italy and Greece, he said.
FTTH Council Europe’s Houbby also cited an interim reliance on lower cost fiber-to-the-node/curb (FTTN/C) implementations, which he believes is delaying the deployment of FTTH. The residential market today may be satisfied with the downstream rates supported by ADSL2+, but emerging applications, including high-definition TV (HDTV), video-on-demand, online gaming, e-commerce and e-learning, and blogs and other personal content exchanges will exhaust the available bandwidth-both downstream and upstream, he said.
On the flip side, there are those who believe that Europe isn’t lagging as far behind as the FTTH Council Europe would suggest. As of mid-2006, for example, Deutsche Telekom had covered 2.9 million homes in 10 major German cities with a combination of FTTN and VDSL2. Swisscom, Belgacom, and KPN also are investing in FTTN and VDSL initiatives.
While the FTTH Council Europe would argue that FTTN is not FTTH, others, like Gerlas van den Hoven, director of FTTH equipment supplier Genexis (www.genexis.nl), wonder if this distinction misrepresents Europe’s broadband landscape. “The U.S. looks faster because they call everything FTTX,” he said. “It’s all in how you market it.”
For his part, van den Hoven believes Europe may be moving slowly, but it is at least on the right track. “People are installing fiber in Europe because it makes business sense,” he said, noting that Japan is deploying fiber because the government is putting money into it, and the U.S. is deploying fiber because competition is forcing it.
Both Vienna and Amsterdam have embarked on large-scale, citywide FTTH projects-scheduled to pass 950,000 and 450,000 homes, respectively-but it is Paris that had everyone at ECOC talking.
Alternative provider Free has already begun migrating its existing ADSL2+ subscribers to an Ethernet point-to-point-based FTTH network and will begin offering service to customers in Paris and its suburbs early next year. To entice existing subscribers to make the switch, Free will offer FTTH-based services at the same monthly price as its current DSL offering, €29.99 per month. Because Free has pledged to make its network available to any provider who wants to offer services, it does not face the same regulatory restrictions as the incumbent provider, France Telecom.
In his keynote address to ECOC attendees, Dominique Hagerman, vice president of products and projects implementation at France Telecom, did not address Free’s recent announcement. Instead, he stressed that carriers like France Telecom need to be prudent about when and how to make such a large capital and operational expenditure, investing only when there is sufficient demand. “You need to prove the business model first,” he asserted before admitting that some services in the future will justify the deployment of fiber, namely video. He also noted that the upstream limitations of ADSL2+-at a mere 1.3 Mbits/sec-create the real bottleneck. Uploading photos, in particular, is “painfully slow,” he lamented.
While France Telecom will continue to deliver services over ADSL2+ in the near term, it has begun investigating higher-bandwidth technologies. Hagerman reported that his organization considered following in Deutsche Telekom’s footsteps with a VDSL to the cabinet approach but ultimately rejected that architecture in favor of GPON, which will provide the high-speed access that France’s sophisticated consumers are demanding.
“GPON fully complies with what we want to offer our customers,” he explained, including 10-Mbit/sec high-speed Internet access, three HDTV channels, and voice and mobile voice services.
At the FTTH Conference held in Las Vegas the week after ECOC, Gilles Coullon, CTO of France Telecom’s Broadband Access Network, Network Carriers, and IT Division, shared more about the carrier’s GPON pilot project, which began last June, “just in time for the Soccer World Cup,” he said. By the end of the year, France Telecom should have 1,000 FTTH subscribers, who will receive unlimited Internet access and voice-over-IP services, plus two channels of HDTV (simultaneously), for €70 per month. Coullon reported that the carrier will launch a similar trial in Slovakia by the end of the year.
For its part, the FTTH Council Europe believes that this competitive activity represents a positive step for the future of broadband deployment in France. However, cautions Houbby, “Until we have a number of Frees across Europe, we will continue to lack competitive pressure.”