Fastweb adds broadband mobile services to FTTH

by Kurt Ruderman

When Europe�s top manufacturers and communications companies met to discuss the future of FTTH early this year in Paris, Fastweb, the industry�s star FTTH player, was absent. The Italian broadband leader was preparing a mobile broadband service launch.

�Fastweb has not dropped its FTTH strategy,� explains Mario Mella, CTO, Fastweb. �The mobile offering will be an extension of our broadband services. We want to be a 360° operator for our customers. It�s a complementary service for outside the home or office. The mobile offer does not replace fixed broadband. We just want to add the fourth leg in broadband.�

In July 2008, Fastweb will become a mobile virtual network operator (MVNO) and launch the service under an agreement with 3Italia, which is part of the Hutchinson Whampoa Group. The 3G service will offer symmetric 8 Mbit/s connections for laptops.

Fastweb remains Europe�s top FTTH player. At year end 2007, Fastweb had more than 2 million homes passed with FTTH. These homes represent 10% of Italy�s population. Fastweb had 1.3 million broadband customers at the end of 2007, compared to 874,000 subscribers a year earlier. Some 300,000 were connected with FTTH networks and the remaining 1 million with ADSL2+ and ADSL.

Some 84% customers are residential and the rest are business customers. However, 60% of Fastweb�s revenue comes from business customers.

Today, Fastweb�s networks cover 160 cities, which account for 50% of Italy�s population. For the rest of the population, the company uses bitstream offers from Telecom Italia.

Since its start, Fastweb has taken a very pragmatic approach, said Mella, explaining the company�s use of FTTH, DSL, and bitstream. �When we began in 2000 our strategy was to build new infrastructure. The only way to do it at the time was to use FTTH,� he says. �There was no unbundling� DSL was not an option. By 2002, we passed 1.5 million households with FTTH. We started DSL in 2001 with no video. In 2003, we launched video [multicast] over DSL. In 2003, Fastweb moved to DSL. We continued to deploy FTTH but mainly to business customers where there is a higher ARPU.

�Until now DSL has made good sense economically and from a technology standpoint,� Mella continues. �In Italy, loop lengths are short�1.2 km from the central office and unbundled copper lines [from Telecom Italia] are cheap compared to rest of Europe. Fastweb used ADSL until 2005 when it switched to ADSL2+.�

Fastweb has no plans to deploy VDSL. Mella says VDSL is a good option if fibre is installed deeper in the network. But in Italy, there is no advantage where copper loop lengths are short. Fastweb is using SHDSL (with 2, 4, and 8 Mbit/s offerings).

Fastweb offers 100 Mbit/s (or higher) connections to business customers. But the company does not yet see a need in the near future for 100 Mbit/s residential service packages. �We can do it but do not see the need right now,� Mella says. �Today, I don�t believe people will pay one more euro for bandwidth. People want content. The only reason for more bandwidth would be to deliver parallel video streams for multiple set-top boxes. But Fastweb uses network-centric recording equipment [network-based VCR], which eliminates the need. This allows customers to record programs in parallel.�

Fastweb�s ADSL2+ offer is a 20 Mbit/s connection and its basic fibre package is a 10 Mbit/s symmetric connection.

Asked to compare his market to the French FTTH market, Mella says that the situation in France is different than in Italy. �There are a huge number of broadband customers on DSL in France. There is a lot of competition. The market is very mature. Fibre is the natural evolution,� he offers. �FTTH announcements by Free and other alternative carriers are in response to France Telecom�s FTTH plans. The French market is being saturated with DSL. Italy has not yet reached this level.

�Here in Italy, Fastweb is not fighting on price. We are targeting quality of service. The ARPU in France is �350 for residential customers. For Fastweb it is more than double. We are targeting the very highest level of the customer base.�

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