FTTH in Europe: One year later

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2007 was the year that the phrase “fibre to the home” (FTTH) started to mean something in Europe. Before 2007, FTTH was viewed by many as a high-end technology aimed at the far-away future. Today, new network operators and incumbents across Europe have discovered FTTH as the way to provide the best communications services at the lowest cost to their end users.

How did FTTH in Europe make this sudden change from niche technology to a mature product? There are three answers to this question.

First, Europe has just seen a period of many successful FTTH pilot projects. Ranging from FastWeb in Italy to the smaller city networks of northern Sweden, visionary FTTH pilots have been deployed. Rather than just jump onto the fibre bandwagon following the example of Japan, the pilots in Europe have paved the way for real open fibre-based communication networks. A notable example is the Amsterdam city network, operated by BBned/Telecom Italia, that is open to a multitude of voice, Internet, and video providers. This openness attracts end users who benefit from the choice in service offerings.0801lwe Optical01

Second, the thirst for bandwidth in Europe is exceeding the 10 Mbit/s mark, and in many areas end users will not settle for less than 20 Mbit/s. Copper-based technologies such as VDSL and cable Internet can meet these speeds. However, when viewed in the long term, the costs involved in upgrading copper networks are higher than deploying new fibre. In 2007 Europe’s communication operators realised: It’s fibre or bust!

Third is the development of FTTH technology specially targeted for Europe. A number of important examples can be seen here. Special types of fibre cable and tubing have been developed to suit installation in buildings and streets, and even to burrow through gardens. The introduction of home gateway equipment with integrated fibre management has enabled quick and easy installation in the home (rather than outside installation as in the United States). Network management tools have simplified the process of provisioning gateways and central office equipment in Europe’s open networks.

Given the leap forward that FTTH has made in Europe during the past year, it is interesting to note that Europe hasn’t yet settled on the point-to-point versus PON question. Take the Paris deployments, for example. Incumbent operator France Telecom focuses on GPON. GPON fits France Telecom’s model of vertically integrated operator and service provider, and given the limitation of duct space in Paris, saves fibre installation cost. Alternative operator Free Telecom has opted for point-to-point, clearly with the goal to be able to offer more bandwidth per user than France Telecom. In the middle, Neuf Cegetel, the third-largest operator in Paris, deploys a mix of point-to-point and PON topologies, optimising its business case to the circumstances of the deployment.

How can this mixture of technologies be understood? At first sight it seems the incumbents tend towards PON-based networks, while the competitive carriers choose point-to-point Ethernet. However, one of Europe’s largest FTTH incumbent deployments is KPN’s Ethernet-based point-to-point network. In fact, KPN has announced a cooperation agreement with Reggefibre, a large FTTH initiative that already has more than 100,000 point-to-point FTTH connections in the Netherlands.

Why, then, would a European incumbent operator choose a point-to-point architecture while a Japanese or U.S. operator is inclined towards PON? The answer is competition!0801lwe Optical02

Europe’s broadband market has many operators and service providers competing for the same customers. Recent studies show that the world’s highest broadband penetration is in northern Europe, with Denmark, Finland, the Netherlands, and Sweden ranking highest. It is no coincidence that these are also the countries leading the FTTH roll-out in Europe. Where there is broadband, there is a thirst for more. Where there is a thirst for more broadband, there is competition among operators to provide the highest speeds. Where this competition is most fierce, FTTH is the way to offer the highest level of broadband at the best price. An interesting example is Slovenia, where CATV operators started with the roll-out of FTTH to offer a full triple play, and now the telecoms operators in turn are rolling out FTTH to compete.

To enable the highest level of broadband, Europe’s operators predominantly choose Ethernet-based point-to-point networks. Today’s 100 Mbit/s gateways simply provide more bandwidth to the user than the average 30 to 50 Mbit/s that the bandwidth-shared PONs are capable of. And, to end any doubts, point-to-point gateways are quickly heading for the gigabit per second mark, with such gateways expected to reach the market early this year. In short, point-to-point actually enables the one thing that FTTH is meant for: getting real bandwidth to the end user!

Europe’s communications operators are making their choices based on how they can attract end users to their networks. Besides bandwidth, initial investment and operating cost are the key factors. Point-to-point and PON networks both have their pros and cons here, and Europe’s operators are basing their decisions on which technology fits their business best, rather than being distracted by irrelevant issues.

As a side-step, it is insightful to mention such a “non-issue” in FTTH. GPON vendors tout their products are being “green.” Indeed, the power consumption of a GPON central office is less than that of an Ethernet point-to-point approach, saving some cost for the operator. However, at the other end of the line, the Ethernet point-to-point gateways are considerably more power efficient than the power-hungry GPON gateways, saving energy and cost for the end user. Taken together, both technologies are equally “green.” Let’s not waste time and energy on false comparisons. Rather, let’s make use of the momentum that FTTH has in Europe, and move into top gear for 2008.

Gerlas van den Hoven is managing director of Genexis B.V. (www.genexis.eu).

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