As the FTTH Council Europe prepares to host its annual conference in Paris on February 27–28, France Telecom’s plans to begin massive commercial FTTH roll-outs nationwide in 2009 have raised the level of competition another notch in France, which in less than two years has become Europe’s most competitive FTTH market.
The first European incumbent to announce an FTTH strategy today faces competition from three major competitors—Neuf Cegetel, Free, and Numericable—and a growing number of municipal and regional government fibre network projects.
“In 2009, our residential market will be mature and our costs will decline because of better penetration rates, which will allow us to begin massive roll-outs,” said Yves Parfait, fibre to the home project manager, Orange (France Telecom), speaking at a conference organized late last year in Montpelier by the French consultancy IDATE.
“We are in a pre-roll-out phase,” said Parfait about Orange’s commercial FTTH network deployments this year in Bordeaux, Grenoble, Metz, Nantes, and Nice. By the end of 2008, France Telecom plans to have 1 million homes passed and 150,000 homes connected. At the end of 2007, according to the latest report by IDATE, there were 1.2 million FTTX subscribers in Europe and 3 million homes passed.
Since the launch of its first commercial trial in Paris in mid-2006, France Telecom has installed pilot GPON FTTH networks in Paris, the Hauts de Seine département, Lille, Lyon, Marseille, Poitier, and Toulouse.
“France Telecom’s commercial FTTH roll-out is the biggest news since the council’s 2007 conference in Barcelona,” said Joeri Van Bogart, president of the FTTH Council Europe.
Van Bogart said he was also encouraged by an increase in the number of deployments by utilities and municipal governments, which have until now driven the European FTTH markets, and some private initiative. He cited the Netherlands, where there has been a big increase in FTTH projects.
One of the largest such projects is being undertaken by Reggefiber, a developer of FTTH networks. In 2007, Reggefiber bought a regional fibre company called Eurofiber, which has operations in the Netherlands, Belgium, and Germany. Reggefiber is using the regional network to connect FTTH networks it began installing in 2007 in Almeer, Daventer, and Eindhoven. The company plans to build in other cities and to pass 150,000 homes per year.
All of this activity has contributed to a high level of optimism on the eve of this year’s FTTH Council Europe conference, which will carry the theme, “Crossing the Chasm to Mass Market Fibre.” Europe could start to approach this objective in 2009. But in the meantime, Richard Thomas, marketing director at Prysmian, and other industry observers say 2008 will be a transitional year. France Telecom will be ramping up while other incumbents will be testing the waters.
“Everything is moving in the right direction, but there are still a lot of small projects that are being developed by small companies,” Thomas said. “We are still waiting for the incumbents to jump in. But incumbents are closer than they were last year.”
Spain’s Telefónica and Telecom Italia have both launched more trials. In November 2007, Telefónica announced that it would launch trials involving 54,000 customers.
Telecom Italia began FTTB plus VDSL trials in Milan in 2007 and will launch trials in other cities in 2008, said Paolo dal Bono, Strategy–Technology–TLC Trend Analysis, Telecom Italia. Nationwide, he said 98% of lines would have ADSL/ADSL2+ capacity by the end of 2008. But Telecom Italia has not made a decision on whether to use FTTB plus VDSL as its long-term strategy.
“We will need to evaluate the access network,” dal Bono said. “We have not yet picked an FTTX technology. There are arguments for and against each one.”
Meanwhile, BT’s Openreach expects to launch in August a GPON trial at a new development in Ebbsfleet Valley, Kent. The company says it plans to offer an “up to” 100 Mbit/s downstream service among its offerings.
Many vendors and telecoms companies continue to worry about Europe’s uncertain regulatory situation. Regulatory issues between the European Commission and Germany caused tense moments last year between Brussels and Berlin, and a commission proposal to create a pan-European telecoms regulatory body has drawn criticism from France’s telecoms authority, ARCEP.
Roger Björk, sales development director, deep fibre access, Ericsson, said that without new legislation incumbents would not invest in fibre. He cited the example of Deustche Telekom, which has refused to invest further in FTTX if it is required to unbundle new fibre access networks.
However, in France strong competition and fears of losing market share have eclipsed France Telecom’s regulatory worries. The competition’s response to France Telecom’s FTTH plan has forced the incumbent to make a number of concessions to ARCEP in order to roll out its FTTH networks on schedule.
Notably, France Telecom has agreed to ARCEP’s demand to make fibre-optic infrastructure such as ducts available to competitors. The incumbent has also accepted ARCEP’s recommendation that only one fibre network should be installed in a building and that the operator that is selected to install the building network should lease the building fibre to other operators on a non-discriminatory basis.
On the technology side, competition has also taken the wind out of the GPON/point-to-point Ethernet debate. For Neuf Cegetel it’s whatever it takes to do the job.
“We use point-to-point Ethernet in dense urban areas where we dig to install networks and GPON in less dense areas when it does not have to dig,” says François Paulus, general manager, Very High Speed Broadband Division, Neuf Cegetel. “If we have to dig trenches the cost of putting in more fibre is not a lot, so we install larger cables.”
Paulus said Neuf Cegetel would spend €300 million to pass 1 million homes as part of its goal to capture 25% of the French market. To date, Neuf Cegetel has passed 110,000 homes in Paris and 40,000 in Pau. The company has 17,000 FTTH clients.
But Free (Groupe Iliad) for now is sticking with point-to-point Ethernet. The company plans to pass 4 million homes by the end of 2012.
Customer response to new broadband services will also affect FTTH roll-out rates. To date, the bulk of France’s FTTH deployments have been in and around Paris, which accounts for nearly 30% of the country’s economy. So despite the commitment of France Telecom and its competitors to FTTH, the speed of their national FTTH deployments will depend on customer response in 2008. New services will be needed to entice customers to pay for more bandwidth.
In Paris, FTTH operators have a two-fold task to sell their services. Before entering buildings they first must sign an agreement with building management companies called syndic in French. Greater metropolitan Paris has probably more than a thousand syndics. The syndics manage buildings which, in many cases, have multiple apartment owners. So selection of the FTTH operator who will cable a building depends on approval by the syndic and apartment owners. And once in a building, FTTH operators will have to sell their services. Free is only targeting buildings where it already has a 20% DSL penetration rate.
FTTH network builders will also face different construction challenges in the provinces. Construction costs will be higher in many provincial cities than in Paris. In Paris, alternative carriers use the city’s sewer system, which comprises tunnels and galleries to connect buildings with fibre; this eliminates the need for civil work and reduces installation costs. Only a few other cities in France have similar sewer systems that can be used for telecoms installations. So FTTH network builders will have to acquire rights-of-way and install their own infrastructure in most of France’s provincial towns and cities.
Another important issue will be building access. In 2008, ARCEP will issue recommendations for landlords and building managers on how to implement the sharing of their fibre connections.