Uneven Competition Enforcement is Slowing Funding of Fiber Networks, EU Official Says

There are “surprising new developments” in the latest global fiber deployment rankings, the Fiber-to-the-Home Council said at its Milan conference Thursday. Turkey made the list for the first time, and the United Arab Emirates popped up fourth in FTTH market penetration, ahead of all European and Americas economies, the council said. Russia is about to overtake the U.S. in fiber connection penetration, it said, but European deployment remains slow and patchy. European Commission Digital Agenda Commissioner Neelie Kroes blamed regulators, saying their uneven enforcement of next-generation access rules is hampering investment.

South Korea tops the list with the highest fiber-to-the-home/building penetration (nearly 55 percent), the FTTH Council said. It’s followed by Japan and, far behind at around 7.5 percent, the U.S., the council said. Russia is neck-and-neck with the U.S., followed by China (around 2.5 percent), France, Italy and Turkey, it said. The ranking includes 26 countries worldwide with at least 1 percent of households connected to FTTH for broadband.

There are almost 3.9 million FTTH subscribers in Europe, 8.1 million including Russia, an increase of 18 percent in six months, the council said. While Eastern European countries show some “dynamism,” Europe’s fiber pioneers are lagging, said FTTH Council Europe President Chris Holden. Large economies such as the U.K., Germany and Spain “have yet to show real progress,” and Europe has a “long way to go,” he said. In the U.S., there’s growing interest in upgrading to all-fiber networks to meet projected consumer demand for bandwidth, said FTTH Council North America President Daniel O'Connell.

The EU takes fiber’s role in providing access to superfast broadband seriously, Kroes said at the conference. “It is not possible to maximize access while failing on fiber.” While Europe’s broadband market is moving toward higher speeds because of fiber and cable, the rate of new connections isn’t enough to meet Europe’s 2020 targets, she said. Regulatory clarity is crucial, she said.

The EC next-generation access recommendation aims to maintain incentives for investment in new networks while ensuring they're open to alternative operators, Kroes said. This can be done by including a risk premium in the prices regulators set for third-party network access and giving companies a great deal of price flexibility when they deploy FTTH, she said. “Everybody should now play by the rules,” but some national telecom regulators don’t, she said. The EC has the power under the revised telecom package to investigate whether competition conditions are being imposed properly, she said. “This is not a warning but a request for deeper cooperation."

Several conditions must be in place if investment in high-speed broadband networks is to become a reality, said Luigi Gambardella, executive board chairman of the European Telecommunications Network Operators’ Association. The question of whether the current model of Internet development is sustainable in the long term must be resolved, he said. The exponential increase in data traffic means networks need constant upgrade and investment, but at the same time competition is making services available to customers at ever lower prices, he said. New business models are needed that improve incentives for all players in the value chain to contribute to meeting the investment challenge, he said.

Another necessity is to develop more proportionate and targeted regulation, which takes into account different levels of market competition in order to spur risky investment, Gambardella said. Some authorities do that, favoring commercial agreements between operators over enforcing strict access prices for fiber networks, he said. ETNO also opposes forcing regulators to set cost-based access tariffs, because a major factor influencing the investment decision is consumer demand and willingness to pay, he said. Not all users want the same broadband speeds and capacity, he said.