FTTH Council Looks to Spur Fiber in Europe

MUNICH -- Industry and regulators are grappling with the slow uptake of fiber-to-the-home networks in major Western European countries. Countries like Germany and the U.K. don’t even figure in the recent statistics of the Fibre to the Home (FTTH) Council Europe, the Council warned at its meeting this week.

Both countries have less than 1 percent of FTTH users -- FTTH growth rates in Europe are mainly generated by Russia, Scandinavia and some East European countries. The 27 EU member states only have 4.5 million FTTH/FTTB (fiber to the building) subscribers, compared to a combined 5.1 million in Russia, Ukraine, Kazakhstan and Belarus. The U.S. and Canada have 9.7 million, and Asia has 74 million subscribers. But Reinald Krueger, head of unit in the EC Directorate General-Information Society said: “I am absolutely optimistic that we will meet the deadline for the Digital Agenda targets. We have eight long years ahead of us.”

The declared goal is to have 30 Mbps data rates for every citizen in the European Union, with a half of the households using 100 Mbps or faster lines, using a mix of fiber and cable networks. But an FTTH outlook study downgraded the 2016 forecasts for many European countries, with several only reaching 20 percent of FTTH/FTTB penetration after 2020.

Krueger said EC saw no need to change the goal, but underlined the need for regulatory stability. The Commission is internally discussing two new regulations, one on local loop prices, and the second on how member states have implemented non-discriminatory network access for third parties.

The local loop price in Munich is twice that in Vienna, Krueger said. National differences can’t be the reason, he said. After analyzing answers to a recent consultation, by the end of the year the EC expects a new regulation.

Some countries have very clear rules on network access, but others don’t, Krueger said, and the instrument of functional separation should be defined in more detail.

While the European Competitive Telecommunication Association (ECTA) welcomed the Commissions stepping up to the plate on price regulation, Ilsa Godlovitch, director of ECTA’s Brussels office, said lowering the prices for the copper access would not only not help investment in fiber, it would keep the competing operators on the old cheap lines, she said. Luigi Gambardella, ETNO executive board chairman, said capped copper access prices would make large operators even more hesitant to make big investments in fiber roll-out projects. A study commissioned by the FTTH Council Europe speaks of a clear incumbent gap in fiber projects in Europe -- only Portugal Telecom has been investing in FTTH roll-out.

Godlovitch adamantly warned against what she called a “game incumbents are playing” by announcing roll-outs exactly in regions where competitors were investing in their own infrastructure. But Gambardella called for a hands-off approach for FTTH networks and “freedom of pricing.” Incumbent operators like British Telecom and Deutsche Telekom have been accused of a “fiber to the press release” strategy for some time, describing roll-out announcements that first drive other investors away, but are not followed-up by real projects.

Deutsche Telekom has clearly downsized their roll-out strategy. Andreas Lischka, DT head of program management, said the company had adapted its policy to a “sell first and build then” strategy. Only if 80 percent of house owners agree to be connected to the fiber network and 10 percent of the residential customers enter pre-contracts, would DT build the fiber infrastructure in a city, Lischka said.

Ideas about what regulators should do differ considerably over Europe. While Matthew Braovac, head of public policy for fixed services at Vodafone Group, backed a co-investment strategy, Gabrielle Gauthey, executive vice president-global government and public affairs of Alcatel-Lucent, said “regulation is not the only policy tool."

Cisco Vice President-Government Affairs Robert Pepper said: “Public authorities must not write the check, but rather should help that access to facilities in the cities should not get higher for FTTH operators, but lower.” Pepper supported market-driven deployment but acknowledged that investors could be wrong. When Verizon rolled out its FTTH network and AT&T its more conservative fiber to the curb net, investors punished Verizon for an unnecessary deployment. But today investors think Verizon made a smart move.