Only incumbent European operators with their extensive infrastructure and customer bases could profitably roll out high speed fibre to the home (FTTH). This is according to a study carried out by WIK, commissioned by the European Competitive Telecommunications Association (ECTA).
The research covers six major European countries (Germany, France, Spain, Italy, Portugal, Sweden) and combined with other governmental studies, show that it is financially far more viable for incumbents to roll out fibre networks than it is for small and entrant operators to do so.
The research found that incumbents can save up to 30% of the necessary investment because they own ducts nationwide, unlike newer market entrants.
They can also make big efficiency savings compared to their existing network structure and have enough subscribers to pay for the switch to FTTH. Again, these are advantages not enjoyed by alternative suppliers.
In some countries the return on capital was estimated at 10%, similar to today's regulated copper access networks.
ECTA is calling for mandatory access to fibre networks to be included under the European Framework for Communications just like the unbundling of copper networks were.
The question is why this was not considered by regulators a great deal sooner, both at European Union and national levels. It's sobering that after some two decades of regulation to liberalise Europe's telecoms, largely through the fostering of competition, that the odds are still so heavily tipped in favour of incumbents.
And even better, from the incumbent's point of view, another option under consideration by a number of countries is to provide public funding of fibre roll-outs. They include Singapore, Australia, Sweden and Greece.
So not only do the incumbent retain the upper hand, they also get the tax payer to shore up their dominant position.