European operators are paying the price of years of delay in rolling out fiber access networks, with fast-growing competition from cable operators and utility companies.
Much of Europe is lagging seven years behind Asia and the US in FTTH and FTTB deployment, according to a new report from Arthur D Little.
Several of Europe’s incumbents plan to roll out fiber, but only to cover 5%-10% of households within two to three years – very low compared to the more than 50% of households passed in leading countries.
Already, 65% of European fiber connections been deployed by utility companies, alternative operators and housing associations, the report says.
Cable operators have also updated their networks to DOCSIS 3.0, allowing them to offer speeds of 50Mbps to 100Mbps to areas not covered by fiber.
As a result, they are capturing a very high share of net additions. In Germany, cable firms accounted for 50% of broadband net additions in 2009 within their footprints.
“Incumbent telecom operators have to react now to the double-squeeze from cable operators and from the deployments by utilities and alternative operators. If they do not act, they risk the erosion of their core business,” the report states.
Part of the reason for Europe's FTTH inertia is regulatory – European countries typically do not subsidize fiber rollouts, and regulators have not encouraged fiber investments. They also typically require carriers to open access to their networks to third parties, making deployments unattractive.
But facing down the pressures on their market shares, incumbent operators have begun to form partnerships with utilities, alternative operators and even each other to grow their fiber presence.
Swisscom, for example, has agreed to work with Swiss utility companies to rollout FTTH networks with wholesale rental capacity.
Deutsche Telecom is conducting a pilot fiber project with alternative network operator EWE Tel in Northern Germany, and has partnered with utility-owned M-Net to jointly roll out FTTH in Munich.
France Telecom will partner with arch-rival SFR to roll out fiber in two French cities.