InfoCom report reveals FTTH still looking for a strong business case in Europe.
InfoCom's latest study on FTTx deployments and business models reveals that high investments - and consequently associated CAPEX - for deploying a new infrastructure is one of the major deterrents for telecom carriers in Europe. Most of network operators are still busy upgrading their broadband network capabilities and expanding their nationwide coverage. A senior Analyst at InfoCom commented: "Telcos do not see yet a consumer demand for it in the mid-term; VDSL is still seen as a viable alternative to address current and midterm bandwidth demands and represents the investment priority in most incumbents' fibre strategy".
The study also revealed that although roll-outs privilege high density areas, FTTH is indeed not a "one-size-fits-all" model. While FTTH deployments favour metropolitan areas and business districts as well as new residential areas, in some countries, such as in the Netherlands, FTTH deployments are actually prevalent in mid-size cities rather than in major business areas. In other countries, such as Japan or the UK, aerial cabling is establishing as a cost-efficient alternative to street digging while in other countries - for instance France or the Netherlands - such a solution is prohibited for "aesthetic reasons".
The report points out 2 different business models adopted along the value chain. Integrated, facility-based models, where the same player, typically a telecom carrier, manages passive and active infrastructure as well as the service provision level. An evolution of this vertically integrated model sees especially new entrants - power utility companies, private equity-funded fibre optic companies - owning both the passive and active infrastructure, which partner with telcos and ISPs for the service provision level. A second business model is based on open access, where each layer of the value chain sees different players, active in one or more levels of the value chain, with different flavours of integration.
Regulation plays a decisive role in the type and scale of fibre roll-outs in many countries. In most European markets, access to the dark fibre as well as civil works are regulated in order to promote competition. In Germany, for instance, the incumbent Deutsche Telekom is obliged to keep its street cabinets and cable ducts open to allow altnets to offer competitive VDSL products. In France, the horizontal access (civil engineering) is regulated to open up France Telecom's ducts and lessen civil work costs. In markets, which are not or are less regulated, altnets are taking the lead in the fibre optic market, especially power utilities and city councils.
About this contribution:
InfoCom latest paper Trends in FTTx Deployments - Strategic overview of major fibre broadband markets, is one of the reports of the new Series FTTx 2010 - Telecom carriers' strategies, a new series of reports focused on specific topics all around FTTx. This paper presents key findings as of deployments, innovative services and carriers' business models with compelling examples in a worldwide perspective.
About InfoCom GmbH
InfoCom is a market research and consultancy company with over 20 years experience providing strategic analyses and planning assistance to stakeholders in the telecommunications, IT and multimedia industries. InfoCom's independent and fact-based analyses highlight trends and opportunities, supporting decision makers to understand market dynamics in order to improve their competitive advantage.