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FTTH Conference 2011 - News

NEWS: FTTH deployment must speed up, says EU Commissioner


There are now nearly 3.9 million FTTH subscribers in Europe (8.1 million including Russia), according to the latest update to the FTTH Rankings unveiled by the FTTH Council Europe at its annual conference in Milan.  Europe still lags behind other regions of the world in terms of FTTH penetration, however.  The industry must accelerate deployment if it is to meet EU broadband targets, said Neelie Kroes, vice-president of the European Commission responsible for the Digital Agenda.



Conference day two: 10th of February 2011



NEWS: FTTH deployment must speed up, says EU Commissioner


There are now nearly 3.9 million FTTH subscribers in Europe (8.1 million including Russia), according to the latest update to the FTTH Rankings unveiled by the FTTH Council Europe at its annual conference in Milan.  Europe still lags behind other regions of the world in terms of FTTH penetration, however.  The industry must accelerate deployment if it is to meet EU broadband targets, said Neelie Kroes, vice-president of the European Commission responsible for the Digital Agenda. 

“While the EU broadband market is moving towards higher speeds because of fibre and cable, time is against us,” she told delegates during her plenary speech.  “The current rate of new connections – now down to 25,000 a day – is simply not enough to meet our 2020 targets.”

Deployment of FTTH networks is not evenly distributed across Europe.  Lithuania tops the European Ranking with 22.6% household penetration followed by Sweden (13.6%) and Norway (13.6%), while Russia is the largest market in absolute numbers (4.18 million), with Sweden (600,000) second place and France (486,700) in third.  Some countries, notably Latvia, Portugal, Russia and Turkey are expanding FTTH coverage rapidly, while others like Germany, Spain and the UK, are lagging behind.

Regulation of next-generation access (NGA) networks also varies widely – something Commissioner Kroes is unhappy about.  “Whatever may be the variations in local conditions, I am afraid that these highly diverse national approaches [to regulation] will not contribute to a stable European approach to NGA roll-out and competition,” she said.

The Commission believes that appropriate regulation across Europe is important because it helps to create favourable conditions for investment in new networks and prevent the creation of new monopolies.  Regulation must also be consistent to promote the emergence of a single market for telecommunications.

A Recommendation on the regulated access to NGA networks was approved in 2010, which is a document that lays out the principles to guide regulators when setting regulatory policy for fibre networks – but some member states are deviating from the core principles of the Recommendation, says Kroes.  “These provisions strike a good balance between investment incentives and the need to protect competition. It took long and intense discussions with stakeholders to agree on these principles,” she said. “So in my view, everybody should now play by the rules.”

The Commission has powers through the new Article 7 procedure to open a second investigation into the consistent application of regulatory remedies, Kroes explained.  But she stressed that this was not a warning, but a request for deeper co-operation between operators, national regulators and the European Commission.  “Neither regulators nor operators can address our broadband challenges alone – we need each other.  For my part, while I drive a hard bargain, I am also your biggest supporter,” she concluded.



NEWS: Customer satisfaction is everything, says Altibox

Norwegian service provider Altibox runs what is arguably one of the most successful FTTH operations in Europe.  From an early start in 2002, the company now has around 200,000 customers with a penetration rate (subscribers compared to homes where service is available) of 65%, according to chief technology offer Tore Kristoffersen.

In addition, Altibox boasts average revenues per user of €100 per month, which is considered high in the industry. It is able to command these revenues by launching new services that bring in additional revenues streams; it does not simply rely on the standard triple-play offer of voice, data and TV.

The most recent product launched was a burglar alarm and monitoring solution.  Altibox is currently working on a range of new offerings, including remote healthcare and solutions that integrate with mobile devices to offload data onto the wired network.  “Wow there are a lot of new services you can launch on fibre,” said Kristoffersen.

The key, he says, is customer satisfaction; when the customer is happy they are willing to try new services.  Altibox attributes the high satisfaction levels on its network – it claims 75% – to the fact that the nework is built on fibre.

The first benefit of FTTH is that it is possible to make the network homogeneous, so that the customer experience is the same regardless of how many subscribers are on the network or the distance of the end-user from the central office.  “The technology needs to be invisible to the customer,” said Kristoffersen.

The second main advantage is bandwidth.  Plentiful bandwidth means the operator doesn’t need to spend a lot of money on compression, traffic management or error correction equipment.  In contrast when bandwidth is scarce and packets containing highly compressed data get lost, the customer becomes very unhappy.  

Underlying all of this is a simple, well-established network technology –point to point Ethernet – that allows the network to run with minimum downtime, and with a staff of just 90 to service 200,00 customers.



Conference day one: 9th of February 2011


NEWS: A new business model for FTTH in the Netherlands


How does an operator invest in FTTH in a crowded communications market where prices are low and most consumers already have access to more than one infrastructure supplier?  That’s the dilemma in the Netherlands, where cable TV networks cover around 90% of the population.  Managers of the Rabo Bouwfonds Communication Infrastructure Fund (CIF) think they have found a solution.

In late 2010, CIF attracted several pension funds as new institutional investors, and now plans to invest more than €750m in telecoms infrastructure in the Netherlands.  CIF is backed by Dutch investment back Rabobank and managed by real-estate investment company Bouwfonds.

The fund managers view infrastructure as a long-term investment with stable cash flows; and their horizon aligns with that of the pension funds, which are looking for long-term growth.  “We need to remove the ‘casino economics’ that Carlota Perez talked about in her keynote speech,” said Joost Goderie, the fund managing director. “We are looking to invest in asset classes that do not have high volatility.”

Rolling out a third infrastructure does not make sense; instead, the strategy is to provide an upgrade path for existing infrastructure.  Laying fibre alongside an existing network will enable the timely migration of customers onto the new infrastructure, and thus “de-risks the assets”, according to Goderie.

To make the business model work, there are two important features.  First, the network must be structurally separated; CIF isn’t really interested in the more unpredictable services market with its shorter investment cycles. Second, there must be a long-term lease agreement to give network operators the certainty they need to make their own investment in the network.

Last year, the Fund purchased its first hybrid-fibre coax (HFC) network serving 155,000 households, split the service provider from the infrastructure ownership, and is now in the process of laying two strands of fibre to each customer premises alongside the coaxial cable. 

Two strands of fibre will allow two operators to connect to the network – this number was chosen because history has shown that operators can only make a profit if they have at least 35% of the market.  Many more service providers can be supported at the wholesale level, however, which will guarantee competitive service offerings for consumers.

It’s still early days for the fund, which plans to expand by purchasing more HFC networks. “Our biggest challenge is to persuade existing network owners to give us access, but it is doable,” Goderie said.



NEWS: Could FTTH be the foundation of a new ‘Golden Age’?


The FTTH Council Europe is a firm believer that fibre to the home will is an enabler for social, environmental and economic prosperity.  But they don’t expect you to take their word for it.  They invited respected socio-economic expert, Professor Carlota Perez, to explain from a big picture perspective how the goals of the Council align with a possible future “golden age” based on sustainable development.

Prof. Perez is an international authority on the socio-economic aspects of technological change.  Author of the book, Technological Revolutions and Financial Capital: the Dynamics of Bubbles and Golden Ages, she has analysed the dynamics of technology markets, and observes that technological revolutions always pass through a necessary but painful financial boom and bust before settling down into a calmer, more prosperous period – the golden age.

There have been five technological revolutions to date, she says.  The first brought canals, which were the internet of their age; the second was the age of coal, steam and railways; the third was based on steel, heavy engineering and steamship transport; and the fourth was all about cheap fuel, with ubiquitous electricity and the development of road networks and air travel.  We are already in the middle of the fifth revolution based on information and communications technology (ICT).

Each technological revolution creates new infrastructure that transforms the production and consumption of goods and services, and this in turn generates a quantum leap in productivity and wealth. The new infrastructure of the current revolution is, of course, the internet.

“We know that the propagation of digital networks is at the root of major changes of our time,” said Perez. “It has made the knowledge society possible.  Isolated computers would not have taken us very far; it is precisely because they are connected that they have become so powerful.  The internet has accelerated innovation and its diffusion.”

The ICT revolution could be as significant as the emergence of the American way of life, she says, when energy-scarce living was replaced with a lifestyle based around energy-intensive homes, with central heating, chilled food, electronic gadgets to do the housework, and a car standing on every driveway.

This time the revolution is all about cheap information, with a move away from physical, disposable products to a preference for services and intangible value. The spread of the knowledge society is also intrinsically linked with the “green” agenda in as much as it is a shift to intangibles, it allows us to reduce and avoid transport, and it supports diversity.

But will this shift necessarily occur? History tells us that technological revolutions always come in two parts, Perez explained.  The first half is characterised by what she calls the “casino market”.  Credit must be created through short-term capital gains – that’s how money pours into long-term investments like infrastructure.  But this is an unstable situation.

In order for the golden age to happen, the market needs to become more stable, so that industry can move into a phase of productivity and growth, and wealth can be spread around more evenly – without this there will not be a large enough buyers for new products.  But the market shift does not happen automatically; in fact old industries sometimes fight it tooth and nail. “Last time it took 13 years and a major war before the American way of life could really begin,” Perez observed.

The turning point of the ICT revolution has now been reached, she says.  It was prolonged in the 1990s by the existence of cheap oil and cheap Asian labour which stretched out the old production and consumption patterns, but neither of these conditions is going to continue to hold.

The shift, when it eventually takes place, is enabled by public policy and regulation to shape and broaden markets.  The welfare state is an example of past policy success, because it allowed people to keep up their repayments on their houses and cars even when they were out of work. In the current context, the best way to encourage the shift is to make high-speed universal access as universal as electricity, Perez contends.

To return to the original question, will the internet – built on a foundation of high-speed internet access – usher in a new golden age of sustainable development? “Betting on the future is a risky business, but history can be a powerful guide,” she concluded.



NEWS: Not why fibre, but how fibre?


The last year has seen some important developments in the FTTH scene in Europe, said Chris Holden, President of the FTTH Council Europe, in his opening speech at the FTTH Conference in Milan.
The first, of course, is the publication of the Digital Agenda, which sets ambitious targets of 100Mbps connectivity for 50% of Europe’s citizens and 30Mbps for everyone. Now that the Digital Agenda has been released, it is up to individual countries what measures they take to achieve the objectives. 
Explicit in the Digital Agenda is a recognition that fibre is the ideal technology to meet this bandwidth demand, Holden claimed. FTTH is firmly in the forefront of people’s minds when they think about internet connectivity.
This policy goal has helped contribute subtle but fundamental shift in the questions that the FTTH Council Europe is being asked by people with an interest in fibre to the home, said Holden. The question is not simply “why fibre,” but “how fibre?”
But Holden warned that we should not underestimate the difficulties in fulfilling the targets of the Digital Agenda. “Our networks are at a crossroads,” he said. "We can go in several different directions but only fibre guarantees the infrastructure of the future. The other directions could lead to stranded investment or worse still, there may be no funding available in the future, and we could end up in a situation where we continue to have haves and have-nots.”
Wireless networks are not a separate technology path, Holden claims. The Council believes that wired and wireless networks go hand in hand. A future without mobile is unthinkable, but that future also depends on fibre to connect high capacity base stations.



NEWS: Ministry outlines Italian broadband vision


At the opening presentation of the FTTH Conference this morning, Dr. Roberto Sambuco of the Italian Ministry of Economic Development described Italy’s ambitions for the information and communications technology industry.
“I am convinced that the future for communications will be different. There will no longer be a distinction between the on-line and the off-line worlds. We will be always on and the access will be automatic and involuntary. The simple act of being born will signify getting on to the internet.”
But is this more than just a visionary statement? “The future is closer than you think,” Sambuco claimed. The Italian government is putting its legislative might and financial backing behind a plan to remove network bottlenecks and accelerate FTTH deployment across the country.
Next-generation infrastructure is a government priority that requires action and cannot be left to market forces, Sambuco added. Governments that don’t act now could really damage the economic competitiveness of their country; and the longer they delay the harder it will be to close the gap.
Set against this national imperative and ambition, however, is the fact that it is not possible to spend public money easily and certainly not to waste it. The proposed solution – the middle ground – is that the government should act as a temporary entrepreneur, replacing the market for a short period of time.
The vehicle for this is a public-private partnership to build out the passive communications infrastructure across Italy. Within 10 years the state plans to withdraw from the company and leave the infrastructure to the market.
Accordingly, in November 2010 Paolo Romani, the Minister of Economic Development, signed a memorandum of understanding with 20 telecommunications operators in Italy. A group of operators, including FastWeb, Vodafone Italy and Wind, have already build a pilot network in a neighbourhood of Rome, which will inform the technical and business decisions for future deployments.
“We wait with great interest to see if this is a model that could be followed elsewhere in Europe,” commented Chris Holden, President of the FTTH Council Europe.



NEWS: FTTH Global Ranking presentation


Find here the presentation of the FTTH Global Ranking, presented on February 9th 2011 at the FTTH Conference in Milan.