Europe - FttH commitments to 2020

Telecom Investment Research Note

Synopsis

All European countries have national broadband strategies, though some are more ambitious than others in terms of scale, timeframe and the preferred mix of technologies. All will ultimately migrate to FttH, though the peculiarities of individual markets – given the state of competition, financial resources available and regulatory ambitions – mean that some countries will not achieve full fibre connectivity (FttH) for another 15 to 25 years. Interim measures include adopting technology upgrades for existing copper networks (HFC and DSL), as well as promoting hybrid VDSL/FttC solutions while relying on new developments in mobile technologies, particularly LTE, to fill the gaps in geographically uncommercial areas. Some of the major national providers such as BT and KPN have dispensed with FttC in favour of FttH as the preferred solution, having gamely trialled both solutions. In similar fashion, those countries which adopt the stepping stone approach will be pressed to expedite their national networks to FttH in coming years. This will be the result of a number of forces, including consumer demand for services requiring increasingly higher bandwidth (in truth, some of which may not yet be imagined), the demands placed on governments to develop IP-dependent services in the health, education, electricity and transport sectors, and the practical consideration a nation being the laggard in telecom infrastructure faces considerable disadvantages when attracting jobs and investment in the competitive international arena.

By 2020 fibre will be the standard access method across Europe, with ADSL2+ and VDSL having been transitory technologies in all but low-density areas where the cost benefits of hybrid xDSL/FttC will retain a stronger business case. Migrating to a national FttH infrastructure requires the astute alignment –to varying degrees – of sympathetic regulatory policies, operator investment based on customer demand and anticipated revenue, and financial support from local and regional governments. This report assesses these considerations in the European context.