Just like its European contemporary, Portugal Telecom SGPS SA (NYSE: PT), Dutch incumbent KPN Telecom NV (NYSE: KPN) is looking to work through tough times in its domestic market with investments in next-generation broadband and entertainment service delivery technologies. (See Glimmers of Hope for PT.)

In its second-quarter earnings Tuesday, KPN stated that "the positive trend in FTTH [fiber-to-the-home] sales order intake continued," but that this wasn't yet reflected in the actual customer numbers "due to the time lag between order intake, fiber roll-out and activation." At the end of June, KPN had 61,000 activated FTTH homes and was offering packages with synchronous speeds of up to 30 Mbit/s, 50 Mbit/s and 100 Mbit/s. (See KPN Reports Q2.)

Despite momentum with the current offering, the carrier plans to roll out new FTTH capabilities in the near future, including, by the fourth quarter of this year, some of the fastest in the world: synchronous 500Mbit/s broadband speeds, with a view to upgrading further to 1 Gbit/s.

While building its IPTV customer base is one of the drivers behind its FTTH rollout, KPN, which commands about 40 percent of the Dutch fixed-broadband market, isn't just relying on fiber access to meet demand. It has been investing in VDSL upgrades at its local exchanges (having decided against a fiber-to-the-curb strategy) to deliver higher copper line speeds. It has already started using pair bonding techniques to take the potential VDSL line speed up to 100 Mbit/s and is looking at vectoring (for speeds up to 190 Mbit/s) and, like other EMEA carriers, so-called phantom DSL techniques (up to 300 Mbit/s). (See Telekom Austria Eyes Phantom DSL, Turk Telecom Checks Out AlcaLu's Phantom DSL, BBWF 2010: NSN Takes DSL to 825 Mbit/s, ASSIA Gets Behind DSL Management and Copper: Still a Precious Metal?)

KPN needs these greater speeds to deliver, with quality assurances, what it calls "new TV features" such as HDTV, uploading and multi-screen delivery. It has already started marketing multi-screen IPTV capabilities, supplying the requisite home networking technologies needed for such a service, and has plans to introduce a new IPTV interface in the fourth quarter of this year.

The increased focus on its IPTV service has clearly been paying off for KPN, which launched its service years ago but found it difficult to compete against its cable and other pay-TV rivals. (See KPN Sticks With IPTV for Its FTTx Future.)

Now, though, it's seeing much improved uptake, adding 56,000 new IPTV customers during the second quarter, taking its total IPTV subscriber base to 416,000, a vast improvement on the 193,000 of a year ago.

In total, KPN has 1.3 million TV customers (for IPTV plus its Digitenne satellite TV service), giving it a 16 percent share of the Dutch pay-TV market.

— Ray Le Maistre, International Managing Editor, Light Reading