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FTTH Fever Hits Europe

Ray Le Maistre
2/23/2010

Many of the key fiber access players from the EMEA (Europe, Middle East, and Africa) will be heading to Lisbon, Portugal, this week to attend the FTTH Conference 2010, and one thing is almost guaranteed: The mood will be positive and optimistic.

After all, it's inevitable that broadband demands will ultimately lead to the widespread deployment of fiber to people's homes and workplaces.

But is a positive mood justified in the European FTTx sector? Well, maybe in some quarters, but certainly not everywhere, as Heavy Reading chief analyst Graham Finnie explains in this interview:



The slow progress in Western Europe in particular means Finnie has had to downgrade parts of his annual forecast for European FTTH uptake, commissioned by the FTTH Council Europe and to be unveiled during the conference. (See Euro FTTH Update.)

The analyst says that because of slower than expected progress in major markets such as France and Spain, the number of FTTH households in the European Union region by the end of 2013 will be much lower than previously forecast. Last year the prediction was for about 14 million active fiber access connections, but now that forecast is almost 20 percent lower. The detailed new forecast will be revealed in Lisbon this week.

And then there's the outlook for FTTH pricing, which isn't exactly good news for service providers either. According to research conducted by Pyramid Research analyst Ozgur Aytar, which will be presented to the conference in Lisbon, the premium pricing that fiber-based broadband services currently attract aren't going to last too long. (See Pyramid to Present at FTTH.)

"We don’t believe that premium pricing for broadband access is sustainable, given the rate of service commoditization taking place in today’s competitive communications and media markets," notes Aytar in her pre-show analysis of FTTH pricing trends, "FTTH Price Premiums: Enjoy Them While They Last."

So is there any cause for optimism and celebration at all? Well, with regulatory issues now seemingly resolved, Orange (NYSE: FTE) has renewed its resolve to take fiber to millions of French households, recently pledging a €2 billion (US$2.7 billion) investment by 2015. Dutch incumbent KPN Telecom NV (NYSE: KPN) is also still talking positively about FTTH rollouts, though it has developed what might be viewed as a risk-averse strategy. (See FT Plans €2B FTTH Spend and KPN Sticks With IPTV for Its FTTx Future.)

And in his report for the Council, Heavy Reading's Finnie notes that "some leading indicators for build-out of FTTH remain positive: The economy appears likely to improve in most countries; some regulatory issues are being ironed out; and the underlying demand for high bandwidth services continues to rise both in reality and prospectively." What's missing, currently, is "a belief and confidence among carriers... that FTTH really is the future, and that work on creating that future must start now."

What's also clear is that there is still a lot of interest in the market, and that the vendor community is still developing new technologies and systems to help the service providers make the leap into the fiber access world. Here's a selection of the announcements made in the build-up to the Lisbon event:

— Ray Le Maistre, International Managing Editor, Light Reading

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