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Neuf Kicks On With FTTH Plan

Ray Le Maistre
3/11/2008
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Neuf Cegetel Group (Euronext: NEUF) had passed more than 130,000 homes with its new fiber access network and signed up 20,000 customers to its €29.90 ($45.88) per month triple-play service by the end of last year, the French competitive carrier revealed today as it reported its 2007 financial results. (See Neuf Reports 2007.)

Neuf also confirmed its plan to have 1 million homes passed, and 250,000 customers connected, by the end of 2009.

The operator's main objective is to strengthen its broadband share in major cities, where it competes with Orange (NYSE: FTE), Iliad (Euronext: ILD), Telecom Italia (TIM) 's French business, and cable operator Numericable-SFR . Neuf has 3.2 million broadband customers, giving it a healthy 21 percent market share.

Neuf is investing €300 million ($460 million) in the first phase (2007 to 2009) of its fiber to the home (FTTH) rollout that's focused on France's main cities. A further €150 million ($230 million) in capital expenditure will be freed up if Neuf is happy with the competitive and regulatory landscape.

Neuf and France's other main competitive FTTH hopeful, Iliad, are pressing France Telecom to offer equivalent and affordable access to its ducts, and to make affordable dark fiber and wholesale capacity available to alternative operators, so they can get to market at the same time and at the same pace as the incumbent. (See Iliad Tempers Its FTTH Target.)

"We can settle on our plan when France Telecom's plan is settled, when the regulator issue is clarified, and when cooperation with other [operators] is a reality," stated Neuf's general manager, Michel Paulin, at the recent FTTH Council Europe conference in Paris.

Both France Telecom, which is forging ahead with its own FTTH plans, and French regulator Arcep have committed to creating an open and competitive market, and the European Commission is also keeping a close eye on each market under its jurisdiction. FT, though, wants agreements to be reciprocal. (See EC Stays Firm on FTTH, FT Wants Open Ducts, and FT Fleshes Out FTTH .)

If Neuf's needs are met and it moves ahead with its extra investment, it says it has the financial backing of its soon-to-be owner, mobile operator SFR , which has committed to provide some of the additional capex. (See SFR to Swallow Neuf in $6.4B Deal.)

And according to Paulin, Neuf's financial planning is currently spot on. He told the Paris conference that each connected, paying customer is costing €1,200 ($1,840) to hook up, provision, kit out, and activate.

Mix of point-to-point and GPON
While Neuf waits for FT to provide a detailed wholesale offer, it's ramping up its bandwidth capabilities as it builds out in cities such as Toulouse, Rennes, Bordeaux, and Strasbourg, as well as Paris.

Neuf can offer symmetrical bandwidth of up to 50 Mbit/s, but the operator says this will double in some areas to 100 Mbit/s symmetrical this year.

The top end bandwidth is likely to be offered in Paris, where Neuf is using mostly point-to-point technology to run a dedicated fiber connection to 500,000 homes. In other cities, Neuf says it will deploy GPON technology, where each fiber connected to the local exchange is shared by up to 32 customers.

Neuf is just one of a number of operators at the early stages of their fiber rollout plans in Europe, where FTTH progress has been slow up to now. However, markets such as France, the Netherlands and Sweden are set to make Europe a FTTH growth hotspot during the next few years, according to a recent Heavy Reading report. (See Report: EMEA Set for FTTH Surge.)

— Ray Le Maistre, International News Editor, Light Reading

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