The Challenges of Fiber Rollout in Europe
“We can say with confidence that we are on the right track to meet the EU’s ambitious connectivity targets set out by Gigabit Society 2025 and Digital Compass 2030 strategies, yet the current momentum needs to be maintained and for this to happen, support at the political and regulatory level will be key."
- Eric Festraets, president of the FTTH Council Europe.
What are the challenges facing these ambitious claims?
The disparities are often a result of a combination of economic, technological, regulatory, skills/Manpower, and Incumbents.
Although fiber rollout across Europe has been 10 years in the making, Europe has the infrastructure but not everywhere. The fiber challenge is massive, and countries are starting from a variety of positions. In Europe, Portugal and Spain are leading the way, with both already achieving more than 80 percent coverage. Meanwhile, the United Kingdom and Germany are lagging far behind. The competition from alternative Internet Service Providers (ALTNETs), municipalities and utility companies have begun. This has been possible with the collaboration with private finance, pushing for broadband acceleration. The objectives of bringing connectivity to rural areas have helped narrow the digital gap and create opportunities for every EU citizen.
While many players are operating on heterogeneous networks with a mix of technologies such as ADSL, VDSL, and G.Fast to DOCSIS 3.x, FTTX, and fixed-wireless solutions (5G), most believe FTTH will ultimately be the only fixed network technology that can meet the demands for bandwidth.
Governments that truly want this to happen will need to take an active role and help these investments unfold through the easing of regulations. In the EU regulatory environment, the markets are fully liberalized and are aimed at assuring the proper functioning of these markets. Because of the monopoly power incumbents have, many regulators, also require them to provide access to their network to other telcos at regulated wholesale prices. This is done with terms that aim to allow other operators to compete with the incumbent.
The challenge is finding qualified personnel who can plan and execute the fiber rollout. The reason is basic: staff is in high demand in many markets besides telecoms and by many operators at the same time. This is accentuated in markets where there is a lot of building demand for civil infrastructure upgrades, such as in Germany, as these projects are often more attractive in size and have longer-term certainty than smaller regional fiber rollouts. As Spain and Portugal finalize their fiber build-out, talent should become available.
An incumbent telecommunications company is a former monopoly that still has a dominant market share. They are still in a very strong position, and although their legal monopolies have been removed in almost all countries, they continue to have considerable monopoly power because the infrastructure they have built over the years results in high barriers to entry. The result of this is that incumbent telecoms companies are usually very tightly regulated. This means tighter controls on the prices they can charge customers and other networks.
Different countries have different requirements, but what does emerge is that some form of cooperation is required between the private and public sectors to achieve the best financial outcomes for commercial operators and strategic objectives for governments.