France�s alternative FTTH leaders ask Orange for help

by Kurt Ruderman

Less than 2 years after launching aggressive plans that helped make France Europe�s most competitive FTTH market, France�s alternative providers are asking Orange/France Telecom and local French authorities for help in completing their fibre access roll-outs.

Speaking during the opening session at the annual FTTH Europe Council, held last February in Paris, Maxime Lombardini, director general, Free (Groupe Iliad), and Michel Paulin, director general, Neuf Cegetel, called on Orange to give them access to Orange�s fibre infrastructure and broached the subject of reselling Orange�s FTTH services.

�Duct sharing is very important. It will allow us to deploy faster,� said Paulin of Neuf Cegetel. The company aims to pass 1 million households and to connect 250,000 by the end of 2009 as part of its �300 million plan.

The French perspective session, which was meant to highlight France�s dynamic FTTH plans, instead had a sobering effect on the conference, which attracted a record turnout of more than 2,200 attendees. The high level of competition in France was the main reason that the council picked Paris this year for its annual event. The situation in France also inspired the title of this year�s conference: �Crossing the Chasm to Mass Market Fibre.� France�s FTTH market has been in the spotlight since 2006 when Orange became the first European incumbent to launch a commercial FTTH project�a move that sparked similar projects by France�s top alternative carriers.

Orange has agreed when possible to make fibre-optic ducts available to competitors and to share new building fibre networks under a plan proposed by ARCEP, the French telecoms regulator. But Yves Parfait, FTTH project manager, Orange, declined during the session to talk about the details of the duct offer and to comment on the requests from Free and Neuf Cegetel for other fibre infrastructure offers such as bitstream (reselling of services).

The last few metres between city networks and apartment buildings is proving to be a major obstacle for France�s alternative providers, which�with the exception of cable TV operator Numericable�do not own �last metre� rights of way.

Orange, which doesn�t plan any massive roll-outs before 2009, seems to be assessing the situation and building FTTH networks in neighbourhoods where it faces FTTH competition.

Orange and the alternative providers have also underestimated the task of securing entry into apartment buildings, a process which involves negotiating with hundreds, perhaps thousands, of apartment management companies called syndics that represent apartment owners.

In France, unlike Europe�s other leading FTTH markets, alternative carriers are building their own FTTH networks instead of leasing fibre capacity from local authorities and municipal-owned utilities. Many Dutch and Swedish FTTH network operators question the economic sense of building multiple FTTH networks and say, like the operators of Amsterdam�s city network, that it is a waste of money. They say that competition should be at the service level where it benefits subscribers.

A bit ironically, ARCEP is probably doing more than any other European regulator to coordinate and stimulate FTTH deployments. Later this year, ARCEP plans to release guidelines for the sharing of fibre-optic ducts and the cabling of apartment buildings. The regulator has won the support of network builders for its recommendation of only one fibre network per building. Under the recommendation, the first operator to gain entry to a building would install the building network and make it available on an equal access basis to other service providers.

The French government�s determination to make the country an FTTH leader will likely help keep projects moving forward. However, it is probably too early to make any near-term forecasts. Much will depend on the French operators� ability to win over syndics and sign up FTTH customers in 2008.

According to data presented at the conference by IDATE (www.idate.org), the French consultancy, at year-end 2007, France Telecom/Orange (the incumbent) had passed 146,000 households with FTTH networks; Free 241,000 households; Neuf Cegetel 120,000 households; and Numericable 2,000,000 (with FTTLA and FTTB).

Speaking at the Paris conference, Roland Montagne, head of Broadband Practice, IDATE, said that at the end of 2007 there were 1 million FTTH/B subscribers in the 31 European Union (EU) countries and around 4.9 million homes passed. These figures represented a growth of 23% in terms of subscribers and 79% in terms of homes passed compared to June 2006. Today, France is No. 3 in terms of homes passed (FTTH) but sixth in terms of subscribers.

Across Europe, municipalities and power utilities continued to initiate FTTX projects in 2007, said Montagne. However, he noted that alternative operators had made significant deployments. At year-end 2007, a group of alternatives including Fastweb (Italy), B2 (Sweden), Free, Neuf Cegetel, and T2 (Slovenia), accounted for nearly 50% of the European FTTH subscriber base (see table).

Despite a surge in FTTX project launches across Europe, according to IDATE, 86% of subscribers are still concentrated in five countries: Sweden, Italy, Norway, the Netherlands, and Denmark. Penetration rates vary greatly in these countries from 60.6% for Norway and 44.8% for Sweden to 13.2% for Italy and 13.7% for Denmark.

The level of FTTH network construction was particularly high in three countries, Montagne noted. In terms of homes/buildings passed, Denmark and Norway showed a strong growth of 139% and 104%, respectively, between June 2006 and end 2007, while the Netherlands witnessed a greater than 161% increase.

But, Montagne said, Europe�s pioneer FTTH countries�Italy and Sweden�are now presenting slow growth in terms of homes passed, with 28% and 22%, respectively.

Commenting on the rest of Europe, Montagne said there were other encouraging signs in 2007 for the future of FTTH in Europe. He cited Germany, where three major city networks (Munich, Hamburg, Cologne) have announced ambitious FTTH roll-outs, and the United Kingdom, where the government may intervene to promote the deployment of FTTH in front of the reluctance of the main British players. He also mentioned large incumbents such as Telefónica, Telenor, and KPN as being close to launching FTTH projects.

While most service providers agree that the demand for bandwidth is soaring, many are not yet convinced that residential customers need�or are willing to pay a premium for�more than 20 Mbit/s.

�At the moment there is no �killer application� to boost revenues for FTTX development,� said Paolo Dal Bono, strategy�technologies, Telecom Italia, speaking at the Council�s Paris conference. But �bandwidth-hungry� applications are always increasing, he added.

Telecom Italia has decided to take a phased FTTX approach and not jump right into FTTH like Orange. In 2007, the Italian incumbent launched its domestic NGN2, which Dal Bono called �the first important steps toward FTTH.� For now, Telecom Italia has decided to use GPON FTTH networks in greenfield areas. Dal Bono said that the agenda for FTTX roll-outs in Italy will depend on the results of the company�s FTTB trial begun last year in Milan. Under its domestic NGN2 plan, Telecom Italia aims to make FTTC or FTTB lines available to 65% of its subscribers by 2010.