By Vincent Garnier, Director General of the FTTH Council Europe
At the FTTH Council Europe, we believe that Full Fibre networks are the future-proof, climate-friendly infrastructure which enable innovative digital technologies and services.
My 16 year old son recently asked me what I was doing of my days as Director General of the FTTH Council Europe. I told him, joking, that I was mostly talking to my computer. Just like me with my classes on Teams! He replied. And I guess, most of us are in the same situation. Sometimes video conference works fine, sometime not so well.
What the COVID-19 pandemic as revealed is the critical importance of telecom networks to keep people and businesses connected. And this is only one aspect of what digital technologies can do to help us adapt to the challenges the world is facing.
The European Union embraces this vision and has set objectives to make Europe fit for the digital age while helping to achieve its target of a climate-neutral continent by 2050.
Fibre, the only future proof and sustainable technology
At the FTTH Council Europe, we believe that Full Fibre networks are the future-proof, climate-friendly infrastructure which enable innovative digital technologies and services. We have been monitoring the progresses of fibre deployment across Europe and from recent updates we will see the key drivers behind the development of full fibre access networks in Europe as well as the roadblocks still in front of us. We should do something today, to make sure we can meet and exceed the targets set by policy makers and pave the way for a better future for our children.
The benefits of fibre are now well established: Higher upload and download speed, virtually unlimited capacity, extremely low latency and low operating costs. The fibre infrastructure you build today have all chances to meet the needs of your children in 20 years.
What is less known, and becomes now critical, is the fact that fibre is also the technology which has the lowest energy consumption, by far, compared to alternative solutions. Copper or coax networks, require more energy when frequencies and data rates increase, while fibre, as a passive system, keeps a very low power consumption level regardless of the bandwidth it offers. All data converge to demonstrate that fibre has a much lower carbon footprint than other technologies and that this advantage will dramatically increase with the growth of data rates. Fibre is the only technology supporting both EU ambitions of a Digital and Green society. The FTTH Council, together with other trade associations will soon communicate about this subject and reference several studies.
Partly due to the good quality of legacy networks in Europe, the development of FTTH has been slower than in other region like Asia. But we are catching up. Our latest market panorama, based on 2019 data, shows that, since 2012 the number of homes connected to full fibre networks has tripled to reach 50% coverage ,and the number of subscribers has been multiplied by more than 4 to reach 20% of households. This average subscriber penetration rate is the combination of very contrasted situations by country. While Sweden, Spain or the Baltic states are above 50%, we still see large countries like Germany, Britain, Italy or Poland below the 5% threshold. We still have a long way to go.
In December we will publish our market forecasts, which have been adjusted to take into account the impact of the coronavirus pandemic. These data will show an acceleration of the FTTH development, especially in Western Europe. According to our survey, the COVID 19 crisis has significantly amplified this evolution and our forecasts integrate an uplift of up to 14% due to the expected long lasting consequences of the crisis.
Not only roll out plans are accelerating, but the take-up rate is expected to progress significantly. How can we explain this evolution? What are the key drivers of Fibre to the Home in Europe?
The volume of data on the internet keeps growing at impressive rate and leads to a demand for more bandwidth. We expect wireless networks, especially those using millimetre waves, to become an important driver for fibre deployment as multiple small cells will need to be backhauled with fibre.
As telecom networks are built to last decades, you need a long term vision, an anticipation of the societal needs of tomorrow, and this is the job of policy makers. The latest plans presented by the European Commission show its ambition to progress towards a more digital and green continent. The European Union has historically played an important role to foster competition in the interest of citizens. With the European Electronic Communications Code which is to be implemented in country legislation by the end of this year, the EU favours clearly investments and take up in Very High Capacity Networks, which are defined as having technical performance of fibre.
At country level, we now see much more ambitious Full Fibre development plans. Spain, France, the UK and just recently Poland are good examples.
Public investments are important, especially for rural areas, but the majority of the money comes from private investors. The growth of Fibre in Europe owes a lot to alternative operators who have been pioneers and have proven that their business case can fly. Thanks to these entrepreneurs, incumbents have been obliged to react and develop their own FTTH plans. Full fibre networks are increasingly seen as utilities and become a very attractive long term investment. We are happy to see more and more private funding supporting the development of fibre.
Wholesale only operators are particularly interesting for investors who like the simplicity and transparency of their business model. This is to be put in perspective with a trends among incumbents to split the management of their broadband infrastructure from their activity of service. Cooperation between incumbents and alternative Operators, network sharing and network mutualization are increasingly frequent. This reduces overbuilt, make FTTH coverage more cost effective and accelerate the availability of fibre for citizen.
If we continue and amplify the current trend, EU average Full Fibre subscribers’ penetration could jump from 20 % to 50% by 2025. This requires however to address several challenges.
A report shows that European roll out are an average 2 years behind schedule. In many cases this is due to difficulties to obtain permits and complete administrative processes. If National and local authorities could facilitate things even more, this would greatly help operators. At a European level several pieces of the regulatory framework are still to be adapted and to align with the new Code. At the FTTH Council Europe, we are contributing actively to these revision works. We also believe that public funds should be focused on areas where there is no business case for private initiatives, this concerns to a large extent rural, low density areas where Government Investments are important. However, these state aids must only support future proof infrastructure, and we believe only full fibre networks can be qualified as such.
Digital public policies should also embrace the Green Deal as broadband networks are an essential enabler of a more sustainable society. We would like to see the level of energy consumption of broadband technologies considered as an important decision criteria.
Increasing the take up rate remains a very important challenge. It has progressed to reach now 40%, but it needs to be much higher if we want to fully transition to fibre infrastructures. To do so, end user must be convinced by the compelling experience brought by full fibre networks.We need much more services leveraging the gigabit symmetrical speed so people see the full benefits of fibre.
At the edge of the fibre network, performance of home connectivity is crucial. It should not be the bottle neck of the network and impact negatively customer experience.
Last point. Customer should also be able to make the difference between genuine full fibre connectivity and the other technologies combining fibre with copper and coax. We encourage governments to fight against misleading advertising where the brand fibre is associated with broadband services which are based on hybrid technologies.
In conclusion, Europe has made good progresses in its Journey towards full fibre connectivity, the momentum is there but we should stay focused, because every detail counts. Ultimately, the choices we are facing are simple. Decisions are not about the next quarterly results, not about next year, they are about the next generation. The investments of today will impact the infrastructure available for the next 30 years.
Next time my son ask me what I am doing of my days as Director General of the FTTH Council, I will not joke. I will tell him that I am working to make his world a better place.