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French FTTH plan gets European fibre on the road
[January 20, 2006]

French FTTH plan gets European fibre on the road

(Total Telecom Via Thomson Dialog NewsEdge)This week's announcement by France Telecom that it wants to build a fibre-to-the-home network in France is a shot in the arm for European fibre advocates.

But it does not mean Europe is getting all lit up.

A report from investment bank Goldman Sachs, published two days before the France Telecom news, showed how little progress has been made with fibre across the Continent.

Belgacom is apparently the most advanced. Its Broadway project is due to be completed this year. But that network completes its broadband link on very high speed DSL (VDSL) not fibre. And it is only intended to reach 50% of households in Belgium.

Dutch incumbent KPN and Swisscom are "relatively advanced", according to the report.

Among the big telcos, Telecom Italia has built fibre to the node in 63 cities, covering 26% of the population.

Spain's Telefonica has done its sums - a national fibre network would cost 4 billion euros: if that's what the company decides to do.

Deutsche Telekom's 2.2-billion-euro investment, announced last September, also stops at the kerb (or curb), from where it will use VDSL. This network will reach 3 million homes. The German incumbent said it will commit to spending 800 million euros, but it won't go further without some regulatory reassurance it doesn't have to share access with competitors.

Goldman Sachs estimates that even VDSL rollout to 40% of the population would cost 5 billion euros.

More interesting to the Goldman Sachs analysts than fibre buildout is the possible impact on telco revenues of voice-over-IP services, especially VoIP delivered by alternative service providers across broadband lines unbundled from national operators' networks.

The analysts estimate the average cost of fully unbundled lines in Europe is just 10.5 euros a month, with shared LLU at 3.6 euros a month.

On Wednesday this week, chief executive Didier Lombard announced that France Telecom would test FTTH systems in the Paris area. The plan is to replace the copper loop with fibre, and sell more services over the new network. Like the analysts, the telco can see VoIP getting bigger.

"We're going to accelerate the transformation [of our services]," said Lombard. "The migration towards the Internet and IP was faster than we thought it would be."

If that sounds as though France Telecom is under pressure, it is. Competitors are aggressively marketing unbundled access to residential users in France, using flat-rate voice plans as one of their selling points.

"We said voice will be free," said Lombard, adding that in February the company will unveil more plans to field off competitors in the broadband market.

Lombard is not quite right. Right now, most VoIP providers launching new services are billing for them. In the U.K., retailer Tesco's telecoms division on Friday launched a consumer VoIP service offering international calls at 2 pence a minute and calls to mobile at 10 pence a minute.

But despite all the caveats, this week's news from France will cheer delegates travelling to the FTTH Council meeting in Vienna on 25th this month. But don't forget Groundhog Day

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