As consumer demand for services such as high definition TV and peer-to-peer file exchange increases, Arthur D. Little’s latest viewpoint “FTTH: Double Squeeze of Incumbents – Forced to Partner?" provides insight into the ultra-high-speed broadband sector.  It calls on incumbent operators in Europe to change their strategy, and for governments and regulators to adjust their policies or Europe’s economic competitiveness could be impacted.

Utilities and alternative operators have formed new business models, enabling them to take the lead in rolling out FTTB/H networks in Europe.  In 2009, 65% of the 11 million fibre-connected European households were served by networks deployed by utilities (22%), alternative network operators (40%) or housing associations (3%). At the same time, cable operators have updated their networks and can offer 50 to 100 Mbps broadband services at very competitive prices. 

The ultra high-speed broadband services offered via the FTTB/H deployments of utilities and alternative operators on the one hand, and cable operators on the other, put incumbents into a double squeeze. Incumbents must now protect their broadband market.  Some have already increased their FTTB/H roll-out efforts, though remarkably, this has been done in partnership with utilities or even with direct competitors in an effort to share costs and risks.

“Partnering along the value chain and sharing the necessary investment can enable incumbents to protect their core business and remain competitive in a growing sector," says Karim Taga, Director at Arthur D. Little’s Telecoms, Information, Media & Electronics (TIME) Practice. 

Regulators in Europe should also play a more active role. In Asia, the US and the Middle East, governments and regulators have actively supported FFTB/H deployment by co-financing fibre rollouts or protecting operators’ investments under certain conditions.

“Most EU countries are now lagging up to seven years behind,” states Mr. Taga. “Japan began to rollout FTTB/H in 1997 and now has over 32 percent coverage, while in Europe, we are still debating how best to regulate NGA.”

“This paper should be a wake-up call to governments and regulators – they must support FTTB/H investments now,” concludes Mr Taga. “Otherwise, the fibre gap will widen and Europe will become less competitive due to the lack of adequate growth-orientated regulation.”

To access the full report, please visit:
www.adl.com/Double_Squeeze