Failure to invest in fibre broadband could make Europe an economic backwater

15 Feb 2013

Hartwig Tauber, director-general of the FTTH Council for Europe

European nations and their respective incumbents’ inability to embark on ambitious fibre infrastructure plans that will prepare their countries for the 21st century and beyond could cost them dearly, the director-general of the Fibre-to-the-Home (FTTH) Council Hartwig Tauber told

He said that by 2020, when the EU is targeting 50pc of homes having 100Mbps, consumers will be requiring download speeds of 170Mbps and upload speeds of 100Mbps.

The situation will not be helped by the European Union’s decision to chop €7bn off the projected budget for Connecting Europe Facility, leaving just €1bn for critical broadband infrastructure support for rural areas.

Tauber’s views are at odds with the views of Point Topic’s Tim Johnson, who said investment in copper VDSL will be the one sure way of achieving vice-president of the European Commission responsible for the Digital Agenda Neelie Kroes’ 2020 targets of 100Mbps for 50pc of homes with a minimum 50pc for the rest. Investing in VDSL means bringing fibre only as far as the street cabinet, whereas Tauber and members of the FTTH Council, which includes telecoms equipment makers, are calling for a complete fibre investment that will bring fibre into every home and business.

“The question is the bigger picture,” Tauber said. “Is VDSL a sustainable approach and will it meet the requirements of the economy and consumers and at the end of the day competitiveness on the world stage?

“In other regions around the world, FTTH is being rolled out quite quickly at the moment. Europe is focusing on just achieving the 2020 targets and assuming that the problem will be solved at that stage.

“That is the wrong way of approaching the problem. The 2020 targets won’t meet the needs of end users or businesses at that stage,” Tauber said, adding that Sony is looking at delivering 4K movies by online only because movies based on this standard would be too large to fit on a Blu-ray disc.

“The only other way of shipping 4K movies physically will be on hard disk and streaming this amount of data on VDSL or LTE (4G) networks won’t work.”

Not discouraged by the EU’s budget cut, the FTTH Council will hold an investor day next week (19-21 February) at the FTTH Conference in London, with the aim of coming up with innovative ways of financing critical investment in fibre infrastructure.

Why are European policy makers burying their heads in the sand?

I asked Tauber why time and time again is it clear that there is no sense of urgency from policy-makers at a government level or incumbent operators to embark on an ambitious fibre infrastructure project for the century? It is obvious that this kind of infrastructure will become as important – if it isn’t already – as road networks or airports for enabling commerce.

“Most of the people who own the big copper networks want to hold onto that infrastructure for as long as possible because they can sweat out as much as they can from those assets; their target is to make money and keep their shareholders happy.

“Then there are the decision-makers at government level who are not willing to face the challenge but instead take the easiest route that extends as far as the nearest elections or when interim results are due.

“Governments with a series of national broadband plans get very nervous around this topic.”

I asked Tauber if he believes many countries are just papering over the cracks and there is no real comprehension from the present generation of political leaders of just what’s at stake?

“We are seeing developing economies in South America grasp the issue and they are building massive fibre rollouts. In the globalised world, the big companies gravitate to where the infrastructure fits best and this includes telecoms.

“Europe is a two-speed digital economy. In the US, the big-name companies in the tech space are players like Google, Apple and Facebook. It is no accident that in Europe big-name start-ups like Spotify and Skype have come from the Nordic countries, where fibre has been used for many years.”

Tauber said the problem is frustrating. “On the one hand, we have incumbents who want to protect their assets – they are just fulfilling their business mission and don’t care about the economic development of Europe – and we have this generation of decision-makers who don’t have vision for what is possible with broadband.

“There’s a generation of decision-makers who have advisers who have a strong belief in the former monopolies of the incumbent and who believe the incumbent will solve any problem and they just blindly follow the instructions that come from the incumbent.”

Planning for the 21st century and beyond

But the tide is turning. Incumbent operators in Portugal and Lithuania are already looking well into the future and they are doing fibre-to-the-home rollouts.

In other cases, municipal areas are seeing the bottlenecks caused by luddite politicians and incumbents focused on the middle distance and are financing fibre-to-the-home projects in their own areas.

“There’s a lot of frustration but we see bright spots. We’ve been telling incumbents since 2004 that it is important to go for fibre but the problem is some of them make big announcements then just delay it again and again.

“They then see their rivals – the cable broadband providers – upgrade their networks and they realise the DSL approach isn’t enough anymore because the cable providers can offer faster speeds and so they then begin investing in interim steps like VDSL and vectoring just to cover up their old mistakes.”

Tauber reckons something has to give before Europe becomes economically irrelevant. “In 10 years’ time, households will need more than 170Mbps downstream and more than 100Mbps upstream.

“The argument is that fibre is too expensive for a European-wide rollout and it is true, it is an expensive investment.”

Tauber calculated that to provide 98pc of European households with fibre, an investment of around €200bn would be required.

“But if you take into account that incumbent operators invested more than €24bn in infrastructure in Europe last year and that incumbent operators invested between €16bn and €20bn it is not impossible to finance over time.

“Europe will face a bigger challenge by failing to make this investment. It is a challenge we should face. We need to make sure that Europe gets the deep fibre infrastructure that will last for the 21st century and even longer,” Tauber added.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years