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Europe Fiber-to-the-Home Market Penetration

There are over 1 million subscriptions to fiber-to-the-home (FTTH) services in western Europe, according to research by Telecom Markets for Informa Telecoms & Media.

Fiber-to-the-home is a type of next-generation access network technology that uses optical fiber in the last-mile connection to provide broadband services with speeds tens, even hundreds of times faster than conventional alternatives.

Although FTTH represents only 1.4 percent of western Europe's 79 million-plus broadband subscriptions, the nascent business models behind the networks are already having a significant impact on competition in Scandinavia. FTTH is most-advanced in Sweden, where the technology is used for 650,000, or over 27 percent of the country's 2,340,000 broadband subscriptions.

Significantly, the 150 municipal networks serving these customers tend not to be owned by conventional telecoms operators, but by utilities or local authorities. These new-entrants tend to offer an "open access" model, whereby any third-party can provide their own-brand services over the networks.

The success of the model is likely to be further bolstered by the launch in Sweden of Europe's first scheme to coordinate activities around municipal networks on a national level. To date, companies that wanted to get involved would have to negotiate deals with each project separately or on a regional basis, which has discouraged large, national operators from providing services over, or submitting proposals to operate the networks.

Notably, the Citynet Access scheme has been endorsed by several of Sweden's conventional telecoms and cable TV operators, including TeliaSonera. The former state-owned monopoly already provides retail services over a number of municipal networks.

Generally speaking, there is less interest in building FTTH networks from conventional, national telecoms operators, who argue that the approach is currently too expensive to carry out on a widespread basis.

The majority of former state-owned monopolies, for example, have instead committed to fiber-to-the node. These networks use fiber for part of the last-mile connection and the traditional copper network for the final leg to the home, which generally limits commercial speeds up to 50Mbps (often half this speed).

France Telecom and its domestic competitors, Iliad and Neuf Cegetel, are notable exceptions, having each begun to roll-out out FTTH in cities and suburbs across France. Apart from France, Scandavia and the Netherlands, there is no immediate prospect in Western Europe that FTTH services will enjoy widespread availability.

In part, this is due to a lack of initiative from utilities and local authorities, but also because markets are dominated by telco incumbents and cable operators, who have no motivation (i.e. competitive pressure) to make the hefty investments in brand new network infrastructure.

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