October 23, 2021

2021 FTTH Deployment in Europe: Status and Perspectives

                   2021 FTTH Deployment in Europe: Status and Perspectives

The deployment of broadband infrastructure is a long-term investment with long-lasting consequences worldwide.

Founded in 2004 as a not-for-profit organization, the FTTH Council Europe was charged with the mission of promoting full fibre technology as a bridge to future prosperity.

At the time, that was a very ambitious goal as only a very small minority of European citizens could access full fibre broadband. The FTTH Council Europe started with the vision that full fibre networks represent the only future-proof technology that would enable access to all services of the digital society, connecting homes, enterprises, machines, and objects, and feeding wireless antennas. Today, the FTTH Council Europe comprises more than 150 members and our mission remains as relevant and important as it was in 2004: We represent the entire value chain of fibre networks from manufacturers and service providers to operators and investors, forming a unique ecosystem of expertise dedicated to promoting fibre and creating value for our members.

However, public policies have changed since our inception, especially some major initiatives recently undertaken by the EU directly impact FTTH deployment. As a reaction to the coronavirus pandemic, the Recovery and Resilience Facility program combines US$672 billion in loans and grants to support investments and reforms undertaken by member states. A key condition of these funds is that at least 20% must support digital transition, with FTTH and 5G networks identified as the main goals.

On March 9, 2021, the Commission launched the Digital Compass, proposing that all European households will be covered by a Gigabit network by 2030, with all populated areas covered by 5G.

The EC’s digital compass comprises skills, infrastructures, business & government

The Broadband Cost Reduction Directive is a key European Union legislation that is currently under review by the European Electronic Communication Code. The directive aims to facilitate and incentivise the rollout of high-speed electronic communications networks by lowering the costs of deployment with a set of harmonized measures. The FTTH Council Europe is an active contributor and we strongly support this initiative. We’ve been able to share some of our studies, including the work done on the benefits of having a converged approach between FTTH and 5G network design and deployment, leading to significant cost savings.

On March 26, 2021, the European Commission communicated that EU Member States have agreed on a Union-wide Connectivity Toolbox, a report of best practices that they consider the most efficient at rolling out very high-capacity fixed and mobile networks. In December 2019, the European Commission unveiled The European Green Deal, which set out specific objectives and targets, including achieving greenhouse gas neutrality by 2050 and reducing greenhouse gas emissions by 50% by 2030.

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The digitalization of society is a precondition for reaching our sustainability goals while maintaining Europe’s quality of life and economic prosperity. At the FTTH Council, we are convinced that full fibre is the most sustainable broadband technology. On January 28, we published a paper outlining key findings from several studies: Fibre networks consume up to seven times less electricity than copper networks. In addition to this difference in direct energy consumption, the maintenance costs of fibre networks are up to 60% lower than for alternative technology, which limits further their carbon footprint. Based on this data, we recommend to policy makers that they integrate carbon neutrality in their choice of broadband technology and give a clear preference for full fibre networks.

The billions contained in the EU recovery fund are making headlines and represent a key measure of public support. The bulk of investments for FTTH comes from the private sector. European fibre network projects have never been more attractive. They are now seen as safe and profitable long-term investments, particularly for Infrastructure Funds. At the end of 2020, the FTTH Council met with a senior telecom analyst working from one of the largest European Banks.

His view is that the key challenge today is not how much money is available, but how assets are utilized. His advice to us is that we should help to create good economic conditions for rollout by sharing best practices and educating the ecosystem on the different business models available. In June 2021, we will publish the report Successful Fibre Business Models in Europe. Based on the experience of eight existing operators, this comprehensive analysis will describe the different structures from vertical integration to wholesale only. It will go into the details of the financing models and share success factors at the operational and commercial level. With this initiative, we hope to help investors and operators to maximize the business value of FTTH and further develop their networks.

In addition, we will measure the progress of FTTH deployment across Europe. We have seen that there is a strong support from EU institutions and a large financing capacity. We should consequently see the impact on our annual survey, which explores the state of fibre in Europe. As of the end of 2019, we had reached 50% FTTH coverage in Europe. With a take up rate of 41%, that meant that 20% of all broadband subscribers had full fibre connectivity. Without giving too many spoilers from the 2021 report we will publish in May, I will say that over half of the 39 countries surveyed have home coverage above 50% for the first time.

Future Coverage & Challenges

Looking ahead, our forecasts show a net acceleration of FTTH deployment across Europe. The COVID-19 crisis has probably contributed to this evolution. Between now and 2026, we expect to see an average of 21 million new homes passed, and nearly 20 million new FTTH subscribers each year. On the road to gigabit connectivity for all by 2030, Europe may be progressing quickly, but that does not mean that all challenges have been overcome.

European countries enjoying an FTTH coverage of 80% or more still have a long way to go before they can claim 100% coverage. Very low-density rural areas present multiple challenges for FTTH roll out.

Yet, bridging the digital divide is a very important policy in Europe. Some rural areas can represent economically viable business opportunities for private investors, while others require public support. The FTTH Council encourages governments and national regulators to strike the right balance and limit their intervention to where there is no commercially viable opportunity.

Given the cost of FTTH deployment in rural areas, we understand that some operators might be tempted by alternative broadband technologies like Fixed Wireless Access (FWA) or satellite, which can be faster and cheaper to deploy. However, neither FWA nor satellite can match the performance of full fibre networks. We also see the risk that what could be considered as a tempting temporary solution ends up being long-term infrastructure, creating a new digital divide between some rural areas and the rest of a given territory that benefits from full fibre connectivity. The slow and complex delivery of permits as well as the amount of red tape are familiar hurdles for all operators rolling out fibre. It seems that the situation is improving: The new Broadband Cost Reduction Directive will address these issues and hopefully overcome these obstacles.

With a surge in FTTH rollout programs, the shortage of skilled fibre professionals is real. While mitigation plans are in place, it is important that political objectives remain realistic. The risk exists that more investment only results in higher deployment costs and lower profitability for operators without adding more fibre connections. As more residences and enterprises are connected with fibre, subscribers have access to unparallel bandwidth. But, it does not necessarily mean that they can benefit from the full fibre experience.

In-home connectivity is the bottleneck. Ensuring that every device in the home has seamless access to the bandwidth provided by fibre networks is very important for subscriber satisfaction, including their willingness to pay a premium for new services and for a fiber service subscription in the first place. Our second report on copper switch-off, published at the end of 2020, shows that Europe is still far from decommissioning its legacy copper networks. We encourage governments and operators to plan ahead for this complex process, which starts with the digitalization of all services using copper networks. It must be clear that copper switch-off is the objective. It makes no sense to continue maintaining live legacy networks in parallel when a much better and cheaper- to-manage alternative exists.

Since 2004, we have seen solid progress alongside the ambitions of European leaders for 2030. But the goal is to make sure that the infrastructure we build now will still meet the needs of our children in 30 to 40 years. Such an effort cannot take place at each generation; we have the responsibility to do it right, and select the best technology.

We believe that full fibre networks are the only future proof solution up to the challenge.

About the Author:

Vincent Garnier, Director General, FTTH Council Europe

Vincent Garnier brings to this position 25 years of experience in the telecommunications industry, in Marketing and Business Development in EMEA and Asia for BtoB companies.

Most recently he was Marketing Director responsible for defining the marketing strategies for the broadband solutions at CommScope, a global network infrastructure provider company. Prior to joining CommScope, Mr. Garnier worked in international business development at TKH Group N.V. and as a Marketing Manager at Prysmian Group & Exide Technologies.Vincent Garnier has been actively involved in the FTTH Council Europe activities for several years. He became a Member of the Board of Directors and Treasurer in 2019.

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