The race between cable and IPTV operators to reach customers in Europe is heating up with acceleration of fiber-to-the-home (FTTH) deployment by telcos in a bid to take the lead for access bandwidth. Cable operators originally responded to the IPTV threat through measures to increase effective bandwidth for subscribers, including node splitting, switched digital video to deliver content only when requested by subscribers within a service area, and DOCSIS 3.0 to increase channel bandwidth through channel bonding.
The success of such strategies was discussed at the recent Cable Congress conference in Switzerland, where Manuel Kohnstamm, president of Cable Europe, the body representing the industry, argued that recent progress had given cable operators a longer window than expected to exploit their current access bandwidth advantage over telcos. There had been a widespread belief among cable operators that their plan gave them just a two-year advantage over telcos before the latter’s continued investment in fiber achieved parity, anticipated around the end of 2011 or into 2012. This would happen when telcos had pushed fiber sufficiently deep to deploy VDSL2, which delivers higher bit rates than ADSL because the length of the copper loops, and consequent signal attenuation, is reduced.
VDSL2 can support bit rates of 100Mb/s over distances up to 1.5km from the nearest DSLAM, either in a street cabinet or local central office, and cable operators had feared that extensions to the VDSL2 specification might increase the range to possibly as far as 5km. But these extensions have yet to materialize in the field, and cable operators have successfully broached 100Mb/s themselves under DOCSIS 3.0. There is also a lot more to come, with Kabel Deutschland recently testing 1Gb/s broadband access in Hamburg, for example. The result is that cable operators will maintain their access bandwidth advantage for longer, according to Kohnstamm.
However, this advantage will disappear as soon as telcos extend fiber to the home, or at least the curb, which is the end game for cable operators as well. At the same time as the Cable Congress, the FTTH Council was holding its annual meeting in Milan, where it emerged that FTTH deployment in Europe had accelerated toward the end of 2010, with 3.9 million FTTH subscribers across Europe, excluding Russia, by the end of the year. In addition, there was a slightly larger number of FTTH subscribers of 4.2 million in Russia, most of which are within the western area defined as Europe.
Most significantly, however, was that a number of telcos or other agencies were investing heavily in FTTH deployment in areas already well covered with cable TV networks serving subscribers with broadband and TV services at high bit rates. In the Netherlands, Rabobank has backed a group called the Communications Infrastructure Fund (CIF) to invest €750 million to build an FTTH network across the country, even though 90 percent of the population is reached by cable networks. Cable TV services are accessed by 75percent of households, with two dominant players: Zesko, with 3.12 million subscribers in June 2010, and UPC Nederland (Liberty Global), with 1.93 million, according to the Mavise database of TV companies in the European Union. Yet the FTTH backers believe that they will be well-placed to go after some of these customers by offering even higher bit rates of 1Gb/s, or potentially 10Gb/s. What these customers will use such bit rates for is another matter, but there is advantage in having the highest speeds.
Elsewhere in Europe, it seems to be the smaller and emerging economies that are deploying FTTH the fastest. Lithuania tops the European league with 22.6percent household penetration, followed by Sweden (13.6percent) and Norway (13.6percent). Russia is the largest market in absolute numbers, at 4.18 million, with Sweden in second place at 600,000, according to the FTTH Council Europe. While smaller or emerging markets, including Latvia, Portugal, Russia and Turkey, are expanding FTTH coverage rapidly, two of the leading European economic powers, Germany and the UK, are lagging behind. France, which leads the world in IPTV deployment, mostly over ADSL, has also been relatively slow to roll out FTTH, with 486,700 FTTH subscribers.