FTTH growth accelerates in Europe

LISBON, Portugal — In 2009, growth in terms of subscribers and Homes/Buildings passed has accelerated in Europe, with respectively 19% and 29% rate between June and December 2009. In EU36 (including Russia), there were nearly 3.5 million FTTH/B subscribers and more than 25 million Homes/Buildings Passed.

Because of its specific demographic characteristics, Russia is the heaviest country in terms of subscribers and Homes/Buildings Passed even if the FTTH/B market is still in its infancy in the country. The potential of the Russian market is huge and might convince new players to get involved in FTTH/B deployments in the near future.

In the Middle East (14 countries covered), UAE are the main FTTH/B market, totalling more than 1 million Homes/Buildings Passed and nearly 63,000 subscribers. In other countries, FTTH/B deployments are very limited, and even municipalities, which initiated most of the FTTH/B projects in Europe, do not seem to get highly involved in deployments.

Even with new deployments in Eastern and Southern Europe, more mature countries still dominate the global European FTTH/B market. In countries such as Sweden, rollouts are still engaged even if on a smaller scale. The main issue now is really to convince end users to subscribe to services based on FTTH/B networks. At end 2009, 18 European countries are in the Global Ranking, which is the proof that commercial effort is on-going, but still has to be enhanced.

Regarding Middle East, the FTTH/B market is still in its infancy. Several announcements have been made but have to be concretised. Contrary to Northern Europe, where first deployments were engaged by municipalities and/or power companies, rollouts in Middle East will more probably be initiated by incumbents and private players, among which Real Estate Owners which will rapidly find a high interest in Fiber as value-added for their new housing programs.

European FTTH/B market at end 2009

As in previous years, IDATE has been commissioned by the FTTH Council Europe to provide an overview of the status of FTTH rollouts across Europe at the end of 2009. To date, IDATE has identified 249 FTTH/B projects in Europe, of which 136 are new initiatives since June 2005.

Municipalities and utilities are still the main category of players involved in FTTH/B deployments in Europe as they represent 55.7% of total number of projects. Nevertheless, they are still giving ground to alternative players which, even if they only represent 28.7% of total number of projects, reach 74% of FTTH/B Homes/Buildings Passed.

In terms of subscribers, alternative operators still dominate the market. Those which were involved first in FTTH/B deployments represent the most important customer base: all together, FastWeb (Italy), B2 (Sweden), Illiad/Free, Numericable & SFR (France), Orange Slovensko (Slovakia) and T2 (Slovenia) at the end of 2009 totalled 841,500 subscribers, or around 24% of Europe’s FTTH/B subscriber base (including Russia). However, this figure is lower than a year ago. This is mainly due to the involvement of incumbents which have been deploying largely in 2009 after months (and sometimes years) of expectation for regulation clarification.

• New FTTH/B markets, mainly in Eastern Europe, are very dynamic. Countries such as Lithuania, Estonia and Czech Republic are among the most dynamic in terms of new FTTH/B subscribers during second half 2009.
• Sweden, third country in terms of number of new subscribers between June and December 2009, is still a very dynamic market where local and national players continue to convince end users to subscribe to services based on FTTH/B architecture. On the other hand, the coverage is still increasing, and the consequence it a lower penetration rate in the country compared to end 2008.
• At end 2009, 4 countries have entered the Global Ranking, meaning that more than 1% of households have subscribed to a FTTH/B service: France, Czech Republic, Portugal and Bulgaria.
• The majority of subscribers (around 67% of FTTH/B subscribers at end 2009) is concentrated in 7 countries in Western and Northern Europe: Sweden, Italy, France, Norway, The Netherlands, Denmark and Germany.

Significant FTTH/B* rollouts in Europe, at end 2009:

                                                           Homes/Buildings
                                                                    passed
Country      Player                                        (December 2009)
-----------  --------------------------------------------  ---------------
Denmark      DONG Energy          Power utility                    180,000
Finland      TeliaSonera          Incumbent                        450,000
France       France Telecom       Incumbent                        570,000
             Illiad/free          Alternative operator             370,000
             SFR                  Alternative operator             380,000
             Numericable          Cable operator                 4,400,000
Germany      Wilhelm Tel          Public                           200,000
             M-Net                Public                           120,000
             NetCologne           Power utility                    150,000
Italy        Fastweb              Alternative operator           2,000,000
             Telecom Italia       Incumbent                        100,000
Netherlands  Reggefiber           Infrastructure operator          500,000
Norway       Lyse / Altibox       Power utility                    210,000
Russia       Beeline (Vimpelcom)  Alternative operator           8,000,000
Slovakia     T-COM                Incumbent                        315,000
             Orange Slovensko     Alternative operator             285,000
Slovenia     T2                   Alternative operator             310,000
             Telekom Slovenije    Incumbent                        105,000
Spain        Telefónica           Incumbent                        150,000
Sweden       B2                   Alternative operator             460,000
             TeliaSonera          Incumbent                        250,000
Lithuania    Elion                Incumbent                        110,000
Hungary      Magyar Telecom       Incumbent                        160,000
Portugal     Portugal Telecom     Incumbent                        800,000
             Sonaecom             Alternative operator             200,000
             ZON                  Cable operator                   150,000

* Fibre To The Home or Fibre To The Building (not including FTTN+VDSL)

Source: IDATE for FTTH Council Europe

Excluding Russia, which leads the FTTH/B market in terms of subscribers and Homes/Buildings Passed due to its specific demography, France is still ahead of all other European countries at the end of 2009. But other countries have shown a strong growth and are now positioned among the 10 leaders in terms of number of Homes/Buildings Passed. This is the case for Portugal, Bulgaria and Lithuania which are respectively n° 4, 5 and 6 at end 2009.

Scandinavian countries, and notably Sweden and Norway, still lead the way in Europe in terms of penetration rate with 41.4% and 64.9%, respectively. However, those rates have slightly decreased between end 2008 and end 2009: this signifies that deployments are still engaged and that the coverage, even in those advanced countries, has not reached maturity yet.

FTTH/B subscribers compared to number of homes passed in Europe’s leading markets (end 2009):

Rank  Countries    Penetration at end 2009*
----  -----------  ------------------------
1     Norway                          64.9%
2     Sweden                          41.4%
3     Netherlands                     33.8%
4     Denmark                         22.3%
5     Germany                         16.2%
6     Italy                           14.8%
7     France                           5.4%

* Number of subscribers in total Homes/Buildings Passed

Source: IDATE for FTTH Council Europe

Regarding technology deployed, Ethernet is still the first choice of players and represents 84% of total FTTH/B rollouts at end 2009.

The main change during 2009 concerns the architecture deployed as at end 2009, FTTB represents 58% of rollouts compared to 47% a year ago. This is further proof of the fact that players often opt for FTTB to avoid the issues involved in installing fibre on private properties, and especially MDUs (negotiation with landlords).

Middle East FTTH/B market at end 2009

As part of its inventory, IDATE also examined the status of FTTH in Middle East at the end of 2009. With the exception of UAE, there have been very few FTTH/B deployments in Middle East up until now. Some players have announced and/or have begun FTTH/B rollouts in major cities, but coverage and take-up levels are not yet significant.

The key driver for FTTH/B deployments in the region is massive new housing programs. Alternative operators are more involved in FTTH/B deployments than other categories of players, however, incumbents are dominating the market as they represent more than 60% of FTTH/B Homes/Buildings Passed at end 2009.

Total number of Homes/Buildings Passed and subscribers (December 2009):

                         Middle East(1)
                         -------------- 
Subscribers                      68,822
Homes/Buildings Passed        1,123,522

(1) Bahrain, Egypt, Iran, Iraq, Jordan, Kuwait, Lebanon, Oman, Palestine, Qatar, Saudi Arabia, Syria, UAE, Yemen

Source: IDATE for FTTH Council Europe