The battle over the future of broadband will be fought in the streets and houses

Door-to-door salesmen touting 100Mbps connections. Field engineers fighting over permission to wire up apartment blocks. Coffee mornings about ultra-high-speed broadband for the over-60s. House-proud homeowners digging telecoms trenches in a bid to boost property prices.

This is how Europe is being wired up with fibre-to-the-home (FTTH), according to some of the more outlandish claims coming out of last month’s FTTH Council Europe conference.

Certainly, operators believe the stakes are high enough to justify unprecedented sales tactics. Laying fibre-to-the-home networks takes time and money. According to various estimates put forward at the conference, passing each home will cost about Eur1,000 (US$1,540) in many of Europe’s cities and towns, and many thousands of euros elsewhere.

The operators are understandably keen to make sure that customers sign up to those connections, especially given that monthly tariffs in the tens of euros mean that it will be many years before they make a complete return on their investments.

There is also evidence that operators that are first with fibre find it easy to attract and retain customers. John Quist of the Dutch incumbent KPN described how 85 per cent of households covered by one municipal FTTH network in the Netherlands converted to paying customers.

“The cable companies and KPN and the other telcos were just wiped out,” he said. Another Dutch municipal network, Neunen, claims 90 per cent take-up, while Sweden’s ViaEuropa claims 78 per cent. One municipal operator said that its FTTH services were so appealing that it did not need to market them to the younger population, hence the coffee mornings for the older generation.

Others are even confident that customers will pay the thousands of euros it costs them to lay fibre to their homes. Malarnetcity in Sweden charges ?2,800 to potential subscribers in houses and Eur300 to those in flats. Denmark’s DONG Energy charges up to Eur1,600, reduced to Eur400 for customers who dig the trenches the fibre will be laid in.

Malarnetcity claims that removing the need to fold the capital expenditure of laying fibre into its wholesale tariffs will ultimately result in lower retail tariffs.

The difference compared with tariffs on an incumbent’s network can be so great that Malarnetcity estimates that even subscribers paying the full ?2,800 can make back their investment through cost savings within four years. The operator also says an FTTH connection increases a property’s market value.

As unlikely as it sounds, there might be something in the municipal operator’s pitch. Malarnetcity claims that 60 per cent of house owners in eligible areas have made such investments, with more queuing to stump up the cash.

The problem for conventional telecoms operators is that there is more at stake than just subscriber numbers. If one operator beats others to wiring a house or apartment block, it will have a monopoly on that infrastructure that will likely last decades. In order to serve these customers, other operators will have to rent capacity at least on their competitor’s in-building wiring, even if they take the risk of laying their own fibre to those properties.

Municipal networks in particular pose a challenge to conventional operators. Driven largely by social rather than commercial motives, these publicly funded projects are spreading from Europe’s northern states to its larger markets, having been sanctioned in France and Spain.

Reggefiber, the owner of the network Quist referred to, already has FTTH infrastructure covering 200,000, or nearly 3 per cent, of the Netherlands’ 7.2 million homes and is expanding. One of its projects, Citynet, plans to eventually cover 450,000 homes in the capital, Amsterdam. Municipal networks in Sweden, meanwhile, pass more than 6 per cent of homes and counting.

The progress of the Swedish networks has already caused the incumbent, Telia, to rent capacity on them, while KPN has agreed to operate a network covering 40,000 homes that Reggefiber will build and own.

Another advantage the municipal networks have over incumbents are their close links with communities. Organising town meetings, door-to-door sales and recruiting well-known local figures as ambassadors for their wares is not much of a stretch for them.

The same cannot be said for incumbents and alternative operators. Although they share the municipal networks’ optimism about the appeal of fibre, they admit that their glossy nationwide campaigns will only serve to annoy customers who can’t access services.

Already, such “legacy” operators in France, Sweden, Norway and Finland have taken to the streets to recruit housing authorities, apartment-block owners and even individual householders to their cause, knocking on every single door if necessary.

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