Claims that European countries cannot afford the roll-out of fibre to the home (FTTH) networks may not stand up to close scrutiny, according to the director general of the FTTH Council Europe.
Hartwig Tauber said that, despite seemingly 'insurmountable' obstacles of shareholder demands, increasing competitive pressure and the economic downturn, there is plenty of money available to invest in such a project.
Tauber said: 'The European Telecommunications Network Operators' Association (ETNO), which represents incumbent operators across Europe, said its members invested €29 billion annually, on average, over the last six years, of which approximately €17 billion was for fixed networks. In addition, alternative operators invested nearly €16 billion annually, and we assume a similar proportion of their investment was directed towards fixed networks.
'If the level of operator investment remains stable, then up to €210 billion would be available for investment between now and 2020. If we take into consideration additional spending to increase fibre backhaul capacity for 4G/LTE mobile base stations, the investment potential would be even greater.'
Tauber says the situation is exacerbated by the fact that incumbent operators typically build FTTH networks in the most profitable areas, such as major towns and cities, where the deployment cost is lower and they are under pressure from competitors.
'As a result,' says Tauber, 'the incumbents account for less than one quarter of FTTH deployments to date, and it is unlikely that they will roll out FTTH everywhere. Investing in smaller towns and villages requires a longer-term vision, and so it is mainly utility companies, small regional operators, and municipal government who have taken the lead in those areas.'
He continues: 'Regrettably, small players are often caught in a financial no-man’s land because of their size, and some potential FTTH projects struggle to get off the ground. While the investment is too big and too special to be handled by local banks, it is too small to be addressed by institutional investors.'
Politicians also need to step up to the plate, says Tauber: 'Many investors are desperate for sound long-term investment opportunities. The low interest-rate environment has made government bonds unappealing to pension funds or insurance companies. Infrastructure as an asset class could provide an attractive investment opportunity with greater returns.
'To make this possible, the European Commission needs to develop a coherent approach that takes the requirements of long-term investors into account, backed up by supportive financial regulation.'
Media Partners