The Cost of Fibre for Europe’s Gigabit Society

POLICY

According to the FTTH Council Europe, FTTH for Europe is achievable, but a realistic discussion on deployment costs is urgently needed.

Erzsebet Fitori

DIRECTOR GENERAL OF THE FTTH COUNCIL EUROPE

The FTTH Council has calculated the overlay of EU28 countries with FTTH in a greenfield scenario. This includes 100% homes passed and 50% connected. Accounting for already existing fibre coverage and connections - some 30% and 10% respectively - the model shows that the outstanding costs of full fibre coverage in the EU are €156 billion.

The re-use of existing infrastructure and effective implementation of the Cost Reduction Directive can lead to further 12% cost savings and could further bring down these costs to €137 billion. This cost reduction can be achieved by reusing existing infrastructure, more co-ordination and sharing of civil works and re-use of in-building infrastructure.

Transparent & realistic

“Our model was developed by network designers and cost modelling experts COMSOF,” said Erzsebet Fitori, Director General of the FTTH Council Europe. “I don’t wish to understate the challenge that Europe faces or the size of the required investment - but the challenge should not be overstated either. These cost estimates show that FTTH is achievable throughout the EU. We believe that a transparent and realistic discussion is needed so that the co-legislators, end-users and investors are aware of the real costs of creating a Gigabit Society.”

“Our study aims to show that rolling out fibre across Europe might be expensive but not unattainable. It includes an extensive description of how we arrived at our figures, including what costs included and assumptions made. Not all reports are quite as transparent. However, several different figures are floating around, which can’t be directly compare, partly because they don’t all use the same figures and assumptions.”

A report from the Boston Consulting Group commissioned by ETNO (European Telecommunications Network Operators’ Association) claims that meeting Europe’s Gigabit targets would cost € 660 Bn. Of that, they also calculated that realizing Fibre to the Premise across Europe would cost €360 Bn, which we think is wildly overstated. New Street Research, a London financial analyst specialising in telecom recently arrived at €161 Bn, without including cost reduction measures. This is comparable to the FTTH Council Europe €156 Bn. The EC also arrived at a figure of 500 Bn to achieve full Gigabit and 5G coverage and identified €154 Bn of the total as an investment gap, which again is quite close to the FTTH Council Europe figure of €156 Bn.

“There is a clear political and investor momentum for a step change in Europe’s digital infrastructure towards fibre-based Gigabit networks. The figures are particularly interesting in this context and amidst the current ongoing legislative process rewriting the EU’s telecoms rulebook. Fibre and new network investment models such as wholesale only or co-investment are getting traction from investors. We see governments and national regulators in big markets which have traditionally been FTTC-focused moving towards FTTH.“

Ambition levels

Erzsebet Fitori adds: “Lively discussions are taking place in the European Parliament and the Council of Ministers - the EU legislative institutions - about the level of ambition Europe should have for very high capacity connectivity. Some of the definitions recently proposed are not especially ambitious. In our opinion, overly modest targets incentivising operators to extend the lifetime of decades-old copper are harmful for future-proof investments in Europe. Technology neutrality shouldn’t lead to ignoring what different technologies are capable of delivering. Europe needs fibre-based very high capacity networks to meet the needs of a digital economy and society. Policy makers should not compromise in seeking the best networks for Europe that can support next generation technologies and digital services. In practice, that simply means fibre. We’re seeing more and more connectivity-dependent financial and e-government services. There are more and more devices online that are continuously communicating. What’s more everything from G-fast to 5G needs fibre to operate properly. Many new services might not require a lot of bandwidth but require extremely low latency. Also, security and resilience are vital. In each of these cases, fibre is the obvious solution.”

“Fibre based infrastructure is the only future-proof foundation enabling fixed and wireless Gigabit networks as well as all new innovative digital technologies and services and the prerequisite for Europe’s global digital competitiveness and sustainability.”

Ronan Kelly, President of the FTTH Council Europe

Download the cost studies

FTTH & ETNO

The FTTH Council has calculated the overlay of EU28 countries with FTTH in a greenfield scenario. This includes 100% homes passed and 50% connected. Accounting for already existing fibre coverage and connections - some 30% and 10% respectively - the model shows that the outstanding costs of full fibre coverage in the EU are €156 billion.

The re-use of existing infrastructure and effective implementation of the Cost Reduction Directive can lead to further 12% cost savings and could further bring down these costs to €137 billion. This cost reduction can be achieved by reusing existing infrastructure, more co-ordination and sharing of civil works and re-use of in-building infrastructure.

Transparent & realistic

“Our model was developed by network designers and cost modelling experts COMSOF,” said Erzsebet Fitori, Director General of the FTTH Council Europe. “I don’t wish to understate the challenge that Europe faces or the size of the required investment - but the challenge should not be overstated either. These cost estimates show that FTTH is achievable throughout the EU. We believe that a transparent and realistic discussion is needed so that the co-legislators, end-users and investors are aware of the real costs of creating a Gigabit Society.”

“Our study aims to show that rolling out fibre across Europe might be expensive but not unattainable. It includes an extensive description of how we arrived at our figures, including what costs included and assumptions made. Not all reports are quite as transparent. However, several different figures are floating around, which can’t be directly compare, partly because they don’t all use the same figures and assumptions.”

A report from the Boston Consulting Group commissioned by ETNO (European Telecommunications Network Operators’ Association) claims that meeting Europe’s Gigabit targets would cost € 660 Bn. Of that, they also calculated that realizing Fibre to the Premise across Europe would cost €360 Bn, which we think is wildly overstated. New Street Research, a London financial analyst specialising in telecom recently arrived at €161 Bn, without including cost reduction measures. This is comparable to the FTTH Council Europe €156 Bn. The EC also arrived at a figure of 500 Bn to achieve full Gigabit and 5G coverage and identified €154 Bn of the total as an investment gap, which again is quite close to the FTTH Council Europe figure of €156 Bn.

“There is a clear political and investor momentum for a step change in Europe’s digital infrastructure towards fibre-based Gigabit networks. The figures are particularly interesting in this context and amidst the current ongoing legislative process rewriting the EU’s telecoms rulebook. Fibre and new network investment models such as wholesale only or co-investment are getting traction from investors. We see governments and national regulators in big markets which have traditionally been FTTC-focused moving towards FTTH.“

Ambition levels

Erzsebet Fitori adds: “Lively discussions are taking place in the European Parliament and the Council of Ministers - the EU legislative institutions - about the level of ambition Europe should have for very high capacity connectivity. Some of the definitions recently proposed are not especially ambitious. In our opinion, overly modest targets incentivising operators to extend the lifetime of decades-old copper are harmful for future-proof investments in Europe. Technology neutrality shouldn’t lead to ignoring what different technologies are capable of delivering. Europe needs fibre-based very high capacity networks to meet the needs of a digital economy and society. Policy makers should not compromise in seeking the best networks for Europe that can support next generation technologies and digital services. In practice, that simply means fibre. We’re seeing more and more connectivity-dependent financial and e-government services. There are more and more devices online that are continuously communicating. What’s more everything from G-fast to 5G needs fibre to operate properly. Many new services might not require a lot of bandwidth but require extremely low latency. Also, security and resilience are vital. In each of these cases, fibre is the obvious solution.”