Sunday, December 30, 2007

2008: Year of the fibre breakthrough

Amsterdam got its Christmas present from the European Commission. The municipality of Amsterdam was cleared from unfair state competition in the matter of the fibre project of the Cityring from the complainants the cable operator UPC and cable operators’ association VECAI (which changed its name to NLkabel recently). Amsterdam had never doubted the positive outcome of the EC investigation.


(c) 2007; Houthoff Buruma Solicitors

The Directorate General of Competition, headed by Ms Neelie Kroes, decided to start an investigation, acting on the complaints of UPC and VECAI. The municipality of Amsterdam had invested 6 million euro as equity with private companies in the passive level the proposed Cityring. Amsterdam did the investment in order keep control on an open fibre network. UPC have been closed out of the bidding process early, lodge a complaint of unfair state funding with the DG Competition. The DG started a voluntary and non obligatory investigation. A lot of documents went back and forth, confidential documents had to be cleaned up due to corporate details and draft documents were held up due to court cases. Even a case before the Court in Luxemburg was under consideration. In May the DG Competition was ready to start the final leg of the investigation, which ended in December with a ruling favourable for the municipality of Amsterdam.

The DG Competition looked at three items:
a. does the municipality act as a market conform investor, in other words does the municipality not support the foundation of a company unfairly with state support;
b. Is fibre to the home a achievable business case;
c. And some specific sub-items.

Already in December 2006 UPC and VECAI had the draft text, clearing the municipality of unfair support. UPC decently kept its mouth shut as the investigation was not yet final. Remained left the business case and the specific sub-items. Helped by the timeframe, the business case was not an item any longer either. In the Netherlands FttH initiatives mushroomed: Nuenen, Hillegom, Geldrop-Mierlo, Deventer, Enschede as well as abroad. Besides the projects various companies competed for these projects; in the Netherlands notably Reggeborgh and KPN. Last October, the Amsterdam municipal project manager Dirk van der Woude has published an updated list on Dutch and foreign FttH projects. The last sub-items have been cleared by the municipality of Amsterdam successfully.

So Amsterdam can continue its project to bring fibre to more than 450.000 Amsterdam homes. In the meantime more initiatives spring up, besides the already mentioned one. As ambitious as the Amsterdam Cityring is the living lab Almere project where 70.000 will be connected to fibre before 2010.

From the updated list it is clear that 2008 will be the year of the fibre breakthrough in The Netherlands. Not in the list is yet the Fibre to the Farm (FttF) project, a project where rural areas will be linked up to urban networks. Difficult areas will be bridged by leading cables through trees in woody areas; besides farmers will dig the ducts with tractors instead of calling in a cable laying contractor with urban experience. Also internationally fibre will break through with large urban areas in 2008. Fibre will no longer be in a pilot phase, but will be in a project phase.

Cable projects will have to prove in 2008 that they can reach the same type of speeds by cable. So far UPC has demonstrated speeds of up to 100Mbps, but has not started marketing it. It looks like UPC and other cable operators will have to stick to lower rates over against fibre operators. I look forward to the battlefield in Almere.

The usage of higher speeds will have consequences for content. We have seen the usage of video grow fast. Also the social networks have grown with movies and twitter-like services. But with higher speeds, services will have more freedom to compose services with live video. This will for example be a challenge for newspapers and broadcast services. But it will also have consequences for bloggers. So far the majority of bloggers have worked with text. But I would not be surprised, when we see more bloggers go into audio or video interview blogs.

Blog Posting Number: 964

Tags: FttH, FttF, Fibre to the Home, Fibre to the Farm, , , ,

1 comment:

Jak Boumans said...

I received a remark on the posting. UPC has never been excluded from the Amsterdam FttH tender. They just have not participated, contrary to KPN.