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

Amsterdam glass fibre still not convincing to EC

EC Commissioner Kroes in the EC responsible for market competition still has great doubts about the way the municipality of Amsterdam is investing in the glass fibre project. There is still a question about the way the city of Amsterdam has invested in the glass fibre project linking 400.000 household. Ms Kroes suspects the city of Amsterdam of subsidizing the large-scale broadband project to the detriment of private telecom companies and cable operators. She is also calls the plans over ambitious.

From the beginning of the project there has been opposition to the way the municipality has handled the project. The municipality was already warned by the announcement of an investigation last December. Kroes scrutinises the position whether the municipality of Amsterdam is partaking as a private investor or whether is subsidises the project. If so, she says, it looks like the municipality did not make the investments simultaneously with the private investors nor under the same conditions.

Now it appears that Ms Kroes sent a letters formulating several questions to be answered. The press release about the investigation came as a public announcement and as a not very welcome Christmas present for the Amsterdam municipality. The letter with questions was confidential. Amsterdam claims that it has answered all the questions. Kroes claims that 18 months after her first request and several reminders she finally has the information.

The business plan is also criticised; it is too optimistic, Kroes says. In the first phase 37.000 households will be connected; eventually 400.000 households have to be linked up. The business plan is seen as over-ambitious and optimistic, while the connecting time and the amount of households do not square. The penetration in the minimum scenario is optimistic.
The in-depth investigation stems from complaints filed by telecom company UPC and the association of cable operators VECAI. UPC has been excluded as a partner and investor at an early stage; the company serves the Amsterdam area with analogue and digital television, internet and fixed and mobile telecom. The Amsterdam glass fibre project is not only competition for the cable operator UPC, but also for the incumbent telecom operator KPN; KPN is involved in the project in the meantime.

The VECAI considers the protest of the cable operators as valid, as it is not just one question the municipality of Amsterdam has to answer to the EC, but at least five or six. The municipality has not made public statements about the investigation, but has continued with its activities (connecting the first households and the promotion of the project as was seen during the Australian New Zealand trade mission). The question does not move fast; since the public announcement of an inquiry more than 5 months have passed. This does not bode a positive decision fro Amsterdam.

Blog Posting Number: 772

Tag: glass fibre