DARK FIBRE EUROPE II

Published May, 2008

Re-visiting issues first identified in the BroadGroup report of 2005, this new report reaffirms the continued expansion of Dark Fibre in Europe, with steady growth averaging at 8% per annum, continuing through to 2012. The boom and bust approach to new network deployment has vanished, and has been replaced by an air of caution with speculative fibre build out being kept to a minimum and mainly focused on the access part of the network to the customer site.

The report does however identify a number of new drivers in the marketplace which is stimulating growth, ranging from sustained broadband demand and continued growth in cross-border peak Internet traffic to the emergence of community fibre, already a growth vector in North America. Muni-fibre appears to be taking hold in a number of European countries (now around 15% of the Dark Fibre provider market by type) and quite often these developments are financed by local government authorities. These projects are now being assessed by the European Commission whose aim is to make Dark Fibre as accessible as possible to all user groups. But it also refers to the increasing propensity of business users to “club” together and access Dark Fibre links.

Perhaps most strikingly, the report contends that evidence collected in research supports the view that Dark Fibre is becoming a service of choice for an increasingly large number of companies, and is emerging as a marketplace of opportunity, rather than its former image as an arcane and inaccessible part of the network. New players see it as a service to sell to enterprises and other operators, rather than a strategic asset to retain.

Incumbents have yet to resolve provision of access to Dark Fibre, and the regulatory theme posed by the evolution of muni-fibre, is being sustained as national regulatory authorities, particularly in the UK, France and Germany, increase their focus on accessibility.

Using case studies and trend analysis, the report reviews the status of Dark Fibre in 17 countries in western Europe, and identifies provider segmentation ranging from utility companies to cable TV providers. A summary of Dark Fibre activity by each player is provided.

Customers of Dark Fibre include an important group of academic networks, the NRENs (National Research and Education Networks). Although NREN’s in Europe are the most identifiable common users of Dark Fibre (and one of the main international users) there are a number of new customer segments which are becoming active users of the service, also identified in the report. In targeting some of these segments, and capture market share, Dark Fibre providers are adopting new pricing strategies.

However it is the emergence of FTTH (the report cites 30 key developments across the region) which is most directly impacting Dark Fibre provider business models. One such example is the new need to develop fibre-to-the-kerb in tier 2 cities across Europe, and offering layered services, making it possible for other players to provide their own services.

The report also considers new trends in fibre technologies and factors impacting civil engineering costs in building out fibre networks. It also summarises the main trends in fibre deployment in Europe where less used routes are now favoured. The same approach applies to the deployment of submarine cable systems in Europe. Rather than lay new systems on the most saturated routes new cables are being laid on less developed routes.

Overall the report provides a comprehensive review of Dark Fibre markets and players in Europe, updates on developments in the past three years and looks forward to growth drivers through to 2012.