Dark Fibre Europe 3

Published: June 2015
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The report researches Dark Fibre in 24 European markets and covers 89 operators and provides a completely updated review (the previous report was published in 2008).

With a buoyant competitive market operating across the countries covered, the report reveals provisioning dark fibre has now become a commercially acceptable alternative to other types of bandwidth for the mobile backhaul sector.

Regulatory pressure on telcos – still the main owner of dark fibre assets - continues to edge gradually towards definition as a wholesale product and stimulating competition. However the premium pricing applied remains challenging for users.

Nevertheless the report uncovers emerging trends that could eventually shift behaviours. Until now only 4 players have built presence in dark fibre across several country markets. Most players remain highly national in approach and outlook. This suits incumbent telecom operators who charge Dark Fibre at a premium rental tariff, typically higher than for rental wavelength services.

The report believes that private equity players in particular will be behind future shifts having identified a valuable asset play as well as the opportunity for consolidation across European markets. (the recent sale of Eurofiber, the owner of Netherlands largest independent fibre optic network, to Antin Infrastructure Partners for 875 million euros (£627.8 million) attests to these developments) There remains a significant opportunity to create pan-European dark fibre networks.

Enterprise acquisition of dark fibre is one of the key changes over the past 7 years in addition to other players. Demand is also being driven by data centres requiring network links between facilities, telecom providers, and mobile operators.

Despite new players entering the market, supply remains a severe constraint with much still owned by incumbent telecom operators. Mobile operators are campaigning with regulators – who are proving to be a key change driver - for the provisioning of dark fibre as a wholesale product.

Some relief in the market is being provided by utility (electricity and gas in particular) and municipal owners who are moving into the market space and willing to productize dark fibre offerings at commercial rates. Swiss regional water and energy providers for example are deploying fibre using their existing duct network. Some - but limited - submarine cable system availability also exists.

The report contains the results of a survey with 46 end users of dark fibre in Europe, most requiring large or unlimited bandwidth capacity and a high level of scalability. Passive infrastructure is being used as a preferred alternative to multiple wavelengths when capacity is forecast to increase over time.

Sweden has a particularly high number of dark fibre operators. The Dark Fibre Link for example runs across the Oresund Road Bridge, between Denmark and Sweden.

Profiles of dark fibre players – including new players, pan Europeans, and nationals in 24 European countries – are contained in the report.

Technology is also changing the both the capacity and value of the dark fibre opportunity. Backbone speed per fibre is increasing over time – currently at 100 Gbps in practice – with future speeds potentially being as high as multiple terabytes. Demand will quickly take up these services.

The report identifies developments in several Tier 2 metro markets where dark fibre deployments have taken place, cites deployments between Data Centre facilities, the business models used and developments in the pricing structure and contract terms of Dark Fibre services.

Early evidence of online trading of dark fibre resources is identified in the report which combined with emerging cloud brokerage services could coalesce into a powerful proposition enabling faster availability, transactions and costing.

Further change might be anticipated as country regulators continue to force incumbent telecoms provider to offer Dark Fibre services - as a lower cost alternative to renting bandwidth services.

The report concludes with a review of international dark fibre in the US where services are typically provided by smaller telecoms providers and regional providers who are specialists, and Asian markets.

Europe remains problematic for financing of Dark Fibre networks compared with North America. In the US Dark Fibre network start-ups are financed by investment funds, whilst in Europe the main Dark Fibre entrants are more typically infrastructure utilities and subsidiaries of municipalities.

In Europe, this means that the choice of Dark Fibre providers to the user are limited, as the existing telecoms providers typically do not wish to cannibalize their existing managed service revenues. The number of Dark Fibre providers – outside Scandinavia – in Europe remains limited by comparison with North America.