Triple play, convergence, bundled services: whatever spin you want to put on it, broadband access is currently where the action is as far as Europe's service providers and their equipment suppliers are concerned. The headline figures remain encouragingly robust, especially in Central and Eastern Europe, where the 10 newest European Union (EU) states had registered 1 million broadband connections by the end of the third quarter of last year - a 29% hike on the previous quarter.
In the EU as a whole, the number of broadband connections was running at 33.7 million lines by the end of the same quarter, a 14% rise on the previous three months. Meanwhile, from a technology perspective, it's clear that Digital Subscriber Line (xDSL) - which accounts for 79% of broadband connections in the EU - retains its stranglehold versus cable TV and other high-speed offerings such as fibre.
Cable TV operators, incumbent telcos and alternative service providers are understandably anxious to capitalize on the mass dash for high-speed connectivity in Europe's last mile. Setting the pace are the cable companies, which for several years have been pushing - with a good deal of success - the triple play of voice, data and television services. The rationale is simple: more customers taking more services equals higher average revenue per user and, most importantly, reduced "churn". Now, following the cable companies' lead, an increasing number of Europe's telecoms service providers are looking to book their ticket on the bundled-services bandwagon.
One of the most innovative advocates of the triple-play mantra is FastWeb, a leading alternative provider of broadband services in Italy. To date, FastWeb has rolled out a network that "passes" 18% of the Italian population, exploiting a combination of xDSL and fibre-optic lines to deliver packaged voice, Internet and TV. As FibreSystems went to press, however, the operator was unveiling plans to turbocharge the reach of its access network (and at the same time turn up the competitive heat on its main broadband rival, incumbent operator Telecom Italia). Equipment vendors take note. On the back of an €800 m rights issue, FastWeb plans to invest €2.8 bn in network expansion over the next five years. Encouragingly, the new-look business plan also sets demanding targets when it comes to delivering the payback on that capital spending. Over the same time-frame, FastWeb aims to have 2.2 million signed-up customers and to be pulling in €2.4 bn in annual revenues. By the end of 2006, the network is expected to pass 10 million homes (around 45% of the Italian population).
Even in isolation, numbers like this look significant. What's more, if the FastWeb model is replicated elsewhere across the EU, telecoms equipment vendors can expect to see substantive growth in the addressable market opportunity at the edge of the network. David Dunphy, author of this month's keynote feature (see "Competitiveness rules in the brave new world"), sums it up well: "Now, with the broadband-access build-out under way worldwide, leveraging both FTTP and xDSL technology to enable triple-play services, the industry at last will begin to have the foundations for strong and sustainable growth in demand - growth that previously had been so inaccurately and prematurely forecasted."
• This article originally appeared in FibreSystems Europe in association with LIGHTWAVE Europe January 2005 p5.