Belgian operator Proximus unveiled its intention to invest €3 billion (US$3.14 billion) in a fiber-to-the-business (FTTB) and fiber-to-the-home (FTTH) network in the next ten years and ultimately aims to cover more than 85% of all enterprises and more than 50% of all households.
Analysts from Jefferies International said the project would in fact cover 40% of households within the initial ten-year period, with the 50% target achieved within 15 years. They also noted that the fiber plan would have significant implications for competitors in Belgium, which is among the few countries in Europe with almost universal cable coverage.
"We see the current FTTP announcement as a logical evolution that highlights the structural pressures facing incumbents in 'cable countries.' We also believe that Proximus's targeting of residential broadband share gains risks market disruption," the analysts added.
A primary objective of Proximus 's "Fiber for Belgium" project, which will see the company upgrade its existing fiber-to-the-curb/cabinet (FTTC) and VDSL networks in urban areas, will be to provide full fiber coverage in dense city areas, with a "progressive rollout" starting in Antwerp, Brussels, Charleroi, Ghent, Namur and Roeselare in early 2017.
In its former guise as the incumbent Belgacom, Proximus has been investing in FTTC networks since around 2004 and said 21,000 kilometers of optical fiber now connect its street cabinets.
It believes that bringing fiber directly into homes and businesses is an essential next step. Connecting businesses remains a priority for Proximus, but it noted that the rollout of FTTB also supports the business case for FTTH in dense city areas.
The operator added that it has already rolled out fiber in over 80% of business zones in Belgium, and said more than 6,000 of its enterprise customers are connected to fiber today. It will also continue to invest in its existing FTTC network as well as next-generation VDSL for customers living outside dense city areas.
Jefferies added that the FTTC infrastructure will be "densified" in less urban areas through measures that include shortening sub-loop lengths from an average of 530m today to less than 350m, enabling speeds up to 250 Mbit/s with "super vectoring."
CTO Geert Standaert said Proximus would be the first operator on the Belgian market to bring fiber inside existing homes and apartments.
"This is great news for Belgian customers, as optical fiber can be considered as the ultimate broadband technology, allowing us to meet customer needs in the very long term," he said.
Proximus has also previously invested in ADSL, VDSL2 and vectoring technologies that allow copper networks to be upgraded in order to provide higher speeds. Rivals have also been able to provide local loop unbundling projects in the past, although it's not clear as yet how rival operators might also benefit from the FTTB/H network.
As noted by Jefferies, Belgium is very much a "cable country" and the main competitive implications of the fiber investment are in the B2C segment. The analysts said Proximus's management clearly believes that fiber upgrades will create a competitive advantage over cable in terms of speed and reliability, and is therefore targeting "significant" market share gains in residential broadband.
"At the same time, management stated on the conference call that the product advantage alone is sufficient for such share gains, without need for price-driven competition. However, we would argue that targeting higher market share necessarily implies competitive friction as cable is unlikely to simply accept shrinking share -- noting also that Telenet in particular has announced a DOCSIS 3.1 programme aiming 1Gbit/s service on its network by 2020e," the analysts added.
"We believe there are significant risks to 'rocking the boat' by going for share in a price-inflationary and highly oligopolistic market structure," Jefferies concluded.
— Anne Morris, Associate Editor, UBB2020