France Telecom & Vodafone team up to challenge Telefonica in Spain’s FTTH/High Speed Broadband Access market

France Telecom (FT)/Orange and Vodafone will invest up to up to 1 billion euros (=$1.3 billion) in the joint development of a fiber optic network in Spain, Vodafone-Spain’s Antonio Coimbra told Reuters on March 13th.  The Financial Times reports that Vodafone and FT/Orange plan to offer their own high speed broadband services to customers, in addition to bundled services with mobile, fixed line and TV that are becoming increasingly important in gaining and keeping customers.  The fiber-to-the-home network will reach 800,000 households and workplaces by March 2014, 3m by September 2015, and 6m by 2017.

The new network will challenge Telefónica d’Espagna in the high-speed broadband access market.  But the deal will still need permission to use Telefónica’s network to reach individual homes.  The planned jointly built fiber optic network is intended to reach 6m premises across 50 major cities by September 2017. Vodafone and FT/Orange will each deploy fiber optics in separate but complementary areas to share the network scale. The fiber optic lines will be owned independently but will work as a single network.  The combined capital expenditure needed to reach 6m homes and workplaces is expected to reach €1bn, according to the companies.

Vodafone, which has traditionally been viewed as a purely mobile operator, has slowly established a pan-European fiber optic network through either partnering existing fixed line owners, building its own network as in Portugal or buying companies with fibre or cable assets.  Vodafone and FT/Orange said that the agreement would increase the efficiency of fiber optic deployment and maximize returns on investment for both operators. The agreement is also open to third parties willing to co-invest.

Paolo Bertoluzzo, chief executive of Vodafone’s Southern Europe region, said: “This agreement demonstrates Vodafone’s commitment to provide high-speed unified communications services to our customers coupled with our willingness to invest when there are positive returns.”

KC FTTH network was described at the Feb 13th ComSocSCV meeting.  Ken Pyle of
Viodi View wrote: 
“A step function improvement in capability,” is how Milo Medlin described Google’s Kansas City fiber project at the February 13th IEEE ComSoc meeting in Santa Clara. That huge improvement in customer experience is in contrast to the incremental gains of MSO [Multiple System Operator] and telco broadband networks which have much lower access speeds.  Medlin, who is VP of Access for Google, described a Gigabit/second fiber network that eliminates the bottleneck between the home and the cloud, unleashing new applications and devices both in the home and by implication, throughout a city. Google’s biggest innovation may not be in technology, but it in its ability to improve the provisioning process, create a simplified offering and use grass-roots marketing to promote its high speed fiber access
offering.  The story of Google Fiber is pretty well-known by now. Google issued an RFI a couple of years ago to which 1,100 cities responded he test bed for Google’s fiber to the home project. What isn’t so well-known is that the motivation for this was the middling price/bandwidth performance of the U.S. as compared to other countries.

Hopefully, Ken’s write-up of this IEEE ComSocSCV Feb 13, 2013 seminar will be published at in the near future! 

Medlin, who was a key figure in the early success of cable modems, through his affiliation with @Home, suggested that, instead of complaining to government, Google decided to solve the problem. The unexpected response of so many communities was also a surprise to Google and was an indicator of a pent-up demand.

Interestingly, government turns out to be part of the reason for their success, but not in the form of subsidies or tax breaks. The techniques Google and the local city are using to streamline the permit process and literally work together is saving an estimated 2% of the build cost. Similarly, attachment of fiber to the poles is made somewhat easier because the local utility is municipally-owned.