Summary
Against the background of the EU targets for digitisation and the very different developments in the Member States, considerable efforts will be required in the future to expand high-performance communications networks. Based on Within the framework of an econometric analysis, it is being investigated which factors could accelerate the expansion of fibre based on FTTB/H connections and which parameters could possibly counteract this goal. In contrast to conventional studies, which use the change in coverage as a proxy for investment costs, a model-based investment cost index for FTTB/H connections is developed for the EU-27. This index explicitly takes into account the fact that expansion becomes more cost-intensive with increasing coverage and is therefore much closer to reality than previous analyses.
The results of the quantitative analyses of potential factors influencing FTTB/H investment in Europe indicate a strong non-linear correlation between cable (in the form of DOCSIS) and FTTB/H. According to this, infrastructure competition between these two technologies will initially lead to an accelerated deployment of FTTB/H. However, above a DOCSIS coverage of 50%, cable has a restraining effect on FTTB/H deployment. This could be due to the fact that an increase in DOCSIS coverage is accompanied by a higher risk for fibre investments, as DOCSIS is in principle also gigabit-capable. Therefore, the market addressable by FTTB/H is relatively declining.
The data set on which the analysis is based covers the 27 EU Member States and a period from 2011 to 2017. The analysis is therefore based on past experience. Developments expected in the future tend to point in a different direction. It can be assumed that demand for bit rates will continue to rise strongly with a trend towards gigabit. On the supply side, FTTB/H is being promoted throughout Europe by extensive government support measures. Against the background of the performance of the technologies expected in the future, both developments could lead to a situation where broadband cable could become less attractive as a "shared medium" in relation to fibre. Studies on the costs of FTTB/H expansion also show that in about half of the access areas in Germany, marketing quotas of more than 50% are necessary for a profitable fibre expansion. Prospectively, this could lead to a situation in which only one infrastructure remains in many areas, namely FTTB/H.
Discussion paper is available for download.
