Thanks to activity from regional players as well as investment by major multinational names, the market for global wholesale services in central and eastern Europe is developing healthily.
While mobile broadband is, predictably, where much of the access effort is going across the region, the eastern European directly-attached fibre story is interesting in its own right. According to the FTTH Council Europe, the not-for-profit body which exists to promote fibre connectivity into homes and enterprises, Europe is now ahead of the US in fibre deployment, with eastern Europe in the vanguard of that trend.
Europe hit the landmark of 10 million fibre-to-the-home and building (FTTH/B) subscribers during the summer of 2011. Russia, intriguingly, accounts for more than half of that total, according to the European ranking provided by analyst firm iDate for the FTTH Council Europe. “We have overtaken the US,” said Nadia Babaali, communications director with the council. “Asia is clearly leading [with 46 million connections as of mid-2011]. The Middle East has just 0.3 million subscribers.”
Four CIS countries – Russia, Ukraine, Belarus and Kazakhstan – count 5.6 million subscribers between them, emphasising that for the most part it is eastern European countries that are showing the way to their western counterparts. Lithuania leads Europe in terms of penetration of FTTH, measured as a percentage of population. The two most recent entrants in the FTTH ranking are Hungary and Ukraine. Of the top 20 on the present ranking, 11 are Eastern European countries.“Eastern European countries are driving the growth for FTTH in Europe,” believes Babaali.
So how are they achieving this? And where are France, the UK and Germany falling down? For one thing, the regulatory regimes in those larger and more mature economies militate against keeping pace with the Slovenias and Lithuanias. Major incumbents like France Telecom Orange and BT are not in an economic position to abandon legacy investments just yet, nor are they free to determine how they charge other service providers for access to their infrastructure as they see fit. In Lithuania, incumbent Teo has been free to approach the roll-out of fibre on something like its own terms.
The stratagem of most fibre network operators in eastern Europe has also been to hit the low hanging fruit of major apartment blocks, which is where the bulk of urban citizens live in such economies. By wiring one block with fibre, you connect dozens of households. And by not being required by regulators to include outlying rural regions in roll-out plans, many eastern European fibre network operators are scoring over their western peers here also.
Developments in 2012
Relatively new to eastern Europe is NTT Communications whose Tier 1 global IP network now extends to the region with PoPs in Budapest, Bucharest and Sofia. The company plans to expand further in the region to the point where it rivals other major global operators.
The Level 3 acquisition of Global Crossing means that much of 2012 will see the consolidation of the network assets of those two players across the region.
GTS Central Europe will be investing further, both organically and most likely in acquisitions also as it seeks to retain its status as one of eastern Europe’s most focussed indigenous operator. It has also recently opened a new data centre in Bratislava, Slovakia to add to its now considerable portfolio of data facilities, a move which will only help complement its extensive fibre network.
