Monday, 17 March 2008

Two FTTH projects fail and more trouble in The Netherlands

Two projects supported by Reggefiber have had to face defeat. Both were unable to reach the required sign-up rate for the project to commence.

The first one is a progression of the succesful Lijbrandt Telecom FTTH project in Hillegom. In Hillegom market share has been way over 50%. Trying to build the network in neighbouring Lisse (of Keukenhof-fame) was a failure. The treshhold for building the network was at 40% and wasn't met. This being a non-subsidized, private sector initiative the investors cancelled the project.

The same thing happened in the Dutch town of Arnhem, where XMS wanted to build a fibre network in the neighbourhood De Laar. Here too not enough people signed up for the project to start.

BBNed has troubles with ISP's defecting the FTTH projects where it manages the layer 2 infrastructure. This is both in Amsterdam and Rotterdam. Complaints are that BBNed doesn't fulfil orders in time and that it doesn't fix technical problems fast enough. Whether or not this is true is hard to see from the outside, but it does show that running an open fibre network requires quality on many layers and not just the fibre layer.

This shows the difficulty of entering the market. In order for it to be financially viable a new entrant needs to become an instant incumbent overnight and that is not easy. Everything needs to be perfect from the get go, both the technology and the companies that deliver those services have to deliver perfection. Price is also an issue. In the Netherlands the cable companies have started a fierce competition against any new entrant into the market. UPC for instance dropped the price of its offer in very specific neighbourhoods to counter the introduction of fibre. Just to make matters worse, lawyers are part of the problem. Legal fights over Citynet's fibre in Amsterdam have been well documented.

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