Sunday, October 25, 2009

KPN may move beyond FTTH

Last week, I spoke with a couple of Ericsson people. They had a really cool slide of how market shares have moved for all vendors (Ericsson, NSN, Alcatel-Lucent, Huawei, ZTE, NEC, Cisco, Motorola, Nortel). The X and Y axis represented mobile and fixed sales. Each company was represented by three blobs, representing sales in 2006, 2007 and 2008. By their size and direction, one could tell who is moving where. Curiously, Cisco was regarded purely fixed (not counting the Starent takeover) and in LTE, Ericsson expects to see three winners: Ericsson, Huawei and some third party (I wonder who that could be).

When it came to LTE, they were perfectly clear about what it means: it is the third pipe that we have been talking about for a long time (but not recently). In Ericsson speak, mobile broadband (MBB) is not a complement, but a fully-fledged replacement to fixed NGA networks (helped by releases such as these: 500 Mbps, even if we should not get carried away). And make no mistake: we are talking laptop (or netbook) usage, not an inferior smartphone experience. Of course, MBB requires FTTS (site).

All this may be a blissing to KPN's indecisiveness regarding FTTC and FTTH.
On the side, new service development is notoriously slow, which may contribute to KPN's undecisiveness. One reason is (semi) governmental agencies' unwillingness to move online. A reason behind this, as was stressed in my newspaper this week, is the fact that health workers are paid by the hour. They are completely disincentivised to embrace e-health, because it threatens to make their work much more efficient.
Back to KPN. They bought a 41% stake in the FTTH start-up Reggefiber, and injected their own (few) FTTH projects into it. And now they are trialling both FTTH (through Reggefiber) and FTTC. By the end of the year, they want to decide their strategy going forward, based on these trials. (The Q3 release is due October 27.)

My prediction is: they will freeze the Reggefiber expansion (blaiming it on the financial markets) and move forward with FTTC. And this may be a smart move after all. The original FTTC targets were to bring fiber to 28k street cabinets. And perhaps some of these can also house LTE gear. At the same time, KPN's mobile sites will have to be fiberised as well (it is a well guarded secret how many actually already are).

It also becomes clear why KPN bought the Reggefiber stake: for the good old business reason of taking out a competitor. Remember Nielsen Media Research, once part of VNU, following the exact same strategy by buying start-ups that threatened Nielsen's monopoly on the US TV ratings market. They were never heard of again.

As a result, KPN may be the first operator in the world to actually move beyond FTTH. (So much for those who like to term FTTH not NGA but LGA: last-generation access.)


Neal Lachman said...

I agree completely with your vision on KPN taking out a competitor if they actually close down Reggefiber.

But I don't understand what you mean with "beyond" FTTH, because FTTC is not an advancement; it's half baked.

Tim Poulus said...

Beyond FTTH: LTE. You have to look at the access part of the network. Tim