"I don't doubt the need for full fibre coverage, or the eventual appetite for those speeds, but I struggle to see the need for quite the patchwork of infrastructure builders we now have," Matt Howett, founder and principal analyst at Assembly Research told TelecomTV.
"Scale is important in this game, especially when negotiating with suppliers, which surely puts smaller builders at a disadvantage," he noted. In addition, he warned that there is also recruitment and the training of engineers to build the networks to consider, which is a sizeable part of the cost of deployment. "What is that competing demand for labour going to do to the cost of build?" he asked.
ARCEP is not talking regulation... yet. But nobody is in doubt that regulation will follow if the recommendations are ignored.
According to Luca Schiavoni, an analyst at Assembly Research, the move by ARCEP can be part explained by a long-running dispute between Orange and SFR over their 2011 deal to split the ‘medium density’ territories in France to deploy FTTH. When SFR merged with Numericable the new entity decided it wanted a bigger share of the areas. Unpleasantness broke out between the two telcos with the end-result that Numericable threatened that it would gather investors in a joint venture and cover disputed non-density areas anyway, overbuildiing some of Orange’s infrastructure.
“That didn’t happen, but clearly it would have been undesirable for everyone,” said Luca. “If you duplicate networks you’re likely to remove the case for investment for both yourself and for the other operator.”
So ARCEP wanted to avoid any possibility of this sort of “lose-lose” competitive play ocurring again since it tends to be unnerve potential investors and affect their investment plans.
So is this sort of problem a live issue in other European countries?
“Yes, I think it is a live issue,” says Luca, but we are still at question time, not at answers time. In the UK, for instance, we’re still at the stage where operators are finding out about the viability of their investments.
“In France the regulator has sent a recommendation which means it has no real binding power but it also means that the regulator has sent a message which says, ‘We are watching this and in the future, if needed, we will take action’.