Portugal joins world FTTx elite…sort of

Portugal crept into the world’s elite group of broadband connected nations at the end of 2009. With 41,500 FTTH subscribers, just under 2% of Portugal’s broadband homes used FTTH at the end of last year and the measure of eliteness used by the FTTH Council Europe, is that more than 1% of connected homes must use FTTH/B.

March 3, 2010

3 Min Read
Portugal joins world FTTx elite…sort of
Brazil's Copel and Australia's Telstra have expanded their fiber network capacity. Meanwhile, Mastercard has enhanced its payment service with a deal with Ogone; while Juniper Networks has signed a deal with a UK university.

By Julian Herbert

Portugal crept into the world’s elite group of broadband connected nations at the end of 2009. With 41,500 FTTH subscribers, just under 2% of Portugal’s broadband homes used FTTH at the end of last year and the measure of eliteness used by the FTTH Council Europe, is that more than 1% of connected homes must use FTTH/B.

This milestone was recently announced by no less a personage than the Prime Minister of Portugal himself, Eng. Jose Socrates, who gave the opening address at the FTTH Council Europe’s annual shindig, which took place in Lisbon. Mr Socrates was gracious and modest in his positioning of this fact and rightly so. I say that because 2% of not very much is not something the Portuguese don’t really want to crow about.

Portugal, according to our calculations, is ranked 24th in terms of broadband penetration of households in EU27, ahead of Bulgaria, Romania and Slovakia. It is bottom of the Western European broadband penetration league, by a considerable margin. With 35% of homes subscribing to broadband service, it comes a full 13 percentage points behind Italy, its nearest neighbour in the league table. In the whole of Europe, it ranks 37th out of 57 nations.

This is not to decry the fact that Portugal has FTTH. Portugal has more FTTH subscriptions than nearly all of its big Western European EU partners and Anacom the regulator has taken an incredibly liberal attitude to the construction of fibre infrastructure. So liberal, in fact, that the result is almost Romanian or Bulgarian or Russian. I would argue that this is not better or worse than approaches taken in other markets, just different. The almost pathological attachment which some governments (notably our own in the UK) have to universal access stands in contrast. Over 99% of the UK population is already within reach of a DSL enabled exchange and something like 80% has access to 2Mbps service. This will increase with the roll out of ADSL2+ and VDSL to well over 90%, but even with all this effort and political hand-wringing, the UK will still have fewer subscribers enjoying 100Mbps access than Portugal.

So what does it all point to?

Principally, I think, that you can’t have the best of both worlds. Fibre roll out will always be at the mercy of economics: somebody has to pay and those that can pay have to decide whether it’s best to spread the jam thinly and address the widest possible market at modest speeds, or whether to dollop it on thicly it places where immedate returns can be made. Given Portugal’s precarious position on the edge of a budget deficit abyss, it’s every man (or operator) for himself and if that means building fibre in places where there is an obvious retrun, so be it.

Secondly, that the experience of Portugal still demonstrates, as we have argued for months, that in competitive markets, take-up is driven by price, not speed. I had a go with Zon’s 1Gbit service which is on display here in the Exhibition Centre and it is super-impressive. Jitter-free, unpixelated HD streaming and all that jazz, but it isn’t available at any cost. The 100Mbps service costs 60 Euro a month, compared to 19.99 Euro for Portugal Telecom’s mid-speed (4-8Mbps) DSL product. Arguably, even 19.99 Euro is too much – about 50% more than a UK household pays for something roughly comparable.

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