High fiber anxiety

While the FCC yesterday seemed to hand the RBOCs back a significant degree of control over their destinies with the decision on FTTH (Om Malik's stinging assessment is here: http://www.gigaom.com/2004/10/shrinking_consum.php), Europe is shaping up to be a horse of a different color, at least in countries like the Netherlands. Housing corporations are big in the Netherlands (and in other parts of Europe, an issue we covered in some depth in EuroTelcorama No. 5) - they own about 3m of the 7m homes in the Dutch market, and increasingly are looking to differentiate themselves by offering additional features and services, and that includes FTTH.

There are a number of significant projects in the pipeline (hopefully I will be in a position to update in greater detail in a few weeks' time), but already the cable companies are getting their feathers ruffled. Last week, they were so upset by the 1,500 home pilot project being launched in Tilburg en Breda, that cable association Vecai wrote a formal letter to the Dutch Housing Minister to complain

(http://www.vecai.nl/downloads/docs/Brief%20Min%20Dekker.pdf). Their case is that the housing associations are acting outside their remit, effectively with a state subsidy, and that tenants will pay in the long run in the form of higher rents.

The housing associations would probably argue that they are providing a superior service at a superior price to what the market has delivered so far, and that in fact, this issue goes further than a competitive telecoms platform. Their next step is probably to integrate security monitoring, telemedicine, and e-government services to meet the needs of an aging tenant base. This arguably makes it more of a social welfare issue than a telecom market spat, and the government would probably have a tough time arguing with that.

This tension between public policy goals and the shorter term concerns of the capital markets is an issue we may see highlighted elsewhere in Europe in the not-too-distant future (check out Bryggenet in Denmark, where the tenants of a housing development got fed up with waiting for broadband and just did it themselves http://bryggenet.dk/).