Early stage diagnosis

At the end of my last post on Dutch fiber developments, which certainly must be one of the most interesting stories in the industry at present, I mused about the possible regulatory complications of a market where access becomes fragmented down to a highly localized level. As if regulators didn't have enough to grapple with. Now, once again from Trouw comes an update on the situation, in which industry consultant Hendrik Rood of Stratix Consulting urges the Dutch Parliament to address the situation explicitly.

I can't work out precisely what measures he envisages with respect to a privately funded network like Hillegom - it seems to me that if Lijbrandt, the company behind the Hillegom network, has gained the appropriate planning permission and is operating within the law, then restricting its (or others') investments on the grounds of preserving the telco/cable duopoly would be difficult to defend. Not that I'm trying to put words into Mr. Rood's mouth, because I'm still not clear on what exactly he proposes.

He does have a good point, however, regarding a likely duplication of infrastructure investment, stating that the Hillegom situation suggests we are about to witness a proliferation of projects. He says, "In Hillegom a commercial company is laying an FTTH network in the ground. Up to now most people thought that this would be too expensive, that it could only be done with subsidies. If this turns out to be possible and many become aware of that fact within the next few moths, the floodgates will open. Then you will see similar initiatives in a lot of cities and towns. The big players will also have to join. For he who doesn't build an FTTH network, will lose 70 percent of his market." At that level of market share, maintaining one's presence in a local market dominated by the new FTTH player looks highly unpalatable. Mr. Rood points to Nuenen, a project I have written about in the past, which has also attained roughly 70% market share among the 7500 households in its footprint, and claims that neither UPC nor KPN could be covering their costs of service in the area with the remaining 30% split between them. So, I guess the question for cable and telco alike in such situations is whether to build, or as KPN appears to be doing in Haarlem, to pursue a wholesale agreement with the new "local incumbent."

I assume the regulators are buying in a lot of aspirin in anticipation of chronic migraines as the traditional relationships and market definitions break down. I guess they will also have to hire more people to deal with an increasingly complex and fragmented market. Perhaps all of this could somehow be viewed as a vindication of the single neutral open network concept...