FTTH deployment in Europe: enabling sustainable transformation

Summary

European countries have committed to an extensive fiber rollout that provides ultrafast and reliable internet access to all its citizens. Beyond its immediate benefits of enhanced connectivity, FTTH deployment can significantly contribute to sustainability efforts. This article explores how telcos can promote sustainability and drive positive environmental impact for their benefit.

Introduction

The 2023 FTTH Conference was held in Madrid, Spain: a mature market in terms of FTTH deployment, which made it an apt location for industry experts to discuss the challenges and opportunities facing FTTH deployment and uptake. European countries have committed to an extensive fiber rollout that provides ultrafast and reliable internet access to all its citizens, as outlined by the Gigabit Society 2025 and Digital Compass 2030 strategies. Beyond its immediate benefits of enhanced connectivity, FTTH deployment can significantly contribute to sustainability efforts. This article explores how telcos can promote sustainability and drive positive environmental impact to their benefit.

Status of the FTTH rollout in Europe

European countries have made significant connectivity and sustainability commitments in recent years. Spain ranks ninth in Omdia’s Total Fixed Broadband Subscriptions Report, with an 83% fiber subscription market share in 2022—the highest in Europe. Data presented in the conference’s Market Panorama session confirmed that FTTH deployment across Europe is advancing at an increasingly fast pace. Notably, the UK and Italy led European FTTH deployment in terms of homes passed and subscriber growth. This is good news for meeting the EU’s ambitious connectivity targets; however, there is a long way to go with only eight European countries passing 50% fiber subscription penetration.

Figure 1: FTTH penetration and median download speed, select countries Source: Omdia, Ookla

Fiber as a catalyst for sustainability

Telefónica, which has been leading the rollout of FTTH in Spain, is already realizing significant savings on its fiber networks, stating a 94% reduced environmental impact in terms of energy and other material resources, which is 18 times less than copper for equivalent data consumption. The passive nature of a fiber network’s infrastructure leads to lower energy consumption and lower operational intensity. Furthermore, FTTH networks boast longer lifespans than legacy networks, minimizing total lifecycle emissions. By adopting FTTH, Europe can cut down its overall energy usage and play an active role in combating climate change.

With ambitious environmental goals incorporated into organizational ESG and CSR objectives, fiber, and in particular FTTH, can offer unique advantages that position it as a key enabler of sustainability. Occupying a distinctive intersection between connectivity and infrastructure, the telecommunications sector should take advantage of fiber’s sustainability credentials to support the continued rollout of fiber networks. This not only aids telcos themselves in reducing emissions but also paves the way for business strategies that are well integrated with environmental and societal considerations. Ultimately, it facilitates the delivery of efficiencies required for a more sustainable future across industries.

As part of the EU’s Green Deal, the Corporate Sustainability Reporting Directive (CSRD) comes into effect in June 2023 and will see a significant increase in the range of companies required to report on sustainability performance. During the conference, telecom operators referenced the increasing customer appetite to understand their value chain emissions, of which network emissions are upstream for most businesses. CSRD will be yet another catalyst for companies to understand their emissions value chain.

Research has estimated that the global emissions of the telecommunications industry are comparable to those of the aviation industry. In contrast to other sectors, telecoms have not faced as much scrutiny as other high carbon intensity industries. This is likely to change. As businesses turn to digitalization to meet sustainability targets, the focus will grow on the greenhouse gas emissions produced by telecoms. By acting as an enabler for reducing emissions in other sectors, the telecom industry’s share of global emissions will increase and make it a prime target for scrutiny. To avoid this, telcos should be proactive in defining the sustainability agenda around them.

Monetizing fiber deployment through green credentials

Telcos involved in FTTH deployment should leverage their green credentials to attract revenue and secure investments for further expansion. To increase monetization of existing FTTH deployments, telcos should look to marketing campaigns that focus on the speeds, reliability, and environmental benefits of switching to fiber to appeal to environmentally conscious consumers. A recent report from the French Autorité de Régulation des Communications Électroniques, des Postes et de la Distribution de la Pressech (ARCEP) quantified the average energy consumption per subscriber on France’s fixed access network as 34kWh on copper networks compared with less than 10kWh on fiber networks. Quantifying reductions such as these can also be used to attract business customers who wish to measure and reduce their value chain emissions.

The year 2022 was a record one for fiber deployment financing, but as access to financing becomes more challenging in light of rising interest rates, service providers should look to use fiber deployment to gain access to capital from investors that are increasingly inserting ESG indexing in investment decisions and ratings. During the conference, the European Investment Bank spoke about digital infrastructures’ eligibility for Climate Action investment and how FTTH met criteria for both climate change mitigation by enabling other sectors to reduce their greenhouse gas emissions, and climate change adaptation, reducing risk, and enhancing the resilience of connectivity infrastructure.

By aligning strategies with sustainability goals, telcos can create mutual benefits for consumers, businesses, and investors and secure the necessary funding to continue expanding FTTH networks.

Expedited shutdown of legacy copper networks

Accelerating the shutdown of legacy copper-based networks can lower operating expenses faster. While rolling out full FTTH networks can be costly, it can also be financially beneficial in the long run. Legacy copper-based networks require more maintenance and replacement, resulting in higher operating expenses over time. While coexistence with copper networks is necessary during the transition phase, prioritizing the decommissioning of legacy networks to realize operational and emissions-based savings sooner presents an opportunity for service providers to play a leading role in aggressively limiting the collective impact on the environment.

Conclusion

As Europe progresses towards achieving its ambitious connectivity targets, FTTH deployment holds immense potential for meeting the twin transition goals of digitalization and sustainability. The telecoms industry will play a pivotal role in enabling sustainable activities across sectors. By leveraging the unique advantages of FTTH, telcos can monetize their green credentials to generate revenue and secure investment for continued network expansion all the while reducing energy consumption, emissions, and realizing faster shutdown of legacy networks. Service providers have a clear opportunity to take a leading role in the global movement to limit the collective impact on the environment.

Appendix

Further reading

World Broadband Information Series WBIS Data Dashboard (May 2023)

Fixed Broadband Subscriptions and Revenue Forecast Report (March 2023)

Telefónica closes all its copper central offices and heads towards its 100th anniversary (April 2023)

Total Fixed Broadband Subscriptions Report (February 2023)

Author

Kyle McKenna, Senior Market Forecaster, Market Forecasting

askananalyst@omdia.com

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