In 2002 France still had a very weak broadband market. One would not have predicted that France Telecom's offer, the most expensive among major offers in the French market, would, within six years, be for speeds twice as fast as those offered by Verizon for a little less than one-third the price, or would be offering speeds several times as fast as those AT&T offers at roughly the same price. Similarly, KDDI's investments in power company lines in Japan, complemented with unbundled DSL, should surprise those who predicted that open access policies would cause disinvestment from competing platforms. Similarly, the fact that NTT is offering price/performance ratios that put France Telecom's to shame, but are identical to the offer by Japan's innovative entrant, Softbank, also strongly suggest the presence of a highly competitive market.
Quite the opposite of the Western world where the enormous cashflow out of fully depreciated copper lines and cable created financial addiction.
There is a growing understanding in Europe that the financial markets will prevent incumbents (including cable) from investing in NGN until all other options are exhausted (see the 70 % hurdle). The comfortable unbundling line fees do not help. The reason is: a gigantic cashflow and for some incumbents still quite high debts remaining out of the crazy 3G and "world domination" era.
EBITDA margins can be as high as 55 % of revenue, quite addictive.
Without a very pressing need (life threatening), why would you allow a company to pour that cashflow into an infrastructure? Without rocksolid proof that there will additional ARPU (and worse, more indications like Free that prices will drop?) (http://www.fiberevolution.com/2009/10/of-dinosaurs-evolution-and-suicides.html is a good read on the latter)
So succesfull rogue new entrants (like Free or Reggefiber) and municipalities create the pressure that (willing) incumbents can use to convince the financial markets that they need to move also or face trouble. The roll-out of DOCSIS 3.0 which is an answer of cable to these new entrants increases the pressure on telco's.
Another part of the pressure on telco's is cable voice. The idea of facility based competition originates partly from the days telco's had a monopoly on the fixed voice infrastructure (high utilization, all costs covered) and cable had a monopoly on TV-distribution (high utilization, all costs covered). Internet broadband was the area of competition, at marginal costs. An artifact created by the safe harbours of monopolies.
Cable was able to attack the "safe harbour" of telco's by adding VOIP, telco's tried to respond by adding TV (unsuccessfully) so they are more exposed.
Why is sharing the access infrastructure good business?
The financial lever of higher utilization of the infrastructure's "sunk costs" is quite significant.
The secondary effects of a vibrant ecosystem where consumers have a choice is that is becomes more attractive for everybody (consumers, developers, added services). The tertiary effect not often mentioned is the reduced costs of innovation for the market leader. It is much cheaper to let 1000 flowers bloom (financed by others) and follow in the mainstream what is succesfull.
Fiber to the home has an advantage over FttC. It is quite easy and cheap to add broadcast TV via a 3rd wavelength (as is done by FiOS, in Japan en many other places). It does NOT compete for bandwidth with Internet access, does not influence latency, is cheap and reliable.
Reliability expectations for TV are way higher over here than expectations for Internet access. There are hilarious stories known of the local police picking up engineers at home saturdaynight to repair TV distribution because a mad crowd was badgering the police (popular football game on live TV).
The same spectrum as cable can be used (50 - 900 MHz), same modulation techniques, same gear. Many TV-sets sold nowadays in the EU have an embedded DVB-C tuner which decodes digital (HD-)TV without a separate settopbox, quite convenient. You even can use without extra costs the spectrum up to 3 GHz for more channels or higher bandwidth HD.
Broadcast is cheaper and (currently) more reliable than IP-TV.
Broadcast TV adds ARPU to a telco's revenue and is a new competitive weapon, justifying investments in NGN.
Cable is responding however by creating exclusive distribution deals with HD-channels. For policy makers this is a can of worms because you enter the copyright legal arena (exclusivity is based on copyright law).
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