July 23, 2008 / 3:42 PM / 12 years ago

Dutch KPN to open fibre network to competitors

AMSTERDAM, July 23 (Reuters) - Dutch telecoms group KPN (KPN.AS) will open its network to competitors to boost utilisation when it hooks up homes with high-speed fibre-optic access, its chief financial officer said on Wednesday.

KPN CFO Marcel Smits said the company believed a tiered model — with one company owning the fibre-optic cable in the ground, but multiple firms providing services over that cable — would work well.

“We believe in open models, because that seems to be the best way of making sure we get full utilisation,” Smits said.

KPN’s stance is markedly different from other carriers such as France Telecom FTE.PA and Deutsche Telekom (DTEGn.DE), which want to keep their upgraded networks to themselves.

KPN, the former Dutch telecoms monopoly, is setting up a joint venture with privately-held Reggefiber that will roll out fibre to homes in selected Dutch towns and own the cable in the ground. KPN will act as a service provider on the network, using its brand to sell high-speed Internet access and other services, and get an opportunity to test the business case.

Smits said the joint venture, in which KPN will hold a minority stake of 41 percent, means KPN does not have to bear the full cost of the rollout and will share the downside risks.

While European countries are mostly on par with regards to mobile phone networks, there are large differences on how carriers have approached fibre.

In France, several operators are building fibre networks all the way into homes, while many operators elsewhere for now only plan lay fibre to the street.

Britain’s BT (BT.L) said last week it will invest 1.5 billion pounds ($3 billion) in rolling out “super-fast broadband”, but mostly only to the curb.

Extending fibre networks will substantially boost the speed of broadband Internet connections, which can also be used for high-definition television, video on demand and other services requiring large bandwidth.

Smits said KPN generated about 140,000 euros ($220,300) of core profit per year from fixed-line services from an average neighbourhood of 1,000 homes — but the profit was shrinking.

“We reckon that if we do 1 million euros of investment in those 1,000 homes, we can hook everybody up to Fibre to the Home and go to 250,000 euros EBITDA, and increasing,” he said.

“That’s a business case. The only issue is that this is a spreadsheet — the question is: Does it work in the real world?”

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