KPN announces intentions to open fibre networks to rivals

24 Jul 2008

Dutch former monopoly fixed line operator KPN plans to open its fibre-optic infrastructure to rival operators to help increase network utilisation rates, once it begins the process of connecting homes with high speed optical fibre cables, Reuters reports. The news agency quotes KPN chief financial officer Marcel Smits as saying that the telco believes in a ‘tiered model’ whereby one company would own the fibre-optic cable itself, but many operators would be allowed to provide services over the network. ‘We believe in open models, because that seems to be the best way of making sure we get full utilisation,’ Smits said. In a marked diversion from the likes of France Telecom and Deutsche Telekom which want to restrict access to next generation networks (NGNs), the Dutch incumbent is proposing a more relaxed approach. It is already setting up a joint venture with a privately owned company, Reggefiber, which will deploy fibre-optica cabling in a number of towns and retain ownership of the cable in the ground. KPN will then act as a service provider on the Reggefiber network, offering own-brand high speed internet access and other services to end users. The CFO said that under such a plan, whereby KPN will hold a minority 41% stake in the joint venture, it will not be exposed to as much financial risk.

Smits told Reuters that his company currently generates EUR140,000 (USD220,300) of core profit from fixed line services per 1,000 average households, but that this income figure is in decline. The KPN man believes that if the company invests the equivalent of EUR1 million per those 1,000 homes to connect everybody to fibre-to-the-home (FTTH), the investment will yield a much higher EBITDA of EUR250,000 – a figure which will rise in coming years.