Breaking into European Digital Infrastructure Markets: Drivers and Trends

Final blog of a three-part series – Fiber

As reviewed in our recent webinar, the digital world has become essential to everyday life. Driving a digital transition requires investments in infrastructure – data centers, fiber networks and wireless communication towers that can support the growth of data and connectivity needs by improving density, speed and network reliability.

Data centers serve a variety of functions and are essential for hosting edge and cloud workloads. Wireless communication towers are the last mile for all mobile devices and serve as the primary connection hub for 5G, fixed wireless and edge computing. In this last blog of our Breaking into European digital infrastructure markets series, we discuss the state of broadband in Europe.

  • Broadband penetration in Western Europe has grown steadily over the past 10 years and is expected to reach almost 90% by 2030. As the market becomes more saturated and overall broadband penetration reaches 100%, broadband subscriber growth will naturally slow. Yet broadband revenues continue to rise as consumers seek faster, more reliable internet.
  • Fiber will generate revenue for telecommunications operators. For telecommunications operators, revenues from fixed services are expected to be driven by growth in broadband revenues. Consumers are increasingly inclined to subscribe to high-speed broadband subscriptions, even premium, with broadband subscriptions equal to or greater than 100 Mbps, increasing from 36% in 2018 to almost 50% in 2020.
  • The region is dominated by three technologies: DSL, cable and fiber. Fiber is the only one seeing increasing penetration and is expected to become the main platform by 2026. While cable and fiber are gigabit-enabled technologies, many cable companies have sought to extend their networks with fiber and gradually move away from the cable.
  • Regulators have pushed their operators to commit to ambitious fiber plans, which has led to new partnerships and investments in the market. In some countries, however, fiber rollout has been slow (notably in Germany, the UK and Italy), where incumbents have relied on DSL upgrades, focusing on fiber up to to the closet rather than fiber to the home (FTTH).
  • In some markets, the lack of government regulation and financial incentives has deterred large operators from investing in FTTH and extending networks beyond major urban areas. The costs associated with these builds in remote areas remain high, and it may take longer to see a return.
  • The absence of targets at national or operator level in the UK has led to poor coordination, leading to a market lag in terms of fiber deployment. However, this has resulted in the creation of more than 100 smaller networks in the country, which are building their own fiber networks. However, their reach remains limited, as these networks overlap and focus on urban areas.
  • Many operators have found investors to help scale up FTTH rollout, advancing timelines by three to five years. For example, Deutsche Telekom, which partnered with IFM Global Infrastructure in 2021, now aims to reach 12 million premises by 2028.
  • An increasing number of operators are separating their infrastructure activities from their retail activities and creating new joint ventures. The cost of building fiber has caused more telcos to seek partners, often private equity and infrastructure specialists, resulting in a large influx of funds to accelerate fiber goals and network building.

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Listen on demand to the full webinar titled Breaking into European digital infrastructure markets: Drivers and trends.

Read the second blog HERE.

Mary I. Bruner