According to Rudolf van der Berg over on Internet Thought, the FTTH effort in the Netherlands has run into a little snag. What snag? Oh just that little thing called money. The buildout is supposed to cost some $4B, however the partners KPN (NYSE:KPN, news) and Reggefiber were supposed to contribute only 25% each. The rest was to come from the banks, and of course we know that banks all over the world have amazingly re-learned the word ‘no’ (or in this case perhaps ‘nee’) with a vengeance.
I haven’t said much about the FTTH effort in the Netherlands, mainly because I haven’t followed it that closely and don’t really understand the Dutch regulatory environment. But I have to wonder though just how big a surprise this could possibly be. Raising $2B right now is only possible for those who don’t actually need it, such as Cisco Systems (NASDAQ:CSCO, news, filings). Oh, and of course those lucky enough to actually be banks with no money who are deemed too big to fail.
So what now? “Local governments and pension funds”? I don’t know how it is in the Netherlands, but here in the US state and local governments are facing huge revenue shortfalls. And pension funds, at least the non-pyramid-scheme ones, well those aren’t exactly investing in new construction either. I will be amazed if they can find much gold in those pockets.
If anyone asks me (and they won’t), I would suggest the clwr route: make the buildout a moving target. Fiber doesn’t need to be everywhere to be valuable, if you can only get $2B plus small tranches periodically, then build what you can with that and prove its value by the cashflows generated. The situation has drastically changed, so must the plans.
If you haven't already, please take our Reader Survey! Just 3 questions to help us better understand who is reading Telecom Ramblings so we can serve you better!Categories: Fiber optic cable · ILECs, PTTs