In most European countries, fiber overbuild is an unlikely scenario. It is mainly driven by the high capital requirements, operational complexity, and required penetration levels needed to justify the investment (competing fiber infrastructure would put it on risk). Therefore, fiber operators or investors are intensively analysing the market in order to identify to most promising rollout clusters (“fiber race”).

The fiber cluster pipeline has typically a funnel structure and consists of the following stages:

  • Cluster selection: top-down driven process with a goal of identifying interesting fiber investment areas on a street-by-street level. It is driven by an own market intelligence or specific request from other market participants, like resellers or municipalities, either directly or through subsidy process.
  • Cluster development: bottom-up driven process where selected clusters are developed further through network planning, selective site visits, financial analyses, and resulting cluster adjustments (cutting off selected areas to improve ROI estimations) as well as direct alignments with the local authorities.
  • Demand aggregation (in case it is part of company’s business model): an operational process that takes place in the selected clusters that are ready to be deployed, run in order to check if the required fiber demand is there or to create it through marketing activities.
  • Cluster deployment: clusters that successfully moved through the whole funnel are being handed over for deployment. For this to happen the company must secure building permissions (in case cluster development has been done properly this should be a formality) and the company has to align with the contractor all required project criteria.

As learned during the engagement, the fiber race situation it is a very dynamic process. Fiber operators must continuously monitor pipeline status and develop it, because reacting to competitive forces and market dynamics always requires the presence of enough clusters from which to select and push to the next stage.