France Telecom will double its investment in fiber to home networks in 2012 to 300 million to 350 million euros, Reuters reports. There’s both good and bad news in that announcement. The good news is that the heavy spending is likely crucial for the survival of France Telecom’s fixed network business. The bad news is the huge risk.
France Telecom CEO Stephane Richard said fiber to home investments were key to the firm’s future competitiveness as a fixed line provider.
France Telecom has pledged to spend two billion euros by 2015 on rolling out a national fiber network.
Keep in mind that France Telecom expects a payback time of 30 years to 40 years, far exceeding the three-year to five-year payback expected of application investments.
That indicates the risk France Telecom and other providers are facing. Those time frames are so long they typically only can be considered by very capital intensive utility firms that operate in monopoly style markets, as fixed network providers used to assume was the case.
