OTE announces VDSL rollout and upsets Greece’s FTTH Plans

OTE’s CEO Panagis Vourloumis announced this Friday (10/7/2009) that the organization decided to set in motion its VDSL roll-out plans “as soon as possible”. According to organization’s top executive, national FTTH plans face bureaucratic delays and OTE “can’t wait any longer” [Check Reuters and Adslgr.com].

OTE has been testing VDSL for a long time. And while the organization is investing hard money in its IPTV platform (content: NBC UNIVERSAL GLOBAL NETWORKS, security: SecureMedia, etc), its ADSL2+ network delivers average video quality, (slightly) inferior to standard analogue TV (Read: Video on Demand by OTE. But When?). No one objects that OTE’s VDSL roll-out to monetize its IPTV investment is a fair marketing practice and in fact it was long anticipated.

The interesting part is the timing of the announcement. It was made a one (1) day after the parliament’s majority,  stressed by the country’s not-so-good financial situation, voted in favor for an additional 5% shares sell to DT (Report in Greek). Shares will be sold at €27,50 when their listed price is €10,66. That’s an additional (as in “extra”) 413 millions for the seller (not a bad deal at all). So, DT (at a substantial expense) will soon own 30% leaving 20% to the Government making it much harder for the public sector to oppose the plan (assuming that they would want to).

But, there’s more: The announcement complicates Greece’s application for EU funding and (most importantly) project approval by the Competition Commission. Herman Wagter made an excellent remark a few weeks ago commenting on European Commission’s draft “Guidelines for the application of State Aid rules in relation to the rapid deployment of broadband networks“:

The EC takes the opposite approach, creating an impossible burden of proof on governments where companies do not have to proof an intention to roll out to create a blockade. If an operator claims a roll-out in the next 5 years (on paper) it blocks any initiative from a (local) government. If after 2-3 years “unforeseen” circumstances appear which “force the operator to delay investments” the cycle starts again: the government has to prove that the operator will not roll out in 5 years FROM THAT MOMENT ON, which the operator can easily claim on paper that he will do.

This is effectively a free (no obligation, no costs, no commitment) blocking trigger which can be used by any operator almost indefinitely to block any initiative from a municipality or government. Very lopsided. A enforceable burden/commitment of the operator to roll out if they want to excercise the blockade would have been more balanced.

That’s a puzzle for strong players and a tough enigma for national and European regulators. How will public policy makers respond? And how will Greece’s national broadband strategy be defended?  Let’s see if the underdogs can play again serious ball!

(*) photo by xamad