Dispute over technology massively hinders Swiss fiber optic expansion

The Swiss telecommunications group Swisscom has to stop the FTTH expansion of its fiber-to-the-home network for the time being. This is the consequence of an order that the Swiss Federal Court (BGer) announced last week. This was in turn in response to an objection by Swisscom to a previous judgment by the Federal Administrative Court (BVGer). The background to the quarrels is the construction method used for the expansion of the fiber optic network.

At a round table organized by the authorities from 2008 to 2012, the industry agreed on a nationwide architecture for the fiber-optic network to be set up. At that time, the creation of an FTTH network was specified as a four-fiber model with a P2P topology.

Cheaper, faster, more energy efficient
To put it simply, the P2P / Point-to-Point standard means that an undivided cable with four optical fibers leads from the connection center (PoP – Point of Presence) in a star structure to the connection of a user and enables a so-called Layer 1 offer . In such a way that it is possible for other telecom providers to offer their own access on the free of the four glass fibers (“unlit fibers”) and thus enable competition.

Now, Swisscom, the largest Swiss telco, would like to double the current number of its FTTH connections, including in rural areas, by 2025 – from today supplying a third of Swiss households and businesses to around 60 percent. For this reason, Swisscom switched from the P2P network architecture to the so-called point-to-multipoint network topology (P2MP) about two years ago, which is, above all, much cheaper because it means that less civil engineering work is required for larger cable ducts (i.e. faster too built) and it is also more energy efficient, as fewer switches (distributors) are required.

Disadvantage to small providers
With P2MP, however, several customers share the cable with just one fiber between the connection center and the distribution shaft in the street. Only in the shaft is the signals distributed over several fibers with the help of an optical splitter (switch), which then lead to the individual customer connections. In the single-fiber model in a P2MP topology, smaller Internet providers are dependent on the technology that the company that carried out the network expansion uses in the shared route section, argues Init 7, a telecommunications provider in Winterthur. Where possible, Init7 offers customers top speeds of up to 25 Gbit / s via P2P topologies and dedicated fiber optics. For smaller Internet providers, however, the installation and maintenance of a splitter is not worthwhile, argues the head of Init7, Fredy Künzler.

The reason: With the P2MP network topology, the splitters would have to be placed close to the end customer and therefore only a small number of customers could be served. The last section of the route can therefore hardly be operated by oneself for economic reasons and one therefore has to rent the services of the company that built the network. As a smaller provider, you are therefore at a disadvantage.

Because of the switch from P2P to P2MP, Init7 filed a lawsuit with the Federal Competition Commission (Weko): With this move, Swisscom is assuming a dominant position and also determining, for example, which bandwidth competitors can offer their customers on the new network topology. According to Init7 boss Künzler, there are no longer 100 gigabits / s that he has been able to deliver to his customers in many places, but only a maximum of 10 gigabits. The introduction of new technologies is also becoming more difficult because innovations always have to be made for several customers at the same time, says Künzle.

Deviation from the specifications is a technology restriction
With a number of arguments, Swisscom argues that not only is network construction much cheaper, but also, for example, that the newly selected P2MP network structure corresponds to the technology used around the world. But the Weko is also of the opinion that Swisscom is deviating from the agreed standard in expanding the fiber-optic network, initiated proceedings against Swisscom and ordered a precautionary measure in December 2020 which prohibits Swisscom from expanding its network on the basis of the P2MP network topology .

Swisscom appealed against this to the Federal Administrative Court. But at the BVGer, Swisscom flashed off at the end of September 2021. The precautionary measure ordered by the Weko to ensure layer 1 access when the FTTH network is expanded by Swisscom is legitimate. The implementation of the new network construction strategy by Swisscom is a technology restriction, according to the BVGer. Swisscom filed another appeal against this judgment, now to the highest Swiss court, the Federal Supreme Court (BGer). Swisscom called for the measures ordered to be postponed in order to be able to continue operating its fiber optic expansion. The irreparable financial and reputational damage is serious.

But last week, the telecommunications company also lost out with its complaint to the BGer. Swisscom’s request for suspensive effect was rejected by the court.

“Own goal in network expansion”
Swisscom is now emphasizing that a judgment by the BGer on the legality of the precautionary measures ordered by the Comco is still pending. “Currently and in the future, four fibers are being built from the shaft in the neighborhood to the apartment,” says Urs Schaeppi, CEO of Swisscom. However, it was never decided at the round table that four fibers per customer would also be needed from the connection center to the shaft in the quarter.

In addition, “all competitors can use our networks with the full bandwidth and design their own offers via what is known as Layer 3 access,” he says. With the decisions of the Weko and the courts, he sees an “own goal in the network expansion”. “If P2P is prescribed for us, fiber optic expansion will stall and rural regions will fall behind.” said the Swisscom boss.

Final verdict pending
Fredy Künzler from Init7, on the other hand, is “of course pleased that a further step has been taken towards a monopoly-free Internet in Switzerland. We regret that the expansion of fiber optics is a bit delayed in some places, but is bearable in the overall context.” For him, “this whole process is also about the economic significance”. He calculates that a broadband connection in the countryside without competition costs around 20 francs (currently 19.20 euros) more per month than in the city, where there is competition. “In addition, the bandwidth achieved is much worse,” said Künzler. Extrapolated to all Swiss households and a 30-year service life of the fiber optic infrastructure, 18 billion francs would be missing at the end of the economy.

The more obvious consequences of the dispute in Switzerland about the “correct” fiber optic access technology cannot really be foreseen at the moment. The investigations that the Weko is conducting against Swisscom are expected to be completed in 2022. The final judgment of the federal court is still pending. According to the Swiss media, it can take years before a final decision is made.

Backing for Swisscom
The already established P2MP networks may initially no longer be marketed. For example, a project partnership between the third largest Swiss Telco Salt and Swisscom is on hold.

The head of the second largest Swiss telco, the merged Sunrise UPC, André Krause, was very critical of the news agency AWP on Friday and supported Swisscom. He criticized the Weko, which has stopped Swisscom’s network expansion based on the single-fiber model. From an economic point of view, the single-fiber P2MP model is the right network architecture for the sparsely populated areas of Switzerland, says Krause.

It wouldn’t help anyone if Swisscom had to switch back to a four-fiber architecture. In the end, the additional costs would have to be paid by the end customers, who would not benefit from the P2P model.

The only advantage
The only advantage is that there is a continuous Layer 1 product, said Krause. But the possibility that a Swisscom competitor could launch its own products with Layer 1 access is rated more important by the Weko than the fastest possible diffusion of fiber optics in Switzerland. The four-fiber model of the past is defined by the Weko as the standard. “You can argue about whether there was ever an agreement about a standard,” says Krause.

Swisscom must now come to an agreement with the Weko. To do this, they had to submit a resale offer for the competitors with technical alternatives that corresponded to a Layer 1 offer, said Krause. Market Research Telecast