Europe’s telecoms sector has spent years racing to build more fibre. Now, the industry is facing a different question: what happens when simply building more is no longer enough?
AI is driving huge increases in traffic, data centres are appearing in new locations and power availability, and land is becoming as important as proximity to traditional connectivity hubs.
That means the question for the telecoms industry is no longer simply how much fibre Europe needs. It is where that fibre needs to be, how it connects with existing networks and, crucially, whether there is a clear customer need for it.
Neos Networks CEO, Lee Myall, believes the industry is entering a more targeted phase of investment.
Building fibre where demand is emerging
According to Myall, Europe doesn’t just need more fibre. It needs the right fibre in the right places.
“There is still significant infrastructure in the ground, but increasingly the challenge is that that isn’t where new demand is emerging, it isn’t necessarily of the required quality or capacity, or it can’t easily be bought as one coherent route,” he tells Mobile Europe.
“That means the next investment cycle can’t be another “build it and they will come” boom. It needs to be much more targeted: deep, high-capacity infrastructure built against identifiable demand and capable of being used from day one.”
However, having fibre somewhere does not necessarily mean having the connectivity a customer needs.
Some existing networks may not have enough capacity for new requirements. Others may be in the wrong locations, or it may be difficult for a customer to combine different networks into one end-to-end service.
Europe’s networks need to work better together
Europe has a mix of national, regional and specialist networks, and a single customer connection can sometimes cross several of them.
From the customer’s point of view, however, none of that should really matter. In practice, it can mean dealing with different operators, contracts and procurement processes.
Myall believes the answer is not necessarily to build more networks, but to make better use of the ones already in place.
He says: “Europe will always have some level of diversity in the number of national and regional networks operating across it, but I don’t believe a push to more network ownership is the right answer. It’s more about becoming much better at stitching networks together.
“Operators need to make that complexity largely invisible, and we can do that through better interoperability, simpler commercial arrangements and much greater visibility of what connectivity is available.
“We’re already seeing this across individual markets. If you can combine backbone and access infrastructure from different networks and turn it into a single service that can be identified and quoted quickly, you make much better use of the infrastructure that’s already there.”
Myall continues: “Europe needs to move further in that direction. We don’t necessarily need everyone building everywhere; we need existing networks to work together more effectively so customers can access seamless, resilient connectivity across regions and borders.”
For customers, the ideal is straightforward: a reliable, high-capacity connection without having to worry about who owns each section of the route.
Making that possible could also help Europe get more value from the infrastructure it already has, rather than building another network every time a new requirement emerges.
Governments have a role beyond regulation
Private capital will continue to fund much of the commercially viable infrastructure, but governments still have an important part to play, Myall believes.
He explains the governments first job is to create confidence for long-term investment.
“Telecoms infrastructure is funded over 10-, 15- or 20-year horizons, so constant shifts in policy or regulation inevitably create more caution amongst investors,” he notes.
“We also need a genuinely level playing field. Across Europe, former state-owned incumbents still benefit from enormous inherited scale, so regulation needs to ensure challengers can invest with confidence that they will be competing in a fair and commercially sustainable market.”
The bigger issue? Governments need to think about digital infrastructure in a much more joined-up way.
“We talk a great deal about AI, data centres and power, but connectivity is the infrastructure that allows all those assets to work together. It needs to sit alongside energy, transport and data centres as part of the country’s critical infrastructure planning, rather than being considered afterwards,” he says.
Who pays for the next wave of fibre?
The question of funding is becoming more important as the industry moves away from speculative builds.
There is still private capital interested in infrastructure. What investors increasingly want is confidence that there will be real demand for the capacity they are funding.
“The majority of commercially viable core fibre should still be funded by private capital. The challenge is giving investors sufficient confidence that they are backing genuine long-term demand.
“What’s changing is that AI is providing much clearer demand signals. Data centre developers, hyperscalers and AI infrastructure businesses increasingly know where they need capacity, at what scale and with what level of resilience. That gives operators and investors a much stronger basis for targeted build than we had during previous speculative fibre cycles,” Myall explains.
He adds governments also have an important role here too. They need to provide the stable regulatory and planning environment that gives investors’ confidence.
But he explains it can also help unlock opportunities for private investment.
“I don’t think the answer is that governments or AI companies suddenly become fibre operators. It’s about moving from speculative capacity to infrastructure backed by identifiable demand, with operators, customers, investors and government each playing the role they’re best placed to play.”
A smaller number of stronger players
All of this could lead to another major change: consolidation.
“We’re going to see significant consolidation. We’ve already begun to see it in parts of the UK altnet market, where a period of aggressive build has been followed by a much tougher commercial environment,” he explains.
“There are parallels with what happened in backbone fibre 25 years ago, and with the consolidation we’ve subsequently seen in the US.
“At the same time, demand for high-performance, high-capacity fibre is increasing dramatically. We’re creating more data, it needs to move faster and across greater distances, and AI and data centre growth are increasing the importance of resilient regional and international routes.
“It feels natural to me that the market might therefore consolidate around fewer, stronger infrastructure platforms, while the remaining investment becomes much more targeted.
“As businesses become increasingly international, those providers will also need to make it far easier to deliver connectivity seamlessly across borders,” he concludes.
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