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The battle for the underground networks floating Europe's cloud

A number of recent acquisitions are showing the importance of fibre, and particularly dark fibre, in determining the future of the cloud.

Cloud services, big data, mobile working, the internet of things: it all adds up to one thing — growing demand for bandwidth.

It's a golden opportunity for carriers and wholesalers who are keen to expand their networks and the capacity they can offer to increasingly pan-European businesses.

The expensive way is to construct new pathways, which is costly in terms of time and money for planning the network, getting permissions, laying cable, and so on. The easier, more cost-effective route that several bandwidth infrastructure providers (BIPs) are taking is acquisition.

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The latest such deal came last month with the takeover of Swiss company Fibrelac by London-based euNetworks. It is another salvo in the arms race that's going on among BIPs keen to grow their network and fibre footprint, said Ian Redpath, principal analyst at Ovum.

The euNetworks deal follows on from Deutsche Telekom's acquisition in July of GTS Central Europe , which extended its fibre-optic and datacentre network into Central and Eastern Europe.

Also this summer, US-based BIP Zayo continued its expansion in Europe with the acquisition of Paris-based Neo Telecoms and the addition of 1,800 miles of fibre in the UK through the addition of Geo Networks.

Cloud-driven

euNetwork's main focus is on datacentre connectivity. It has 260 datacentres connected directly with another 50 indirectly. The addition of the Fibrelac network adds another five in Switzerland, with more indirect connections via partners.

While the cloud is undoubtedly helping to float the growth in bandwidth demand, it is also a limiting factor, believes Ovum's Redpath: "The impediment is the actual pace of cloud adoption, if that accelerated traffic would grow further."

Even without the benefit of the full potential of cloud-driven demand, "euNetworks is working its way up to be a pan-European heavyweight," he added.

"Networks and fibre footprint are inherently more valuable with greater connectivity to more and more high-value telecom sites. euNetworks has just extended their pan-European footprint to the important financial centre of Zurich and deeper into Switzerland targeting a number of key datacentres," said Redpath.

The company, which has an annual turnover of €100m, owns and operates 13 fibre-based networks across Europe. Although concentrated in Germany, Ireland, the Netherlands, and the UK, the long-haul, high-capacity backbone extends to major cities in other areas, such as Paris. Overall it covers 38 cities in nine countries.

The addition of Fibrelac's dark fibre network now gives the company a route, like Hannibal, through the Alps.

Fibrelac's 360km fibre optic network connects Geneva with Zurich, as well as Basel, Bern, and Lausanne, taking in 11 Swiss cities in all. The company takes its name from its first project - in 1998 - of laying an optical-fibre cable under Lake Geneva to link Geneva with Villeneuve (Vaud).

Fibrelac's strength is that they provide the highway (literally, in a sense that most of its dark fibre network runs along Swiss motorway routes) that connects the intercity networks. In addition, they provide dark fibre lease and maintenance services for some 700 Swiss enterprises, such the giant multinational Nestlé.

"EuNetworks is now cost-effectively positioned to serve Swiss-Europe high capacity connectivity demands," said Ovum's Redpath.

With the acquisition, euNetworks doesn't increase the footprint of its metropolitan networks, simply the long-haul network.

In keeping with its federalist nature, the fibre networks in the cities and towns of Switzerland are being jointly-developed by Swisscom, the part government-owned telecoms operator, as well as utility companies, cable companies, and local authorities. Using fibre to the home (FTTH) technology for direct connection to the network, each cable is in fact a bundle of four: one dedicated to Swisscom and the others available for other service providers, so they can compete on services. In more rural, remote areas, where there is no competition, it is the town itself that has to subsidise the infrastructure costs.

Swisscom is investing up to CHF 2bn (€1.7bn) to create the metro fibre-optic networks. They aim to cover a third of the population by 2015, although currently just 14 percent of homes and businesses in the country can connect. Meeting the demand for bandwidth exceeding 1Gbps is essential, according to Swisscom, given that data traffic on its telecommunication networks is doubling every 21 months.

What is dark fibre?

Although dark fibre might sound like a Halloween horror story, it's simply optical fibre that has been laid but isn't currently in use.

As information is sent through fibre-optic cable as light pulses, a dark fibre cable is unlit fibre. To light dark fibre, users put their own optics equipment - that transmits the light - on the end of it. Because of the technical complexities of doing this, many enterprises or large organisations are increasingly looking at managed services, where operators light the pipe for the customer.

Dense wavelength division multiplexing (DWDM) allows multiple data signals to be transmitted — effectively different colours of laser light — down the same optic fibre. The different wavelengths keep the data signals separate, in effect turning one optical fibre cable into multiple virtual fibres. It gives companies the option of leasing a wavelength, or strand of fibre.

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