Milton Keynes, UK - November 20, 2006 - Municipal fiber networks being built by cities such as Amsterdam, Paris and Vienna may be attracting plenty of buzz, but their impact on the European broadband market will be marginal in the near term.

That's the conclusion of a new report from technology research firm Strategy Analytics. The report, "Fiber to the Home: Will Municipalities or Markets Drive Growth in Europe?" predicts that incumbent telecom operators and other commercial providers will remain the dominant broadband players in Europe.

"Despite the attention that municipal FTTH plans have attracted from the media, politicians and equipment vendors, their impact on the European broadband market is likely to be quite limited," notes James Penhune, the report's author and Director of the Strategy Analytics Broadband Media & Communications service. "With competition driving down prices throughout Europe, most consumers who want broadband will already be able to afford it. This trend will make it harder for cities to justify building their own networks to provide low-cost or free service."

The report also predicts that over the next five years most incumbent telcos and other service providers will follow a more economical approach to network upgrades, moving in increments from the ADSL technologies in place today to more advanced alternatives such as VDSL and Fiber to the Node (FTTN).

"Unlike local governments, which can justify investing in expensive FTTH technology on the grounds that it may benefit the public or stimulate economic growth, telcos and other shareholder-owned companies face intense pressure to limit costs and show near-term returns on investment," adds Penhune. "This financial pressure will continue to make FTTH difficult to rationalize in the near term."