Fibre optic shortage threatening to hit Europe’s digitalisation, cushioned by Spain

High broadband penetration in the region has made telecommunications operators less exposed to rising broadband infrastructure costs, although manufacturers are already feeling the effects of inflation.

Although the pandemic has accelerated the activities of large technology companies and telecommunications operators, this growing demand for Internet services has a dark side: the global shortage of fibre optic cables. In recent months, the difficulty of accessing the components that make up this type of infrastructure has caused prices to soar and threatens to slow down the advance of digitalisation in several countries.

How will this problem affect Spain? Europe, China and India are the regions most affected by the shortage of this key material. Fibre prices have shot up 70% from their March 2021 lows, which could threaten deployment plans and global connectivity.

On the one hand, experts attribute the fibre shortage to a surge in demand, which has grown by more than 8% year-on-year due to the connectivity boom forced by the COVID crisis. On the other hand, there are shortages of the main raw materials needed to manufacture such cables, such as helium and silicon tetrachloride. The prices of both materials have risen by 135% and 50% respectively. In addition, the acceleration of inflation following the Russian invasion of Ukraine has aggravated the problem.

and what about spain?

This can be a big problem in countries where fibre penetration is still low, such as Greece, Belgium, Austria and Germany. In Spain, the impact is being less because digitisation is more advanced than in neighbouring European countries. Spain is the second country on the continent with the second highest fibre penetration rate on the continent, after Iceland, with 68.4%.

In addition, several reports by the FTTH Council Europe, the industry association, indicate that Spain is the country with the third highest penetration rate in rural areas and the second fastest growing market. Data from the Comisión Nacional de la Competencia en el Mercado (CNMC) show that the number of active lines reached 13.2 million in May last year.

Optical fibre is essential to ensure the digitisation of society and its increasing dependence on the network for the economy. 5G, which allows thousands of mobile devices to be connected simultaneously at very high speed, and the so-called Industry 4.0 rely on this digital architecture.

RESILIENCE OF TELECOMS

Currently, 77.6% of fibre optic lines in Spain are concentrated in three major operators, Movistar, Orange and Vodafone. In recent years, the government has granted millions of euros in subsidies to these companies to accelerate the deployment of cables and bring broadband internet to every corner of the country. As a result, it decided to close its traditional copper network and replace it with a more efficient fibre network, a strategic move that has put Spain in a good position.

The country’s large telecoms tend to sign multi-year supply contracts with fibre optic manufacturers, which strengthens their position in the face of market ups and downs. This allows them to cope with such setbacks or normal fluctuations in the economic market in which they find themselves.

PROBLEMS FOR MANUFACTURERS

However, the first to feel the effects of rising energy, transport and raw material prices are the manufacturers of fibre optic products. In recent months, the price of fibre optic cables has risen from less than four euros per kilometre to around 6.70 euros today.

The damage to manufacturers does not end there. New fibre orders are negotiated at the current price, but things get complicated when customers who have already signed long-term fixed-price supply contracts – many of which are financed through public tenders – do not accept the cost increase, which ends up being passed on to manufacturers.

On the other hand, a possible shortage of fibre optic cables is looming The lack of components will affect the telecommunications market in Spain and Europe. Delivery times are going to soar, so we suggest you make good forecasts.

The fear of some suppliers in the face of rising prices will cause them to lower the quality of the products they sell. And this is where we are talking about quality vs. price. So we suggest you keep an eye on these things, demand quality certificates, warranties, DoPs, and don’t get carried away by a low price, as you know, the repercussions for your network can be significant.

At KeyFibre we have been absorbing the increase in costs for months, and now we are forced to increase our prices. We can say that we have never seen anything like this inflationary crisis in our entire career. And this cannot influence our raw materials, as one of the fundamental aspects of our brand is to offer only quality products. At KeyFibre our cables are guaranteed for 25 years on fibre optic cables.

We invite you to take a look at all the multi-fibre multi-tube cables we have available:

https://keyfibre.com/productos-fibra-optica/cables-fibra-optica-multifibra-multitubo/

We have plenty in stock, please ask us for availabilit

«KeyFibre, the peace of mind that comes with a secure network»

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