The business rationale Behind going from a Vertical business To an Open access Fiber business.

Background

Delta fiber Netherland, a key telecom player in the The Netherlands with delta and caiway as commercial brands, Offering broadband, television, and telephony to both Consumers and businesses.

Delta fiber, formerly named Car Westland (caiw) has Under the brand name Caiway, provided internet access Services to private customers in The Netherlands since 1995 And originates from a joint venture between seven westland Municipalities that developed a cable tv business in 1981.

In 2008 their passive network and its operations were Transferred to a separate company, communicate Infrastructure fund (cif), and in 2014 a new open access Ethernet access offering was launched, enabling other Service providers to sell and provide retail services in caiw’s Network.

In 2018 caiw merged with delta and became delta fiber Nederland under the new owner EQT

Delta fiber’s Journey Towards Open access

DELTA Fiber started as a vertical integrated, meaning they managed all three layers. They owned and controlled both the passive and active network and provided services directly to consumers in the top layer.

The establishment of CIF in 2008 meant that CAIW performed a split between the passive infrastructure and the active network, and the retail services. In doing so, they had CAIW as a single service provider.

This split played a crucial role in their decision to invest in FTTH. It allowed them to take a long-term approach to passive infrastructure investment, where they had the highest cost in their fiber business. The split was done between layers 2 and 3. They created the brand Caiway, which was the brand the consumers saw. CAIW was the company that managed the operations of the active network.

The full split

This case study focuses on the 2014 split that separated the retail business of Caiway from the active network business of CAIW and the choice to enable other Service Providers to sell their services in their network.

In 2017 CIF was remerged with CAIW to form an integrated active and passive network infrastructure business.

They retained their retail brand Caiway but allowed other retail service providers to market, provide, and sell their services in the new open-access network. The main reason why they kept their brand was that they needed a brand to start with when they expanded their fiber network into new areas.

Results

The split from passive sharing to full sharing was performed within a year.

Old footprint

DELTA Fiber saw an increased penetration, especially when new large service provider brands were launched – ideally a provider that brings a new different offering onto the network.
DELTA Fiber decided to select which external service providers would be able to sell their services in their network. As a service provider, it needed to bring something unique that complemented the portfolio.

New footprint

DELTA Fiber saw a reduced time to reach rollout thresholds. Scientifically higher penetration levels compared to the old footprint.

Moreover, it saw scientifically higher penetration levels compared to the old footprint.
The scale effect of higher penetration drove down COGS (Cost Of Goods Sold) and thus improved the margin of the active network businesses of CAIW.

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