Spain cushions the fiber optic shortage that threatens to hit digitization in Europe

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    Spain cushions the fiber optic shortage that threatens to hit digitization in Europe

    The pandemic has The business of large technology and telecommunications companies has accelerated, but this growing demand for internet services also has a dark side: the strong>worldwide shortage of fiber optic cables. In recent months, the difficulty in accessing the components of this infrastructure has pushed up prices and threatens to put a brake on the growing digitalization of various countries. How are you? How is this problem affecting Spain?

    Europe, together with China and India, are the regions hardest hit by the scarcity of this material crucial for the industry. The priceFiber growth has shot up to 70% since the lows of March 2021, according to a study by the firm Cru Group, which may undermine deployment plans and global connectivity.

    On the one hand, experts attribute the shortage of fiber optics to a strong increase in demand, which has grown by more than 8% year-on-year due to the 'boom' in connections forced by the covid crisis. On the other hand, due to the lack of key components in the manufacture of this type of cablessuch as helium or silicon tetrachloride. The price of both materials has skyrocketed by 135% and 50% respectively, according to the same study. This problem has been accentuated by the accelerated inflation after the Russian invasion of Ukraine. “In my professional career I have never seen anything like this inflationary crisis,” Wendell Weeks, CEO of Corning, the world's largest fiber optic producer, told the 'Financial Times'. p>

    And Spain?

    This problem can wreak havoc in countries like Greece, Belgium, Austria or Germany, where fiber optic coverage is still poor. In Spainthe impact is being more limited, since its digitization is far ahead of that of its European neighbors. Thus, it is the second country on the continent with the highest fiber optic penetration, 68.4% of the population, only behind Iceland. Spain is also the third country with the most penetration in rural areas and the second fastest growing market, according to several reports from the FTTH Council Europe, the association n that brings the industry together. Active lines reached 13.2 million last May, according to data from the National Commission for Markets and Competition (CNMC).

    Fiber optics is essential to guarantee the digitization of societies and to accelerate an economy that is increasingly dependent on the network. The promise of 5G, which will allow ultra-fast connectivity of thousands of mobile devices simultaneously, or the so-called industry 4.0are based on this digital architecture. “In the short term there will be no problem, but in the medium term the increase in prices will affect the to new fiber deployments”, warns José; A. Lázaro, professor at the Escola Tècnica Superior d’Telecommunications Engineering of Barcelona (ETSETB).

    Resilience of the 'telecos'

    Currently, 1977, 6% of the fiber optic lines deployed in Spain are concentrated in the three major operators: Movistar, Orange and Vodafone. In recent years, the Government has provided millions of dollars in aid to these companies to speed up the deployment of wiring and make the broadband internet connection available to all corners Of the territory. Thus, it has opted to switch off the traditional copper network and replace it with a more efficient fiber optic network, a strategic deployment that puts Spain in a position of strength.

    The large ‘telecos’ Most of the country's companies tend to conclude multi-year supply contracts with fiber optic manufacturers, which strengthens their position in the face of market ups and downs. “We make long-term and long-volume purchases, which perhaps makes it less sensitive to inflation,” Alberto Moreno, director of regulation at Telefónica, explains to this newspaper. >in Spain. “We are not immune, but we have some resilience”. From Orange they point out that although they are beginning to notice “a certain increase in cost” their fiber deployment is not increasing. being affected “thanks to foresight and anticipation with suppliers”.

    Problems for manufacturers

    However, those who do What are being affected by the rise in energy, transport and raw materials are the fiber optic manufacturers, in the first line of impact. “The general increase in prices has coincided with the lack of capacity to respond to the demand of telemarketers,” says Ramón Alós, president of the OPTRAL manufacturing company. In recent months the cost of fiber optics has gone from less than four euros per kilometer to around the current 6.70 euros.

    The damage caused by manufacturers does not end here. New fiber orders are agreed at the current price, however it is more complicated when customers who had already agreed long-term supply contracts at a fixed price -many of them financed through public tenders. ;public– they do not accept an increase in cost, which ends up affecting the manufacturers. As Alós warns, the prolonged increase in prices will Let more and more problems pile up: “No one has a magic wand, but the outlook is bad.”

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