Amsterdam's City Council has unanimously backed the first phase of the planned citywide fiber-to-the-home (FTTH) buildout project, CityNet , that will initially connect 40,000 homes in the Dutch capital. (See Amsterdam Commits to FTTH.)

All 45 members of the Council backed the scheme, the €30 million (US$36.3 million) initial phase of which is being backed by funds from the City of Amsterdam, five housing corporations, and ING Group .

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The next step, according to CityNet spokesman Dirk van der Woude, is for the shareholders to formulate a binding agreement, which will then be presented to the European Commission.

While those bureaucratic processes are going on, wholesale carrier bbned and its main vendor partner, Cisco Systems Inc. (Nasdaq: CSCO - message board), will test and trial the active Ethernet technology that will deliver services to the Dutch households. (See Amsterdam Gets Active With FTTH.)

Should the initial phase be successful, the CityNet project could be expanded to the whole of the Dutch capital's 420,000 homes and businesses.

Daiwa Securities SMBC Europe Ltd. analyst James Enck reckons the unanimous vote is a "complete knock-out blow [on behalf of] municipal networks." In his European telecom blog, Enck crows that the vote is the "perfect start for 2006 for those who wish to see more robust connectivity for all!"

Enck also refers to another FTTH trial in the Netherlands, in the small town of Nuenen. There, 7,500 homes have been connected since March 2005, with the 15,000 residents getting speeds up to 100 Mbit/s.

The Daiwa analyst notes that the residents had until the end of December for users to commit to subscribing to the service, with 80 percent choosing to stick with the FTTH scheme, "despite a lot of targeted marketing from both KPN Telecom NV (NYSE: KPN - message board) and [cable operator] United Pan-Europe Communications NV (UPC) (Nasdaq: UPCOY - message board), the latter of which also cut triple play pricing in the local market to respond to the fiber threat."

Such a response will no doubt encourage CityNet and other European municipal network hopefuls, while Enck believes this is the tip of the competitive iceberg that will cause grief to incumbent KPN in the Netherlands and to other national carriers that face the threat of such high-speed, low-cost, open-access municipal projects that are being encouraged by bodies such as the Fiber-to-the-Home (FTTH) Council . (See FTTH Council Applauds Amsterdam.)

— Ray Le Maistre, International News Editor, Light Reading