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AMSTERDAM (Reuters) - A group of over 40 companies is asking European governments to shell out billions of euros to connect all homes to superfast fiber optic broadband cables, the president of the fiber-to-the-home council said on Tuesday.

"We need to make an effort that will be somewhat similar in ambition as the trans-European rail and road infrastructure," Hartwig Tauber said on the eve of a fiber optic conference in Amsterdam, where the city government is mulling a proposal to connect 40,000 homes with fiber.

Connecting homes with new fiber optic cables in many cases will require that streets have to be dug up. The bill in a medium-sized city can run into hundreds of millions of euros.

Cable operators and providers, which are using digital subscriber line (DSL) technology to boost the capacity of phone lines, have criticized the fiber optic lobby.

Building a fiber optic network would add a state-funded rival in an already competitive industry, in which basic broadband access costs as little as 15 to 20 euros per month, they say.

The fiber council, backed by telecoms network equipment suppliers such as Alcatel, Ericsson (news - web sites), Lucent, Draka Comteq, Agilent and Nortel, says existing broadband networks, built with DSL and cable networks, cannot carry enough information in the long run.

"In Europe we have regions where 380 kilobits per second is called broadband. But even 10 megabits will not be enough. In the future, a family may watch two simultaneous high-definition video streams, doing a video chat and downloading heavy work files, all at the same time. And there will be new bandwidth-intensive services we're not aware of yet," Tauber said.

"Did Edison think of dishwashing machines when he invented electricity? We need a new approach toward fiber-to-the-home, which can revolutionize the way we work and live," he added.

FAST, FASTER, FIBRE

Speeds of 10 megabits per second means that the average song can be downloaded in less than a second. A tightly compressed high-definition video stream requires a speed of at least some 6 megabits per second to be received without distortions.

Most broadband homes in Europe currently achieve speeds between 500 kilobits and 2 megabits per second for downloading, but DSL technology is constantly being improved to become faster.

Tauber says that even if DSL were pushed to the limit of perhaps 50 megabits per second, Europe needs to make the transition to fiber if it wants to be the world's leading knowledge economy, even if the private sector is not willing to make the investment.

"Broadband is critical for Europe's future. Public funds have to be involved. Perhaps it can be something like here in Amsterdam, where the project may be financed by the municipality and then opened up to the market," Tauber said.

He could not give an estimate of the total investment that is needed to achieve the council's ambition to give most European homes 100-megabit-per-second connections by 2010.

"We're working on that," he said.

There are now some 140 fiber-to-the-home projects across Europe, most of which are small. Only a handful are large and ambitious initiatives such as the project in Amsterdam, which still needs to be approved, and Italy's Fastweb.

In the United States, two national operators Verizon and SBC , have announced large fiber optic investments, while in Japan NTT Group plans to connect half of the nation's homes with fiber optic cables. South Korea (news - web sites) also has a rapidly increasing part of the population on a fiber network.

Representatives of the City of Amsterdam at the conference are expected to point to these international initiatives and warn that Europe may miss the boat if it does not invest in fiber.