European Broadband penetration growth rates are expected to continue through at least 2013, though expert opinions differ on the importance of provider competition.

Broadband services penetration within the European Union (EU) has finally reached the same levels found in Japan and the United States. In the third quarter of 2007, the original member states of the EU (EU15) achieved average broadband penetration of 19.9%, surpassing the United States (19.6%) and very close to Japan (20.2%).

European Broadband Service Penetration Rates in Q3 2007

According to a recent European Competitive Telecommunications Association (ECTA) report, 20% of European residents now subscribe to broadband service connections, up from 16.2% at the end of 2006.

Current broadband penetration rates for the EU15 are:

• Denmark - 34.5%
• Netherlands - 33.9%
• Finland - 29.9%
• Sweden - 29.5%
• United Kingdom - 24.9%
• Belgium - 24.7%
• Luxembourg - 24% (as of July 2007)
• France - 23.4%
• Germany - 22.4%
• Austria - 19.1%
• Spain - 17.%
• Ireland - 16.8%
• Italy - 16.5%
• Portugal - 15.6%
• Greece - 8.1%

Greece had the largest half-year growth rate of 45%, followed by Belgium (19%), Ireland (17%) and Germany (15%).

2007 Sector Observations

Northern European countries continue to be world-leaders in broadband penetration, while Greece, Poland, Slovakia and Bulgaria are amongst the worst, with penetrations remaining below 10%. The Netherlands, Q1 2007 leaders in broadband penetration, fell behind Denmark after a surprisingly slow growth rate of 5% in the last six months.

The ECTA report found total broadband lines across Europe increased by 10% between Q1 and Q3 2007, while growth slowed in comparison to the previous six months.

Duplication of access lines is limited across Europe, with 82% of broadband lines relying on older copper local loops, while the remaining access uses more modern cable, fiber, fixed wireless and satellite connections.

Broadband Stimulates Economic Growth

The current European telecommunications market is worth 300 billion euros, accounting for 2% of EU gross domestic product. In 2007, the broadband sector added 19 million lines and generated revenues of approximately 62 billion euros.

European Commission regulators want to increase broadband coverage in the European Union from 20 to 30% by 2010. Information Society Commissioner Viviane Reding believes increasing the use of broadband will create additional retail competition, providing people with more choices while reducing prices.

Opinions Regarding Sector Competition

Varied opinions abound regarding the importance of telecommunications sector competition. Commissioner Reding feels competition is necessary and can be increased by separating networks from supply activities, Michael Bartholomew, director of the European Telecommunications Network Operators' Association, the trade association of the incumbent operators, disagrees. He feels the EU should focus on infrastructure-based competition and encourage the deployment of high-speed access networks.

UNI Telecom, the trade union representing worldwide telecommunications workers, believes there has been too much focus on competition, and not enough on working conditions and quality of service.

Anticipated Future Broadband Penetration Rates

Forrester Research, an independent technology and market research company, estimates that by 2013, 71% of European households will have broadband connectivity. Counties with the highest levels of broadband penetration are expected to be:

• Netherlands - 85%
• Denmark - 85%
• United Kingdom - 82%
• Germany - 72%
• France - 69%

The addition of approximately 48 million new broadband connections appears to be an excellent opportunity for existing service providers such as the UK’s BT Broadband, France Telecom, Deutsche Telekom and KPM. If these incumbents are granted a moratorium on unbundling next generation fiber access lines, they could control up to 82% of broadband lines across Europe. However, anticipated regulatory action may force these providers to open their networks to competitors, decreasing their control of the market.

References

“EU sets 30% broadband penetration target for 2010.” TeleGeography. March 20, 2008.

Knight, Kristina. “Forrester: European broadband penetration to reach 71% by 2013.” BizReport. January 8, 2008.

Phillips, Leigh. “Broadband penetration in EU good, but not good enough says commission.” EUobserver. March 20, 2008.

“Report Shows Incumbent Operators Could Control 80% of Next Generation Broadband Market.” European Competitive Telecommunications Association (ECTA). February 18, 2008.

Sachoff, Mike. “EU Sets Broadband Goal of 30 Percent By 2010.” WebProNews. March 20, 2008.