Month: October 2013

Broadband deployment in Europe: better than expected

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Many have worried that the European Union is falling catastrophically behind a number of competitors (including Japan, South Korea, and the United States) in terms of deployment and adoption of broadband and high-speed access infrastructures. In July 2012 this assumption has lead in the European Commission, deeply lobbied by ETNO (the trade-association representing the incumbents such as Deutsche Telekom, Orange, Telefonica ecc.) to deregulate the Regulatory Framework of 2009 . At the end, after overwhelming critics by governments, national regulators and stakeholders as well as lots of internal controversies, a simple recommendation was adopted in September 2013.

The same presumption that Europe may fall behind the rest of the world urged Commissioner Kroes to launch the so-called Single Market Regulation, de facto another implicit review of the 2009 Regulatory Framework. Also this initiative is encountering oppositions and reservations at various levels (governments, regulators and stakeholders) which will likely extend the time of discussion and approval (if any).

This catastrophic view derives also from the presumption that the targets of the European Digital Agenda (universal coverage of basic broadband by 2013, and universal coverage of 30 Mbps and 50% take-up of 100 Mbps broadband by 2020) could not be achieved.

Now: a study commissioned by the European Parliament (on the initiative of the dynamic policy advisory team lead by Fabrizio Porrino and Mariusz Maciejewski) suggests that the above concerns were somewhat over-blown and that the picture is not as dark as Commissioner Kroes fears. Since the European Parliament will have to intervene on the Single Market Regulation proposal, no doubt that this study and the data herein reported will shake a debate.

With regard to basic fixed broadband, European deployment is close to universal (with however some gaps in newer Member States in the east). According to the most recent data (ITU), the top-ten countries are all located in Europe (except South Korea). The only non-European entrants into the top twenty rankings are Canada (12°), Hong Kong (China) (16°) and the US (20°). In terms of access speeds European citizens enjoy better performances than their US counterparts with both xDSL Internet (36% faster than in the US) and other technologies (such as cable and FTTx). In terms of prices, according to OECD, fixed broadband tariff ranges in the three largest European markets (Germany, France and UK) are lower than in the US.

In other words, Europe is doing quite well regarding basic broadband, although discrepancies between Members States are not negligeable.

Also in the mobile broadband the situation is not so dark, since the increase rate of the European market is spectacular. However, actual deployment and take-up of fast 4G mobile data services in Europe is still behind those in Japan, South Korea, and the US. Remarkably, the European Digital Agenda does not specifically address mobile broadband in terms of objectives and targets to be achieved.

The situation is more intrigued for fibre-based ultra-fast broadband and LTE, where a deficit effectively occurs. However, according to the study this deficit must be seen in a context: “Bandwidth is not just a question of the nominal speed of the link. Actual bandwidth available to customers in Japan and South Korea is far less than the speed of the access link. Available bandwidth is actually lower in the US than in many EU Member States”. Fact is, the data reported in the study show that the correspondence between broadband access speeds, actual speed delivered, and data usage reflects a complex scenario. For instance, data usage in Japan is actually less than that in the UK, while data usage in the US is very high (largely due to video), even though delivered bandwidth is actually lower than in a number of European countries.

The study explores in depth numerous theories put forward by commercial parties and experts in support of one or another policy measures in the matter of broadband deployment and make some final recommendations:

a) there is scope for cautious optimism on Europe’s progress on broadband against other countries. Evolutionary rather than revolutionary approaches should suffice in maintaining Europe’s competitiveness. There is no need for a radical overhaul of European policy.

b) The existing European targets for universal coverage are appropriate, but would benefit from further clarification and refinement. Upload speeds, the ability to use real-time applications, and the ability to access applications of the user’s choice deserve attention.

c) Policymakers should also consider setting specific targets in relation specifically to mobile broadband in order to foster the availability of services at any time and from anywhere.

d) A policy framework that is technologically neutral to the maximum feasible degree should continue to be preferred.