This article is part of our special report Broadband: driving recovery?.
Europe’s broadband internet coverage is close to 100%, but super-fast connections remain marginal and well behind the EU's official target despite the rhetoric surrounding the benefits of the digital economy.
European Commission figures show that 95.3% of EU households live in areas covered by broadband – walking distance from the 100% coverage the bloc aims to achieve by 2013.
Some countries – the UK, Belgium, France, Luxembourg, Cyprus and Denmark – are ahead of the pack and have already reached the 100% objective.
Broadband allows fast internet and offers a range of services only available at higher speeds, such as watching streaming music or playing online videogames.
Total coverage is considered important to avoiding the so-called "digital divide" but here statistics are less encouraging, with only one-quarter of European households having a broadband subscription.
In the first half of 2011, the broadband penetration rate was 27.2% of the EU population – some 500 million – but recorded the lowest growth rate since 2003, the Commission said.
“The slowdown is a cause for concern, because the EU is still far from saturation,” the Commission noted in a statement.
Super-fast internet pipe dream
With such a low penetration of conventional broadband, Europe’s official objective of reaching widespread coverage of ultra high-speed internet by the end of the decade appears like a pipe dream.
By 2020, the EU executive indeed wants to have 100% coverage for high-speed connections (30 megabytes per second) and hopes to see half of European households subscribing to at least 100 Mbps, which is the measure of super-fast internet.
However, closing the gap appears difficult as only 6.5% of broadband connections work on 30 Mbps speed, and just 0.9% of them rely on 100 Mbps.
“Figures on super-fast internet are far from comforting,” an EU official acknowledged, admitting that the target is likely to be missed without a serious step change.
A matter of fibre
So far in Europe people access the internet at low speed mainly through copper networks which account for three quarters of existing connections. Another 16.8% is provided by cable services, which have been significantly deployed only in a few countries, notably Belgium, the Netherlands, Portugal, Malta and Hungary.
Mobile broadband is growing sharply but represents mainly a complementing service rather than a stand-alone product, because the technology does not allow for too many users to use it simultaneously.
This leaves optical fibre as the key technology on which Europe is expected to rely to close the gap.
But here, the take-up has been extremely slow, with only 2% of internet connections in Europe based on fibre.
Large incumbent operators such as Deutsche Telekom or Telefonica in Spain are dragging their feet in deploying fibre networks as they fear losing customers in the transition from copper.
They have called on regulators to allow charging higher prices for granting competitor's access to their networks, saying higher margins will facilitate investment in fibre. Cutting the copper access price, like the Commission has recommended, will only delay investments and "prolong access to cheaper copper which will further delay migration to fibre,” argues Luigi Gambardella of ETNO, Europe’s main lobby of top telecoms operators.
Smaller operators are instead pushing for making the copper market less profitable. This should create an incentive for bigger operators to migrate to fibre, they argue.
Another big quarrel relates to the extent of fibre deployment. The Commission favours direct connection to households – or fibre-to-the-home (FTTH) in industry jargon, a line supported by new entrants.
But bigger operators have argued in favour of connecting the fibre cables to a ‘cabinet’ (FTTC) situated in the neighborhood, from where connections should start. This would decrease cost of deployment and spread the financial burden among operators, but it is also likely to slow down the take-up of fibre.
The Commission seems so far to favour the approach of new entrants but no binding decision has been made yet to force a specific model of deployment.
Ryan Heath, spokesperson of EU Digital Agenda commissioner Neelie Kroes, said: “Europe is doing very well on basic and mobile broadband, but fibre broadband is moving slowly.”
“This does not mean that there is no fast broadband, but so far it is coming from other sources like cable and fibre-copper combinations rather than pure fibre to the home,” he said.
Luigi Gambardella, executive Board Chair of ETNO, the association of the main European telecoms operators, said: “In 2010 and 2011, overall revenue of the telecoms sector in Europe declined respectively by 1.4 and 2 %, despite cautious economic growth. This confirms that structural rather than cyclical changes are shaping the sector.”
“Action is urgently required so that this negative evolution does not hamper Europe’s ambitions as set out in the 2020 growth strategy. Insisting on deploying only fibre to the premise crowds out other cost effective options for delivering high speed broadband in the near future. This is not a recipe for success; it is a recipe for delay and failure,” he concluded.
Ilsa Godlovitch, director of ECTA, the main lobby of new entrant telecoms operators, said: “Broadband take-up is linked to competition and to the quality of the infrastructure. In order to meet the targets, consumers should be able to afford high quality broadband access. This is currently not happening in Europe, mainly because pro-competitive telecom rules are not being correctly implemented and because incumbent operators in many countries continue to charge high prices for telecoms access without investing in modern fibre infrastructure.”
A letter signed by the main CEOs of the European cable industry and seen by EURACTIV reads: “We are concerned at the apparent increasing bias towards FTTH/FTTP and the regulatory approaches under consideration which are aimed at reinforcing that.”
“In particular, the recent consultation on costing methodologies introduced the prospect of setting prices for access to incumbents' copper-based networks low if they do not invest in super-fast networks capable of offering 100 Mbps services. Not only would this fail to achieve the goal of driving incumbents’ investments in fibre but as a consequence of the wider reaching effects of the regulation of incumbent access prices, will also jeopardise existing and further competing investment in infrastructure by other players such as cable operators.”
Fast internet, or broadband, is available to almost all EU citizens although it is used only by a quarter of them.
Super high-speed broadband, on the other hand is still marginal, accounting for only 2% of total connections. In this field, Europe lags behind international leaders, notably the USA, Japan and South Korea.
Fibre is at the core of the so-called ‘Next Generation Access’ (NGA), the super-fast internet network on which new services – and growth – are expected to rely.
Optical fibre backbones allow for faster and wider transmission of data than copper-based or cable networks. In its 'Europe 2020' strategy, the European Union set ambitious targets to boost the use of the internet within the bloc.