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.