EU is lagging behind on high-speed broadband, while telecoms firms call for greater support.
All major economies are rolling out high-speed optical-fibre broadband networks. The vast increase in bandwidth this provides will allow these countries to launch a new age of advanced digital services, while Europe crawls along with its traditional copper networks. All but the European Union.
A report published by the European Commissioner for Information Technology and Media Viviane Reding’s team in August warned that Europe is “at risk of losing its competitive edge when it comes to new innovative developments”, because it “dramatically lags behind Japan and South Korea in high-speed fibre”.
According to figures from market-analysis firm IDATE, 3.32 million Europeans had subscribed to fibre-broadband networks by the end of 2008, compared to 5.04 millions in the US and 22.71 millions in Asia.
End of 2008, more than 80% of European internet subscribers were still struggling with download speeds of 0.5-8 Mbps (million bytes per second). Their networks are made of copper, slow and unreliable: fibre networks – known as FITH, or fiber to the home networks – can reach speeds as high as 100 Mbps.
Telecoms operators have plenty of explanations for Europe lagging behind in the roll-out of fibre networks. Eric Debroeck, senior vice-president in charge of regulation at Orange France Telecom, says that telecoms companies in the US benefited from a 2004 decision by the Federal Communications Commission that relieves them from the obligation to grant access to new fibre networks to other companies at a regulated price, and this stimulates investment.
Olivia Garfield, British Telecoms’ group strategy and portfolio director, says that in the US “telecom operators had to deal with the development of cable, which acted as a threat”, and this stimulated them to invest in more advanced networks.
According to Christof Sommerberg, head of regulatory issues at German operator QSC, “there are some marked differences between Europe, the US and Japan in terms of deployment costs”. One cause is Japan’s heavy population density. “Europe has much more diversity, in terms of spread of population,” he says.
A common complaint by major telecoms companies is that the Commission has failed to provide the regulatory certainty that they need if they are to invest.
“If you want to mobilise private money you need a certain amount of legal certainty for investors,” Debroeck says. “Rules have to be properly settled from the outset.”
Of prime concern for European operators envisaging building new networks are the conditions that will govern rival operators’ access. The Commission published a draft recommendation on these conditions in July, which was severely criticised.
The European Telecommunications Network Operators’ Association said that the draft contained “onerous access and price control obligations” for investors, and warned that it would stifle fibre roll-out.
The European Competitive Telecommunications Association, which represents mainly newer operators, has warned that it would allow anti-competitive collusion between telecoms firms to restrict access to fibre networks. The final version of the recommendation is not expected before next year.
John Blakemore, director of European regulatory affairs for mobile operator 3 Group, says that the demand for innovative fibre services is “not yet proven”.
Garfield believes, however, that there will be demand. She says that fibre allows families to get access to multiple services at the same time. “One family member can be watching high-definition TV, another can be downloading photos, another can be doing online gaming,” she says.
Garfield predicts a “tipping point” next year when operators will decide to invest. The Commission will be crossing its fingers that she is right.