Unbundling Said to Drive European Broadband Competition, But Gaps Remain
EU broadband penetration now matches that of the U.S. and Japan, the European Competitive Telecommunications Association will report Friday. The figures reflect the penetration rate of 15 EU countries combined, which presents a different picture from an OECD country-by-country comparison that showed the U.S. dropped from 12 to 15 (CD April 24 p1) in 2006. The record rate has resulted from competition by new players using local loop unbundling, cable and alternative technologies, the association said in its twice yearly broadband scorecard. But, it warned, a chronic lag in enforcing unbundling means “success stories are still in the minority.”
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A chasm still separates EU members in broadband penetration, the group said. Levels in eight countries top 20 percent, with the Netherlands, Denmark, Finland and Sweden in the lead. But penetration in Greece, Poland, Slovakia and Cyprus remains less than 10 percent, it said.
For the first time, the 15 EU countries average 19.9 percent penetration, comparable to U.S. and Japanese levels at 19.6 and 20.2 percent, the association said, citing Organization for Economic Cooperation and Development data. Among the EU 15, the greatest increases in penetration have been in Germany, Ireland and Greece and the smallest in Finland, Belgium and Portugal, the group said. Overall, there are now 84 million broadband lines, up 16 percent from six months ago, it said.
The group traced the growth partly to unbundling, in which alternative providers rent the network last mile from incumbent telecommunications companies and offer their own broadband services to consumers. Unbundling has had the most evident impact in the U.K., where splitting British Telecom into separate infrastructure and services units spurred a quadrupling of unbundled lines within a year, as well as an “explosion of triple-play offers,” the association said.
The EU has required unbundling since 2001, but levels remain very low in 17 of the 25 nations, the survey found. Chairman Innocenza Genna of the competitors’ group said he hopes governments will use a coming European Commission review of the electronic communications regulatory framework to boost regulators’ power to enforce unbundling requirements.
The association wants national authorities given the power to order functional separation of incumbents, along the lines of BT’s arrangement, when other regulatory measures haven’t ended the incumbents’ entrenched market power. Information Society and Media Commissioner Viviane Reding also supports the remedy, which is apparently part of the regulatory package getting final Commission scrutiny (CD Aug 28 p10).
A world leader in broadband penetration, Sweden is considering functional separation, the association said. Asked why, the association’s regulatory affairs head, Ilsa Godlovitch, said Swedes, while having high penetration, still lag behind other Nordic nations and have had trouble enforcing rules that would bring broadband competition to rural as well as urban areas.
Another argument for functional separation that applies across Europe is to ensure of an effective, clear structure not only for copper and switched telephone networks but also for next generation core and access networks, Godlovitch told us. A nation with effective unbundling and high broadband penetration could “quickly slip behind” if its competitiveness is compromised as networks are upgraded, Godlovitch said. Functional separation could increase incumbents’ and rivals’ certainty about future applications of regulation to networks, she said.
Germany remains a problem despite “particularly strong” growth in broadband deployment the past six months, the association said. Growth, always positive, nonetheless starts from what is still a low base, Godlovitch said. Deutsche Telekom rivals still have reason to worry that the incumbent will lag in providing access to the network as it upgrades to fiber, undermining much of the competition that has emerged, she said.