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RealTime IT News

Addressing the Broadband Conundrum

LONDON -- Jupiter MMXI has released details of current broadband penetration across Europe and forecast which are the countries most likely to take up the broadband offer. The research company considers that pan-European take-up will be relatively pedestrian, owing to pricing, low customer demand and a lack of competition among broadband operators.

At the moment, Jupiter MMXI does not believe that the benefits of broadband are being effectively put across to consumers. According to analyst, Staffan Endegard, "The high prices currently being charged for broadband access means that the majority of consumers are discouraged from the technology. To attract these people, companies need to improve their marketing message to ensure that Europeans understand the added value of broadband."

This is a view backed up by recent comments from the investment bankers, Goldman Sachs, who appreciate that broadband will have an impact in Europe, but who point out that "the question of when these 'broadband benefits' will accrue is much less clear."

Again, the bankers believe that the key is in delivering incentives to consumers to upgrade to broadband services, but warns of "the 'chicken and egg' problem," where increased uptake depends upon "better content and functionality. But the development of this content and functionality will largely hinge on the mass-market adoption of broadband to offset higher costs."

Information in the Government's report UK online: the broadband future doesn't paint a particularly rosy picture: by 2003, 50 percent of the population will be served by ADSL and cable modem, 25 percent by ADSL but not cable modem, and less than 10 percent by broadband fixed wireless alone. Although this means that only 20 percent of the population would be left without access to higher bandwidth and broadband services, this 20 percent covers a wide geographical area. The population connected to broadband services will be mostly centered on metropolitan areas; more sparsely populated areas, such as the South West and Wales, might find almost half of their populations unable to gain access to faster connections.

Estimates for the current penetration of broadband in the UK vary widely, as do those for its potential. Jupiter MMXI, for instance, placed household broadband access in the UK at 0.3 percent in 2000, set to rise to 15 percent by 2005. Other analysts suggest that between 30,000 and 120,000 UK households had already gone broadband last year, and that by 2004 that figure will rise to between three and nine million.

It's not even really clear what is likely to be the main method of accessing broadband services. Demand for ADSL is backed up as BT struggles to roll the service out nationwide. Goldman Sachs comments, "We still view the UK as a toss up, though with BT's very slow DSL roll-out schedule and the high levels of UK cable penetration, cable could be a much greater contender in the UK." Against this stands the fact that cable networks from providers like NTL and Telewest do not have countrywide coverage.

It also remains to be seen whether alternative technologies, including broadband fixed wireless access and satellite access, can fill in the gaps. The Strategis Group recently predicted that the European fixed wireless market is set to hit $8.6 billion in annual revenue by 2006, although only 28 percent of this is expected to come from residential customers, with fixed wireless operators focusing on high revenue customers from urban business districts.



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