Europe’s advanced telecommunications networks and population density have enabled the region to be a prime testing ground for emerging technologies. As fixed-voice traffic and revenue continues to fall, the focus has gradually shifted to other data-rich applications such as mobile TV and HSDPA, which in turn have placed competitive pressure on the business models of developing WiMAX networks across the EU. The copper networks have continued to be augmented by substantial cable and fibre network deployments during 2006. Further investment to the end of the decade is expected following the consolidation of cable operators in key markets (the UK, Germany, The Netherlands) as operators extend and upgrade networks in an effort to compete with dominant DSL. In addition, new technologies including wireless networks, Broadband Powerline, 3G mobile networks and satellite broadband have increased the reach and versatility of telecoms’ provision. Effective regulatory controls have enabled rivals to encroach on the incumbents’ market shares in all sectors.
Other key developments during 2006 were the further progress towards Next Generation Networks (NGN), moving infrastructure to an IP packet-based, full service typology. The principal innovator in this sector is British Telecom, which opened the first stage of its 21CN all-IP network in November 2006. The company successfully underwent structural separation and has since operated its Openreach division to service competitors on an equal footing. BT’s regulated approach, in particular Openreach, is likely to be imitated by the Dutch regulator in 2007 and by other regulators in Europe in coming years.
Europe continued to show strong broadband growth in 2006, driven by intensifying competition and by regulatory measures to improve competitor access to local loops. In addition, technological developments in both the cable and DSL platforms have provided sufficiently fast data speeds for a large number of consumers to be able to extend broadband from its limited PC-based function to one which is increasing the basis for household entertainment through services such as Video-on-Demand (VoD) and IPTV. The main growth driver remains xDSL followed by cable, but with fibre enjoying an improving footprint in certain markets, notably Scandinavia, The Netherlands and Italy, as the cost of roll-outs falls and network builds are undertaken by municipalities and other groups as often as by telcos. Satellite Internet and wireless broadband retain a niche presence, though the European Commission (EC) has facilitated the use of WLANs for accessing public services, and WiFi / WiMAX systems have been widely deployed in Europe.
Broadband penetration varies considerably across European states and is generally highest in countries where infrastructure-based competition exists via cable and other alternative networks, and where Local Loop Unbundling (LLU) is well regulated. Countries which implement pro-competitive regulatory frameworks have experienced faster broadband adoption, while those countries with unrestrained incumbent market power have fallen behind. Thus countries, such as France and the UK, with established bitstream and/or alternative infrastructures have seen substantial growth. There remains scope for improvement in the development of LLU, the success of which largely relies on regulatory pressure. The overall broadband growth rate in 2006 was about 9% per quarter, compared to 15% per quarter in 2005. Slower growth was noticeable in some countries where adoption was already high (Belgium and Sweden) though it continued to grow strongly in The Netherlands.
