The European broadband market continues to develop solidly despite the ongoing economic turmoil. The market during the next two to three years will be characterised by the migration to higher-data services and from copper-based networks to FttH. Although growth will remain steady, in part fostered by government economic stimulus funding, regulatory measures to encourage competition, and consumer socio-economic dependence on faster connectivity, in some markets the adoption of FttH and high-capacity broadband may be slowed due to the absence of a ‘killer’ app which would warrant the additional cost involved for subscribers. Nevertheless, the collective growth in household data use, together with emerging high-end services and applications which will require FttH or upgraded DOCSIS3.0 technologies, will ensure the steady migration from DSL.

The main growth driver in coming years will be fibre, complemented by mobile broadband in the wireless broadband sector. The two are closely linked insofar as mobile broadband, largely based on LTE technology, requires that most traffic – generated in the home or office environment – is offloaded onto fibre backhaul. Most countries have developed programmes for FttH-based national networks, and some including Denmark and Finland are looking to provide widespread FttH-based 1Gb/s services by 2020.

Cable networks have also seen considerable subscriber growth as a result of operator investment in DOSCSIS3.0, which is now commonly providing up to 200Mb/s though some trials are pushing this to 400Mb/s. Consolidation within the market in key countries such as the Netherlands and Germany have provided the main cablecos with the scale to invest in broadband infrastructure and so deliver a more sophisticated range of bundled services.

Europe’s broadband market remains the largest in the world, with some 500 million subscribers. A number of Member States lead the world in terms of broadband penetration. By mid-2012 a number of EU countries had achieved full broadband coverage (Denmark, Finland, France, Luxembourg, Latvia, Malta, the Netherlands, the UK among them), though in some instances there remain areas where broadband is unavailable in practice other than by satellite or mobile broadband alternatives.

Broadband development has also been stimulated by regulatory strategies to promote NGA networks in the region. As such, a range of measures have been introduced to ensure facilities-bases access, with regimes initially focussing on DSL networks before interest switched to fibre-based networks.

For detailed information, table of contents and pricing see: European Fixed Broadband, Internet Market and Forecasts

Spain’s economy has been among the worst affected by the global financial crisis. GDP has fallen steadily since 2009, and is expected to contract by a further 1.5% in 2012. Companies in all economic sectors have faced a drop in demand for products, under-productive capacity and restrictions in obtaining funding in capital markets: retail sales falling 9.8% in April 2012, the 22^nd month of successive falls.

Economic difficulties have had a long gestation, compounded by poor management and EMU policies which resulted in interest rates during the mid-2000s being set far too low. As also happened in Ireland, this encouraged speculators and investors, secured with cheap loans, to move into the housing market, so building many more thousands of units than the market could sustain. The collapse in the housing market, and the consequent default on loans, was the catalyst for banks needing state intervention to stay afloat. Bankia, the country’s fourth biggest bank, was the main institution into which bad loans were channelled, and it has thus far been the recipient of more than €23 billion in state aid.

Economic woes show no signs of abating. The budget deficit must be brought to 5.3% of GDP by the end of 2012 and (recently revised) to 3% by 2014. However, the deficit has barely moved since a year ago, and so the challenge is daunting. Government borrowing costs have approached the level at which Ireland, Greece and Portugal sought financial help.

Compounding the government’s difficulties is the high rate of failing businesses, which is reducing tax revenue, and high unemployment (in some regions more than others, and particularly among the young), which is draining state coffers at a time when tax and VAT revenue is falling markedly. This scenario has already been played out, in Greece.

As a result of these factors, the telecoms sector has been hit hard. Investment has fallen since 2008, while overall market revenue fell 4.6% in 2011, year-on-year. The steady fall in revenue since 2007 is mainly attributed to the dampening of consumer spend in all sectors. The broadband sector was the single area of positive growth until mid-2010, since when revenue from the sector has fallen by between 1.5% and 2.9% per quarter.

Henry Lancaster
Senior Analyst

For more analysis on Spain’s telecom market, see the updated report Spain – Key Statistics, Telecom Market and Regulatory Overviews.

Back in 2010 I reported on my trip to Japan where I saw supermarkets in the metro stations, similar to those in South Korea. At first glance they seem like normal shops with their products on display, but they are actually high-quality, life-sized pictures of the products, and they can be bought by using the QR code or the NFC function on a smartphone. By the time the buyer arrives home the goods have been delivered.

A slightly different feature is now popping up in Europe (and I am sure elsewhere) where photo kiosks are installed in the shop. They also offer the opportunity to order products that are not available in the shop and they will either be delivered the next day or picked up at the store.

Typically only 10% of all the department stores and supermarkets offer the full range of products. Smaller stores have more limited stocks.

These new in-shop developments are still only the tip of the e-retailing iceberg. As mentioned in previous analyses in the future stores will have WiFi connections that allow shoppers to be guided to the right aisles, to specials and further tips will be given to the shopper. At the same time shops will have to extend their services beyond the store itself. All products nowadays have electronically scanned barcodes that could be sent to the shopper’s computer or smartphone. In this way shops can start building much better relationships with their customers.

See also:

• Digital Economy – E-Commerce and M-Commerce Insights
• Digital Media – The Dynamic Digital Economy
• Global Broadband – Facilitating the Digital Economy

Namibia was one of the last countries in Africa to introduce competition in the mobile communications sector when a second network finally launched in 2007. Despite this, the country has achieved a market penetration rate well above the regional average. However, the average revenue per user has more than halved since then. Both GSM operators – MTC (managed by Portugal Telecom) and Cell One (renamed Leo by its new owner, Orascom) – have entered the internet and broadband market with 3G mobile broadband services in a bid to create new revenue streams. MTC introduced fourth generation (4G) technology to the market in May 2012 when it launched an LTE network in the capital, Windhoek. In addition, Telecom Namibia (TN) is offering 3G mobile broadband services using EV-DO technology.

Fixed-line services are still a monopoly of TN, but as a member of the WTO the government plans to open the telecom sector to full competition. TN entered the lucrative mobile market as the third player with a CDMA network but was put on hold by the industry regulator, the Namibian Communications Commission, until a new communications law was enacted which, among other issues, addresses fixed-mobile convergence. Since then, however, the absence of effective regulation during the transition to a new regulatory authority, the Communications Regulatory Authority of Namibia, has led to further delays in market liberalisation.

Despite being reasonably competitive with six ISPs, development of Namibia’s internet and broadband sector has been held back by high prices for international bandwidth, caused by the lack of a direct connection to international submarine fibre optic cables. This changed in early 2011 when the WACS cable landed in the country, with services launched in May 2012. In parallel, Namibia is working to diversify its transit access routes via neighbouring countries, but broadband price reductions on the retail level have only been moderate so far.

The country is well prepared for a broadband boom, with 3G and 4G mobile services and a national fibre backbone infrastructure in place. Several WiMAX and other wireless broadband services offer additional access options and are standing by to bring additional competition to the voice market as well, once internet telephony is deregulated.

Market highlights:

• LTE fourth generation (4G) mobile services launched;
• WACS international submarine fibre optic cable brings more internet bandwidth;
• 3G mobile broadband prices remain stable following 4G launch;
• Market analysis 2012;
  • Estimates for mobile, fixed-line and internet market to end-2012;
• Profiles of major players in all market sectors.

Estimated market penetration rates in Namibia’s telecoms sector – end 2012

(Source: BuddeComm based on various sources)

For detailed information, table of contents and pricing see:

Namibia – Telecoms, Mobile and Broadband

Telecom overview

The Dutch telecom market has one of the most developed infrastructures in Europe, providing a solid foundation for the country’s IP-services offerings. Almost 90% of the population uses the internet, while the high broadband take-up has benefited from government support and competing cable, fibre and DSL platforms. FttH networks have become also a significant feature of the country’s broadband landscape, with an effective collaboration between national, regional and municipal governments working with the industry and with academic institutions to ensure that the Netherlands maintains its broadband lead into the fibre age.

A bill to make the Authority for Consumers and Markets responsible for telecoms regulation from the beginning of 2013 may revitalise regulatory matters, with a greater focus on consumer protection. The ACM will be the merged authority incorporating OPTA, the Consumer Authority and the Netherlands Competition Authority (NMa).

Broadband sector

The strong broadband infrastructure has provided a range of content and digital products, including bundled offers. There are at least a dozen operators offering a double-play package (fixed-voice telephony and broadband), while several others offer TV and broadband and full triple play services (TV, broadband and fixed voice) to more than a million subscribers. Quad-play offers are available from a number of players.

Mobile sector

Growth in the mobile sector since 2006 has largely been due to strong competition among network operators and the range of MVNOs which has kept consumer prices low. The recent market entry of the cablecos Ziggo and UPC Nederland has created additional competitive pressure – both operators were awarded spectrum in the 2.6GHz band, allowing them to complement their existing bundled services (based on fixed-line access) with mobile voice and broadband offers.

Key telecom parameters – 2010; 2013

(Source: BuddeComm)

Key Highlights

• In May 2012 the Dutch Parliament passed the world’s first net neutrality legislation, affecting mobile and fixed internet networks.
• Pending legislation will make the ACM, the merged authority incorporating OPTA, the Consumer Authority and the NMa, responsible for telecoms regulation from the beginning of 2013. The ACM will be run by a three-member board focussed on consumer protection, industry-specific regulation, and competition oversight.
• Overall average realised download speeds have risen from 2.8Mb/s in 2006 to 5Mb/s in 2008 and 16Mb/s in early 2012. This jump in data speed is largely the result of the growing number of subscribers on fibre networks and the increased speeds from cable operators.
• The overall number of SMS has fallen steadily in recent years as consumers migrate to other applications such as Skype and WhatsApp, which enable messages to be sent via the internet.
• The government’s plans to auction spectrum in the 800MHz, 900MHz, 1800MHz, 1900MHz, 2.1GHz and 2.6GHz bands in October 2012 will include 60MHz of paired spectrum from the Digital Dividend. The new licences will run until 2030. 2x10MHz spectrum in the 800MHz band has been reserved for new players to encourage market competition.

BuddeComm’s quarterly publication, Netherlands – Telecoms, IP Networks and Digital Media, provides a comprehensive overview of the trends and developments in the telecoms and digital media sectors in this leading market. The report includes the regulator’s market data to end-2011, telcos’ operating and financial data to Q1 2012 and market developments into mid-2012.

For detailed information, table of contents and pricing see:

Netherlands – Telecoms, IP Networks, Digital Media and Forecasts