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Europe to Boost Rural Broadband Internet Access

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The European Commission says that it is earmarking 1 billion (USD1.3 billion) to achieve 100 % high speed internet coverage for all European citizens by 2010 as part of the European Economic Recovery Plan. On average, 93 % of Europeans can enjoy a high speed online connection but in some countries broadband covers less than half of the rural population.

A recent study shows that, assuming a constant adoption rate up to 2015, broadband development will help create around 1 million jobs in Europe and a broadband-related growth of economic activity of 850 billion between 2006 and 2015.

The impact on European industry is clearly positive: apart from civil work for networks which has a direct impact on local employment, sales of network equipment will also benefit global European suppliers (like Siemens, Ericsson, Nokia, Alcatel-Lucent), as well as telecoms or satellite operators. And areas with advanced broadband connections will see an increase in demand for products and services.

What is the current state of broadband coverage and speed in Europe?

Broadband access is increasingly widespread in the EU, following substantial EU efforts and a pro-competitive regulatory framework in place since the liberalization of the telecoms sector. In December 2007, broadband connection was available to around 93% of Europeans, mostly in densely populated areas.

However 30% of the EU rural population still has no access to high speed internet.

At the start of 2008, on average, more than half of European users enjoyed advertised internet speeds above 2 Megabits per second, which is considered the minimum to enable advanced services like television over the internet, and about 10% of users had access to more than 10 Megabits per second. This compares favourably with the USA, where 37% of broadband lines offer at least 2.5 Megabits per second and only 4% have speeds equal or above to 10 Megabits per second. These are however "advertised" speeds which overestimate actual speeds. In fact, internet speed worsens when the distance between the exchanges and the location where the user is based is great and/or when several users access the internet simultaneously.

Internet speeds increase with the share of fiber-based high-capacity access technologies. Fiber accounts for 45% of all broadband subscriptions in South Korea and 39% in Japan. These numbers are similar between the EU and the US (1.4% and 1.5% respectively) but much lower than in Asia.

In terms of penetration rate (broadband take up per population), which was 21.7% in EU27 in July 2008, Denmark, The Netherlands, Sweden and Finland lead the rankings in the OECD area penetration rates above 30%. The penetration rate in the US is 25%.

The EU money will be used in addition to private investments and national funding. It means that rural areas which are not covered by existing plans to roll out or upgrade broadband will be able to participate in the web economy very soon. In particular, this means that areas that are already at an economic disadvantage will be better placed for economic recovery already in 2009.

European rural areas suffer from much lower coverage rates than urban or suburban areas and this is where the European help should focus. In some countries, even traditional telephone networks are not available in rural areas (in Bulgaria or Romania for example). In others, lack of investment and difficult geographic conditions has limited broadband coverage to less than 50% of the rural population (Greece, Poland, Slovakia). Even countries with a more developed infrastructure still have rural coverage rates below 80%. This is the case of the Czech Republic, Estonia, Ireland, Latvia and Lithuania. Finally, even in the most developed countries (Germany, France, Italy, Austria), there are still areas that, due to their geographical location or mountainous landscapes, do not enjoy the same conditions as the rest of the country.

Finally, these figures relate to the coverage of DSL, which is the most widespread access platform in Europe. But they do not take into consideration people who live too far away from telephone exchanges to have access to DSL. This is around 3% of the population in the EU15 and much more in the new Member States. Thus, there is considerable scope for investment to ensure all Europeans have the right to broadband.

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Tags: nokia  european commission  rural  alcatel-lucent  ericsson  eu  satellite  oecd  television  eu27