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Info European broadband connections up 20%, but incumbents' dominance stifles
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Info European broadband connections up 20%, but incumbents' dominance stifles - 08-March-2009, 13:10

European broadband connections up 20%, but incumbents' dominance stifles

European broadband connections continued to post healthy adds in 2008, rising 20% year-on-year to reach 110.5mn connections by year-end, according to new figures from the European Competitive Telecommunications Association (ECTA), but the body warns that market dominance by incumbent telcos is - in some instances - stifling further potential for growth.

The body cautions policy-makers against yielding to dominant telcos' "demands for special treatment" over the rollout of fibre networks, adding that growth and investment in high-speed networks across the continent are contingent on competition. ECTA notes that Telefnica continued to increase its control of the Spanish broadband market in 2008, supplying more than 57% of all retail broadband connections, adding that the Spanish market has "stagnated" with the result that Spain is below the OECD and EU average with a broadband penetration of 20% and low growth rates.

Light touch regulation has not worked in the banking sector and there is no reason to assume it will work to consumers benefit in telecoms," said Innocenzo Genna, Chairman of ECTA. "Financial results from incumbents, such as Telefnicas last week, show that they are primarily focused on increasing profitability at the expense of vital infrastructure investment What is particularly disingenuous is that, at the same time, they are threatening governments and European politicians that they will not invest in next-generation access unless there is a relaxation of competition rules that allow rivals to offer services over these networks.

Mr. Genna continued, Despite Spanish regulator CMT granting Telefnica a regulatory moratorium for next-generation fibre networks, ostensibly to support a EUR 1bn fibre investment programme, there is little or no evidence that it will prioritise infrastructure investment in future. Instead it is committed to preserving the companys strong cash flow generation, to the benefit of shareholders.

It is not all doom and gloom though - and it has to be said, it is not surprising that the organisation is highlighting competition as the key to broadband health in Europe - for the top four countries in terms of broadband penetration (Denmark, Finland, Sweden and the Netherlands) all have penetration rates in excess of 30%, with the UK not far behind in sixth place with 28.1%.

ECTA goes on to say that "common to all these top ranked countries is strong competition from both cable and regulated unbundling of the local loop. In some of these countries, incumbents have also publicly committed to open access policies, in contrast with those of incumbents in Germany and Spain".

Fibre penetration rates were, as usual, found to be highest in Sweden, with a number of new EU member states such as Lithuania and Estonia also leapfrogging legacy copper technology to install fibre access lines. Swedish consumers also enjoyed the fastest broadband speeds, with more than 30% having speeds over 2 Mbps and 10% having speeds higher than 10 Mbps.

At the other end of the scale, the lowest penetration rates (at just over 10%) were found in Poland, Romania, Bulgaria and Slovakia. The highest growth rates for broadband access meanwhile were found in Greece, Cyprus and Malta.
   
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