2010 European Fixed Broadband and Internet Market

FttH and DOCSIS driving Europe's high-capacity broadband to 2020

The European broadband market has evolved rapidly during the last few years, epitomised by the migration to higher-data services and from copper-based networks to fibre. Growth in many markets slowed in 2010 as a result of high broadband penetration, while markets in the less developed southern and eastern countries have sought to catch up with their northern counterparts. Growth is still driven by intra-and inter-platform competition and by regulatory measures to improve access to incumbent networks. Technological developments in the cable, DSL and fibre platforms have helped transform broadband from a PC-based service to a fundamental component of many households’ entertainment, through services such as VoD and IPTV.

The main growth driver in coming years will be fibre, complemented by mobile broadband in the wireless broadband sector. FttH has emerged as the preferred albeit more costly architecture, followed by cable and DSL. Many operators which had initially looked at VDSL/FttC architectures, including France Telecom, KPN and BT, have since responded to pressure from competing fibre network operators and the anticipated demand for bandwidth from consumers to refocus on FttH to future-proof their network. Some regulators, including those in Denmark and Finland, are looking to provide widespread FttH-based 1Gb/s services by 2020.

Cable networks have seen considerable subscriber growth as a result of operator investment in DOSCSIS3.0 technology, which is theoretically capable of 400Mb/s. Many cable networks have been upgraded to provide 100Mb/s or 120Mb/s, while Virgin Media in the UK has tested a 400Mb/s service though no commercial launch is foreseen in the near future.

The EU’s broadband market remains the largest in the world, with about 125 million subscribers in mid-2010. A number of Member States lead the world in terms of penetration rates, while the average fixed broadband penetration rate reached almost 25%. High penetration in some markets, combined with economic difficulties since late 2008, has resulted in a marked fall in the number of new subscriptions per annum: indeed the growth rate in 2009 was the lowest since 2004.

During the next few years, however, the broadband market will be characterised by a slow migration of DSL subscribers to copper networks in response to the efforts and investments made by cablecos in new technologies, as well as by a significant migration to fibre networks. This will be the result of churn by customers being offered fibre in their area from a new provider, or by the natural migration to fibre from their existing copper connection as their provider replaces legacy copper with their All-IP fibre infrastructure.

The migration to FttH will address the difficulties which many areas have in accessing high-capacity broadband: although 84% of fixed broadband lines in the EU offer speeds above 2Mb/s only 23% of these are above 10Mb/s. By the end of 2011 the availability of 40Mb/s services should become mainstream on both cable and upgraded DSL networks, and by 2015 FttH will have gained a far higher proportion of overall subscribers.

ADSL has been hitherto been the most common form of broadband access, though considerable consolidation among cablecos in a number of markets has enabled the principal operators to challenge incumbent DSL providers effectively. DSL represented about 78% of all broadband lines in mid-2010, as well as 70% of all new connections. Nevertheless, the share of new connections held by alternative technologies will steadily increase in coming years, principally by fibre but also – in overall terms – by mobile broadband.

Broadband lines based on FttH and hybrid FttC/DSL currently represent between 1.8% and 5% of all broadband lines in the EU, compared to 51% in Japan and 46% in Korea. Although prices for broadband offers based on FttH remain comparatively high, competition among players, particularly in the major cities, as well as sympathetic regulatory measures to secure access to networks will lower the cost of network roll-outs and so also the cost to consumers. This will have a marked effect in propelling fibre as the main access technology by the end of the decade.

 Data in this report is the latest available at the time of preparation and may not be for the current year.