Bridging the broadband gap

Characterised by constant change and rapid development, the telecoms sector still represents huge opportunities for growth and holds a wealth of untapped potential benefits for European businesses.

It seems, however, that while the US is embracing the evolving technologies with open arms, Europe is more cautious. Steen Clausen, MD of the European Competitive Telecommunications Association talks to Business Management about what he sees as some of the challenges for Europe in realising that potential and assesses the current trends in the industry today.

BM. A recent report by the SPC Network revealed that increased competition in Europe could add an additional 20 million broadband lines. What are the benefits of an increase in competition and what steps need to be taken by regulators to get there?
SC. Competition lowers prices, increases diversity and choice and stimulates investment. For example in France, following implementation of the broadband ladder of investment, triple play (and now quad play) finally took off. Further benefits also included 20 Mbit/s broadband with IPTV and free calls for €30.

My advice would be to implement the broadband ladder of investment (i.e. local loop unbundling and bitstream access), ensure competitive access to spectrum and promote cable development. The SPC study shows that the more ways there are for competitors to access a customer, the more broadband penetration accelerates.

BM. The European Commission recently criticised the slow uptake of digital technology in European States. Is Europe lagging behind the US, particularly with regards to ICT research?
SC. There are undoubtedly some differences between the US and EU and it does seem that there is more of a culture in the US of R&D investment. People in the US are also often more open to technological developments and to using IT effectively. Europe definitely needs to look at this ‘usage’ gap if it wants to meet its Lisbon goals.

However, it is also interesting that the differences between countries inside Europe are often as great as those between the EU and elsewhere, despite the fact that we share the same legal framework. Often differences simply come down to how effective regulation is in promoting competition and how open and flexible markets are more generally. Essentially, more liberal and liberalised markets do better.

BM. Why due you think the uptake of broadband is so slow in some of the new EU member states? How can it be speeded up?
SC. There is obviously a wealth gap and computer gap as these countries catch up and their economies develop so overall one would expect broadband penetration not to be as high as elsewhere in EU

But even taking that into account there are stark differences between some poorly performing countries like Poland and Slovakia and better performing ones like Malta and Estonia, and the difference almost always comes down to competition – when there are ways to promote competition, through local loop unbundling, wireless or bitstream, broadband prices are lower and take-up is higher. It’s as simple as that and that rule works across Europe.

BM. Roaming charges for using mobile phones abroad are likely to be scrapped soon. What effect is this likely to have on the industry?
SC. I am very pleased as an individual and manager of a small organisation that roaming charges will be coming down. The Commissioner identified a real market failure there that will make a difference to people’s lives when it is addressed

I can’t say what impact this will have on the mobile industry, but I can say that the action on roaming is positive for many of our fixed members, who have wanted to enter mobile markets but were unable to reach agreements with mobile operators that would give them the ability to compete effectively

A key part of the roaming measures will be to bring down wholesale prices for roaming. What our members need now is a commitment that they as mobile virtual network operators (MVNOs) will be able to take advantage of the lower wholesale rates so they can really offer a competitive choice for customers.

BM. What impact are new technologies and applications such as VOD and IPTV likely to make? Can you outline any challenges with these technologies?
SC. The more ways people can use a broadband connection, the more demand there will be for them. So there is a real need for operators to be able to offer these services effectively to inject competition into the ‘content delivery’ market.

Some potential challenges are:

• The need to be able to guarantee the speed and quality of the network. Sometimes this is restricted when operators buy access from incumbents and we need to ensure this does not become a barrier.
• And the negotiation of content deals to compete effectively with established content channels.

BM. What other important issues and developments have been taking place in the industry?
SC. Important issues and developments include the review of the Telecoms Framework, moving to next generation access and core networks, and we are also seeing the delivery of seamless fixed/mobile services.

BM. What trends do you foresee for the telecoms industry in the future?
SC. I predict continual evolution with faster and faster bandwidths and a greater role for wireless technologies – although speeds will never catch up to fixed. Another trend will be convergence, which will really happen rather than being just a rumour. Finally, intelligent services so not just plain old telephony any more.

Of course all of this depends on competition continuing to flourish, because without it the industry will just stagnate, much as it did before liberalisation in 1998. If regulators fail to tackle some of the challenges such as next generation network bottlenecks, then of course the future could look very different.