Best Practices in Broadband Development

Project Title: “Broadband in Greece: Current Status and Perspectives” Deliverable: “D1 –Best Practices in Broadband Development“ Report Title: “Broadband in Greece: Current Status and Perspectives” Deliverable: “D1 –Best Practices in Broadband Development” Contractor: Version: Date: Comments: KPMG Kyriacou Advisors AE (along with subcontractor Research Academic Computer Technology Institute) 1 9 May 2006 Final version Best Practices in Broadband Development EXECUTIVE SUMMARY This report presents an overview of the broadband status at the international level, by performing a qualitative and quantitative analysis on the use and adoption of broadband services and infrastructures in: • • • the countries of the European Union (EU), the candidate countries of the EU, as well as the OECD countries with broadband penetration rate higher than 7% (number of broadband connections per 100 inhabitants). Furthermore, the report focus on the identification of the factors that support the broadband growth and the practices that the countries under examination adopt and which could be considered as best practices. In particular, the report, using data coming from relevant reports published by international organizations (e.g. OECD, ITU, Eurostat, ECTA, etc), Information Society Strategies, official websites of the countries monitored (e.g. ministries’ websites, national regulation authorities’ websites, National Observatories’ websites), as well as from selected studies, papers and other publications, is engaged with the following issues: Overview of the international broadband status for monitoring: the current situation in the broadband market, emphasizing on (a) broadband network infrastructure internationally, (b) broadband services with the highest demand internationally, (c) cost for the end user. Some basic points and results concerning the broadband market are: The number of broadband subscriptions, based on OECD data, continued to increase in the first half of 2005 from 119 million to 137 million. More specifically, broadband penetration in the OECD countries grew by 15% in the first half of the year, reaching to 11,8 subscribers per 100 inhabitants. Given the fact that penetration grows, broadband providers in the OECD countries increasingly offer voice and video services over broadband. The speeds offered by providers are also increasing. Regarding broadband technologies, the international survey shows that DSL stands as the leading broadband platform, followed by cable modem access. In particular DSL accounts for 61.2% and cable modem for 32.0% of the total technologies used. Regarding other technologies (e.g. fiber, LAN, satellite and fixed wireless) account for 6.8% of the total technologies used. Alternative technologies adoption is usually related to the morphology of each country, the percentage (in terms of area) of rural and remote areas, as well as to the broadband penetration. In particular, countries with high broadband penetration rate seem to adopt more advanced technologies, as for example fiber to the home (FTTH), while countries with a high percentage of rural population tend to use wireless technologies or satellite communications. Competition is driving fixed and mobile operators to invest in new technologies, in order to reduce cost and position themselves in a converged environment. Operators are beginning to offer portfolios of services, with different combinations of low-cost voice (including mobile), internet access and audiovisual content to attract and retain customers. After falling significantly in 1999-2001, investment levels are recovering, with capital expenditure for the sector as a whole, conservatively estimated, to exceed the amount of €45 billion in the EU for 2005, presenting an increase of approximately 6% compared to 2004. Final version May 2006 3 Best Practices in Broadband Development As far as it concerns the broadband cost, it seems to show an important reduction the last two years, while it is strongly related to the variety and quality of provided services, as well as to the connection speeds of these services. At this point it should be mentioned that broadband cost reduction is strongly related to the level of competition in the broadband market. In cases of countries where the level of competition is low or the market is monopolistic, the cost is significantly higher, in relation to the GDP per capita. In the context of the services, the multiple play offers, which include voice, data and video services, seem to prevail, representing the first stage in a two-part evolution of converged ICT service delivery. This first stage has seen video, voice and data services consolidated on a given infrastructure (e.g. cable networks). The second stage will include consolidation of access platforms on one IP network, allowing users to seamlessly access content while moving over a variety of wired and wireless networks. the strategies and policies adopted and applied for supporting broadband growth. Basic points and results regarding strategies and policies applied are the following: The policies that the countries adopt for the development and deployment of broadband are strongly related to Internet and broadband penetration, as well as to the percentage of the population that live in rural or remote areas. In particular, countries which show high penetration rates, tend to focus on the preservation and extension of these rates. Identification of the basic factors for supporting broadband growth and best practices analysis. These subjects concern the following: Regulatory framework. The regulatory framework regarding the telecommunications and broadband constitutes an important factor for increasing (or not) the broadband growth and the level of competition in the telecommunications market of a country. This report presents briefly the current EU framework for electronic communications, as well as a synopsis of the national regulatory telecommunications framework for the EU countries. Moreover, various data about the current situation in Ireland, Germany, Australia, United States of America, Portugal, Hungary and Turkey are presented, according to information provided by OECD. These data concern the following: (a) Number of operators in service; (b) Foreign ownership restrictions in telecommunications; (c) Treatment of national and international voice telephony services provided over the Internet (VoIP); (d) Local loop unbundling. Various valuable conclusions can be extracted from the investigation of the regulatory telecommunications framework in connection with the broadband and Internet penetration. The first conclusion is that the regulations should support a competitive structure of market along with the existence of bodies that will hold continuous control of this competitive structure. These bodies should have the authorization to take the necessary measures when it is needed. It is important to notice that countries that show good conditions for a quick broadband uptake (e.g. economically developed countries, technologically advanced countries), such as Ireland, USA and Germany, did not present the predictable broadband growth (e.g. USA and Germany) or a satisfactory broadband penetration rate (e.g. Ireland), due to insufficient regulatory telecommunications framework (e.g. Germany), problems in the application of regulations because of appeals (e.g. Ireland), or bad application of regulations (e.g. USA). The second conclusion is that the regulatory framework should include the determination of an effective process of appeals in order to avoid legal uncertainty in regard with the National Regulation Authority (NRA) decisions, which discourages the Final version May 2006 4 Best Practices in Broadband Development investors in the telecommunication market. Examples of such cases constitute the countries Germany and Ireland. The third conclusion is that in cases where the market is not competitive enough, the NRAs should be able to impose penalties (e.g. fines) that would be really avertive for incumbent operators. The fourth conclusion, which concerns the EU member states, is that the countries that correctly applied the EU regulatory framework for the electronic communications sector presented a better broadband growth than others that did not follow this path. Examples of such cases are the countries Ireland, Portugal and Hungary. The fifth conclusion is that the independence of NRAs should be ensured, avoiding political interventions in the regulatory framework. Germany faced important problems due to the political intervention in the regulating environment. Technological level of the countries. Concerning the technological level of the countries, the following indices investigated: DAI, NRI, E-readiness, and DOI. Moreover, the participation of organizations of various countries in European programs and projects concerning the broadband applications sector (e.g. IST, TEN, etc.) has been examined. The main results are the following: It seems that there is a strong correlation between these indices and the broadband penetration for many countries. For example, Greece is at the last rank (26th) concerning the broadband penetration and it is also in the last places regarding the classification based on indices DAI (20th rank), e-readiness (21st rank) and NRI (24th rank). Moreover, there is no strong correlation between the participation of various countries’ organizations in European programs and the broadband penetration, because the most partners in the projects come from France, Germany, UK, Spain and Italy, i.e. countries which are not the leaders in the broadband penetration in Europe. Factors that affect the broadband development. The main factors that lead the broadband developments could be summarised as follows: the structural changes in the ICT markets (e.g. higher level of competition, more privatizations, market deregulation, globalisation), the changes in the services and their use (e.g. rapid broadband penetration, VoIP, mobile telephony, 3G, WLAN, WiFi, WiMAX, digital television), the technological developments (e.g. creation of innovative, interoperable and open solutions for the IP environment, IPv6, optical networks, digitalisation, increase of PC’s computational power), the user’s need for fast content access, the cost, the E(electronic)-readiness. It is generally observed that there is a tendency to apply policies that promote the broadband growth and the improvement of the national telecommunication regulatory frameworks. An example is the European strategy i2010. Furthermore, regarding the regulatory frameworks, there is an evident concern in Europe for the insufficiency of the regulatory frameworks in the telecommunications. Further trends are the deregulation of the telecommunication markets and the Internet neutrality. Moreover, another conclusion is that broadband growth is correlated with (a) the increment of broadband demand and (b) the promotion of the supply of broadband. Final version May 2006 5 Best Practices in Broadband Development Over and above differences in culture, landscape, and technological development, the economies that have been successful in promoting broadband have several key factors in common. In the area of broadband demand, a successful broadband economy can be characterized by: Informing the public about broadband. Making effective use of broadband through applications and content. Having an environment that fosters broadband innovation. Having a competitive market structure that keeps prices low and quality high. In broadband supply, fundamentally, the objective is to provide all those who would like broadband with the opportunity to access it. Therefore, in the area of broadband supply, a successful broadband economy can be characterised by: Having a competitive market structure. Having government programmes in place that focus on broadband. Applying innovative ideas to expand the network. Additional factors that affect the broadband growth are the existence of broadband content and applications, the high level of Internet penetration, the extensive use of computers in the households and the maintenance of prices of broadband access in low levels (depending on the purchasing power of consumers). Best Practice Analysis. This report has defined what is a best practice in broadband growth based on the following criteria: The cost of 1 Kbps per United States Dollars (USD) calculated in PPP. The annual average growth rates of Gross Domestic Product (GDP) per hour worked. The Economist Intelligence Unit’s e-readiness rankings. The broadband penetration growth rate. The broadband subscribers per 100 inhabitants. The Internet subscribers per 100 inhabitants. The Internet penetration growth rate. The investment in information and communication technologies (ICT). The level of competition in telecommunications sector. The above criteria have been categorized in three basic categories. The first category contains technological criteria, the second category contains financial criteria and the third category contains social criteria. According to these criteria, which have been quantified and normalised, the best practices have been determined. The practices of the following countries were determined as best practices: Denmark, United States, Japan, Canada, and South Korea. Furthermore, the practices of United Kingdom and the Netherlands were determined as good practices. The highest score has been achieved by Republic of Korea, while the lowest score has been achieved by Greece. Only one European country’s policies (Denmark) could be regarded as best practice, while the policies of other two such countries could be considered as good practices (The Netherlands and UK). However, in the relative classification, four European countries (Belgium, Norway, Sweden and Finland) have also shown a high rank. Final version May 2006 6 Best Practices in Broadband Development When comparing the results of best practices with ECTA Regulatory Scorecard 2005, it seems that there is a relation between the effectiveness of the telecommunication regulation frameworks and the best practice results. When comparing the scores of each country concerning best practices with their geographic location and morphology, it does not emerge a strong relation between the geographical characteristics of the countries and their scores. In particular, there are countries (such as Japan) with geographic characteristics that do not encourage the growth of broadband networks in a such a high degree. Analyzing the best practices, there are many basic conclusions coming out of this analysis for broadband growth. The main conclusion is that the ICT development, including investment in a robust broadband infrastructure, requires an extensive coordination and cooperation among the private and the public sector players. A successful ICT development typically occurs if and only if both types of participants stick to roles proven to maximize benefits. For government, the empirically proven role involves neither a laissez faire abdication of responsibility, nor an intrusive, heavy-handed, command and control regulation that predominated when private or government monopolies largely controlled the roll out of ICT. Governments can enhance ICT development by articulating from the top a broad vision of what ICT can do for a nation and its citizens, while leaving to community champions the flexibility to propose specific, ‘‘bottom-up,’’ projects that aggregate the supply of services needed to support the build out of a telecommunications infrastructure. For the private sector, the proven role does not involve extensive litigation and delayed investment, or the leveraging of ICT investment in exchange for even greater deregulatory relief. The private sector needs to make the necessary investments in ICT incubation, but governments can create incentives for such investment by underwriting and guaranteeing loans, providing favourable tax treatment and financially supporting a portion of the necessary research, development and technology demonstration projects. Governments do not serve as a catalyst simply by throwing money at the ‘‘problem’’ of insufficient ICT development. Nations achieving comparatively greater success in ICT development demonstrate the value in having a specific mission, achievable goals and policies designed to achieve success. The governments of Canada, Japan and Korea articulated a vision of what ICT could do for both public and private sectors beneficiaries. At the macro-level, these nations compiled laws that created incentives for risk taking and innovation and penalized litigation and strategies to delay making necessary investment in capital-intensive projects. At the micro-level, these nations linked public funding with private initiatives that aggregated demand, generated matching funds and justified the installation of ICT even in geographically unattractive areas. Nations exhibiting best practices in ICT development clearly show the benefit of a combination of public and private initiatives. An exception is the case of United States that has largely failed to match its comparative advantage in private ICT incubation, such as Silicon Valley, with similar world class governmental incubation, despite having achieved success in developing and then privatizing the Internet. The lack of success in recent governmental incubation efforts, e.g. in broadband market penetration, stems largely from the failure to appreciate the need to blend and integrate both private sector entrepreneurialism and public sector stewardship. Such stewardship involves active governmental involvement, as cheerleader, referee, loan guarantor, grant under and anchor tenant in a sector that many in the United States believe warrants little if any government involvement. Final version May 2006 7 Best Practices in Broadband Development TABLE OF CONTENTS CHAPTER 1: INTRODUCTION ..........................................12 CHAPTER 2: INTERNATIONAL OVERVIEW OF THE BROADBAND STATUS........................................................14 2.1 2.1.1 INTRODUCTION .............................................................................................. 15 European Union Countries.................................................................15 2.1.2 2.1.1.1 2.1.1.2 2.1.1.3 2.1.1.4 2.1.1.5 2.1.1.6 2.1.1.7 2.1.1.8 2.1.1.9 2.1.1.10 2.1.1.11 2.1.1.12 2.1.1.13 2.1.1.14 2.1.1.15 2.1.1.16 2.1.1.17 2.1.1.18 2.1.1.19 2.1.1.20 2.1.1.21 2.1.1.22 2.1.1.23 2.1.1.24 2.1.2.1 2.1.2.2 2.1.2.3 2.1.2.4 Candidate Countries of the European Union ....................................... 24 Austria ............................................................................................... 15 Belgium ............................................................................................. 16 France ............................................................................................... 16 Germany ............................................................................................ 16 Denmark ............................................................................................ 17 Estonia............................................................................................... 17 Ireland............................................................................................... 17 Spain ................................................................................................. 18 Italy................................................................................................... 18 The Netherlands ................................................................................. 18 Cyprus ............................................................................................... 19 Latvia ................................................................................................ 19 Lithuania ............................................................................................ 19 Luxembourg ....................................................................................... 20 Malta ................................................................................................. 20 United Kingdom .................................................................................. 21 Hungary............................................................................................. 21 Poland ............................................................................................... 21 Portugal ............................................................................................. 22 Slovakia ............................................................................................. 22 Slovenia ............................................................................................. 22 Sweden.............................................................................................. 23 Czech Republic ................................................................................... 23 Finland............................................................................................... 24 Bulgaria ............................................................................................. 24 Croatia............................................................................................... 24 Romania ............................................................................................ 25 Turkey ............................................................................................... 25 2.1.3 Other Countries ................................................................................25 2.1.3.1 South Korea ....................................................................................... 25 2.1.3.2 Canada .............................................................................................. 26 2.1.3.3 Japan................................................................................................. 26 2.1.3.4 USA ................................................................................................... 27 2.1.3.5 Australia............................................................................................. 27 2.1.3.6 Switzerland ........................................................................................ 27 2.1.3.7 Iceland .............................................................................................. 28 2.1.3.8 Norway .............................................................................................. 28 2.2 CONCISE RESULTS OF THE SURVEY OF THE INTERNATIONAL ENVIRONMENT ..... 28 2.2.1 2.2.2 2.2.3 2.2.4 Internet Penetration .........................................................................28 Broadband Penetration ..................................................................... 30 Access Technologies .........................................................................32 Competition .....................................................................................34 Final version May 2006 8 Best Practices in Broadband Development 2.2.5 2.2.6 2.2.7 2.3 2.4 Cost.................................................................................................36 Services ...........................................................................................41 Synopsis ..........................................................................................43 REFERENCES FOR CHAPTER 2 .......................................................................... 45 WEBSITES FOR CHAPTER 2 .............................................................................. 49 CHAPTER 3: INVESTIGATION OF MAIN FACTORS FOR BROADBAND GROWTH – BEST PRACTICE ANALYSIS.......53 3.1 3.2 3.2.1 INTRODUCTION .............................................................................................. 54 FACTORS FOR SUPPORTING THE BROADBAND GROWTH.................................... 55 Regulatory Framework ...................................................................... 55 3.2.2 3.2.3 3.2.1.1 Overview of the EU regulatory framework for the electronic communications sector ........................................................................................ 55 3.2.1.2 Overview of the implementation of the electronic communications framework in the 25 Member States ..................................................................... 56 3.2.1.3 Overview of the regulatory telecommunications framework of Ireland, Germany, Australia, Portugal, United States, Hungary and Turkey ........................... 60 3.2.1.4 Conclusions ........................................................................................ 65 Financial and social factors................................................................ 65 Technological level ...........................................................................67 3.2.4 3.2.3.1 3.2.3.2 3.2.3.3 Other factors....................................................................................74 Data for DAI, NRI, E-readiness, DOI ..................................................... 67 Participation in European IST Projects................................................... 72 Conclusions ........................................................................................ 74 3.2.4.1 Technologies and factors that lead the broadband developments ............ 74 3.2.4.2 Current trends .................................................................................... 76 3.3 BEST PRACTICE ANALYSIS ............................................................................... 78 3.3.1 3.3.2 3.3.3 Definition of best practice in broadband growth.................................. 78 Identification of best and good practices ............................................ 80 Best and good practices analysis ....................................................... 85 3.3.1.1 3.3.1.2 Criteria............................................................................................... 78 Data sources ...................................................................................... 79 3.3.3.1 Korea................................................................................................. 86 3.3.3.2 Canada .............................................................................................. 88 3.3.3.3 Japan................................................................................................. 90 3.3.3.4 Denmark ............................................................................................ 93 3.3.3.5 United States...................................................................................... 96 3.3.3.6 United Kingdom .................................................................................. 99 3.3.3.7 The Netherlands ............................................................................... 102 3.4 REFERENCES FOR CHAPTER 3 ........................................................................ 106 3.5 WEBSITES FOR CHAPTER 3 ............................................................................ 110 CHAPTER 4: CONCLUSIONS ..........................................112 4.1 4.2 4.3 4.4 4.5 OVERVIEW OF INTERNATIONAL BROADBAND STATUS ..................................... 113 TECHNOLOGIES AND FACTORS THAT LEAD THE BROADBAND DEVELOPMENTS . 114 FACTORS AFFECTING THE BROADBAND GROWTH ........................................... 114 MAIN BEST PRACTICE ELEMENTS ................................................................... 116 REFERENCES FOR CHAPTER 4 ........................................................................ 118 Final version May 2006 9 Best Practices in Broadband Development LIST OF FIGURES FIGURE 1: OECD BROADBAND SUBSCRIBERS PER 100 INHABITANTS BY TECHNOLOGY [173] ................. 31 FIGURE 2: OECD BROADBAND PENETRATION (PER 100 INHABITANTS) NET INCREASE Q2 2004-Q2 2005, BY COUNTRY [173] ................................................................................................... 32 FIGURE 3: OECD BROADBAND SUBSCRIPTIONS BY TECHNOLOGY (JUNE 2005) [173] .......................... 32 FIGURE 4: NON-DSL ACCESS LINES ....................................................................................... 33 FIGURE 5: INCUMBENTS' VS. NEW ENTRANTS' RETAIL MARKET SHARE BY TECHNOLOGY [174] ................. 36 FIGURE 6: MULTIPLE PLAY AVAILABILITY AMONG OECD COUNTRIES (SEPTEMBER 2005) [58] ............... 42 FIGURE 7: MULTIPLE PLAY SERVICES BY TECHNOLOGY (SEPTEMBER 2005) [58]................................. 43 FIGURE 8: OECD BROADBAND PENETRATION AND GDP PER CAPITA (SOURCE: [232])......................... 66 FIGURE 9: OECD BROADBAND PENETRATION AND POPULATION DENSITIES (SOURCE: [232])................. 67 FIGURE 10: PERCENTAGE OF PARTICIPATION OF VARIOUS COUNTRIES ORGANIZATIONS IN EUROPEAN R&D PROGRAMS CONCERNING THE BROADBAND APPLICATIONS SECTOR ........................................... 73 FIGURE 11: SIMPLE CORRELATION OF THE COUNTRIES RANK CONCERNING BROADBAND PENETRATION AND THE INDICES DAI, E-READINESS AND NRI ....................................................................... 74 FIGURE 12: BROADBAND SUBSCRIBERS PER 100 INHABITANTS IN OECD COUNTRIES, BY TECHNOLOGY, JUNE 2005 ([194]) ......................................................................................................... 75 FIGURE 13: WIRELESS TECHNOLOGY ROADMAP ......................................................................... 77 FIGURE 14: ECTA REGULATORY SCORECARD 2005 (SOURCE: ECTA [218]) ................................... 82 Final version May 2006 10 Best Practices in Broadband Development LIST OF TABLES TABLE 1: INTERNET PENETRATION OF THE SURVEYED COUNTRIES [172] .......................................... 30 TABLE 2: BROADBAND PENETRATION FOR OECD COUNTRIES (JUNE 2005) [173].............................. 31 TABLE 3: LEVEL OF COMPETITION FOR DIFFERENT TECHNOLOGIES OF SURVEYED COUNTRIES [175] ......... 35 TABLE 4: EQUIVALENCE OF CURRENCY OF EACH COUNTRY TO PPP USD, AS ESTIMATED BY OECD (DECEMBER 2005) ................................................................................................... 37 TABLE 5: INDICATIVE PRICES WITH REGARD TO MONTHLY DSL ACCESS COST IN OECD MEMBER STATES, FOR SPEEDS OF AT LEAST 512 KBPS AND FREE DATA OF AT LEAST 1 GBYTE (NOVEMBER 2004) ............ 39 TABLE 6: INDICATIVE PRICES WITH REGARD TO MONTHLY DSL ACCESS COST IN OECD MEMBER STATES, FOR THE HIGHEST ACCESS SPEED PROVIDED AND HIGHEST FREE DATA VOLUME (NOVEMBER 2004) ........ 41 TABLE 7: THE LATEST STATE OF PLAY ON THE 18 “MARKETS” FOR ELECTRONIC COMMUNICATIONS IN EU COUNTRIES [243]..................................................................................................... 59 TABLE 8: NUMBER OF TELECOMMUNICATION OPERATORS IN SERVICE. DATA 2003 , [179].................... 61 TABLE 9: FOREIGN OWNERSHIP RESTRICTIONS IN TELECOMMUNICATIONS [179] ................................ 62 TABLE 10: TREATMENT OF NATIONAL AND INTERNATIONAL VOICE TELEPHONY SERVICES PROVIDED OVER THE INTERNET [179] ...................................................................................................... 63 TABLE 11: LOCAL LOOP UNBUNDLING [179] ............................................................................ 65 TABLE 12: DIGITAL ACCESS INDEX FOR 2003 [261].................................................................. 68 TABLE 13: NRI INDEX CONCERNING 2005, THE COUNTRIES RANK CONCERNING 2005 AND 2004 AS WELL AS THEIR EVOLUTION [273] ............................................................................................ 70 TABLE 14: E-READINESS INDEX OF ECONOMIST INTELLIGENCE UNIT CONCERNING 2005 [181] ............. 71 TABLE 15: ITU’S DIGITAL OPPORTUNITY INDEX (DOI) [274]...................................................... 72 TABLE 16: ANALYTIC DATA CONCERNING BROADBAND SUBSCRIBERS PER 100 INHABITANTS IN OECD COUNTRIES, BY TECHNOLOGY, JUNE 2005 ([194]) ............................................................ 76 TABLE 17: LEVEL OF COMPETITION IN TELECOMMUNICATIONS ....................................................... 80 TABLE 18: CALCULATION OF BEST AND GOOD PRACTICES ............................................................. 83 Final version May 2006 11 Best Practices in Broadband Development CHAPTER 1: INTRODUCTION Final version May 2006 12 Best Practices in Broadband Development INTRODUCTION The main objective of this consists the input for the broadband services in the identification of the factors report is the overview of the international broadband status, that qualitative and quantitative analysis of the use and adoption of surveyed countries. Furthermore, this deliverable focuses on the and best practices that support the broadband growth. Thus, the objectives of this report could be summarized as follows: Overview of the international broadband status. Identification of the basic factors that support broadband growth and best practices analysis. This report is structured as follows: Chapter 2 (titled “International overview of the broadband status”) presents the broadband status on an international basis covering the 25 member states of the European Union (EU), the EU candidate countries (Bulgaria, Croatia, Romania, Turkey), as well as the OECD countries with broadband penetration rate higher than 7% (broadband connections per 100 inhabitants). Chapter 3 (titled “Investigation of Main Factors for Broadband Growth – Best Practice Analysis”) presents an evaluation of the current state of each surveyed country, based on the information presented in the previous chapter. In addition, this chapter presents the important factors for supporting the broadband growth and an analysis of best practices for the promotion and growth of broadband is presented. Chapter 3 (titled “Conclusions”) presents briefly the conclusions that can be extracted from the overview of the broadband status on the international level, as well as from the analysis of the basic factors and best practices for broadband growth. Final version May 2006 13 Best Practices in Broadband Development C H A P T E R 2 : I N T E R N AT I O N A L OVERVIEW OF THE BROADBAND S TAT U S Final version May 2006 14 Best Practices in Broadband Development INTERNATIONAL OVERVIEW OF THE BROADBAND STATUS 2.1 INTRODUCTION The survey of the broadband status on an international basis has been performed in an extent that covers the 25 member states of the European Union (EU), the EU candidate countries (Bulgaria, Croatia, Romania, Turkey), as well as the OECD countries with broadband penetration rate higher than 7% (broadband connections per 100 inhabitants). In particular, the countries surveyed are the following: Member States of the European Union: Austria, Belgium, France, Germany, Denmark, Estonia, Great Britain, Ireland, Spain, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Hungary, Poland, Portugal, Slovakia, Slovenia, Sweden, Czech Republic and Finland (the broadband analysis for Greece is covered by the next deliverable). Candidate Countries of the European Union: Bulgaria, Croatia, Romania and Turkey. Other countries (OECD countries with broadband penetration rate higher than 7%): South Korea, Canada, Japan, USA, Australia, Switzerland, Iceland and Norway. 2.1.1 European Union Countries This section presents a brief overview of the broadband status in the countries of the European Union. In particular, the countries presented are: Austria, Belgium, France, Germany, Denmark, Estonia, Great Britain, Ireland, Spain, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, Holland, Hungary, Poland, Portugal, Slovakia, Slovenia, Sweden, Czech Republic and Finland. It should be mentioned that the information provided for each country vary, depending on the availability of information coming from the respective Authorities, the international organizations and the Internet. 2.1.1.1 Austria Broadband penetration in Austria in June 2005 (based on OECD data) reached 12.5%, while Internet penetration for the same year was 56.8%. With regard to broadband penetration Austria fell back in comparison to other European States, after having a strong start in 1997 (Cable modem) and 1999 (ADSL). To improve the situation, various measures are to be taken according to the Austrian Regulatory Authority for Broadcasting and Telecommunications. Particularly the following measures are recommended: a) education and awareness of general public with regard to benefits of Internet use, b) creation of user friendly technology by performing usability studies, c) measures to increase user competence in handling information and communication technology, d) creation of content that is adapted to user needs and assures benefits by immediate availability, e) introduction of regulation measures compatible with rules for fair competition, f) measures to extend and improve communication infrastructure in handicapped (rural) areas, g) increase of the number of public access points (e.g. public libraries, kiosk systems, etc) [3]. As far as it concerns the cost, the average monthly fixed charge for a connection of 512Kbps in 2005 run into €32.95, reduced by 13.56%, compared to 2004, while the monthly charge for a 1Mbps connection was € 38.77, reduced by 44.54% compared to 2004. Finally, the monthly charge for a 2Mbps connection was € 54.08 [57]. Final version May 2006 15 Best Practices in Broadband Development 2.1.1.2 Belgium Belgium is one of the European leaders in the area of broadband infrastructure and services. Broadband coverage is higher than 98%, while the broadband penetration rate is among the highest in Europe. In particular, broadband penetration in Belgium in June 2005 (based on OECD data) was 18.2%, while Internet penetration for the same year was also high, reaching 48.7%. There are several reasons to explain this leading position, as: a) the small size of the country, the high population density and the mainly urban topology, b) the existing strong operators in cable (Telenet and UPC) and DSL (Belgacom), started off by cable TV operators’ investment to upgrade their networks and provide cable modem services and c) the governmental will to enhance the communication between the different communities (Flemish, French and German) and regions (Flandres, Wallonia, Brussels) [1]. Broadband access is mainly provided through wired networks. The reasons behind this fact, are firstly the urban formation of the country and secondly the strong competition between the cable and DSL operators. It is important to realize that 60% of the population has a choice of access between DSL and cable technologies in their area. The resulting market split is 62% for ADSL and 38% for cable networks. The most common access mode is offered by the DSL networks (86% provided by Belgacom) covering nearly all of the country. The main objective of Belgium’s broadband policy is to provide broadband connections to the 2.5 million households and the 500.000 small and medium enterprises (SME) at the end of 2006, by increasing the number of services and reducing the prices. This objective is supported by the governmental will to help people to be connected, calling upon operators to put on the market offers for services with lower prices and reduced speed (, with the new services appeared at the beginning of 2005. As far as it concerns the cost, the average monthly fixed charge for a 512Kbps connection in 2005 run into €34.63, reduced by 16.49%, compared to 2004, while the monthly charge for a 1Mbps connection was € 36.93, reduced by 5.82% compared to 2004. Finally, the monthly charge for a 2Mbps connection was € 27.95 [57]. 2.1.1.3 France Broadband penetration in France in June 2005 (based on OECD data) was 18.8%, while Internet penetration for the same year was 43%. Although France had a slow start in IT and Internet penetration, evolution over the years 2003-2004 has placed it in a good position as far as unbundling and penetration is concerned. A very aggressive policy from an alternative ISP delivering triple play services over ADSL has triggered a fast reaction from France Telecom and other operators. Cable operators hold a small share of Internet access (2% households, 10% connections), which is declining. Fibre optics solutions start appearing in very few places. Regarding the broadband challenges that France tries to confront through its broadband policy, they could be summarized as follows: a) multi-service package offers, b) high service quality, c) broadband coverage, d) implementation of a new regulatory framework. As far as it concerns the cost, the average monthly fixed charge for a connection of 512Kbps in 2005 run into €24.90, increased by 1.59%, compared to 2004, while the monthly charge for 1Mbps was € 28.92, increased by 3.03% compared to 2004. Regarding the cost for a 2Mbps connection there are no information available for 2005. However, in 2004 this cost was € 33.70 [57]. 2.1.1.4 Germany Broadband penetration in Germany in June 2005 was up to 10.2%, while Internet penetration for the same year reached 59%. DSL remains the dominant broadband access technology. Other access technologies require high investments or elimination of severe technical obstacles in order to be of wide use. Competition, with regard to the establishment of alternative infrastructures, would be helpful to increase the spread of broadband connections. Such a competition could be possible if cable TV owners could come to an arrangement and were willing to finance the necessary investments. Such investments would not only assure a wider availability of broadband access but also the sustainability of networks, as one might Final version May 2006 16 Best Practices in Broadband Development expect that in future there will be a higher bandwidth demand than today.. With regard to the importance of information and communication technology a strategy titled “Information Society Germany 2006” was adopted by the Federal Government. This strategy stresses activities on: a digital economy aimed at growth and competitiveness, education, research and equal opportunities, e-government, security and confidence in the Internet and e-health. As far as it concerns the cost, the average monthly fixed charge for a connection of 512Kbps in 2005 run into €29.95, reduced notably by 29.50%, compared to 2004, while the monthly charge for 1Mbps was € 26.35, reduced by 37.98% compared to 2004. Finally, the monthly charge for a 2Mbps connection was reduced by 47.14% compared to 2004, reaching € 30.81 from € 58.29 in 2004 [57]. 2.1.1.5 Denmark Denmark is one of the European leaders in the broadband network and services development. In particular, broadband penetration in Denmark in June 2005 was up to 21.8%, while Internet penetration for the same year was reaching 69.4%. Since the mid 90s Denmark has followed a deliberate policy of stimulating competition on the telecom market. Therefore, the Danish market is considered to be today one of the most competitive ones within the EU, with fierce competition in particular in the mobile services market. Denmark was also among the first countries to drive forward the unbundling of the local loop. Denmark has introduced a special taxation scheme, which enables employers to offer PCs, as well as broadband connections to their employees as a tax free benefit. Considering the high levels of income taxes in Denmark, this implies that tax reductions in reality pay more than 50% of the costs. This scheme has become very popular and many companies provide this opportunity to all of their employees as part of their salary. As far as it concerns the cost, the average monthly fixed charge for a connection of 512Kbps in 2005 run into €43.04, while the monthly charge for 1Mbps was € 49.68, reduced by 18.02% compared to 2004. Finally, the monthly charge for a 2Mbps connection reached € 56.33 from € 81.02 in 2004 [57]. 2.1.1.6 Estonia Internet penetration in Estonia in June 2005 was up to 50.0%. The information society in Estonia is in a different situation from most of the new member states. Internet take-up and broadband roll-out has been extremely fast [1] for a country of its income group ($ 17.672 per capita), at least part of which is due to strong policy support. The state has taken the lead in offering online services by rapidly deploying e-government services, while online services offered by companies are equally successful. Estonia’s challenges in broadband policy are quite different from those of the other new member states (in that it is at a much more advanced stage than all of them, both in terms of infrastructure penetration rates and in terms of services offered) and from those of the old member states (in that low income levels pose quite different constraints). The public sector continues to play a leading role. In both cases, Estonia remains at the forefront of innovative applications as a means of fostering infrastructure development. 2.1.1.7 Ireland Ireland’s broadband penetration rate in June 2005 was up to 4.3%, while Internet penetration rate for the same year reached 50.7%. Ireland has been considerably lagging behind other countries. While it is one of the richest nations, it has a high percentage of rural population, which makes broadband rollout cost (and consequently services pricing) high. However, although there is a lack of competition, this problem clearly needs to be addressed. In this respect, Forfas (NRA) recommends a few specific measures such as demand aggregation, freeing up of wireless spectrum and lowering LLU access charges. Because broadband uptake is so low, specific measures are being implemented by the State and other governmental institutions. Most notably, the rollout of a State owned and privately managed Final version May 2006 17 Best Practices in Broadband Development network is a promising, though disputed, approach towards putting some market driven pressure on the incumbent Eircom. As far as it concerns the cost, the average monthly fixed charge for a connection of 512Kbps in 2004 run into €38.42 (no data available for 2005), while the monthly charge for 1Mbps was € 38.26 in 2005, reduced by 79.70% compared to 2004. Finally, the monthly charge for a 2Mbps connection reached € 51.23 from € 180.80 in 2004 [57]. 2.1.1.8 Spain Spain’s broadband penetration in June 2005 was up to 9.3%, below the EU average of 11.8%, while Internet penetration for the same year was 38.7%. In general, broadband development is taking off very fast in Spain. From June 2004 to February 2005, the penetration rate increased by half. This rate stands just under the EU average, which is quite an achievement, given the low population density (although it could be argued that the urban areas, where penetration is highest, have a higher population density than comparable cities in other member states). As far as it concerns the monthly broadband charge in Spain, it presented an important reduction in 2004-2005. In particular, the average monthly fixed charge for a connection of 512Kbps in 2005 run into €33.10, while the monthly charge for 1Mbps was € 40.11 in 2005, reduced by 52.23% compared to 2004. Finally, the monthly charge for a 2Mbps connection reached € 82.51 from € 133.29 in 2004 [57]. 2.1.1.9 Italy According to OECD data, in June 2005 the broadband penetration in Italy was 10.00%, while Internet penetration for the same year was 48.8%. The good structure of the local loop could enable further rapid DSL development. However, the geographic formation of the country, with many mountainous areas, which is reflected in the limited coverage and in the corresponding lower population density, as well as economic imbalances between north and south, may lead to a delay of broadband development in a significant part of the territory. On the other hand, the strong development of Fiber-To-The-Home in the big cities puts Italy in the lead in this technology, together with Sweden. The current strategy, the “National Executive Broadband Programme”, intends to provide a favourable environment for ICT investments through a balanced approach towards the development of broadband infrastructure and services. The objectives of the programme are fourfold: a broadband network for public services, an increase in broadband connected schools, the stimulation of private demand through incentives for the use of digital technologies and facilitation measures for infrastructure building. As far as it concerns the monthly broadband charge in Spain for a connection of 512Kbps in 2005 it run into €19.92, while the monthly charge for 1Mbps was € 31.80 in 2005, reduced by 50.56% compared to 2004. Finally, the monthly charge for a 2Mbps connection was € 31.23 [57]. 2.1.1.10 The Netherlands The Netherlands are in a leading position in Europe when it comes to broadband uptake. In January 2004, the uptake rate was 11.9% of the total population, almost double the EU average of 6%. Even more, internationally the Netherlands rank 2nd in terms of growth in broadband uptake rate between July 2003 and January 2004, behind Finland [17]. According to OECD data, in June 2005 the broadband penetration stood at 22.5%, while Internet penetration for the same year stood at 65.9%. The Netherlands is one of the few countries where there is roughly the same amount of cable and DSL users, which implies a high degree of infrastructure competition. Among the main (static) reasons for the leading position of the Netherlands in broadband uptake are a high GDP, a low percentage of rural population, and a high degree of infrastructure competition. However, the Dutch Government is also very active in its broadband policy and part of the recent strong growth rates is attributable to the focused and ambitious measures and activities undertaken by private-public partnerships. In Final version May 2006 18 Best Practices in Broadband Development addition, various task forces have been set up with an exclusive focus on how to increase broadband uptake. Moreover, municipalities actively roll out fibre networks, while research networks are open to companies. As far as it concerns the monthly broadband charge in Spain for a connection of 512Kbps in 2005 it run into €20.80, while the monthly charge for 1Mbps was € 25.20 in 2005, reduced by 21.44% compared to 2004. Finally, the monthly charge for a 2Mbps connection was € 26.52 reduced by 45.38% compared to € 48.55 of 2004 [57]. 2.1.1.11 Cyprus Internet penetration in Cyprus in June 2005 was 31%, while broadband penetration was very low, lower than 1%. Until recently the only provider of broadband services in Cyprus was the incumbent operator. After the liberalization of electronic communications and services in year 2003, several other providers have started competing the incumbent at the service level, utilizing the Digital Subscriber Line Access Multiplexers (DSLAMs). Policies and strategic planning for the broadband market are handled by the Planning Bureau – Ministry of Finance. It was expected that within year 2005 licenses for the provision of internet broadband connections by means of wireless local loop would be issued. It is also expected that internet broadband connections will be provided by means of 3G and power line communications (PLC). Regarding the cost for broadband access, within 2004-2005 it has been increased. In particular, the average monthly charge for a 512 Kbps connection in 2005 was € 42.14, increased by 69.85% compared to 2004, while the cost for 1Mbps reached € 54.18 in 2005 [57]. 2.1.1.12 Latvia The Latvian broadband market is just emerging from its infancy. Penetration as measured in broadband connections per population stood at 1.4% at the end of September 2004 (no figures available for December), as compared to 1.2% three months earlier. In penetration terms, Latvia is at the very end of the table, together with Poland, Slovakia and Greece, but it has neither the potential DSL vs. cable competition (like Poland and Slovakia), nor a growing number of fixed lines (like Poland), nor a specific broadband strategy (like everybody else). The combination of these factors with low population density and low per-capita income levels makes the infrastructure access at affordable prices the most likely bottleneck for the years to come. Latvia does not seem to have adopted a specific broadband strategy (yet). However, the country started a National Informatics Programme in 1999, updated by e-Latvia in 2000, which was still valid until the end of 2005. However, there is no recent strategic document focusing on high-speed access. As far as it concerns the monthly broadband charge in Latvia for a connection of 512Kbps in 2005 run into €21.78, while the monthly charge for 1Mbps was € 79.01 in 2005, reduced significantly by 59.12% compared to 2004. Finally, the monthly charge for a 2Mbps connection was €114.93 reduced by 54.61% compared to € 253.18 of 2004 [57]. 2.1.1.13 Lithuania The Lithuanian broadband market is now rapidly expanding, after an early but slow start, as the first ADSL connections made available in May 2001. Penetration as measured in broadband connections per one hundred inhabitants stood at 3.7% at the end of 2004, as compared to 2.5% six months earlier. Furthermore, Internet penetration, as estimated in 2005 was 28.3% [75]. Lithuania has followed the eEurope strategy since 2001. For the purpose of implementing the strategic plan, detailed plans for development of information society in Lithuania are drawn on an annual basis, establishing the key measures, the necessary resources, and the responsible institutions. Lithuania’s actions focus on ensuring availability of Internet access and organization of training. The plans for the next few years include establishing another 600 Internet access points. For training, for example a free tool Final version May 2006 19 Best Practices in Broadband Development “Remote Training Course: Computer Textbook” was created and was available on the Internet [90]. In general, Lithuania has been relatively successful in terms of broadband penetration in comparison with its immediate neighbours, Latvia and Poland, but it is significantly lagging behind the overall EU average. Its main challenge will be the same as the challenge of the most new member states, that is, ensuring broadband access in rural areas, despite a very low population density and a very low fixed-line teledensity. As far as it concerns the monthly broadband charge in Lithuania for a connection of 1Mbps in 2005 it run into € 14.19, while the monthly charge for 2Mbps was € 22.88 in 2005 [57]. 2.1.1.14 Luxembourg Broadband penetration in Luxembourg in June 2005 was 11.8%, while Internet penetration for the same year stood at 58.9%. The government of Luxembourg is making a big effort in order to place the country among the leaders in the area of digital access. In a recent benchmark published by the ITU (International Telecommunication Union), Luxembourg was ahead of all its neighbours in this area, i.e. Belgium, Germany and France. In order to reach this position, the government of Luxembourg drives an aggressive policy of investments regarding the infrastructure. These efforts have provided the country with a good optical fiber architecture, a sharp rise of high bit rate links and a full coverage of ADSL access. The country is also the home of one of the most important satellite operators (SES-GLOBAL) and RTL, the European leader in radio and TV services. The objective for 2005 was to provide to 25% of households access to broadband services. The government of Luxembourg provides also a good toolbox for the promotion of the interactive services, including the following: a) eLuxembourg that is an action plan which allowed the launch of an e-government portal, b) the label “Luxembourg e-commerce certified” that is a good tool for the promotion of ecommerce, c) the security that is pushed by the Luxtrust consortium promoting the use of the PKI (Public Key Infrastructure) technology, d) the deployment of “InternetStuffen” allowing to educate the citizens on the Internet technologies and e) the creation of a technical area for hosting Research and Development Centers. As far as it concerns the average charge for broadband access, it should be mentioned that in the period 2004-2005 it was reduced. In particular, the monthly average charge for a 512 Kbps connection was € 37.59 in 2005, while the cost for 1Mbps was € 28.98, reduced by 22.90%, compared to 2004. Finally, the cost for a 2Mbps connection was reduced by 24.20%, compared to 2004, reaching € 46.96 in 2005 [57]. 2.1.1.15 Malta Despite the rather low wealth level of the country, broadband penetration rate in 2004 was 5.8%, which was only marginally below the EU average of 6.03%, while Internet penetration rate for 2005 was 78.1%. Regarding access technologies, 57% involved DSL and 43% involved cable. Fibre to the home is not available, but the backbone of the country is linked via fibre. As for network infrastructure, 95% of the country is covered by DSL and 81% via bi-directional cable. Both access technologies witness similar growth rates. The Maltese Communications Authority (MCA) has produced a very comprehensive and useful report on the national Broadband Strategy. It identifies key drivers and barriers and it contains a Broadband model including the main stakeholders and the manner of how to implement successfully the national broadband goals. The Maltese broadband strategy includes four strategic objectives to be fulfilled during the period 2004-2006: a) secure a ubiquitous multiple broadband infrastructure which covers 99% of the population, b) ensure a regulatory framework which supports and encourages a competitive environment, c) increase the accessibility of broadband technology to all residential and business set – ups and d) sustain the development of broadband content, applications and services targeted at the local population [22]. As far as it concerns the average charge for broadband access, the cost for a 512 Kbps connection was € 46.58 in 2004, while the cost for 1Mbps in 2005 was € 35.94, reduced by 57.36% to 2004. Finally, the cost for a 2Mbps connection reached €32.71 in 2005 [57]. Final version May 2006 20 Best Practices in Broadband Development 2.1.1.16 United Kingdom UK is one of the leading European countries in regard to the growth rate of broadband penetration. Broadband penetration rate in June 2005 reached 13.5%, being above the EU average, while Internet penetration rate for the same year reached 62.9%. Broadband takeup has continued to grow, supported by the introduction of new services, including higher speed services and a number of price cuts. DSL broadband is now available to over 90% of the UK area, with 100% coverage planned by 2005. Provisional estimates suggested that the number of broadband connections has passed the number of six million at the end of 2004; there are now more broadband connections than un-metered dial-up ones. Thanks to the multiple initiatives from the Government and the associated competition in the economy, the growth of broadband in fixed, mobile and wireless is shaping in order to meet the objectives of UK’s broadband strategy. Oftel was used to be the regulator for the UK telecommunications industry, while Ofcom will be the UK’s new communications industry regulator with wide-ranging responsibilities across the UK’s communications markets. The Government recognizes that the Internet has enormous potential for education, entertainment and business and it wants everybody to be able to have access to it and to use it confidently. Regional authorities (Adit) have been put in place to provide efficient public services. The Adits, with their regional focus, are working to provide and procure solutions based on maximizing existing infrastructure [1]. As far as it concerns the average charge for broadband access, the cost for a 512 Kbps connection was € 27.61 in 2005, reduced by 3.39% compared 2004, while the cost for 1Mbps in 2005 was € 29.22, reduced by 27.62% to 2004. Finally, the cost for a 2Mbps connection reached € 39.85 in 2005 from €57.88 in 2004 [57]. 2.1.1.17 Hungary Hungary significantly lacks behind in terms of broadband penetration and uptake rates. For July 2004, the EU reports a fixed broadband penetration rate of 2.2%, considerably lower than the EU 25 average of 6.5% [23], while in 2005 this rate was increased to 4.8%. Regarding Internet penetration rate, in 2005 it reached 30.3%. While Hungary shows a low penetration rate in comparison with other developed countries, recent growth rates are very high, surpassing the growth rates of Portugal for instance. Recently, the Hungarian Ministry of Informatics and Communications has commissioned a report on the national broadband strategy which outlines the main problems and proposes concrete measures as to how to address the identified barriers [24]. Prices for broadband services are far too high for the mass market and there is a limited range of offered services. Another serious barrier is that nearly 60% of Hungarians can be considered digitally illiterate. In response to these key problems, main priorities relate to access, content and equality of opportunities. Proposed measures are of regulatory nature, public policy and financial character. Concerning infrastructure, eHungary and "Közháló" are programs which provide for the establishment of broadband end points [94]. As far as it concerns the average charge for broadband access, the cost for a 512 Kbps connection was € 27.89 in 2005, reduced by 61.31% to 2004, while the cost for a 1Mbps connection in 2005 was € 34.67 and for a 2Mbps connection reached €51.83 [57]. 2.1.1.18 Poland The Polish broadband market is still in its infancy. In June 2005, according to OECD data, broadband penetration rate stood at 3.3%, far below the EU average, while Internet penetration rate for the same year was 27.8%. Poland’s starting point for developing broadband access is not easy. It has, together with Greece, the lowest penetration rate of the entire EU, with such a gap to the most of the other member state (including some poorer ones) that even a period of five consecutive years with annual rate doubling would not be sufficient to catch up with the average. Moreover, the country’s very low mobile phone penetration, again with a significant gap in relation to other member states, shows that the Final version May 2006 21 Best Practices in Broadband Development development of 3G services is likely to be slower than in many other member states, too. Given that Poland is a large country, with an above-average share of the population living in rural areas, the roll-out of all networks is more expensive than that in other countries. On the positive side, Poland’s fixed-line density has been growing recently, thus increasing the potential for DSL rollout. As far as it concerns the average charge for broadband access, the cost for a 512 Kbps connection was € 24.92 in 2005, reduced by 9.98% from 2004, while the cost for a 1Mbps connection in 2005 was € 35.46 and for a 2Mbps connection reached €40.48 [57]. 2.1.1.19 Portugal The Portuguese broadband market is rapidly expanding. Penetration as measured in broadband connections per one hundred inhabitants stood at 9.9% in June 2005, while Internet penetration for the same year reached 58%. Mobile broadband in Portugal is still at the beginning. All three 2G operators have launched 3G networks, but the two operators for which data are available could show a total of only 46.000 subscribers in January 2005. Broadband development is clearly taking off very fast in Portugal. From June to December 2004, the penetration rate increased by half and stands just under the EU average. Given the relatively poor recent performance of the overall Portuguese economy, combined with the significantly below-EU average income of Portuguese households, it is quite an achievement that Portugal’s broadband density is on a par with countries such as Germany, Italy and Luxembourg. However, the state’s policy has set some extremely ambitious goals, and while their creation has probably contributed to the fast growth, it can be questioned whether they can indeed be attained. As far as it concerns the average charge for broadband access, the cost for a 512 Kbps connection was € 25.71 in 2005, reduced by 34.16% from 2004, while the cost for 1Mbps in 2004 reached € 201.71 and for a 2Mbps connection it reached € 34.98 [57]. 2.1.1.20 Slovakia Broadband in Slovakia is still in its infancy. According to OECD data, in June 2005 broadband penetration was once again increased, reaching 1.6%, while Internet penetration for the same year stood at 42.3%. Penetration rates are lagging significantly behind not only the rates of all the old member states (except Greece), but also behind the rates of most new member states. Moreover, a specific broadband policy, which sets a fairly modest target of connecting one in 10 Slovaks to the Internet by broadband by 2012, has only been adopted very recently, again lagging behind the targets of most other member states [1]. Given the low baseline, very high growth rates are to be expected for the coming years, but this may well be insufficient to catch up with the EU average rate: even with a 100% growth for each of the years 2005, 2006 and 2007, Slovakia would still not reach the EU 2004 average penetration rate. On the positive side, the widespread availability of cable networks should eventually facilitate a stronger infrastructure-based competition than that in many other countries. As far as it concerns the average charge for broadband access, the cost for a 512Kbps connection was € 24.17 in 2005, reduced by 30.22% from 2004, while the cost for 1Mbps in 2005 was € 33.36 and for a 2Mbps connection was € 67.05, increased slightly by 3.20% from € 64.97 in 2004 [57]. 2.1.1.21 Slovenia Broadband in Slovenia is fairly advanced for a new member state, lagging behind only Malta and Estonia, but being ahead of Ireland and Greece. Penetration as measured in broadband connections per one hundred inhabitants stood at 5.8% at the end of 2004, as compared to 3.8% six month earlier, showing a very high rate for a new member state. Growth rates are still high, and the presence of a cable network should provide for some competitive impetus. Given the mountainous topography, there is a risk that broadband development will be very Final version May 2006 22 Best Practices in Broadband Development uneven, which is however recognised in the national broadband strategy. In particular, this strategy sets the rather modest overall objective to enable all public institutions and a large majority of those residents who want it to have access to broadband data networks by 2008. In order to achieve this objective, the strategy defines 6 priorities: the data collection and broadband mapping, the development of underdeveloped regions with the assistance of European structural funds, the construction of open-access networks, an active role for local government, the network access by using different platforms and the optical fibre-networks for educational and research institutions. As far as it concerns the average charge for broadband access in Slovenia, the cost for a 512 Kbps connection was € 25.94 in 2005, reduced significantly by 22.75% from 2004, while the cost for 1Mbps in 2005 was € 31.34 and for a 2Mbps connection was €40.25, decreased slightly from € 41,25 in 2004 [57]. 2.1.1.22 Sweden According to the OECD, in June 2004 Sweden ranked 9th in terms of broadband uptake with a total of 12.3% (connections per 100 inhabitants using broadband Internet) [95], while in June 2005 this percentage reached 16.5%. For the same year, Internet penetration rate stood at 74.9%. Taking a more long term view, Sweden is the global leader in “other access platforms” (Fiber in particular). Sweden sees broadband as a utility and every citizen should have access to it [33]. This belief is also expressed in the public policy and projects like Stokab. The strong commitment of the government to provide affordable access to a highspeed infrastructure and the treatment of digital information like essential utilities such as the water and the electricity is one of the key factors for Sweden's leading position. In this respect, the Swedish government passed in June 2000 the “An Information Society for All” bill. Market forces are complemented by a considerable degree of co-ordinated measures. Public funding for infrastructure and the possibility to give to as many competitors as possible an opportunity to use this infrastructure are key points. As another key factor, many innovative services are being developed, tested and first put in the market in Sweden. Certainly, the openness, the technological skills and the attitude of Swedish people towards technology in general and the Internet in particular are major reasons why Sweden is “so good at Broadband”. As far as it concerns the average charge for broadband access in Sweden, the cost for a 512 Kbps connection was € 32.72 in 2005, reduced by 7.88% from 2004, while the cost for 1Mbps in 2004 was € 33.01 and for a 2Mbps connection was € 34.84 in 2005, decreased slightly by 18.07% from 2004 [57]. 2.1.1.23 Czech Republic On the 1st of January 2005 there were 230.000 broadband subscriptions, corresponding to a penetration rate of 2.3% while in June of the same year this percentage was increased and reached 2.8%. The Internet penetration rate for the same year stood at 47%. In general, broadband in the Czech Republic had a very late start: by July 2004, the Czech Republic was 22nd in the EU, being significantly behind most other new member states. Commencing in 2004, penetration rate has started growing considerably (probably at least doubling in the second half of the year). Taking into account this timing, it appears that two factors have caused that take-off: firstly, the incumbent is now offering and actively promoting ADSL, and secondly, local loop unbundling is now available. In addition retail prices, which were above EU average, appear to have decreased somewhat, although prices for unbundled local loop and shared access are still the highest in Europe. However, given the very low penetration to start with, it is unclear whether these developments alone will be sufficient to allow the Czech Republic to catch up with the other countries rates. Even if it could double its penetration rate again in 2005, this penetration would still be at the bottom of the EU rates [1]. As far as it concerns the average charge for broadband access, the cost for a 512 Kbps connection was €20.24 in 2005, reduced by 33.84% from 2004, while the cost for 1Mbps in 2005 was €30.70 and for a 2Mbps connection was €51.87 [57]. Final version May 2006 23 Best Practices in Broadband Development 2.1.1.24 Finland Finland is a fairly new broadband success story. Broadband started to advance rapidly in Finland in 2003. The access and use of broadband has been increasing at a very high rate in Finland during the last two years. According to the Finnish Ministry of Transport and Communications, the actual number of broadband subscribers in May 2005 was close to one million. This equals to almost 20 broadband subscriptions per 100 inhabitants. Regarding the broadband policy of the country, the Finnish government published a resolution on the national broadband strategy at the end of January 2004, which aims: a) to promote competition within and between all communications networks, b) to promote the provision of electronic services and content, c) to stimulate demand for broadband services, d) to continue and develop special support measures in those areas in which there is insufficient demand for the commercial supply of broadband facilities. The accompanying strategy targets included having 1 million broadband connections in Finland by the end of 2005, using all access technologies; affordable high-speed access for everyone, with comprehensive geographical coverage. The goal is also that Finland will be a European leader in the availability and use of high-speed telecommunications [113]. As far as it concerns the average charge for broadband access in Finland, the cost for a 512 Kbps connection was € 21.20 in 2005, reduced significantly by 43.65% from 2004, while the cost for a 1Mbps connection in 2005 was € 26.30, reduced by 44.60% to 2004, and for a 2Mbps connection was €35.07 in 2005, decreased by 39.16% from 2004 [57]. 2.1.2 Candidate Countries of the European Union This section presents a brief overview of the broadband status in the candidate countries of the European Union. In particular, the countries presented are: Bulgaria, Croatia, Romania and Turkey. It should be mentioned that the information provided for each country vary depending on the available information from the respective Authorities, the international organizations and the Internet. 2.1.2.1 Bulgaria In 2005 Internet penetration stood at 28.5% and Internet access was mainly realized through dial-up connections. However, satellite, ADSL and WiFi access are also introduced [38]. Some of the basic factors, which place Bulgaria in the lower bound of Internet penetration are the extremely low computer usage, the high cost of telephony, as well as the high cost of leased lines in regard to the purchasing power of the average consumer [40]. Regarding the cost of ADSL access, the average monthly charge for 512 Kbps was €16.89, for 1Mbps was € 40.96 and finally for 2Mbps connections was € 50.68. 2.1.2.2 Croatia Internet penetration rate in Croatia in June 2005 stood at 29.2%. Internet market is the least developed among all other telecommunication sectors of the country. There are only seven Internet Service Providers, as well as an academic provider. Furthermore, WiFi access is widely used as it constitutes a more cost effective solution compared to leased lines. Even though Croatia constitutes one of the most developed countries in the region of Southeastern Europe, it lacks behind in the telecommunication infrastructure sector, due to the lack of real competition, as well as to the debility of the regulatory authority to provide a field of activity with equal chances. To the direction of supporting broadband development, the program eCroatia, applied during the period 2004-2007, aims to connect to a network a system that will allow to every citizen to use public services, e-health services, and e-education services Final version May 2006 24 Best Practices in Broadband Development through the Internet. Regarding the cost of ADSL access, the average monthly charge for 512 Kbps was € 10.82, for 1Mbps was € 27,26 and finally for 2Mbps connections was € 50,56. 2.1.2.3 Romania In 2005 Internet penetration for Romania stood at 23,2%. During 2001 and 2002, the number of broadband connections increased by 21,8 times, mainly due to the increment of the connections through coaxial infrastructure provided to residential users. Until January of 2004 only RomTelecom provided landline infrastructure. Small providers provided mainly dial up access through RomTelecom lines, while ISDN connections were rolled out rather slow. In Romania the development of Information Society constitutes a strategic objective and a critical priority of the Romanian policy. To this direction, the involvement of the private sector is considered as a critical factor for the viable development of infrastructure, content and services [121]. As far as it concerns the average monthly cost for DSL access, for 768Kbps connections it estimated to € 15,00, for 1.5 Mbps connections it was € 25,00 and 2Mbps reach € 79,00. 2.1.2.4 Turkey Broadband penetration rate in June 2005 stood at 1.2%, while Internet penetration for the same year was 13.7%. In Turkey an enlargement of both Internet and broadband market has taken place as the incumbent focuses on the broadband market as means of increasing its revenue. Furthermore, mobile market has also matured during the last years [40]. Regarding the regulatory framework for telecommunications, it has been reformed in order to adjust to the EU regulatory framework, with incentives for the promotion of competition. According to the new telecommunications law, Turkey promotes the full liberisation of the telecommunications market. In May 2004 the NRA issued 27 licences for companies of the private sector that could provide telecommunication services. The step that follows is the unbundling of the LLU [117]. As far as it concerns the cost, the average monthly charge for 512 Kbps connections was € 37.16, for 1Mbps connections was € 114.76 and for 2Mbps connections was € 175.48. 2.1.3 Other Countries This section presents a brief overview of the broadband status in the OECD countries that show a broadband penetration rate higher than 7%. In particular, these countries are: South Korea, Canada, Japan, USA, Australia, Switzerland, Iceland and Norway. It should be mentioned that the information provided for each country vary depending on the available information from the respective Authorities, the international organizations and the Internet. 2.1.3.1 South Korea Korea had 12 million broadband subscribers in March 2005, as well as the 10% of the global xDSL subscriptions, the second higher such score after China. Korea’s leading position in the global broadband diffusion has provoked the elaboration of several studies trying to explain the factors that underlie the development of Internet and broadband in Korea. The UK DTI study proposed that six success factors underlie the rapid expansion of broadband in Korea: 1) geography and demographics, 2) government leadership, 3) facilities-based competition, 4) the PC bang phenomenon, 5) pricing, and 6) the emergence of clear user benefits. New technologies and technical architectures have become possible, and the cost structures have changed radically during the last seven years. Economic actors have been the main drivers of the broadband diffusion in Korea. The government, however, has also been very active in promoting information society in Korea. The Korean Information Infrastructure (KII) projects were launched in 1995. The KII projects consisted of a high-speed government funded Final version May 2006 25 Best Practices in Broadband Development network, the New Korea Network – Government (NKN-G), and the commercial New Korea Network – Public (NKN-P). Competition has also been very intense in Korea. The average connection speed in Korea is now 4 Mbps, while the subscription to a 20-40 Mbps service costs about 50 US$ per month. In comparison with EU countries, Koreans have often a ten times higher bit rate per €. 2.1.3.2 Canada In 2003, in Canada there were more high-speed Internet households (28%) than households with dial-up subscriptions (24%). According to the OECD, the broadband penetration rate stood at 14.8% in December 2003 with only one country (South Korea) doing better, while in June 2005 this rate was increased to 19.2%. For the same year, the Internet penetration rate stood at 67.9%. Currently, Canada is a global leader in terms of broadband penetration. However, 72% of the communities are not connected, with around 20% of the Canadian population living there. Given the fact that the vast majority of communities are not connected yet, the country’s size will make their digital inclusion more difficult. Satellite technology and bundling of demand are currently coordinated and fostered in order to lead to declining costs for broadband connection in rural areas. There are various initiatives which target the deployment of broadband in rural areas. Generally, one can distinguish between infrastructure and demand aggregation measures. Canada is implementing – at federal, provincial, territorial and municipal level – both types. In addition, there are measures in place which aim to increase the computer skills of teachers and students, stimulating, thus, the demand in the long run. As for the market developments and the competition in particular, during the period 1998 - 2002 the incumbent telecom and cable operator have considerably gained market share in the broadband Internet access market. New entrants and smaller competitors have lost considerable market shares. As far as it concerns the cost, the average monthly charge for 1Mbps connections stands at about € 21.00, while 5Mbps connections reach € 30.00. However, these values vary in respect to the download capacity. 2.1.3.3 Japan Japan is a well positioned country in the area of the information society. The advanced state of broadband networks – both in terms of quantity (penetration rates) and quality (capacity) – the competitive pricing and the attitude of Japanese people towards technology are among the main factors that explain why Japan has an advantage over other countries. In particular, Japan has the most advanced broadband infrastructure in the world, while the access prices are the lowest ones among all OECD countries. The advanced state of the network also means that services can be bandwidth intensive, which, in turn makes broadband attractive to end users. Those are certainly some factors which have an impact on the demand and the subscriber numbers. Another important factor relate to the end users themselves. Surveys show that Japanese increasingly spend more of their time in front of the PC. Their prime concerns relate to security and improper use of and access to personal information. Companies voice similar security concerns and mention lack of skills as one of the main reasons as a deterrent to ICT usage [48]. Penetration of broadband Internet services has been extremely successful. After only three years, broadband penetration rates have reached roughly a third of all households. With respect to the supply-infrastructure dimensions, Japan is the clear global leader. At the end of 2003, roughly 15 million subscribers were connected to the Internet via various broadband technologies. However, the most advanced networks will not become attractive to the mass market if pricing remains at high levels. In this respect, Japan has the lowest prices for broadband access and the “slowest” broadband speed offered is 1.5 MB for $ 40.25. Regarding the broadband policy, the Ministry has emphasised that the private sector has to be the driving force, with the government bound to establishing the right framework for the private and the non-private sectors In spite of this, the central government actually supports the roll-out of broadband facilities by offering attractive financing schemes, tax incentives and guarantee of liabilities. Public policies aiming to increase computer awareness are also undertaken by the Japanese Government. Final version May 2006 26 Best Practices in Broadband Development 2.1.3.4 USA In June 2005, the broadband penetration rate stood at 14.52%, while Internet penetration for the same year reached 68.1%. Even though the United States is the country with the highest GDP, it ranks only 10th in terms of broadband uptake. Recent statistics show and somewhat quantify the importance of education and income distribution on broadband uptake at home. While 40% of all college graduates have a broadband connection at home, the national average is only 24%. As for State measures, the most successful States (New Hampshire, Utah, Wyoming, Washington, Minnesota) can present some initiatives which focus on the broadband development. Generally, those initiatives focus on network expansion, funding programs and often take the form of private-public partnerships. As far as it concerns the cost, the average monthly charge for 3Mbps connections lies between € 14.57 and €24.26. 2.1.3.5 Australia The recent surge in broadband take-up has come after the increased availability of DSL services through their wider deployment and the significant price reduction for broadband services in early 2004 [51]. According to the OECD data for June 2005, the broadband penetration rate stood at 10.9%, while the Internet penetration rate for the same year was 68.2%. Australia, in general, is well positioned regarding the back bone infrastructure. The increased demand for bandwidth has resulted in a variety of investments for more capacity offered to the most important demographic centres [51]. The development of wireless broadband services resulted in the boost of the broadband market, as it empowers the competition among Telstra and the other providers of broadband and telephony services. The availability of wireless services will provide alternative broadband access routes to areas where ADSL is not available. Regarding the broadband policy, the NBSIG developed the national broadband strategy in March 2004. This strategy, which constitutes a high level political document, represents a collective vision for the broadband development of Australia. Many states have included their participation in the NBSIG strategy implementation, as part of their state broadband strategy. The first phase of the NBSIG action plan focuses on the improvement of broadband access in areas where services were not accessible. Finally, as far as it concerns the cost, the monthly average charge for 512 Kbps connections was € 42.12, while for 1.5Mbps connections was € 60.12 and for 24 Mbps connections was € 44.18 (with 4Gb download). 2.1.3.6 Switzerland Switzerland presented one of the highest Internet and broadband penetration rates in Europe in 2005. In particular, Internet penetration reached 66%, while broadband penetration was 20.3%, being above the EU average. In 2004 and 2005, broadband replaced voice communications and DSL networks dominated over the cable for broadband access [164]. Regarding the broadband policy, the Federal Council of Switzerland adopted the Strategy for an Information Society in 1998. The basic concepts of this strategy are “Access for all” and “Empower the confidence in ICT”. To this direction, measures have been taken in the sectors of learning and training, e-commerce, e-government, security and availability of new forms of culture, as well as of research for the development of an Information Society in the country. According to OFCOM, the Swiss policy is based on the notion that the market will be able to cover the needs concerning broadband technologies, without the need of state intervention. Thus, Switzerland does not have an intervening policy regarding the broadband infrastructure, but this policy is mainly based on the market concept and power [50]. Finally, as far as it concerns the cost of broadband access, the monthly average cost for 2 Mbps connections varies from € 5.25 to € 31.27 and for 5Mbps connections vary from € 10.62 to €60.60. Final version May 2006 27 Best Practices in Broadband Development 2.1.3.7 Iceland Iceland lies in the leading tier when it comes to broadband uptake rates. According to the OECD, only South Korea and Canada can show a higher broadband uptake rate. The 81% of the Icelandic people use the Internet. Factors which explain the leading position of the country are a very low number of people living in rural areas (only 7.4%), a high GDP per capita and a general openness towards new technologies. Interestingly, there is no infrastructure competition in Iceland, yet only 1% of users cite prices as the main reason for not having broadband Internet at home. Hence, in the case of Iceland, the lack of competition does not have a major impact on the broadband uptake rates [165]. 2.1.3.8 Norway The majority of broadband connections in Norway are of the DSL type. In March 2005, the broadband penetration rate stood at 34.8% and the broadband subscribers increased by 62% in relation to March 2004 figures [171]. Norway’s topography is more suitable for wireless access and this is mainly the reason that the country is the respective leader in EU, with a wireless broadband market share of 1-2%. It is estimated that around 45% of households in Norway will have a broadband connection by 2008. Some operators launched VoIP trials in Norway in the first quarter of 2004. In different parts of Norway, a wide variety of projects have been initiated in private sector companies, local authorities and public sector bodies to speed up the rollout of broadband [55]. Local initiatives of this nature help to roll out and finance broadband and provide increased competition in areas where telecoms companies do not initially find it profitable to roll out broadband. Financing primarily comes from local sources (local authorities, county municipalities, local businesses, organizations), with some alternative external support for the implementation of pilot projects. In several instances, various public sector enterprises in one region, often in collaboration with local businesses, have joined forces to purchase broadband services at a regional level [50]. As far as it concerns the cost, the average monthly charge for 3Mbps connections was €51.00 and for 6Mbps connections was € 63.39. 2.2 CONCISE RESULTS OF THE SURVEY OF THE INTERNATIONAL ENVIRONMENT This section presents the comparative results of the survey conducted on the international level and briefly presented on a country by country basis in previous sections. In particular, the results will be presented under the following directions: Internet penetration Broadband penetration Access Technologies Competition Cost Services The results of the comparisons are mainly presented in the form of tables and figures for the reader’s convenience. 2.2.1 Internet Penetration The number of the Internet users, as well as the internet penetration rate constitute a basic indicator for broadband development, as these users show a higher probability to shift to Final version May 2006 28 Best Practices in Broadband Development broadband connections. Therefore, the higher the Internet penetration of a country, the higher the probability for a rapid shift to broadband services. Table 1 presents the Internet penetration rate for the surveyed countries. In particular, it presents the number of Internet users in relation to the total population of the country, as well as the Internet use growth during the 2000-2005 period. It should be mentioned that some of the values apposed in this table present small variations in relation with the values given to the brief survey presentation of each country, which took place in previous sections. This fact is due to the different sources that have been taken into account for the realization of the report. However, the variations presented neither alter nor degrade the results of the research conducted. Country Population (Estimation for 2006) Internet Users Penetration Rate (% of the population) Use Growth (2000-2005) European Union Austria Belgium France Germany Denmark Estonia United Kingdom Ireland Spain Italy Cyprus Latvia Lithuania Luxembourg Malta Netherlands Hungary Poland Portugal Slovakia Slovenia Sweden Czech Republic Finland 8,188,806 10,481,831 61,004,840 82,515,988 5,425,373 1,339,157 60,139,274 4,065,631 44,351,186 59,115,261 961,154 2,293,246 3,416,941 459,393 385,308 16,386,216 10,060,684 38,115,814 10,501,051 5,379,455 1,959,872 9,076,757 10,211,609 5,260,970 4,650,000 5,100,000 26,214,174 48,722,055 3,762,500 670,000 37,800,000 2,060,000 17,142,198 28,870,000 298,000 810,000 968,000 270,800 301,000 10,806,328 3,050,000 10,600,000 6,090,000 2,276,000 950,000 6,800,000 4,800,000 3,286,000 56.8 48.7 43.0 59.0 69.4 50.0 62.9 50.7 38.7 48.8 31.0 35.3 28.3 58.9 78.1 65.9 30.3 27.8 58.0 42.3 48.5 74.9 47.0 62.5 % % % % % % % % % % % % % % % % % % % % % % % % 121.4 155.0 208.4 103.0 92.9 82.8 145.5 162.8 218.2 118.7 148.3 440.0 330.2 170.8 652.5 177.1 326.6 278.6 143.6 250.2 216.7 68.0 380.0 70.5 % % % % % % % % % % % % % % % % % % % % % % % % European Union Candidate Countries Bulgaria Croatia Romania Turkey Other Countries Canada United States Australia Norway Final version 7,717,187 4,464,117 21,266,679 74,709,412 2,200,000 1,303,000 4,940,000 10,220,000 28.5 29.2 23.2 13.7 % % % % 411.6 551.5 517.5 411.0 % % % % 32,251,238 299,093,237 20,507,264 4,632,911 21,900,000 203,824,428 13,991,612 3,140,000 67.9 68.1 68.2 67.8 % % % % 72.4 113.8 112.0 42.7 % % % % May 2006 29 Best Practices in Broadband Development Country Iceland Switzerland Korea (South) Japan Population (Estimation for 2006) 297,072 7,488,533 49,929,293 128,137,485 Internet Users 225,600 4,944,438 32,570,000 78,050,000 Penetration Rate (% of the population) 75.9 % 66.0 % 65.2 % 60.9 % Use Growth (2000-2005) 34.3 131.7 71.1 65.8 % % % % Table 1: Internet penetration of the surveyed countries [172] From the data presented in Table 1, it results that the top five countries, with regard to the Internet penetration rate (% of population) are Malta, Iceland, Sweden, Australia and the United States. With the exception of Malta, the remainder four counties present also high broadband penetration rates. As far as it concerns the use growth, it can be noted that the higher growth is presented in countries that show very low Internet penetration rates during the previous years, as e.g. Malta, Bulgaria, Turkey, Romania and Croatia. 2.2.2 Broadband Penetration The total number of OECD countries broadband subscriptions, based on OECD data, continued to increase in the first half of 2005 from 119 million to 137 million. Therefore, the broadband penetration in the OECD area grew by 15% in the first half of 2005 to 11,8 subscribers per 100 inhabitants. Given the fact that penetration rate grows, the broadband providers in the OECD are increasingly offering voice and video services over this platform. The speeds offered by providers are also increasing. Some of the basic results that can be extracted from the first half of 2005 are the following: Broadband subscribers in the OECD reached 137 million by mid-year 2005, adding 18 million broadband subscribers since January 2005. The broadband penetration rate reached 11,8 subscribers per 100 inhabitants in June 2005, up from 10,2 subscribers per 100 inhabitants in December 2004. South Korea maintains its lead in OECD broadband penetration with 25,5 subscribers per 100 inhabitants. The Netherlands is the country with the second-highest penetration rate at 22,5 subscribers per 100 inhabitants. Denmark, Iceland and Switzerland complete the top five countries for broadband penetration. The strongest per-capita growth over the past 12 months has been shown in Finland, the Netherlands, Norway, Iceland and the United Kingdom. DSL is the leading broadband platform in 28 OECD countries. Canada and the United States are the two countries with more cable modem than DSL subscribers. The "Other broadband" category had the highest percentage growth in the past six months, growing 13%. Country Korea Netherlands Denmark Iceland Switzerland Canada Finland Belgium Final version DSL (%) 13.9 13.6 13.2 21.0 12.7 9.4 16.3 11.0 Cable (%) 8.9 8.9 6.1 0.3 7.2 9.7 2.2 7.3 Other technology (%) 2.7 0.0 2.4 0.4 0.4 0.1 0.2 0.0 Total (%) 25.5 22.5 21.8 21.7 20.3 19.2 18.7 18.2 30 May 2006 Best Practices in Broadband Development Country Norway Sweden Japan USA United Kingdom France Austria Luxemburg Australia Germany Italy Portugal Spain Hungary Ireland Poland Czech Republic Slovakia Turkey OECD DSL (%) 14.8 11.3 11.0 5.5 9.7 11.9 7.0 10.4 8.5 9.9 9.4 5.1 7.0 2.9 3.5 2.5 1.8 1.2 1.1 7.2 Cable (%) 2.5 2.7 2.4 8.0 3.8 0.8 5.4 1.3 2.4 0.3 0.0 4.7 2.2 1.6 0.4 0.7 1.0 0.3 0.0 3.8 Other technology (%) 0.9 2.5 3.0 1.1 0.0 0.0 0.1 0.0 0.1 0.1 0.6 0.0 0.1 0.1 0.5 0.1 0.0 0.1 0.0 0.8 Total (%) 18.2 16.5 16.4 14.5 13.5 12.8 12.5 11.8 10.9 10.2 10.0 9.9 9.3 4.6 4.3 3.3 2.8 1.6 1.2 11.8 Table 2: Broadband Penetration for OECD countries (June 2005) [173] Table 2 presents broadband penetration in OECD countries by technology, while Figure 1 depicts the broadband subscriptions per 100 inhabitants and by technology in the above mentioned countries. It should be mentioned that variations among the values of the tables are due to the different sources from which data were extracted, as well as to the different chronologies for which the measures have been realized. DSL 30 25 20 15 10 5 0 O CD average E Cable Other N Kor et he ea rla nd D en s m ar k Ic Sw ela itz nd er la n C d an ad Fi a nl an Be d lg iu m N or w ay Sw ed en U Ja ni p a t U ed n ni te Sta t d Ki es ng do m Fr an ce A Lu ust xe ria m bo Au urg st ra G lia er m an y Ita Po ly rtu ga l Sp ai n H un ga ry Ire la nd C ze Po ch la R nd Sl ov epu ak b R lic ep ub l Tu ic rk ey G re ec e Figure 1: OECD Broadband subscribers per 100 inhabitants by technology [173] Broadband uptake has been rapidly increased and reached almost 53 million lines, growing by 20 million during 2005. Furthermore, in the broadband market, the number of providers has increased while the cost is reduced with a parallel increment of the access speeds. The broadband penetration net increase for the period 2004-2005 is depicted in Figure 2. Final version May 2006 31 Best Practices in Broadband Development 8 7 6 5 4 3 2 1 0 OE D net increase C 2.2.3 Regarding broadband technologies, the survey on the international level shows that DSL stands as the leading broadband platform, followed by cable modem access, as displayed in Figure 3. The breakdown of broadband technologies in June 2005 is as follows: DSL: 61.2% Cable modem: 32.0% Other technologies: 6.8%, (e.g. fiber optics, LAN, satellite and fixed wireless). Final version May 2006 F N inl et an he d rla n N ds or w U I ay ni ce te la d n K d Lu ingd xe o m m Sw bo ur itz er g la Au nd st ra D lia en m a Fr rk an ce Sw ed e Be n lg iu m Ita ly Au st ria Ja pa G er n m a Po ny U rtu ni te ga d St l at e Ire s la C nd an ad a Sp ai H n un ga r C ze Po y ch la R nd ep ub lic Sl ov K ak or R ea ep ub Tu lic rk e G y re ec e Figure 2: OECD Broadband penetration (per 100 inhabitants) net increase Q2 2004-Q2 2005, by country [173] Access Technologies C able M odem 32% D SL 61% O ther 7% Total subscribers: 137 m illion Figure 3: OECD broadband subscriptions by technology (June 2005) [173] 32 Best Practices in Broadband Development Nevertheless, there also exist alternative technologies used in each country, which are usually related to the morphology of each country, the percentage of rural and remote areas population, as well as to the broadband penetration. Figure 4: Non-DSL access lines In particular, countries with high penetration rate seem to adopt more advanced technologies, as for example fiber to the home (FTTH), while countries with a high percentage of rural population tend to use wireless or satellite technologies. The use of these technologies is depicted in Figure 4. Final version May 2006 33 Best Practices in Broadband Development 2.2.4 Competition Competition is driving fixed and mobile players to invest in new technologies to reduce costs and position themselves in a converged environment. Operators are beginning to offer portfolios of services, consisting with different combinations of low-cost voice (including mobile), internet access and audiovisual content to attract and retain customers. After dipping significantly in 1999-2001, investment levels are recovering, with the capital expenditure for the sector (as a whole) estimated conservatively to exceed €45 billion in the EU in 2005 - an increase of approximately 6% compared to 2004 (and the third consecutive annual increase running). While the investment-to-revenue ratio for incumbent operators is approaching its historical levels of 15%, the ratio for the mobile sector as well as for cable operators is higher, pointing to strong future competition for new high-value added services [174]. Table 3 presents the level of competition to the surveyed countries. Country Australia Austria (1) Belgium (2) Bulgaria France Germany Denmark Switzerland Estonia United Kingdom USA (1) Japan Ireland Iceland (2) Canada Croatia (1) Cyprus Latvia Wireless local loop FC FC PC FC FC FC FC PC FC PC FC FC FC FC FC FC Data FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC DSL FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC Monopoly FC Cable modem FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC VSAT FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC Leased lines FC FC FC FC FC FC FC PC FC PC FC FC FC FC FC FC FC FC Fixed Wireless Broadband FC FC PC FC FC PC PC FC FC FC FC FC Mobile FC FC PC PC FC FC PC PC FC FC FC FC FC FC FC FC PC FC Cable TV FC FC FC FC FC FC FC FC FC FC FC FC FC PC FC Fixed sat FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC Mobile sat FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC Final version May 2006 34 Best Practices in Broadband Development Country Wireless local loop Data DSL FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC Cable modem FC FC FC FC FC PC FC FC FC FC FC FC FC FC FC FC VSAT FC FC FC FC PC FC FC FC FC FC FC FC FC FC FC Leased lines FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC Lithuania FC FC Luxemburg FC FC Malta FC FC Norway FC FC South Korea FC FC Netherlands PC PC Hungary PC FC Poland FC FC Portugal (1) FC FC Romania FC FC Slovakia FC FC Slovenia FC FC Sweden FC FC Turkey FC FC Czech Republic FC FC Finland (1) FC FC Key: PC=Partial competition FC=Full competition (1)=2004 data, (2)=pre-2004 data Fixed Wireless Broadband FC FC FC PC FC FC FC FC FC FC FC PC FC - Mobile FC FC FC PC FC PC PC FC FC FC FC FC FC PC FC PC Cable TV FC FC FC FC PC FC FC FC FC FC FC FC FC FC FC Fixed sat FC FC FC FC FC FC FC FC FC FC FC FC FC FC Mobile sat FC FC FC FC FC FC FC FC FC FC FC FC FC FC Table 3: Level of competition for different technologies of surveyed countries [175] Final version May 2006 35 Best Practices in Broadband Development As it can be concluded from Figure 5, the new entrants hold a 49.8% share of the market, even though a large number of these entrants use the networks of the incumbents for providing services, while Local Loop Unbundling (LLU) has become the main access option for alternative providers [174]. Figure 5: Incumbents' vs. new entrants' retail market share by technology [174] 2.2.5 Cost As mentioned above, the cost has presented an important decline during the last two years, while on the other hand both the quality and the variety of the provided services are improved and increased in combination with higher access speeds. Table 5 presents the monthly cost of DSL access (being the basic technology of broadband access), in various member states of OECD in November 2004, for download transmission speeds of at least 512 Kbps and free data volume of at least 1 Gbyte. The providers selected and presented in Table 6, are those with the wider area of coverage. It should be mentioned that some of the values apposed in this table present small variations in relation with the values provided to the survey of each country, presented in previous sections. This fact is due to the different sources that have been taken into account for the realization of the report. However, the variations presented neither alter nor degrade the results of the analysis. For the precise comparison of the prices among the countries, the monthly fixed fee in PPP USD (Purchasing Power Parity) has been calculated. PPP is the rate of currency conversion that eliminates the differences in price levels between countries, as a certain amount of money (e.g. 1 Euro) has different purchasing power in each country. The parity presented is based on data taken from OECD, that compiled a respective table (Table 4) on December 2005, by conducting a comparison on the prices of about 3.000 different products (consuming goods and services, public sector services, equipment and constructional work). In the tables presented below, there are no available data for the following countries: Estonia, Cyprus, Latvia, Malta, Slovenia, Bulgaria, Croatia and Romania. This fact is due to lack of information in OECD table for these countries. Final version May 2006 36 Best Practices in Broadband Development Country Australia Austria Belgium France Germany Denmark Czech Republic Switzerland Greece U.S.A United Kingdom Japan Ireland Iceland 1 USD PPP 1.05 1.08 1.06 1.09 1.1 1.38 0.9 1.39 0.89 1.00 1.09 1.25 1.3 1.65 Country Spain Italy Canada Korea Luxemburg Norway Netherlands Hungary Poland Portugal Slovakia Sweden Turkey Finland 1 USD PPP 0.92 1.02 1.08 0.86 1.07 1.43 1.07 0,62 0.62 0.81 0.59 1.17 0.73 1.23 Table 4: Equivalence of currency of each country to PPP USD, as estimated by OECD (December 2005) Furthermore, for the valid comparison of the cost and given that the surveyed countries do not provide the same access speeds, the cost of 1 Kbps has been calculated in PPP USD. Access speed of at least 512 kbps and free data volume of at least 1 Gb Monthly DSL access cost in OECD member states Country Company Monthly Fixed Fee (€) Monthly Fixed Fee (USD) Monthly Fixed Fee in PPP USD Mbytes Included Access Speed (Kbps) Monthly cost per Kbps of access speed in PPP USD 0.071 0.054 0.008 0.034 0.018 0.050 Australia Austria Belgium France Germany Denmark Telstra Big Pond Telekom Austria Belgacom France Telecom Wanadoo Deutsche Telecom TDC 48.78 56.50 37.33 24.43 25.40 44.86 38.41 44.49 29.39 19.24 20.00 35.32 36.58 41.19 27.73 17.65 18.18 25.60 Unlimited Unlimited 10,000 Unlimited 1,500 Unlimited 512 768 3,300 512 1,024 512 Final version May 2006 37 Best Practices in Broadband Development Access speed of at least 512 kbps and free data volume of at least 1 Gb Monthly DSL access cost in OECD member states Country Company Monthly Fixed Fee (€) Monthly Fixed Fee (USD) Monthly Fixed Fee in PPP USD Mbytes Included Access Speed (Kbps) Monthly cost per Kbps of access speed in PPP USD Czech Republic Switzerland Greece USA United Kingdom Japan Ireland Iceland Spain Italy Canada South Korea Luxemburg Norway Netherlands Hungary Poland Portugal Slovakia Sweden Czech Telecom Swisscom OTE SBC British Telecom NTT Eircom Iceland Telecom Telefonica Telecom Italia Bell Canada Sympatico Korea Telecom P&T Telenor KPN Malav TPSA Portugal Telecom Slovak Telecom Telia 29.83 29.55 54.81 22.45 23.89 33.90 37,71 50,37 82.04 34.85 28.73 21.21 33.48 39.20 20.70 35.48 36.12 33.00 39,36 34.10 23.49 23.27 43.16 17.68 18.81 26.69 29,69 39,66 64.60 27.44 22.62 16.70 26.36 30.87 16.30 27.94 28.44 25.98 30,99 26.85 39.81 16.74 48.49 17.68 17.26 21.35 22,84 24,04 70.22 26.90 20.95 19.42 24.64 21.58 15.23 45.06 45.87 32.08 52,53 22.95 Unlimited Unlimited Unlimited Unlimited 1,000 Unlimited 4,000 Nationally (100 Internationally) Unlimited Unlimited Unlimited Unlimited 1,000 Unlimited N/A Unlimited 5,000 20GB/2GB 1,000 Unlimited 512 600 512 1,500 512 8,000 512 256 512 640 3,000 4,000 1.024 704 416 512 512 512 768 512 0.078 0.028 0.095 0.012 0.034 0.003 0.045 0.094 0.137 0.042 0.007 0.005 0.024 0.031 0.037 0088 0.090 0.063 0.068 0.045 Final version May 2006 38 Best Practices in Broadband Development Access speed of at least 512 kbps and free data volume of at least 1 Gb Monthly DSL access cost in OECD member states Country Company Monthly Fixed Fee (€) Monthly Fixed Fee (USD) Monthly Fixed Fee in PPP USD Mbytes Included Access Speed (Kbps) Monthly cost per Kbps of access speed in PPP USD 0.061 Turkey Turk Telekom Elisa 29.16 22.96 31.45 5,000 512 Finland 36.78 28.96 23.55 Unlimited 1,024 0.023 Table 5: Indicative prices with regard to monthly DSL access cost in OECD member states, for speeds of at least 512 Kbps and free data of at least 1 Gbyte (November 2004) Table 6 presents the prices data for the highest access speed provided in each country along with the highest free data volume. Highest provided speed and free data volume Monthly DSL access cost in OECD member states Country Company Monthly Fixed Fee (€) Monthly Fixed Fee (USD) Monthly Fixed Fee in PPP USD Mbytes Included Access Speed (Kbps) Monthly cost per Kbps of access speed in PPP USD 0.043 0.074 0.006 0.016 0.011 0.037 0.040 Australia Austria Belgium France Germany Denmark Czech Republic Telstra Big Pond Telekom Austria Belgacom France Telecom Wanadoo Deutsche Telecom TDC Czech Telecom 65.05 56.50 56.58 32.91 32.95 74.86 40.91 51.22 44.49 44.55 25.91 25.94 58.94 32.21 48.78 41.19 42.03 23.77 23.59 42.71 54.60 Unlimited Unlimited 15,000 Unlimited 1,500 Unlimited Unlimited 1,500 768 9,000 2,048 3,072 2,048 1,024 Final version May 2006 39 Best Practices in Broadband Development Highest provided speed and free data volume Monthly DSL access cost in OECD member states Country Company Monthly Fixed Fee (€) Monthly Fixed Fee (USD) Monthly Fixed Fee in PPP USD Mbytes Included Access Speed (Kbps) Monthly cost per Kbps of access speed in PPP USD 0.029 0.093 0.010 0.039 0.001 0.074 0.197 0.080 0.051 0.010 0.002 0.030 0.030 0.021 0.042 0.048 0.083 0.038 0.005 0.078 Switzerland Greece USA United Kingdom Japan Ireland Iceland Spain Italy Canada South Korea Luxemburg Norway Netherlands Hungary Poland Portugal Slovakia Sweden Turkey Swisscom OTE SBC British Telecom NTT Eircom Iceland Telecom Telefonica Telecom Italia Bell Canada Sympatico Korea Telecom P&T Telenor KPN Malav TPSA Portugal Telecom Slovak Telecom Telia Turk Telekom 59.71 94.89 30.82 39.82 34.64 37.71 50.37 164.74 61.25 38.31 28.29 92.90 61.68 47.11 42.65 49.11 42.43 57.85 45.16 159.16 47.02 74.72 24.27 31.35 27.28 29.69 39.66 129.72 48.23 30.17 22.28 73.15 48.57 37.09 33.58 38.67 33.41 45.55 35.56 125.32 33.82 83.95 24.27 28.77 21.82 22.84 24.04 141.00 47.28 27.93 25.90 68.36 33.96 34.67 54.17 62.37 41.25 77.21 30.39 171.68 Unlimited Unlimited Unlimited 30,000 Unlimited 4,000 Nationally (100 Internationally) Unlimited Unlimited Unlimited Unlimited 25,000 Unlimited N/A Unlimited 10,000 Unlimited/4GB 1,000 Unlimited Unlimited 2,048 1,024 3,000 1,024 24,000 512 256 2,048 1,200 4,000 13,000 3,072 2,048 2,240 1,024 1,024 512 1,536 10,000 2,048 Final version May 2006 40 Best Practices in Broadband Development Highest provided speed and free data volume Monthly DSL access cost in OECD member states Country Company Monthly Fixed Fee (€) Monthly Fixed Fee (USD) Monthly Fixed Fee in PPP USD Mbytes Included Access Speed (Kbps) Monthly cost per Kbps of access speed in PPP USD Finland Elisa 55.65 43.82 35.63 Unlimited 2,048 0.027 Table 6: Indicative prices with regard to monthly DSL access cost in OECD member states, for the highest access speed provided and highest free data volume (November 2004) As it appears from the tables and the data of this sub-section, the cost seems to show an important decline during the last two years, while it is strongly related to the variety and quality of provided services, as well as to the access speeds of these services. Finally, it is noted that the competition levels drastically affect the cost of broadband access, since in countries with monopolistic markets, the prices remain at high levels. 2.2.6 Services The communication industry is facing an identity crisis. In the past, fixed telephone lines were exactly what their names implied, i.e. a conduit for voice telecommunications. On the other side, cable TV networks only carried television signals to households. However, with the development of ADSL and cable modem Internet access, both networks now offer a much larger range of services over their copper and fibre infrastructure. Telecommunication and cable operators are moving into one another’s markets by offering data, voice and video services over their networks. This section presents a synoptic survey for the changes that have taken place in OECD member states in regard to "multiple play" services [58]. From the survey of the provided services in these countries, it appears that the services with higher supply are the following: Fast Internet: As it can be extracted by the survey, there is a tendency for higher access speeds. The majority of the providers begin with access speeds of 512 Kbps and there are only few that offer lower speeds. The upper level for the access speeds appears to continuously increase, reaching speeds in the order of 100 Mbps (Japan). Voice: The majority of the surveyed countries include voice services in their offers. Currently, these services include unlimited calls plans, while VoIP emerges to prevail in this area. Video: The provision of video content also constitutes one of the basic services provided in the surveyed countries. Video services are usually provided through ADSL and cable networks. To this direction, video on demand and video a la carte are the two most common services of the offers provided. Multiple play offers represent the first stage in a two-part evolution of converged ICT service delivery. This first stage has seen video, voice and data services consolidated on a given infrastructure (e.g. cable networks). The second stage will include consolidation of access Final version May 2006 41 Best Practices in Broadband Development platforms on one IP network, allowing users to seamlessly access content while moving over a variety of wired and wireless networks. An analysis of 87 providers in the 30 OECD countries finds that the multiple play offers of video, voice and Internet access (triple play) are available from 48 providers in 23 OECD countries (September 2005). These offers are provided through all main types of wired infrastructure: telecommunication lines, cable and fibre. A further 29 firms in 21 countries offer double-play services of voice and data over ADSL. A different double-play package of video and data is available from another 10 providers in 9 countries over cable networks. So-called "quadruple-play" offers (including mobile voice) are available in 10 OECD countries. Figure 6 depicts the availability of different types of multiple-play services in OECD countries. Figure 6: Multiple play availability among OECD countries (September 2005) [58] Cable and fibre providers are more likely to offer triple-play services than ADSL providers. Nearly 66% of the 29 cable networks examined offered triple-play services. In contrast, only 44% of the 50 surveyed telecommunication networks have triple play offers. Out of the eight fibre optic providers, seven (88%) had multiple play offers. Multiple-play offers in the OECD are increasingly allowing users to make unlimited fixed-tofixed phone calls for a flat monthly rate. Some operators are now also offering unlimited international phone calls to fixed lines in their bundle. In markets where there are offers of video services, the telecommunication operators typically have been able to offer a similar number of video channels as the cable television and satellite communications providers. Fixed line operators in some markets have also been able to offer video services through strategic alliances with satellite television providers. However, the single number of channels available from one operator tells nothing about the quality or desirability of the channels in the package. Indeed, in many markets the lack of one dominant channel in an offer could severely disadvantage an operator. Asymmetric bandwidth could become a bottleneck for some multiple-play services such as the virtual private networks (VPN) and the video conferencing that require fast upload speeds. The move towards more symmetric bandwidth may be important as multiple play services increase the usage of the upstream path. Set-top boxes and other devices will play an increasingly key role in the provision of multiple play services over broadband. Final version May 2006 42 Best Practices in Broadband Development Figure 7: Multiple play services by technology (September 2005) [58] Figure 7 depicts the availability of different types (by technology) of multiple play services in OECD countries. 2.2.7 Synopsis The conclusions made of the overview of the international situation in broadband can be summarized as follows: The number of broadband subscriptions, based on OECD data, continued to increase in the first half of 2005 from 119 million to 137 million. Broadband penetration in the OECD area grew by 15% in the first half of the year to 11..8 subscribers per 100 inhabitants. Given the fact that penetration grows, the broadband providers in the OECD area increasingly offer voice and video services over this platform. The speeds offered by providers are also increasing. Regarding broadband technologies, the survey shows that DSL stands as the leading broadband platform, followed by cable modem access. In particular DSL accounts for 61.2% and cable modem for 32.0%. Other technologies (e.g. fiber, LAN, satellite and fixed wireless) account for 6.8%. Alternative technologies are usually related to the morphology of each country, the percentage of rural and remote areas population, as well as to the broadband penetration. In particular, countries with high penetration rate seem to adopt more advanced technologies, as for example fiber to the home (FTTH), while countries with a high percentage of rural population tend to use wireless or satellite technologies. Competition is driving fixed and mobile players to invest in new technologies in order to reduce costs and position themselves in a converged environment. Operators are beginning to offer portfolios of services, with different combinations of low-cost voice (including mobile), internet access and audiovisual content to attract and retain customers. After dipping significantly in 1999-2001, investment levels are recovering, with the capital expenditure for the sector tp be estimated to exceed the amount of €45 billion in the EU in 2005, showing an increase of approximately 6% compared to 2004. Final version May 2006 43 Best Practices in Broadband Development As far as it concerns the cost, it seems to present an important decline during the last two years, while it is strongly related to the variety and quality of the provided services, as well as to the access speeds of these services. At this point it should be mentioned that cost reduction is strongly related to the level of competition in the broadband market. In cases of countries where the level of competition is low or the marker is monopolistic, the cost is significantly higher, in relation to the GDP per capita. In the context of the services, the multiple play offers, which include voice, data and video services, seem to prevail, representing the first stage in a two-part evolution of converged ICT service delivery. This first stage has seen video, voice and data services consolidated on a given infrastructure (e.g. cable networks). The second stage will include consolidation of access platforms on one IP network, allowing users to seamlessly access content while moving over a variety of wired and wireless networks. The policies that the countries adopt for the development and deployment of broadband are strongly related to the internet and broadband penetration, as well as to the percentage of the population that live in rural or remote areas. In particular, countries with high penetration rates focus on the preservation and extension of these rates through policies for providing better quality of service and content, as well as on the wider coverage of the population. On the other hand, countries with lower penetration rates mainly focus on the development of the necessary infrastructure. Final version May 2006 44 Best Practices in Broadband Development 2.3 REFERENCES FOR CHAPTER 2 [1] [2] BREAD: Broadband for all- Deliverable D22-D32, Available at: http://www.istbread.org/, STATISTIK AUSTRIA (2003). “IKT-Einsatz in Haushalten 2003, Ergebnisse der Europäischen Erhebung über den Einsatz von Informations- und Kommunikationstechnologie (IKT) in Haushalten 2003 in Österreich“, Available at: ftp://www.statistik.at/pub/neuerscheinungen/ikt_web.pdf RTR-GmbH (2003). 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ECTA 2003: DSL scorecard, end of September 2003. ECTA 2005: DSL scorecard, Q4 2004. http://www.laajakaistainfo.fi/english/ OECD, Telecommunications Database 2003 Statistics Finland, 2004: Tilastouutisia 3.3. 2004, Kuluttajabarometri: Digiboksi yli 250 000 taloudessa helmikuussa. http://www.laajakaistainfo.fi http://www.laajakaistainfo.fi/english/index.php http://www.etampere.fi/office/en/ http://www.oulu.ouka.fi/smartoulu/english/paasivu.htm EC Project “SIBIS” (Statistical Indicators for Benchmarking Information Society), http://www.sibis-eu.org/ http://strategis.ic.gc.ca/epic/internet/inimr-ri.nsf/en/gr117711e.html e-Transformation Turkey Project, http://www.bilgitoplumu.gov.tr/eng/default.asp#002 e-hrvatska, http://www.e-hrvatska.hr/ehrvatska/ European Survey of Information Society Projects and Actions, http://www.euesis.org/esis2basic/RObasic7.htm Information Society in Romania, http://www.wsis-romania.ro/ http://www.kado.or.kr http://www12.statcan.ca/english/census01/products/standard/popdwell/Table-CMAN.cfm?T=2&SR=126&S=3&O=A http://broadband.gc.ca/pub/faqs/faqscomplete.html#whatsnsi http://www.ic.gc.ca/cmb/welcomeic.nsf/0/85256a5d006b972085256db8004f7cb2?Op enDocument http://www.infrastructure.gc.ca/index_e.shtml http://www.cedmagazine.com/ced/2001/0901/09e.htm http://www.analysys.com/default_acl.asp?Mode=article&iLeftArticle=1570&m=&n= http://www.crtc.gc.ca/PartVII/eng/2004/8663/c12_200402892.htm http://www.hollywoodreporter.com/thr/pwc/talking_display.jsp?vnu_content_id=1000 617813 http://www.friends.ca/News/Friends_News/archives/articles06090407.asp http://www.cb-cda.gc.ca/new-e.html http://news.com.com/2100-1027-5182641.html May 2006 50 Best Practices in Broadband Development [134] National Broadband Task Force, The New National Dream: Networking the Nation for [135] [136] [137] [138] [139] [140] [141] [142] [143] [144] [145] [146] [147] [148] [149] [150] [151] [152] [153] [154] [155] [156] [157] [158] [159] [160] [161] [162] [163] [164] [165] [166] [167] [168] [169] [170] [171] Final version Broadband Access, June 2001 http://broadband.gc.ca/pub/program/index.html Http://www.canarie.ca http://www.sourcecan.com/E/sb2410.cfm? http://www.communitynet.ca Sabine Ehlers: ‘IT policy in Japan – from hard to soft’, ITPC, Nov. 5 2003. Commerce and Information Policy Bureau of Ministry of Economy, Trade and Industry: ‘Promotion of the IT Revolution and Electronic Government’. ITU: ‘Promoting Broadband: the Case of Japan’, Geneva, April 2003, pp. 32-33. The Development of Broadband Access in Rural and Remote Areas, OECD (May 2004) A Nation Online: Entering the Broadband Age (September 2004), p. 5. Pew Internet Project Data Memo (2004) http://www.usda.gov/rus/telecom/broadband.htm#info Community Connect Broadband Grant Program: http://www.usda.gov/rus/telecom/initiatives/index_initiatives.htm#broadband Jon S. Beamer, “State Broadband Initiatives”, Fall 2002. http://www.tiaonline.org/policy/states.cfm A Nation of Laboratories: Broadband Policy Experiments in the States (March 2004); available at http://www.apt.org/publica/ http://www.bconnect.org/ http://www.bizjournals.com/twincities/stories/2004/05/31/daily23.html http://www.mcknight.org/about/news_detail.aspx?itemID=1417&catID=54&typeID= 2 http://www.utopianet.org/ http://www.thespectrum.com/news/stories/20040323/localnews/131254.html http://www.uen.org/ http://www.nascio.org/awards/1998awards/Networking/utah.cfm http://www.uen.org/policy/html/feeschedule.html. Southwestern Wyoming Enhanced and Expanded Telecommunications Network; http://sweetnet.us/network/faqs/General.html http://wyoming.edgate.org/index.php http://www.wutc.wa.gov/webdocs.nsf/a23294935a25d43488256e77007df5dc/eafb92 498fac081888256ed200561d7e!OpenDocument http://dis.wa.gov/bestpractices/disbestpractices.htm http://www.wa-k20.net/members/index.html http://www.point-topic.com/content/operatorsource/profiles/australia.htm http://www.pointtopic.com/content/operatorSource/profiles/Norway.htm&comp_id=772&g=1 Situation of the Swiss telecommunications market in an international comparison, http://www.isps.ch/site/attachdb/show.asp?id_attach=959 Hagtidindi (2004), Statistical Series Information Technology, July 2004, http://www.hagstofa.is/template_db_frameset_en.asp?PageID=1236&ifrmsrc=/uploa ds/files/hag_040701.pdf&Redirect=False A summary of the national Information Society Policies, http://eng.forsaetisraduneyti.is/information-society/nr/1248 Icelandic Prime Ministry (2004), Resources to Serve Everyone Policy of the Government of Iceland on the Information Society 2004-2007, http://eng.forsaetisraduneyti.is/information-society//nr/1327 http://www.hvar.is/english/index.html http://www.tungutaekni.is/english.html FS-net, http://www.fsnet.is/ http://www.point-topic.com/content/operatorsource/profiles/norway.htm 51 May 2006 Best Practices in Broadband Development [172] Internet World Stats, http://www.internetworldstats.com/stats4.htm#eu [173] OECD Broadband Statistics, June 2005, http://www.oecd.org/document/16/0,2340,en_2649_34225_35526608_1_1_1_1,00.h tml [174] The European Electronic Communications Regulation and Markets 11th Report, http://europa.eu.int/information_society/policy/ecomm/implementation_enforcement/ annualreports/11threport/index_en.htm [175] ITU, http://www.itu.int/ITU-D/treg/profiles/LevelOfComp.asp Final version May 2006 52 Best Practices in Broadband Development C H A P T E R 3 : I N V E S T I G AT I O N O F M A I N FA C TO R S F O R B R O A D B A N D GROWTH – BEST PRACTICE A N A LY S I S Final version May 2006 53 Best Practices in Broadband Development INVESTIGATION OF MAIN FACTORS FOR BROADBAND GROWTH – BEST PRACTICE ANALYSIS 3.1 INTRODUCTION This chapter presents an evaluation of the current state of each surveyed country, based on the information presented in the previous chapter. In addition, this chapter presents the important factors for supporting the broadband growth. Finally, the analysis of best practices for the promotion and growth of broadband is presented. More specifically, based on the information presented in the previous chapter, the most important factors for supporting the broadband growth in various countries are identified. In addition, other factors are presented (such as the regulatory framework) in order to have a holistic view about the current situation and to conclude in a more exact manner concerning the best practices for the broadband growth. Therefore, this chapter investigates the following issues: Regulatory framework. Specific countries have been selected, the regulatory framework of whose is presented and evaluated. Socio-economic factors. Financial and social data correlated with the usage of broadband services are presented. Technological level of the countries. Other factors that affect the broadband services growth. The examination of the successful cases concerning the broadband growth could appoint which are the best practices for the broadband growth. However, this simple approach does not constitute a sufficient way for choosing the best practices. The basic reasons are the economic, social, technological and cultural differences, as well as the different starting point of the various countries concerning the application of concrete practices. Therefore, the selection of the countries that applied best practices takes into consideration and these important factors. In addition this chapter focuses on the following issues: Definition of what is a best practice for the broadband growth, based on specific criteria. These criteria have been categorized in three basic categories (technological, financial, and social) and they have been quantified and used for ranking the policies of each country. Each criterion receives a weight number in a scale of 1 to 3, receiving as a higher weight number, as more it promotes the use of broadband services. Each criterion has been quantified based on specific data sources. These data has been normalised in a range of 1 to 10. The sum of scores of these criteria gives the ranking of the investigated policies. In aaccordance with the score received by each country, the countries that followed the best practices have identified. Best practice analysis: The examination of best practices is focused on the next points: objectives, timetable of achievement of objectives, synergies between private-public sector regarding the broadband infrastructures and services, priorities for actions, priorities for the citizens and the enterprises, incentives for the broadband promotion, promotion of objectives of eEurope 2005, initiatives for broadband content creation, Final version May 2006 54 Best Practices in Broadband Development support of research and development programs for the promotion of broadband applications, etc. After the analysis of the previous elements, we have compiled a list of basic factors that have affected the broadband growth, as well as a list of best practices that have been applied in the countries under consideration. 3.2 FACTORS FOR SUPPORTING THE BROADBAND GROWTH 3.2.1 Regulatory Framework The regulatory framework of the telecommunications and broadband constitutes an important factor for the increase (or not) of the broadband growth and the level of competition in the telecommunications market of a country. In case that the regulatory framework is insufficient, then the sector of telecommunications can present improper function modes. An indicative fact is that in Europe one can see the evident concern for the insufficiency of the regulatory frameworks in the telecommunications [218] (the sector of telecommunications in Europe can be placed in danger provided that the governments and the regulatory frameworks allow the monopoly of incumbents). This section presents briefly the current EU framework for electronic communications, as well as a synopsis of the national regulatory telecommunications framework for the EU countries. Moreover, various data about the current state for Ireland, Germany, Australia, United States of America, Portugal, Hungary and Turkey are presented, according to information provided by OECD. These data concern the following: Number of operators in service. Foreign ownership restrictions in telecommunications. Treatment of national and international voice telephony services provided over the Internet (VoIP). Local loop unbundling. Evaluation of the regulatory framework. 3.2.1.1 Overview of the EU framework for the communications sector regulatory electronic The EU regulatory framework for electronic communications comprises a series of legal texts and associated measures that apply throughout the 25 EU Member States. The goals of the new framework are: to encourage competition in the electronic communications markets, to improve the functioning of the internal market, to guarantee basic user interests that would not be guaranteed by market forces. The framework provides a set of rules that are simple, aimed at deregulation, technology neutral and sufficiently flexible to deal with fast changing markets in the electronic communications sector. These rules have already led to a circle leading to lower prices and a wider range of products and services for the consumer. Entering into force in July 2003, the regulatory framework undergoes its first regular review in 2006. Final version May 2006 55 Best Practices in Broadband Development In its review process, the Commission follows a “triple-play” approach aiming at innovation, investments and integration. The most important objectives to be achieved with the 2006 review are to: strengthen investment through infrastructure-based competition; promote innovation through openness of the rules for new technologies; complete the single market by making the application of EU rules more consistent across the 25 Member States and by encouraging cross-border communication services. The framework is designed to be future proof, and to take account of the convergence of digital technologies that allow everything from phone calls to entertainment to be delivered over all sorts of networks to all sorts of devices - PCs, televisions, mobile phones and more. Its aim is to move towards truly competitive markets with enhanced cross-border competition. One of the main principles is that when markets become sustainably competitive, the sector specific regulation that controls the market power of dominant companies can be rolled back. The legislation texts in force in EU, concerning the electronic communication, are the following (more information is available at the website [292]): Directive (2002/21/EC) [233] on a common regulatory framework Directive (2002/19/EC) [236] on access and interconnection Directive (2002/20/EC) [234] on the authorisation of electronic communications networks and services Directive (2002/22/EC) [235] on universal service and users' rights relating to electronic communications networks and services Directive (2002/58/EC) [237] on privacy and electronic communications (from 31/10/2003) Directive (2002/77/EC) communications services [238] on competition in the markets for electronic Decision (676/2002/EC) [239] on a regulatory framework for radio spectrum policy in the European Community (Radio Spectrum Decision) Decision (2003/548/EC) [240] on the minimum set of leased lines with harmonised characteristics and associated standards referred to in Article 18 of the Universal Service Directive. 3.2.1.2 Overview of the implementation of the electronic communications framework in the 25 Member States According to a relevant EU report [241], the 25 EU Member States have completed the transposition of the electronic communications framework into their national legislation. Below are presented some highlights of the country chapters in the 11th Report on the Electronic Communications Regulation and Markets 2005 [242]: Austria: Implementation of the new regulatory framework is well advanced in Austria. Austria is part of the group of Member States that is most advanced with the notification of market analyses and remedies. Belgium: Despite the late transposition of the framework into Belgian law in 2005, the competition in the Belgian market is steadily increasing in the mobile, fixed voice and broadband segments. These positive market trends could be undermined by legal uncertainty about NRA powers. Final version May 2006 56 Best Practices in Broadband Development Cyprus: Competition still appears to be very limited in the Cypriot electronic communications market, possibly partly due to both retail and wholesale pricing issues in the fixed and mobile markets. Czech Republic: Regulatory developments were dominated by the adoption of the new law to transpose the regulatory framework. The delay in transposition appears to have had a negative impact on the market review process and in particular on the imposition of regulatory remedies. Denmark: This country is one of the EU leaders in broadband take-up. The Danish telephony market experienced an accelerating shift from fixed to mobile telephony services due to mobile telephony price competition. During the year, most of the Danish market analysis underwent Commission consultation. Regulatory uncertainty was a matter of concern for operators as some administrative decisions were not final. Estonia: There is little infrastructure competition in Estonia and still no effective replacement of SMP obligations that expired at the end of 2005. Mobile telephony is the key market, in particular with the advent of 3G services, while broadband penetration outstripped the competition from other EU-10 Member States. Finland: Due to mobile sector price competition in Finland, the migration from fixed to mobile telephony services has accelerated. While concerns remain of restrictions of the NRA’s ability to impose regulatory remedies in some cases, Finland's national regulatory authority is the first in the EU to have gone through the Article 7 consultation procedure for all 18 markets. France: French users can take advantage of one of the most dynamic and competitive broadband markets in Europe, which has high penetration rates and attractive prices. Germany: Consumers have benefited from the market developments over the past year, mainly through falling prices for some mobile and broadband products. More resolute and timely action on the part of the NRA in areas such as bitstream access, however, could possibly have led to even greater benefits. Greece: The country transposed four of the five Directives (not including e-Privacy) on 17 January 2006. The Greek electronic communications market has suffered from the lack of transposition of the regulatory framework in 2005. Hungary: 16 of the 18 markets have been notified to the European Commission, given that the electronic communications framework was implemented prior to accession. Ireland: Obstacles remain to the further development of competition in the fixed and broadband markets, particularly the limitation of the NRA’s power to enforce decisions. These issues may have contributed to the lack of a functioning local loop unbundling (LLU) product that would help to further improve Ireland’s broadband performance, which has shown progress towards the end of 2005. Italy: The growth in the Italian telecommunication market in 2005 has been mainly driven by broadband and mobile communications. Pro-competitive measures taken by the NRA have almost enabled Italy to close the gap with the EU average broadband penetration rate. Latvia: Implementation of the regulatory framework has progressed in some areas but the NRA has not yet started the important markets review procedure. There are encouraging developments in the mobile sector with the entry of a third network operator. Lithuania: Mobile penetration rate is one of the highest in the EU and stands at around 117%. There is little competition in fixed telephony except for several local companies focusing on international calls and VoIP. Malta: The market continues to be characterized by a limited number of network operators. High fixed telephony interconnection tariffs, a lack of practically available Final version May 2006 57 Best Practices in Broadband Development wholesale products on the broadband market, a lack of number portability, as well as retail prices of the fixed telephony incumbent that are not fully rebalanced seem to be the most important regulatory problems. The Netherlands: Strong infrastructure competition has been intensifying between fixed network and cable operators. They are actively developing consumer-friendly triple play services. Coupled with the quick spread of VoIP, these innovative trends appear to confirm the importance of having a competitive environment. Luxembourg: The mobile market continues to be stronger than the broadband market, with continued growth, high penetration and the arrival of a third operator. The fixed market is characterized by decreasing revenues and call minutes. Poland: Despite some progress (e.g. publication of reference offers, implementation of the “112” emergency number), a number of issues that have a significant impact on undertakings (e.g. access to incumbents infrastructure, market analysis in general) and ultimately on consumers (e.g. number portability, directory services) remain unresolved. Portugal: Regulatory action has led to an improvement in market conditions for new entrants, in particular for broadband. However, the incumbent's position on all markets (including content) remains very strong. Slovakia: The opening-up of the fixed market to competition has dominated regulatory developments in 2005. The publication of a RIO by the incumbent and the availability of carrier selection have certainly improved market entry prospects. However, a number of market liberalization instruments have not yet been implemented. Slovenia: Since the market has been without any SMP obligations for a large part of 2005, it is extremely welcome that the NRA completed a large number of market analyses towards the end of 2005. There is still very little competition in the fixed telephony market. Spain: The country adopted two major parts of the secondary legislation. The review of the level of competition in the relevant markets has been slow and the first market analyses were notified to the European Commission only in late September 2005. However, regulators have been able to promote competition through a number of regulatory measures and Spain has the highest figure of mobile ported numbers. Sweden: Price competition in the mobile sector has accelerated the migration from fixed to mobile telephony services, while the fixed broadband uptake growth phase continues. The most serious challenge to achieving the goals of the regulatory framework in Sweden is the functioning of the appeal system, where procedures are time-consuming. United Kingdom: Implementation of the regulatory framework in the United Kingdom is well advanced, since the initial reviews of all relevant markets other than the wholesale national market for international roaming have been completed. The last year has been dominated by the Ofcom's Strategic Review of the telecommunications sector, which resulted in the incumbent fixed network operator entering into legal commitments designed to ensure that competing operators get a genuinely non-discriminatory access to the enduring bottlenecks in the fixed network. As mentioned before, the main goal of the new EU framework is to encourage competition in the electronic communications markets, and to fully liberate and gradually deregulate the electronic communications markets. When the electronic communications markets characterised by high competition, the commercial behaviour in the market will be restricted by the competition law, as in other sectors. Article 7 of the Framework Directive (2002/21/EC) requires national regulatory authorities (NRAs) to conduct a "national" and a "Community" consultation on the regulatory measures they intend to take - comprising definition and analysis of relevant markets and the proposed imposition or removal of regulation on undertakings providing electronic communications networks or services - prior to adoption. The Commission may comment on the draft measures, and in certain cases, exercise its veto power requiring their withdrawal. Final version May 2006 58 Best Practices in Broadband Development The Commission has established a list of 18 “markets” for electronic communications (e.g. local and national calls), as a starting point for analysis by national regulators. These markets are listed in the Commission Recommendation “on relevant product and service markets susceptible to ex ante regulation” (http://europa.eu.int/information_society/policy/ecomm/article_7/index_en.htm). Table 7 summarizes the state of play on these 18 markets based on data from 13/12/2005. Legend: + Effective competition - no ex ante regulation No effective competition - ex ante regulation Partial competition - partial ex ante regulation The 18 “markets” for electronic communications are the following: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. Access to the public telephone network at a fixed location for residential customers Access to the public telephone network at a fixed location for non-residential customers Publicly available local and/or national telephone services provided at a fixed location for residential customers Publicly available international telephone services provided at a fixed location for residential customers Publicly available local and/or national telephone services provided at a fixed location for nonresidential customers Publicly available international telephone services provided at a fixed location for non-residential customers The minimum set of leased lines Call origination on the public telephone network provided at a fixed location Call termination on individual public telephone network provided at a fixed location Transit services in the fixed public telephone network Wholesale unbundled access (including shared access) Wholesale broadband access Wholesale terminating segments of leased lines Wholesale trunk segments of leased lines Access and call origination on public mobile telephone networks Voice call termination on individual mobile networks The wholesale national market for international roaming on public mobile networks Broadcasting transmission services, to deliver broadcast content to end users Table 7: The latest state of play on the 18 “markets” for electronic communications in EU countries [243] Final version May 2006 59 Best Practices in Broadband Development According to data presented in a relative study [218], it appears that the UK is the leader in regulating policies along with Denmark, France, Austria and Ireland. The worst cases according to this study are Greece and Germany. 3.2.1.3 Overview of the regulatory telecommunications framework of Ireland, Germany, Australia, Portugal, United States, Hungary and Turkey The current study investigates in more detail the regulatory framework of Ireland, Germany, Australia, Portugal, United States, Hungary and Turkey. All these countries have presented some similarities with the Greek situation in terms of broadband penetration, social background or geographical morphology. More specifically: Ireland (low broadband penetration 4.3%): It has a geographic distribution, a culture and a demographic situation similar with Greece and it constitutes a characteristic case, because it has presented a remarkable increase of broadband penetration rate. Germany (medium broadband penetration 14.5%): It does not have a geographic distribution, a culture and a demographic situation similar with Greece, but it constitutes a characteristic case, because it has presented a remarkable increase of broadband penetration rate. Australia (medium broadband penetration 10.9 %): It does not have a geographic distribution, a culture and a demographic situation similar with Greece, but it constitutes a characteristic case, because it has presented a remarkable increase of broadband penetration rate. United States (medium broadband penetration 14.5%): It does not have a geographic distribution, a culture and a demographic situation similar with Greece, but it constitutes a peculiar case due to its technological growth and its telecommunications market structure. Portugal (medium broadband penetration 9.9%): It has a geographic distribution, a culture and a demographic situation similar with Greece. Moreover it has presented a remarkable increase of broadband penetration rate. Hungary (low broadband penetration 4.6%): It has a financial and demographic situation similar with Greece. Moreover it has presented a similar Internet penetration with Greece. Turkey (low broadband penetration 1.2%): It presents a low broadband and Internet penetration. In the next paragraphs an overview of some elements of the regulatory framework of the above countries are presented based on OECD data. These elements are the following: Number of telecommunication operators in service. Foreign ownership restrictions in telecommunications. Treatment of national and international voice telephony services provided over the Internet. Local loop unbundling. Table 8 presents the number of telecommunication operators in service until 2003. Final version May 2006 60 Best Practices in Broadband Development Network infrastructure capacity (only includes companies not licensed to provide voice services) 428 9 - Country Australia Germany Hungary Ireland Portugal Turkey 4 United States 5 Fixed PSTN (local, national and international) 105 182 26 28 12 43 2743 Cellular mobile 4 4 3 3 3 3 150 Wireless local loop (fixed wireless) 10 5 9 8 - IMT-2000 operators (i.e. UMTS, 3rd generation) 1 43 5 3 3 6, 7 MVNOs Permitted Permitted Permitted Permitted No Not yet Permitted 2 Table 8: Number of telecommunication operators in service. Data 2003 [179] Table 9 presents the foreign ownership restrictions in telecommunications until 2004. Country Australia Restrictions Under the Telstra Corporation Act 1991, Telstra is subject to ownership restrictions that limit foreign groups to 35% of Telstra’s listed capital and a maximum holding of 5% for individual foreign entities. No foreign ownership restrictions. The Telecommunications Act allows the FCC to deny radio licenses to corporations with greater than 25% foreign investment only if the public interest is served by this refusal. Wireline common carriers are not subject to these restrictions. Foreign-controlled enterprises and all other foreigners may not hold in aggregate more than 20% ownership in the Communication Satellite Corporation 8 No foreign ownership restrictions. The incumbent must notify ComReg of any changes in shareholding/ownership. No foreign ownership restrictions. No foreign ownership restrictions. Germany United States Ireland Hungary Portugal 1 2 3 4 5 The column indicates the number of UMTS licenses (some of which were not in operation in mid-2004) Mobile Virtual Network Operators Only one license is operational Figures for Turkey reflect the number of operators licensed as of December 2004 US mobile operators have the flexibility to upgrade their networks to 3G technologies on their existing 2G (PCS/cellular/SMR) spectrum. Licensing, authorisation and registration practices differ across OECD countries so that it is difficult to compare the number of operators. For a number of countries licenses do not differentiate between local, national and international PSTN or the provision of infrastructure. Some licenses may be regional. Some countries license services rather than networks so that an individual firm offering a range of services has multiple licenses. Some countries have included companies providing PSTN via carrier selection in data on fixed PSTN. Resellers are not included where they can be identified. In a number of OECD countries analogue mobile, which is being phased out, is a monopoly. Symbol “-“ means that there are no data available. Communications Satellite Corporation (COMSAT): it has been determined by the Congress as exclusive supplier of international satellite telecommunications channels in the USA 6 7 8 Final version May 2006 61 Best Practices in Broadband Development Country Turkey Restrictions No foreign ownership restrictions. Table 9: Foreign ownership restrictions in telecommunications [179] Table 10 presents the treatment of national and international voice telephony services provided over the Internet. Country Australia Treatment There are no regulatory requirements directed specifically at VoIP. It is the view of the regulator, the Australian Communications Authority (ACA), that VoIP services generally fall within the existing technologyneutral definition of the standard telephone service, and as such are subject to the regulatory requirements that generally apply to such services. In many instances, however, exemptions from such requirements can be sought. Reviewing the policy and regulatory environment applying to emerging voice services like VoIP is under consideration. Providers of VoIP services are treated just like any other service provider. Their rights and obligations depend on how the respective service is classified according to its features under regulatory aspects especially telecommunications services, publicly available telephone service, operation of telecommunications networks or telecommunications systems. The use of geographic numbers 9 is tolerated if the customer’s residence is located in the corresponding local area. The German regulator also issued a new numbering space for non-geographic national subscriber numbers 10, which are seen to be especially adequate for VoIP services. As of 13 December 2004 no decision has been taken on the regulatory classification of any VoIP business model. VoIP service is not regulated. The regulator, taking into consideration the basic principle of technology neutrality, is investigating whether a call which is conveyed through a transmission route and has one or more parts using packet switched technology (VoIP) can be regarded as a traditional fixed telephone service. VoIP services will be regulated subject to their classification as electronic communications services (ECS) or publicly available telephony services (PATS). If the service does not fall under these definitions, it will be unregulated. Obligations on the incumbent include network requirements such as provision of access to its own network via interconnection agreements with other operators and provision of service level agreements for provision of facilities/services to customers, as well as other service obligations such as performance related to consumer protection, publication of prices and itemized billing (for the call). If a VoIP service is classified as PATS, then a range of obligations would apply (access to emergency services) or might be applied (obligations for operator assistance, payphones, directory enquiry services and directories etc). If a VoIP service is classified as PATS a lesser range of obligations apply. All providers are subject to the general regime of authorization. Undertakings that wish to provide electronic communications networks and services are bound to submit to the national regulatory authority a short description of the network or service they wish to initiate and to Germany Hungary Ireland Portugal 9 Geographic number: It is a phone number which is correlated with a special geographic area of a country. Non-geographic number: It is a phone number which is not correlated with a special geographic area of a country.. 10 Final version May 2006 62 Best Practices in Broadband Development notify an estimated date for starting the activity. Moreover, VoIP services have some specific conditions, when considered as a fixed telephone service. Turkey There is no special regulation applicable to Voice over Internet Protocol (VoIP) services. National and international long distance voice telephony services are subject to a telecommunications license that is technology neutral. Basically, the approach is restraint from regulating Internet applications, including VOIP. However, the relevance of some social obligations is under review. In a Notice of Proposed Rulemaking on IP-enabled services, comments were asked on 1) classification issues, whether VoIP and similar services should be considered as a telecommunications or information service, and what principles could be used to differentiate services which should be regulated from those which should not be; 2) jurisdiction issues, whether federal or state governments should have authority; and 3) what type of regulation should apply, whether for social or economic objectives. United States Table 10: Treatment of national and international voice telephony services provided over the Internet [179] Table 11 presents the regulatory framework concerning local loop unbundling. Regulatory requirement for local loop unbundling Unconditioned local loop service, mandated in July 1999, was made available in the second half of 2000 by the incumbent. A draft decision made by the ACCC 12 [258] in April 2002 that a line sharing service would be in the long-term interests of end users, but that if Telstra offered reasonable commercial terms to access seekers the ACCC would exercise regulatory forbearance. The incumbent has been obliged to offer access to the local loop since 1998. In 2001 the obligation to offer shared access was implemented. Number of MDFs 11 and percentage that can offer unbundled lines 5,000 MDFs. 100% of MDFs can offer unbundled lines Country Australia Cost methodology for unbundled loops Total service long run incremental (TSLRIC) 13 cost plus contribution to indirect costs. Germany Long run incremental costs - LRIC [260]. -- 11 12 MDFs : Main distribution frames Australian Competition and Consumer Commission: Encourages the competition in Australia’s market and imposes laws for consumers’ protection and fair commercial transactions Final version May 2006 63 Best Practices in Broadband Development Country Hungary Ireland Portugal Regulatory requirement for local loop unbundling Unbundling came into force on 1 July 2001 and the first Reference Unbundling Offer was accepted in 2002. From 2002 full unbundling and shared access has been available. Full unbundling has been available since April 2001. Sub-loop unbundling is also available but has not been taken up. The EC regulation on unbundling came into force in January 2001. Cost methodology for unbundled loops The applied costing methodology is FDC. Number of MDFs 11 and percentage that can offer unbundled lines 1,787 MDFs. 90% od MDfs can offer unbundled lines Prices are reviewed by the regulator and are based on LRIC costs. Cost estimations and international benchmarking for reference purposes. Cost estimations used the incumbent’s cost accounting system, based on historical costs. When assessing new services for which historical information was not available, certain present costs were used. LLU is being used at 40 exchanges 1,753 MDFs. All MDF are able to offer unbundled lines. Turkey United States A communiqué on procedures and principles regarding unbundled access to the local loop was published in July 2004 and will be implemented in July 2005. Incumbent carriers must offer unbundled access to copper analogue loops in all cases, and need not unbundle OCn 14 or dark fibre loop in any case. Pursuant to an order adopted by the FCC on 15 December 2004 and expected to take effect in early 2005, incumbent carriers must unbundle DS1 and DS3 capacity loops, except in central business districts of major Based on forwardlooking economic costs. 22,982 central offices. 75% of central offices able to offer unbundled lines. 14 OCn: Optical Carrier signal level n Final version May 2006 64 Best Practices in Broadband Development Country Regulatory requirement for local loop unbundling cities, as defined by specific criteria measuring business line density and the presence of competitively provisioned fibre optic facilities. Cost methodology for unbundled loops Number of MDFs 11 and percentage that can offer unbundled lines Table 11: Local loop unbundling [179] 3.2.1.4 Conclusions Various valuable conclusions could be extracted from the investigation of the regulatory telecommunications framework in connection with the broadband and Internet penetration. The main conclusion is that the regulations should support a competitive structure of market along with the existence of bodies that will hold continuous control of competitive structure of market. These bodies should have the authorization to take the necessary measures when it is needed. It seems that countries that have good conditions (e.g. economically developed countries, technologically advanced countries) for a quick broadband uptake such as Ireland, US and Germany did not present the predictable broadband growth (e.g. US and Germany) or satisfactory broadband penetration rate (e. g. Ireland) due to insufficient regulatory telecommunications framework (e.g. Germany), problems in the application of regulations because of appeals (e.g. Ireland) or bad application of regulations (e.g. USA). The second conclusion is that the regulatory framework should include the determination of effective process of appeals in order to avoid legal uncertainty with regard to NRA decisions, which discourages the investors in the telecommunication market. Examples of such cases constitute Germany and Ireland. The third conclusion is that in cases where the market is not competitive enough, the NRAs should be able to impose penalties (p h. fines) that would be really avertive for incumbent operators. The fourth conclusion, which concerns the EU member states, is that the countries that correctly applied the EU regulatory framework for the electronic communications sector presented better broadband growth than other countries that don’t. Examples of such cases constitute Ireland, Portugal and Hungary. The fifth conclusion is that the independence of NRAs should be ensured, avoiding political interventions in the regulatory framework. Germany presented important problems from the political intervention in the regulating environment. 3.2.2 Financial and social factors This section presents briefly the relation between the broadband growth and the financial and social factors. These factors could be general for a country such as the Gross Domestic Product (GDP), the GDP distribution in primary, secondary and tertiary sector and the GDP per capita. Other elements could specifically refer to a citizen such as the education level, the familial situation, the place of stay etc. By summarising the data for the general elements (GNP and the distribution of GNP in primary, secondary and tertiary sector), but also the special elements for the broadband users, important conclusions are exported. Final version May 2006 65 Best Practices in Broadband Development It seems that exists a cross-correlation between GDP per capita and the broadband penetration. On the one hand, countries with high GDP per capita (such as Finland, Denmark and USA) present high broadband penetration rates. On the other hand countries with low GDP per capita (such as Greece, Turkey and Hungary) present low broadband penetration rates. However, there is no one to one equivalence, because there are countries with very high GDP per capita (such as Ireland) that do not present a very high broadband penetration. There are also differentiations in countries with almost the same GDP per capita (such as Greece and Portugal) that have different broadband penetration rates. This differentiations are mainly due to the purchasing power that differs from country to country, the cost of broadband subscription and the different broadband strategies of each country. These conclusions are confirmed by the data presented in Figure 8 that shows the simple correlation (=0,596) between the broadband penetration rate and the GDP per capita in the OECD countries. OECD broadband penetration and GDP per capita Broadband penetration 30 Simple correlation = 0.598 Broadband penetration (subscribers per 100 inhabitants, 2005) 25 GDP per capita (USD PPP, 2004) 60.000 50.000 20 40.000 15 30.000 10 20.000 5 10.000 0 GDP per capita 70.000 0 Ic el an d N Ko et he rea rl a D nds Sw enm i tz a r er k la n Fi d nl an N or d w a C y an a Sw da ed e Be n lg iu m U ni J a U ted pan ni te Sta d Ki te s ng do m Lu Fra xe nc m e bo u Au rg s Au tria st r G ali a er m an y Ita ly Sp ai N Por n ew tu Ze ga al l an C ze Ire d ch l R an d ep ub Sl H l ov un ic a k ga R ry ep ub Po lic la M nd ex ic Tu o rk G ey re ec e Source : OECD Figure 8: OECD broadband penetration and GDP per capita (Source: [232]) Moreover, it appears that the broadband and Internet use by domestic users is differentiated depending on the educative level, the familial situation, the age, the place of stay, the economic situation and the work type. On the contrary, the sex does not appear to play some role. More particularly, households with children is more probable to have broadband connection than households that do not have children. Still, the young persons and in a more general manner, the persons among 24-54 years old constitute the majority of Internet users. Moreover, the higher educative level implies a higher Internet use. Concerning the type of work, we can say that the majority of students are Internet users, while follow in internet use the workers and finally come the unemployed. Final version May 2006 66 Best Practices in Broadband Development OECD broadband penetration and population densities Broadband penetration 30 Population density 600 Broadband penetration (subscribers per 100 inhabitants, 2005) 25 Population density (inhab/km2, 2004) Simple correlation = 0.265 500 20 400 15 300 10 200 5 100 0 Ic el an d Ko N r et he ea rl a n D ds en Sw m i tz a rk er la nd Fi nl an d N or w ay C an ad Sw a ed e Be n lg iu m Ja U ni te pan d U St ni at te es d Ki ng do F m Lu ra n ce xe m bo ur Au g st Au ria st ra li G er a m an y Ita ly Sp ai Po n N ew rtu g Ze a l al an d C Ir ze ch elan d R ep ub li c H Sl ov ung ak ar y R ep ub lic Po la n M d ex ic o Tu rk ey G re ec e 0 Source : OECD Figure 9: OECD broadband penetration and population densities (Source: [232]) Concerning the population density in one area, it can be said that the regions with low population density have a smaller broadband penetration, compared with semi-urban and urban regions. However, according to Figure 9, we can say that there is no strong correlation between population density and the broadband penetration in a country. 3.2.3 Technological level This section presents the technological level of the countries. Main indices that are investigated are the following: International Telecommunication Union’s (ITU) Digital Access Index (DAI). Networked Readiness Index of World Economic Forum. E-readiness ranking of Economist Intelligence Unit. Digital Opportunity Index (DOI) of ITU. Furthermore, the participation of organizations of various countries in European programs and projects concerning the broadband applications sector (e.g. IST, TEN, etc.) is presented in this section. 3.2.3.1 Data for DAI, NRI, E-readiness, DOI Broadband subscribers per 100 inhab, Internet users per 100 inhab, Mobile subscribers per 100 inhab, Internet tariff as % of GNI Table 12 presents data for DAI index concerning the year 2003. Subscriber Lines per 100 inhab. Int'l Internet bandwidth per 100 inhab, School Enrolment Infrastructure Adult literacy Affordability Knowledge Country Quality Usage Sweden Denmark Iceland South Korea 65.2 57.4 51.9 48,6 88.9 83.2 90.7 67.9 1.1 0.7 0.9 1.2 98.5 99.5 98.5 97.9 113 98 91 91 10,611.2 20,284.9 236.5 361.5 8.0 8.2 8.2 21.9 57.3 51.2 64.9 55.2 0.94 0.89 0.89 0.74 0.99 0.99 0.99 0.99 0.99 0.99 0.96 0.96 0.64 0.66 0.50 0.74 0.67 0.60 0.76 0.65 0.85 0.83 0.82 0.82 Final version May 2006 67 DAI Best Practices in Broadband Development Broadband subscribers per 100 inhab, Internet users per 100 inhab, Mobile subscribers per 100 inhab, Internet tariff as % of GNI Subscriber Lines per 100 inhab. Int'l Internet bandwidth per 100 inhab, School Enrolment Infrastructure Adult literacy Affordability Knowledge Country Quality Usage Norway The Netherlands Finland Canada USA UK Switzerland Japan Luxembourg Austria Germany Australia Belgium Italy France Slovenia Ireland Cyprus Estonia Spain Malta Czech Republic Greece Portugal Hungary Poland Slovakia Croatia Lithuania Latvia Bulgaria Romania Turkey 50.4 48.5 46.3 61.3 65.0 53.4 55.7 47.7 53.4 40.4 48.2 51,7 42,4 41.5 52.0 44.0 40.1 62.4 35.1 44.6 52.3 33,4 52.4 35.4 32.6 29.5 26.8 39.0 26.4 30.1 36.8 18.7 26.9 84.3 74.5 84.5 37.7 47.3 83.9 78.4 63.7 105.3 80.9 72.7 64.0 78.6 92.5 64.7 83.5 76.3 58.5 65.0 80.1 69.9 84.9 84.5 81.9 67.6 36.3 54.4 53.5 47.6 39.4 33.3 22.9 33.6 0.8 1.2 1.1 0.7 0.5 1.1 0.7 0.8 0.9 1.7 0.7 1.1 1.5 1.0 0.8 3.1 1.4 1.7 3.9 1.7 2.3 4.5 2.4 2.3 4.1 4.1 6.3 4.4 11.2 20.0 8.3 16.4 9.5 99.5 99.0 98.5 98.5 98.5 98.5 98.5 99.5 98.5 99.5 99.5 98.5 98.5 98.5 98.5 99.6 98.5 97.2 99.8 97.7 92.3 98.5 97.3 92.5 99.3 99.7 100.0 98.4 99.6 99.8 98.5 98.2 85.5 98 99 103 94 94 112 88 83 73 92 89 114 107 82 91 83 91 74 89 92 76 76 81 93 82 88 73 68 85 86 77 68 60 4,981.6 10,327.5 3,185.5 2,841.8 1,323.6 5,402.8 8,991.7 237.7 3,271.7 4,421.6 3,155.8 533.9 8,121.4 1,179.8 3,269.8 539.7 3,434.5 236.4 409.6 1,112.7 391.4 2,189.1 222.0 386.2 1,048.3 163.6 1,516.0 41.2 94.8 181.6 10.1 87.2 10.6 4.5 6.6 5.3 11.1 6.9 3.1 6.2 6.2 1.3 5.5 3.9 1.8 8.4 1.9 2.8 2.8 0.3 0.8 3.4 3.0 4.5 0.2 0.0 2,5 1.1 0.0 0.0 0.3 0.6 0.4 0.0 0.1 0.0 50.2 50.6 50.9 51.3 55.1 42.2 34.9 54.5 36.7 40.9 41.2 48.2 30.9 34.7 31.4 37.6 27.1 29.4 32.8 15.2 20.9 25.6 15.5 19.2 15.8 23.0 16.0 18.0 14.5 13.3 8.1 8.1 7.0 0.84 0.78 0.81 0.69 0.74 0.86 0.86 0.72 0.94 0.74 0.76 0.75 0.75 0.81 0.76 0.78 0.72 0.79 0.62 0.77 0.79 0.70 0.86 0.71 0.61 0.43 0.50 0.59 0.46 0.45 0.47 0.27 0.39 0.99 0.99 0.99 0.99 0.99 0.99 0.99 0.99 0.99 0.98 0.99 0.99 0.99 0.99 0.99 0.97 0.99 0.98 0.96 0.98 0.98 0.96 0.98 0.98 0.96 0.96 0.94 0.96 0.89 0.80 0.92 0.84 0.90 0.99 0.99 0.99 0.97 0.97 0.99 0.95 0.94 0.90 0.97 0.96 0.99 0.99 0.93 0.96 0.94 0.96 0.89 0.96 0.96 0.87 0.91 0.92 0.93 0.94 0.96 0.91 0.88 0.95 0.95 0.91 0.88 0.77 0.55 0.61 0.55 0.64 0.54 0.53 0.60 0.47 0.48 0.56 0.52 0.42 0.63 0.45 0.51 0.44 0.47 0.38 0.44 0.47 0.46 0.45 0.36 0.42 0.44 0.35 0.43 0.31 0.34 0.36 0.25 0.33 0.25 0.59 0.60 0.60 0.60 0.65 0.50 0.41 0.64 0.43 0.48 0.48 0.57 0.36 0.41 0.37 0.44 0.32 0.35 0.39 0.18 0.25 0.30 0.18 0.23 0.19 0.27 0.19 0.21 0.17 0.16 0.10 0.09 0.08 0.79 0.79 0.79 0.78 0.78 0.77 0.76 0.75 0.75 0.75 0.74 0.74 0.74 0.72 0.72 0.72 0.69 0.68 0.67 0.67 0.67 0.66 0.66 0.65 0.63 0.59 0.59 0.59 0.56 0.54 0.53 0.48 0.48 Table 12: Digital Access Index for 2003 [261] Table 13 presents data for NRI index concerning 2005, the countries’ rank concerning 2005 and 2004 as well as their evolution. Final version May 2006 68 DAI Best Practices in Broadband Development Networked Readiness Index 2005 (evolution 2004-2005) Countries USA Singapore Denmark Iceland Finland Canada Taiwan Sweden Switzerland UK Hong-Kong The Netherlands Norway South Korea Australia Japan Germany Austria Israel Ireland New Zealand France Estonia Malaysia Belgium Luxembourg Portugal United Arabic Emirates Chile Malta Spain Czech Republic Cyprus Score 2005 2.02 1.89 1.80 1.78 1.72 1.54 1.51 1.49 1.48 1.44 1.44 1.39 1.33 1.31 1.28 1.24 1.18 1.18 1.16 1.15 1.14 1.11 0.96 0.93 0.87 0.80 0.56 0.54 0.52 0.51 0.47 0.36 0.36 Rank 2005 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 Rank 2004 5 1 4 2 3 10 15 6 9 12 7 16 13 24 11 8 14 19 18 22 21 20 25 27 26 17 30 23 35 28 29 40 37 Evolution 4 -1 1 -2 -2 4 8 -2 0 2 -4 4 0 10 -4 -8 -3 1 -1 2 0 -2 2 3 1 -9 3 -5 6 -2 -2 8 4 Final version May 2006 69 Best Practices in Broadband Development Networked Readiness Index 2005 (evolution 2004-2005) Countries Thailand Slovenia Tunisia South Africa Hungary Qatar India Slovakia Italy Greece Lithuania Turkey Poland Croatia Romania Bulgaria Score 2005 0.35 0.34 0.33 0.30 0.27 0.25 0.23 0.19 0.16 0.08 0.08 0.00 -0.09 -0.23 -0.23 -0.31 Rank 2005 34 35 36 37 38 39 40 41 42 43 44 48 53 57 58 64 Rank 2004 36 32 31 34 38 39 48 45 42 43 52 72 58 53 73 Evolution 2 -3 -5 -3 0 New entry -1 7 3 -1 -1 4 19 1 -5 9 Table 13: NRI index concerning 2005, the countries rank concerning 2005 and 2004 as well as their evolution [273] It is noted that Greece receded in the list of 2005 at one rank, concerning the list of the previous year (2004). Also it is reported [262] that Greece had receded 8 ranks between 2004 and 2003. Table 14 presents data concerning e - readiness index of Economist Intelligence Unit. The data concern the year 2005. It is noted that there are no data available for Iceland, Croatia, Cyprus, Luxembourg and Malta. Country Denmark USA Sweden Switzerland UK Finland The Netherlands Norway Australia Germany Final version 2005 e-readiness score (of 10) 8.74 8.73 8.64 8.62 8.54 8.32 8.28 8.27 8.22 8.03 May 2006 70 Best Practices in Broadband Development Country Canada Austria Ireland Belgium South Korea France Japan Spain Italy Portugal Estonia Slovenia Greece Czech Republic Hungary Poland Slovakia Latvia Lithuania Bulgaria Turkey Romania 2005 e-readiness score (of 10) 8.03 8.01 7.98 7.71 7.66 7.61 7.42 7.08 6.95 6.90 6.32 6.22 6.19 6.09 6.07 5.53 5.51 5.11 5.04 4.68 4.58 4.19 Table 14: E-readiness index of Economist Intelligence Unit concerning 2005 [181] Table 15 presents data for ITU’s DOI. The data concern the year 2005. It is noted that there are no data available for: Bulgaria, Greece, Estonia, Ireland, Iceland, Croatia, Cyprus, Latvia, Lithuania, Luxembourg, Malta, Norway, Portugal, Romania, Slovakia, Slovenia and Finland Access paths & device Affordability & Coverage Infrastructure Quality Countries Sweden Denmark South Korea Switzerland 0.95 0.96 0.95 0.95 0.93 0.86 0.69 0.92 0.70 0.71 0.66 0.66 0.18 0.22 0.44 0.19 0.69 0.69 0.68 0.68 Final version May 2006 DOI 71 Best Practices in Broadband Development Access paths & device Affordability & Coverage Infrastructure Quality Countries The Netherlands Japan USA Canada UK Germany Austria Belgium Australia France Italy Spain Czech Republic Hungary Poland Turkey 0.95 0.95 0.96 0.95 0.95 0.94 0.93 0.93 0.93 0.94 0.93 0.91 0.83 0.71 0.86 0.70 0.75 0.65 0.76 0.67 0.77 0.73 0.68 0.58 0.73 0.64 0.63 0.58 0.56 0.46 0.34 0.28 0.63 0.71 0.60 0.59 0.64 0.63 0.58 0.59 0.55 0.58 0.61 0.49 0.56 0.46 0.41 0.32 0.20 0.19 0.14 0.24 0.09 0.09 0.14 0.21 0.06 0.10 0.07 0.09 0.01 0.03 0.01 0.00 0.63 0.63 0.62 0.61 0.61 0.60 0.58 0.58 0.57 0.57 0.56 0.52 0.49 0.42 0.41 0.32 Table 15: ITU’s Digital Opportunity Index (DOI) [274] 3.2.3.2 Participation in European IST Projects The participation of organizations of various countries in European programs and projects concerning the broadband applications sector is presented in this section. The main action lines of IST programme concerning broadband are the following: «Broadband for All» [275]. «Mobile and Wireless Systems and Platforms Beyond 3G» [193]. Figure 10 presents the percentage of participation of various countries organizations in European R&D programs concerning the broadband applications sector. Final version May 2006 DOI 72 Best Practices in Broadband Development Belgium 2,8% Cyprus 0,1% Austria 1,7% Germany 17,1% Denmark 2,4% Finland 2,1% China 0,4% Switzerland 2,8% Japan 0,3% Russia 0,3% France 13,6% Brazil 0,1% Singapore 0,4% Croatia 0,1% Greece 5,1% Spain 11,0% Hungary 2,2% Turkey 0,3% USA 0,6% Norway 2,2% Israel 1,9% Romania 0,4% Australia 0,1% UK 9,6% Sweden 4,6% Portugal 3,2% Slovenia 0,8% Canada 0,3% Italy 9,3% Ireland 0,3% Luxembourg 0,3% The Netherlands 2,1% Poland 1,5% Figure 10: Percentage of participation of various countries organizations in European R&D programs concerning the broadband applications sector The following results are remarkable: None organization of Czech Republic, Estonia, Latvia, Lithuania, Malta and Slovakia participates in a project of the above mentioned action lines. The majority of the partners in the projects of the above mentioned action lines come from France, Germany, UK, Spain and Italy. Non EU countries (such as the USA, China, Singapore, Canada and Australia) participate in small percentage in some projects of the above mentioned action lines. The percentage of the participation of Greek partners in the projects of the above mentioned action lines is 5,1%. Final version May 2006 73 Best Practices in Broadband Development 3.2.3.3 Conclusions Figure 11 presents the simple correlation of 26 countries rank concerning broadband penetration and the indices DAI, e-readiness and NRI. It seems that the there is a strong correlation between these indices and the broadband penetration for many countries. For example, Greece is at the last rank (26th) concerning the broadband penetration and it is also in the last places of classification based on indices DAI (20th rank), e-readiness (21st rank) and NRI (24th rank). 30 25 20 15 10 5 0 Ne Ko th re a er la De n d nm s Sw itz ark er la Ca nd na d Fi a nl an Be d lg iu No m rw Sw a y ed en Ja pa n US A UK Fr an c Au e s Au tria st r G a lia er m an y Ita Po ly rtu ga Sp l Hu ain ng ar Ire y la n Cz ec Po d la h nd Re pu b S l lic ov ak Tu i a rk e G y re ec e e-readiness DAI NRI Broadband Th e Figure 11: Simple correlation of the countries rank concerning broadband penetration and the indices DAI, e-readiness and NRI Moreover we can say that there is no strong correlation between the participation of various countries’ organizations in European programs and the broadband penetration, because the most partners in the projects come from France, Germany, UK, Spain and Italy, which are not the leaders in the broadband penetration in Europe. 3.2.4 Other factors This section presents other factors that affect or are taken into account in the broadband services growth. 3.2.4.1 Technologies and factors that lead the broadband developments The main factors that lead the broadband developments could be summarised as follows: the structural changes in the ICT markets (e.g. higher level of competition, more privatizations, market deregulation, globalisation), the changes in the services and their use (e.g. rapid broadband penetration, VoIP, mobile telephony, 3G, WLAN, WiFi, WiMAX, digital television), the technological developments (e.g. creation of innovative, interoperable and open solutions for a IP environment, IPv6, optical networks, digitalisation, increase of PC’s computational power). Additional factors are the following: The user’s need for fast content access. Since the need for broadband infrastructure is led by the need for content access, the requirements for broadband services and infrastructure are particularly correlated, even if their levels of demand are different. Cost. The more important financial factor seems to be the income compared with the cost of broadband connection. E(electronic)-readiness. E-readiness constitutes an essential measure of the e-business environment of a country and is defined by a collection of factors that indicate how amenable a market can be to Internet-based opportunities. Some of these factors are: a) the connectivity and technology infrastructure, b) the business environment, c) the Final version May 2006 74 Best Practices in Broadband Development consumer and business adoption, d) the legal, policy, social and cultural environment, etc. Convergence is a key concept in development of a broadband infrastructure. Broadband networks become more viable from an economic point of view, if the same network can be used for a wide range of purposes and thereby replace a number of different networks. In addition, a broadband infrastructure may be based on an existing dedicated network infrastructure, e.g. a cable TV network, which is upgraded to support other types of broadband services as well. On the other hand, the availability of broadband access for a substantial number of customers will promote the development of converging services. For instance, interactive Internet TV depends on Internet connections with sufficient capacity to support on-line transmission of live pictures. Convergence is not only a technical challenge, but involves technical as well as market and regulatory issues, which have to be addressed in order to facilitate the objective of broadband for all. The technical development is often seen as the driving force enabling convergence. Although technology is an important factor indeed, this is not entirely true. It was possible to supply the same content at different platforms before the digitalization, but the technology developments has made this a lot easier now. In many countries (e.g. in the US) broadcast and telecommunications have been regulated by the same regulatory authority long before convergence of broadcasting and telecom technologies. On the other hand convergence in technologies does not per se lead to convergence in markets and in regulation. Figure 12 presents the broadband subscribers per 100 inhabitants in OECD countries, by technology (DSL, Cable, etc.) until June 2005. OECD Broadband subscribers per 100 inhabitants, by technology, June 2005 30 DSL 25 20 15 10 5 0 Cable Other OECD average K et ore he a rl a n D ds en m a Ic rk Sw ela i tz nd er la n C d an ad Fi a nl a Be nd lg iu m N or w Sw ay ed en U Ja ni te pa U ni d S n te t d ate Ki s ng do m Fr an c A e Lu us xe tria m bo Au urg st r G ali a er m an y Source: OECD Figure 12: Broadband subscribers per 100 inhabitants in OECD countries, by technology, June 2005 ([194]) In addition, Table 16 presents analytic data concerning broadband subscribers per 100 inhabitants in OECD countries, by technology, until June 2005. Country Korea Netherlands Denmark Iceland Switzerland Canada Finland Belgium Norway Final version DSL 13.9 13.6 13.2 21.0 12.7 9.4 16.3 11.0 14.8 Cable 8.9 8.9 6.1 0.3 7.2 9.7 2.2 7.3 2.5 May 2006 Ita Po l y rtu ga l N ew Sp ai Ze n al a H nd un ga ry Ire la nd C ze P ch ol a n Sl R ov ep d ak ub R li c ep ub Tu lic rk e M y ex ic G o re ec e N Other 2.7 0.0 2.4 0.4 0.4 0.1 0.2 0.0 0.9 Total 25.5 22.5 21.8 21.7 20.3 19.2 18.7 18.2 18.2 75 Best Practices in Broadband Development Country Sweden Japan United States United Kingdom France Austria Luxembourg Australia Germany Italy Portugal Spain New Zealand Hungary Ireland Poland Czech Republic Slovak Republic Turkey Mexico Greece OECD DSL 11.3 11.0 5.5 9.7 11.9 7.0 10.4 8.5 9.9 9.4 5.1 7.0 6.4 2.9 3.5 2.5 1.8 1.2 1.1 0.8 0.8 7.2 Cable 2.7 2.4 8.0 3.8 0.8 5.4 1.3 2.4 0.3 0.0 4.7 2.2 0.3 1.6 0.4 0.7 1.0 0.3 0.0 0.2 0.0 3.8 Other 2.5 3.0 1.1 0.0 0.0 0.1 0.0 0.1 0.1 0.6 0.0 0.1 0.3 0.1 0.5 0.1 0.0 0.1 0.0 0.0 0.0 0.8 Total 16.5 16.4 14.5 13.5 12.8 12.5 11.8 10.9 10.2 10.0 9.9 9.3 6.9 4.6 4.3 3.3 2.8 1.6 1.2 1.0 0.8 11.8 Table 16: Analytic data concerning Broadband subscribers per 100 inhabitants in OECD countries, by technology, June 2005 ([194]) The main highlights from the first half of 2005 show that the breakdown of broadband technologies in June 2005 is as follows (OECD, [194]): DSL: 61.2% Cable modem: 32.0% Other technologies: 6.8%, (e.g. fibre optics, LAN, satellite and fixed wireless) 3.2.4.2 Current trends The trend in the provision of services is characterized by an attempt for convergence, although this is not always feasible. The convergence includes at least five different dimensions: Convergence of services – the same content is supplied via different platforms. Convergence of networks – different services are supplied via the same network. Convergence of terminals – multifunctional terminals that can support different services (that might be supplied through different networks). Convergence of markets – the same companies supply their products and services in different sectors. Convergence of regulation – the same regulator and the same set of rules apply in different sectors. These dimensions involve not only technical and market aspects, but also regulatory issues. Concerning new technologies and terminal equipment a report, written by a team of analysts from the Strategy and Policy Unit (SPU) of the ITU [200], takes a look at the next step in "always on" communications. According to this report the new technologies, like smart Final version May 2006 76 Best Practices in Broadband Development computing, promise a world of networked and interconnected devices that provide relevant content and information whatever the location of the user. Everything from tires to toothbrushes will be in communications range, heralding the dawn of a new era, one in which today’s Internet (of data and people) gives way to tomorrow’s Internet of Things. Concerning IP networks, in a relative study of OECD [203], certain market analysts forecast that the entire public telephone network (PSTN) will evolve into a next generation network (NGN) during the next 10 years. These networks could be determined as “all – IP” networks or as “packet based integrated networks”. Therefore there is a clear tendency to shift to IP services. On the other hand, there is an obvious trend worldwide for a wide provision of VoIP services. The technological developments in IP, including IPv6, in the digitalisation and the increase of personal computers computing power, allow a combination of voice and multimedia transmission over the networks. The MUSE (Multi Service Access Everywhere – MUSE [282]) research European project, indicated a consensus, among many European telecommunication operators, that access devices should become IP-aware. In the long term, we are eventually going to a full-IPv6 Internet, where end-users receive 48-bit prefixes ([269], [270]). With regard to the wireless communications there is a tendency of increase of municipal wireless networks. United States constitute a characteristic case, where, in July 2005, 122 cities and counties counted in the US with operational networks, hotzones, muni-only networks and planned deployments while at the end February 2006, 186 cities and counties counted for the same reason [207]. Figure 13 presents the Wireless technology roadmap. Figure 13: Wireless technology roadmap Concerning satellite communications, the rapid deployment of concurrent access technologies and the extension of these technologies for video transport may lead to more rapid changes and evolution towards a longer term target vision which includes, among other things, a distributed architecture (the tendency is towards in space ad-hoc networks, which can be enabled by the production of smaller and much cheaper satellites) and all IP network in the sky. Final version May 2006 77 Best Practices in Broadband Development Concerning policies and regulatory frameworks, it is observed that there is a tendency of application of policies that promote the broadband growth and the improvement of the national telecommunications regulatory frameworks. An example is the European strategy i2010 [215]. Furthermore (concerning the regulatory frameworks), there is an evident concern in Europe for the insufficiency of the regulatory frameworks in the telecommunications. Further trends are the deregulation of the telecommunication markets and the Internet neutrality. 3.3 BEST PRACTICE ANALYSIS The high broadband penetration rate cannot alone stand as the criterion for considering a broadband strategy of a country as a best practice. There are more criteria and factors that have a major impact on the broadband penetration growth. Some of these factors are the economic, social, technological and cultural differences, between the various countries, as well as their different starting point concerning the application of concrete policies for broadband growth. Therefore, the choice of the best practices in broadband growth will be supposed to take into consideration all these important factors. Based on the above, this section focus on the definition of a best practice in broadband growth and the analysis of the respective best practices. 3.3.1 Definition of broadband growth best practice in The following paragraphs present the criteria and factors that have a major impact on the broadband penetration growth. 3.3.1.1 Criteria The criteria are the following: The cost of 1 Kbps per United States Dollars (USD) calculated in PPP. This criterion is referred as “A”. Annual average growth rates of Gross Domestic Product (GDP) per hour worked. This criterion is referred as “B” The Economist Intelligence Unit’s e-readiness rankings. This criterion is referred as “C”. The broadband penetration growth rate. This criterion is referred as “D”. Broadband subscribers per 100 inhabitants. This criterion is referred as “E”. Internet subscribers per 100 inhabitants. This criterion is referred as “F”. The Internet penetration growth rate. This criterion is referred as “G”. The investment in information and communication technologies (ICT): This criterion is the percentage of non-residential gross fixed capital formation in the total economy and it is referred as “H”. The level of competition in telecommunications sector. This criterion is referred as “I”. We can categorize the above criteria in three basic categories. The first category contains technological criteria such as D, E, F, and G. The second category contains financial criteria such as A, H and I. Finally, the third category contains social criteria such as B and C. Final version May 2006 78 Best Practices in Broadband Development 3.3.1.2 Data sources For quantifying the above criteria the sources used for each criterion are presented. (It should be noted that data for all the above criteria were available for the following countries: Australia, Austria, Belgium, France, Germany, Denmark, Greece, US, Japan, Ireland, Spain, Italy, Canada, Republic of Korea, United Kingdom, New Zealand, Norway, The Netherlands, Portugal, Sweden, and Finland): Criterion “A”: The data for the cost concern Internet access service by DSL in OECD member countries, including tax, in November 2004 (apart from The Netherlands, Belgium, United Kingdom, Austria, Germany, Portugal, Ireland and New Zealand, for which the available data apply for 2002) [179]. The cost of 1 Kbps/USD PPP was calculated as the quotient of: Monthly cost (USD PPP) / Speed of connection downstream (kbps) Criterion “B”: The data concern the Annual Average Growth Rates during 2000-2004 and they are based on GDP per hour worked. These data have been drawn from reference [230]. 6 Criterion “C”: These data concern the 2005 e-readiness score and they were drawn from the report «The 2005 e-readiness rankings, a white paper from the Economist Intelligence Unit» [181]. Criterion “D”: These data concern the broadband penetration growth rate during 20022005 and are based on reference [173] . Criterion “E”: These data concern the broadband penetration at June 2005 and they are based on OECD data. Criterion “F”: The data concern the Internet penetration at June 2005 and they are based on reference [291]. 6 Criterion “G”: The data concern the Internet penetration growth rate during 20002005 and they are based on [291]. 6 Criterion “H”: These data concern the ICT investment by asset in OECD countries, for the year 2003 (2002 for Australia, France, Japan, New Zealand, Norway and Spain; 2001 for Italy) and present the percentage of non-residential gross fixed capital formation in the total economy [231]. ICT equipment is defined here as computer and office equipment, as well as communication equipment; Software includes both purchased and own account software. Software investment in Japan is likely to be underestimated, due to methodological differences. Criterion “I”: These data used for the estimation of the level of competition in telecommunications sectors were drawn form ITU World Telecommunication Regulatory Database [247]. The level of competition in each country has been calculated as the average of the level of competition in each sector. The sectors are the following: Local services, Domestic long distance, International long distance, Wireless local loop, Data, DSL, Cable modem, VSAT, Leased lines, Fixed Wireless Broadband, Mobile, Paging, Cable TV, Fixed sat, Mobile satellite, GMPCS, IMT 2000, Internet services, and International gateways. The level of competition in each sector is denoted as: - 0 in case of monopoly - 1 in case of duopoly - 2 in case of partial competition - 3 in case of full competition According to the above the following results are shown in Table 17. Final version May 2006 79 Best Practices in Broadband Development Country Australia Austria Belgium Canada Denmark Finland France Germany Greece Ireland Italy Japan Rep. of Korea The Netherlands New Zealand Norway Portugal Spain Sweden UK USA I 3.000 3.000 2.750 3.000 2.833 2.882 3.000 3.000 2.722 3.000 3.000 3.000 2.923 2.417 3.000 2.813 3.000 3.000 3.000 2.824 3.000 Table 17: Level of competition in telecommunications 3.3.2 Identification practices of best and good Based on the above criteria, the following equation is used for defining both Best and Good Practices: Score= 2*(Α) + (Β)+2*(C)+3*(E)+2*(F)+2*(H)+2*(I) (1) Where (Α), (Β), (C), (E), (F), (H), and (I) are the normalized values (in a range of 1 to 10) for the values of criteria Α, Β, C, E, F, H, and I respectively. As it appears from the above equation (1), we consider criterion E (that is the broadband penetration) to have high importance as it is considered as the most indicative factor for the calculation of the best practices for the broadband growth. Therefore, we multiply this factor by 3 (weight 3). Final version May 2006 80 Best Practices in Broadband Development Furthermore, criteria A, C, F, H, and I are considered to have equal (among them) importance to the broadband penetration growth. However, we consider that these indicators have lower importance than indicator E and higher than indicator B. Therefore, they are calculated with weight 2. Indicator B is considered as a depended factor and therefore it is assigned with weight 1. It should be mentioned that equation (1) does not take into account indicators D and G. If both these factors have been taken into account in equation (1), then we would subsidize the countries with minimal broadband penetration in 2003 and minimal Internet penetration in 2000, even though they have not presented a good rate of broadband and Internet penetration. Both indicators D and G are taken into account in the Good Practice Index, as explained later in this section. In this context, we define as best practice the practice of a country with Score bigger than the sum of the average of all countries’ scores plus the Number of criteria. The average in our case is calculated in 87, and the number of criteria is 14. Therefore a best practice is defined for a country with: Score > 100 Furthermore, we define as good practice the practice of a country with: Score > Average of scores of all countries and D+G>AVERAGE (D1,…,Dn)+AVERAGE(G1,…,Gn) => D+G>7 Where D1,…,Dn are the scores of countries 1 to n for criterion D, and G1,…,Gn are the scores of countries 1 to n for criterion G. The above equation indicates that we can consider as good practices the practices of the countries that have a score higher than the average score and they furthermore present a rapid growth of broadband and Internet penetration (criteria D and G respectively). Table 18 presents the results and the Score for each country, based on the above equations and the normalized values for each criterion [i.e. (A), (Β), (C), (E), (F), (H), and (I)]. According to the data presented in Table 18 the practices of the following countries can be identified as best practices: Denmark United States Japan Canada Republic of Korea. Furthermore, the practices of United Kingdom and the Netherlands are identified as good practices. The higher Score has been achieved by Republic of Korea, while the lower Score has been achieved by Greece. A considerable result is that Norway, Sweden and Finland are not presented as best practices neither as good practices, although their score is higher than the average score (91, 100 and 99 respectively). However, this can be explained by the value of indicators D and G for these countries, which indicate that they presented small broadband and Internet penetration growth rates. In other words, it can be said that there is a maturation concerning broadband growth in these countries. Therefore, these countries are not considered as best practices. Final version May 2006 81 Best Practices in Broadband Development Comparing the results of Table 18 with ECTA Regulatory Scorecard 2005 (Figure 13), there is a relation between the effectiveness of the telecommunication regulation frameworks and the Score in Table 18. For example the practices of Denmark and UK, which constitute best and good practices respectively, present a high score in the Regulatory Scorecard 2005 as well. Moreover, Germany and Greece that both appear with low Scores in Table 18 (85 and 56 respectively), they also present low scores (220 and 218 respectively) in the Regulatory Scorecard 2005. Score card 2005 UK Denmark France Austria Ireland Italy Sweden Portugal Netherlands Spain Hungary Belgium Czech Republic Poland Germany Greece 0 100 200 244 230 220 218 300 400 500 349 339 327 311 311 300 296 291 286 281 398 440 Figure 14: ECTA Regulatory Scorecard 2005 (Source: ECTA [218]) Moreover, only one European country (Denmark) could be regarded as best practice, while other two could be considered as good practices (The Netherlands and UK). However, in the relative classification four countries (Belgium, Norway, Sweden and Finland) have high rank (having the following score respectively: 91, 91, 100 and 99). Final version May 2006 82 Best Practices in Broadband Development Α (1) Australia Austria (2) Belgium (2) France Germany (2) Denmark Greece (4) USA Japan Ireland (2) Spain Italy Canada S. Korea UK (2) N. Zealand (2) Norway The Netherlands (2) Portugal (2) Sweden Finland 5.76 17.53 77.83 18.63 35.96 25.29 8.91 55.66 241.19 12.98 4.42 13.83 73.96 97.61 18.84 9.49 18.32 18.06 9.84 8.84 8.16 (A) (10) 0 1 3 1 1 1 0 2 10 1 0 1 3 4 1 0 1 1 0 0 0 B (3) 1.76 1.41 1.47 2.22 1.53 1.42 3.78 2.43 1.94 3.75 1.20 0.20 1.49 3.86 2.26 1.28 2.43 0.65 0.63 2.51 2.24 (B) 5 4 4 6 4 4 10 6 5 10 3 1 4 10 6 3 6 2 2 6 6 C 8.22 8.01 7.71 7.61 8.03 8.74 6.19 8.73 7.42 7.98 7.08 6.95 8.03 7.66 8.54 3.46 8.27 7.82 6.90 8.64 8.32 (C) 9 9 9 9 9 10 7 10 8 9 8 8 9 9 10 4 9 9 8 10 10 D 505.56 123.21 109.20 357.14 148.78 162.65 700.00 110.14 168.85 1333.33 210.00 488.24 58.68 16.97 486.96 331.25 333.33 221.43 296.00 103.70 240.00 (D) 4 1 1 3 1 1 5 1 1 10 2 4 0 0 4 2 2 2 2 1 2 E (5) 10.92 12.54 18.23 12.76 10.23 21.78 0.84 14.51 16.42 4.32 9.26 9.95 19.23 25.50 13.53 6.95 18.21 22.45 9.88 16.49 18.72 (E) 4 5 7 5 4 9 0 6 6 2 4 4 8 10 5 3 7 9 4 6 7 F (6) 56.80 68.20 48.70 43.00 59.00 69.40 33.70 68.10 60.90 50.70 38.70 48.80 67.90 65.20 62.90 76.30 67.80 65.90 58.00 74.90 62.50 (F) 7 9 6 6 8 9 4 9 8 7 5 6 9 9 8 10 9 9 8 10 8 G (7) 121.40 112.00 155.00 208.40 103.00 92.90 280.00 113.80 65.80 162.80 218.20 118.70 72.40 71.10 145.50 285.50 42.70 177.10 143.60 68.00 70.50 (G) 4 4 5 7 4 3 10 4 2 6 8 4 3 2 5 10 1 6 5 2 2 H (8)&(9) 22.6 13.2 19.9 13.7 15.5 19.6 10.8 33.2 13.6 8.1 14.1 15.5 18.4 16.4 21.8 13.6 12.6 17.8 13.6 26.6 26.6 (H) 7 4 6 4 5 6 3 10 4 2 4 5 6 5 7 4 4 5 4 8 8 I 3.00 3.00 2.75 3.00 3.00 2.83 2.72 3.00 3.00 3.00 3.00 3.00 3.00 2.92 2.82 3.00 2.81 2.42 3.00 3.00 2.88 (I) 10 10 9 10 10 9 9 10 10 10 10 10 10 10 9 10 9 8 10 10 10 Score 83 85 91 81 82 101 56 106 103 74 69 73 102 114 91 68 91 93 74 100 99 Result Best practice Best practice Best practice Best practice Best practice Good practice Good practice Table 18: Calculation of best and good practices Final version May 2006 83 Best Practices in Broadband Development Legend: 1. Internet access by DSL in OECD member countries, including tax, November 2004. OECD, Communications Outlook 2005. [179] 2. Concerning monthly cost (USD PPP), the offer includes 1 Gbyte or more data transfer and capacity greater than 256 Kbps. Other offers include unlimited data transfer. 3. The data concern the Annual Average Growth Rates during 2000-2004 and they are based on GDP per hour worked. Source : OECD productivity database, http://www.oecd.org/dataoecd/30/14/29861140.xls [230] 4. The data for the broadband penetration growth rate concern the period 2003-2005 5. Broadband subscribers per 100 inhabitants in OECD countries, by technology, June 2005. Source OECD [194] 6. The data concern the Internet penetration (%). Source: http://www. internetworldstats.com [291] 7. The data concern the Internet penetration growth rate during 2000-2005. Source: http://www.internetworldstats.com [291] 8. The data concern the ICT investment by asset in OECD countries, 2003 (2002 for Australia, France, Japan, New Zealand, Norway and Spain; 2001 for Italy) and present the percentage of non-residential gross fixed capital formation in the total economy. ICT equipment is defined here as computer and office equipment and communication equipment; Software includes both purchased and own account software. Software investment in Japan is likely to be underestimated, due to methodological differences. 9. 2002 data for Australia, France, Japan, New Zealand, Norway http://puck.sourceoecd.org/vl=3259653/cl=22/nw=1/rpsv/scoreboard/data/d01.xls [231] and Spain; 2001 data for Italy. Source: 10. (A), (B), (C), (D), (E), (F), (G), (H), and (I) are the normalized values for each criterion (A, B, C, D, E, F, G, H, and I respectively) in a scale of 1-10 Final version May 2006 84 Best Practices in Broadband Development 3.3.3 Objectives Best and good practices analysis This section investigates and analyses the best and good practices per country, for the above countries in the following points: Objectives’ achievement schedule Synergies between private-public sector for the development of broadband infrastructures and services / Prioritization of action lines Priorities for citizens and enterprises Incentives for broadband growth Support of eEurope 2005 and Lisbon objectives Support of initiatives for broadband content development Support of R&D projects and programs for broadband services growth Final version May 2006 85 Best Practices in Broadband Development 3.3.3.1 Objectives Korea Korea Knowledge-based society and economy, where each citizen will have access to a personal computer. The future of Korea depends on its capability to transform itself into a knowledge-based society and economy. Information and communication technologies are viewed as the path towards higher economic growth, better incomes, and global competitiveness. Acceleration of ICT infrastructure’s development with collaboration of all ICT stakeholders to increase productivity, employment and exports. Policy Elements Objectives’ achievement schedule The Korean government articulated an action plan in 1997, entitled Cyber Korea 21, when the Ministry of Information and Communications articulated a vision of a ‘‘knowledge-based economy’’ where every citizen would have access to a personal computer. The government would expedite development of an information infrastructure and all stakeholders in ICT would work together to increase productivity, employment and exports. The Korean Digital Divide Act was established in 2001 and revised in 2002. It generated the five-year master plan for closing the digital divide, annual action plans, the “Digital Divide Closing Committee”, and finally it launched the Korean Agency for Digital Opportunity and Promotion (KADO). Synergies between private-public sector for the development of broadband infrastructures and services Prioritization of action lines The broadband policies are connected very closely with the industrial policies and the Research and Development policies The Korean government recognized that the scale and ambitiousness of its vision would require several types of initiatives and financial inducements including: Efforts by regulatory authorities to encourage infrastructure investment by incumbents and market entrants (OECD, 2004) Regulatory parity among operators with an eye toward promoting facilities-based competition, but also market entry by Final version May 2006 86 Best Practices in Broadband Development Policy Elements Korea operators who might need to access some facilities of the incumbent. Direct underwriting, loans, favourable tax treatment, and other types of financial support for construction of new high capacity backbone digital, broadband networks. Financial support for research, development and technology demonstration projects; subsidies for purchase of personal computers by low-income citizens. Promotion of digital literacy including the ability to use information technologies for interacting with government and for acquiring information, communications and entertainment services. Supporting electronic government, education, e-commerce healthcare and other types of ICT-mediated services. Other actions are the following: 2000-2003: “10 Million People IT Education project”. 2005-2009: the second IT Education Program for 5 million underprivileged citizens. 430 billion Won investment by the government in expanding the involvement of regular educational organisations in information and communication education, as well as cooperation with overseas schools and universities. Retraining of industrial workers for bridging the digital gap among the population, and for developing a highly skilled workforce for the IT field. Provision of tax exemptions and subsidies in high tech enterprises. Priorities for citizens and enterprises Investments for education in the sector of information and communications technology, for the establishment of technical high school that will be specialised in the software development, as well as for the basic research in the relative subjects. Training in the computers sector and basic education directed to the first and secondary education schools, to the housewifes population, to the army and to the handicapped people. Final version May 2006 87 Best Practices in Broadband Development Policy Elements Incentives for broadband growth Korea The Ministry of Communications and Information has indicated to the operators that it would be good if the broadband prices would be low. 30 to 50 % discounts in telecommunication service charges offered to low-income and disabled users. Detailed plan to implement number portability in fixed telecommunication services in January 2001 and in the mobile market in January 2002. Local loop in Korean networks has been unbundled and it is open for competition by default. Provision of low interest loans for communications infrastructure development in less-advantaged regions, as well as funding for Information Society–related R&D. Creation of the Informatisation Promotion Fund: This fund has rotated license auction fees and telecom taxes back to telecom infrastructure development. Support of initiatives for broadband content development Support of R&D projects and programs for broadband services growth Content development for disabled persons and elderly people. Creation of the “University Information and Communication Research Center”. Creation of the “Communication University Overseas Scholarship Program”. Support of Research and Development that is related with the Information Society. 3.3.3.2 Objectives Canada Canada The mains objectives of Canada were: Policy Elements Final version May 2006 88 Best Practices in Broadband Development Policy Elements Canada to be the most connected country in the world, to extend Broadband in rural areas, to provide cheaper prices in rural areas. Objectives’ achievement schedule The Canadian government launched a series of early ICT development initiatives articulated in the 1990s. The Ministry of Industry articulated a strategy to make Canada the most connected country in the world and to achieve ICT development primarily through the promotion of on-line access, developing ICT-intensive ‘‘smart communities,’’ creating incentives for the creation of indigenous content for transmission via the Internet, expediting electronic commerce and delivering electronic government services. In 2001 a National Broadband Taskforce specified a strategy for achieving ubiquitous access to broadband networks and services by 2005. More specifically, the Task Force established several access priorities including the view that all communities, including small businesses and residential users, should have Internet access at throughput speeds in excess of 1.5 Mbps, the rural access rates should not exceed urban rates, and the local broadband infrastructure should extend to schools, public libraries and other public access points. Synergies between private-public sector for the development of broadband infrastructures and services Prioritization of action lines The Canadian NRA created the Interconnection Steering Committee (CISC) which provides a forum for interested parties with the help of CRTC staff to resolve local competition implementation issues of a technological, operational or administrative nature. In 2001 the National Broadband Task Force (NBTF) was created in order to provide advice as to how broadband can be extended to all Canadians. After that, various initiatives and actions were announced aimed at the broadband growth in rural areas. Furthermore, the satellite technology was supported and the demand was aggregated in order to achieve lower costs of broadband connection in the rural regions. The Community Access Program (CAP) aims to establish free Internet access points in schools, hospitals and other public centers. Priorities for citizens and enterprises Final version May 2006 89 Best Practices in Broadband Development Policy Elements Incentives for broadband growth Canada There are two alternative models which aim at increasing rural broadband penetration rates in Canada: (a) A top-down infrastructure government support model that creates broadband network and service investment incentives. (b) A bottom-up ‘‘community aggregator model’’ where government funded pilot programs and the delivery of electronic government services in order to stimulate the generation of sufficient demand to use existing network capacity and the construction of new facilities. Support of initiatives for broadband content development Support of R&D projects and programs for broadband services growth The Ministry of Industry supported the development of ICT-intensive ‘‘smart communities,’’ creating incentives for the creation of indigenous content for transmission via the Internet, expediting electronic commerce and delivering electronic government services. Broadband for Rural and Northern Development Pilot (BRAND) aims at connecting unserved areas and unconnected communities: Not-for-profit organizations in remote communities can apply for funding for the making of a business plan. Establishment of the research network “Canarie”. Initiative “Broadband Marketplace” where Communities can find assistance to develop and/or implement their broadband business plans and can post requests for proposals for broadband services. Provincial program “the Villages branches du Quebec”, which falls in the (second) demand aggregator model aims to use its existing network in connection with – previously unconnected – local and regional facilities. The main idea is to aggregate demand and use public institutions as demand initiators allowing small businesses and residential users to “add their own demand”. 3.3.3.3 Objectives Japan Japan Japan considers the broadband networks as vital instruments for its future growth. The main objectives are the following: Increase of computer awareness. Development of broadband infrastructure. Policy Elements Final version May 2006 90 Best Practices in Broadband Development Policy Elements Japan Development of broadband services. E-government. Research and Development. Bridging the digital divide. Objectives’ achievement schedule 2001: the year that Japan considered it as the broadband kick-off year. 2001-2005: “e-Japan” plan was announced, with the target to create the most advanced broadband network environment by 2005. After 2005: “U-Japan” plan (continuation of “e-Japan”), which aims to provide ubiquitous access to broadband services, but with more focus on the development of applications than in the “e-Japan” programme. Synergies between private-public sector for the development of broadband infrastructures and services Prioritization of action lines The Ministry emphasised that the private sector had to be the driving force, with the government limited to establishing the right framework for the private and the non-private sector operation (e-government, R&D and overcoming the digital divide). Local governments engage in cooperative ventures in order to offer broadband to their citizens. To enable rapid and focused policy implementation related to establishing advanced information society, the Government of Japan established the Cabinet-level Headquarters on IT Strategy (led by the Japanese Prime Minister) and enforced the Basic Law on the Formation of an Advanced Information and Telecommunications Network Society (usually called the “IT Basic Law”) in January 2001 that prescribes the Headquarters framework and the Priority Programmes. The Headquarters announced the “e-Japan Strategy” in January 2001 . The Strategy sets an ambitious target for the country which should be the most advanced IT state in the world within five years. In March 2001, it revealed the “e-Japan Priority Policy Programme” to clarify specific action plans in the Strategy. It also set five policy areas that Japan should focus on. These areas are the following: infrastructure, human resources, Final version May 2006 91 Best Practices in Broadband Development Policy Elements Japan e-commerce, e-government and network security. This programme is reviewed every year. It also produces an annual e-Japan Programme that reflects both the Strategy and the Priority Programme implementation in the form of measures of each Ministry in each fiscal year. Priorities for citizens and enterprises The central government, actually, supports the roll-out of broadband facilities by offering attractive financing schemes, tax incentives and guarantee of liabilities. All schools have been connected to the Internet. Concerning human resources development, the Headquarters issued the “IT Human Resource Development Plan” in March 2002. This Plan aims to: enhance ICT education in schools, offer people chances to study ICT for using them in their daily life, and develop human resources with special ICT knowledge, skills and creativity. Incentives for broadband growth Main incentives are the following: Opening of utility facilities such as poles, ducts and conduits. Facilitation of high-speed Internet access from apartment complexes. Opening of unused optical fibres to private use. Usual regulatory measures such as unbundling, asymmetric regulation, frequency allocation, etc. Support of initiatives for broadband content development The success in infrastructure roll-out has not yet been matched with content production. Hence, the continuation of e-Japan (UJapan), will provide ubiquitous access to broadband services, and it will be more focused on the development of applications than in the previous programme. The following content services are widely used in Japan: Online games Final version May 2006 92 Best Practices in Broadband Development Policy Elements Japan Digital photos Electronic publishing Video over broadband IP telephony Support of R&D projects and programs for broadband services growth (no data available) 3.3.3.4 Objectives Denmark Denmark In 2000 Denmark released its digital strategy [220] including the following goals: Life-long Learning for All. Denmark as an E-commerce Nation. More Effective and Cheaper Service with Digital Administration. Danish Internet Initiatives. IT Lighthouses in Denmark. Furthermore, the Ministry of Science, Technology and Development in 2002 edited a report (“Denmark’s IT Status 2002 [221]”) and defined seven policy areas which are important for the telecommunications growth in Denmark. The new goal is the appointment of Denmark as a pioneer country in ICT. In addition, based on a report [222] for 2004, the current goals are the following: To ensure strengthened, effective and equal competition in the telecommunications market both for the benefit of business Policy Elements Final version May 2006 93 Best Practices in Broadband Development Policy Elements Denmark and private users. To facilitate the development of digital services and content. To make sure that the consumers have knowledge and confidence in using ICT and will therefore be able to make rational consumer choices. To support the development of an open and effective public sector using coherent e-government. Objectives’ achievement schedule Denmark was foreseen to be one of the five countries in the world which have the largest e-commerce turnover per inhabitant in 2003 and be able to offer competitive provisions (δεν είναι κατανοητό τι θέλουμε να πούμε εδώ) for enterprises in the network society. At the latest by 2003, Danish public administration was foreseen to provide the best and most efficient public service in the Nordic countries with the help of digital administration. Furthermore, participation in democracy, open decision-making processes and Danish cultural activities were foreseen to be supported by new and attractive Internet services for all citizens by 2003 at the latest. Finally two IT lighthouses were to be established in Denmark, to promote, from different perspectives, IT development and IT use in the network society. Prices for broadband have remained rather high in Denmark, compared with the bandwidth offered. This has stimulated the creation of a number of alternative providers, such as neighbourhood organisations, that have set up their own networks either based on existing cable infrastructures or WLAN. Also, power companies are active in this area. They are rolling out optical fibres to a large number of households, and will thereby be able to offer an alternative to the access network of TDC. The Danish Government has been very active to develop e-Government services, which also has contributed to the demand. Using the findings of “Denmark’s IT Status 2002”, the Government has initially identified seven policy areas important to a favourable IT and telecommunications development in Denmark. Good results in these areas will place Denmark as a leading IT nation, and will be a good investment in Denmark’s future. The seven areas are the following: More IT in Danish business and industry. A competitive telecommunications sector. Strong IT competences in Denmark. An IT-based public sector. Synergies between private-public sector for the development of broadband infrastructures and services Prioritization of action lines Final version May 2006 94 Best Practices in Broadband Development Policy Elements Denmark IT security. Useful content on the Internet. Danish IT presence in the EU. Priorities for citizens and enterprises Alternative networks’ development characterized by a converged IP platform that is used to offer different types of content in an affordable and/or efficient way by: Establishment of LAN in residential areas using a combination of existing infrastructure and establishment of new cables and network components. Extension of LAN technology to MAN and WAN, resulting in bypassing traditional telecom operators. Establishment of wireless IP based network in residential and work environments using, e.g., WLAN. Establishment of wireless hot spots in pubic and private places. Establishment of wireless networks in larger geographical places. Incentives for broadband growth Main incentives are the following: Increase of the level of competition in the telecommunications market. Local loop unbundling. Deregulation of optical networks. Finance bill, that allows the employers to offer computers as well as broadband connections to their employees without any tax burdens. Offer of cheap telecommunications services and access to the Internet. High quality of telecommunications services and access to the Internet. Free choice of alternative technologies. Final version May 2006 95 Best Practices in Broadband Development Policy Elements Support of initiatives for broadband content development Denmark Denmark promotes the growth of digital content in order to provide effective electronic government. More particularly a report [224] refers that: The public sector must provide coherent services to citizens and businesses. By the end of 2006, at least 60% of citizens and 95% of businesses should use e-government services, and the level of user satisfaction with such services must have increased. The public sector must work and communicate digitally. By the end of 2006, at least 80% of all public authorities should receive at least a quarter of all documents sent by other public authorities in digital form, and at least 60% of all public authorities should be able to communicate securely in digital form with other public authorities, citizens and businesses. Support of R&D projects and programs for broadband services growth (there are no available data) 3.3.3.5 Objectives United States United States Broadband initiatives and programs are adopted on federal and state level, with state level measures However, the main objectives defined by the President of USA are the following: “This country needs a national goal for universal, affordable access of broadband technology by 2007”, (President George W. Bush, Albuquerque, NM, March 26, 2004 Government’s). Elimination of regulating details that prevent the broadband growth. “The other promising new broadband technology is wireless. The spectrum that allows for wireless technology is a limited resource… and a wise use of that spectrum is to help our economy grow, and help with the quality of life of our people” (President George W. Bush, US Department of Commerce, June 24, 2004). Policy Elements Final version May 2006 96 Best Practices in Broadband Development Policy Elements United States Exploitation of the possibilities of «Broadband Over Power Lines» technology. Objectives’ achievement schedule The following actions have been initiated in order to carry out the above objectives: Exploitation of the possibilities of the "Broadband Over Power Lines" technology: FCC in collaboration with NTIA [278] announced regulations for the adoption of technology BPL on 14 October, 2004. As a result of this action, today, a lot of users develop pilot and functional BPL systems. More radio spectrum is available for wireless broadband technologies. Concerning the elimination of regulating details that prevent the broadband growth, the following measures have been undertaken: (a) The provision of FCC’s disposition for the deregulation of broadband infrastructures was supported, (b) there were actions for ugrading the regulation concerning the rights-of-way. On April 26, 2004, President Bush announced a series of specific measures to inspire a new generation of American innovation – policies to expand access to high-speed Internet in every part of America. The President believes that lowering the cost of broadband will increase its use and availability: (a) Making broadband access tax-free will lower the cost to consumers. The President is calling on Congress to pass legislation making access to broadband permanently tax-free; (b) Working to enable the rollout of new broadband technologies. The Administration is acting aggressively to make additional spectrum available for wireless broadband and to create the technical standards needed to enable the widespread and responsible deployment of broadband over power lines. (c) The Federal Government must do its part to remove hurdles that slow the deployment of broadband. Broadband providers often have to cross or use Federal lands to reach consumers. To ensure that broadband providers can get timely responses from the Federal Government, the President has directed agencies to reform their practices to simplify and standardize their rights-of-way processes. Synergies between private-public sector for the development of broadband infrastructures and services Prioritization of action lines In the United States there is a failure to appreciate the need to blend and integrate both private sector entrepreneurialism and public sector stewardship [227]. The lack of success in the governmental incubation efforts, in broadband market penetration, stems largely from this failure Various broadband initiatives and programs are adopted on federal and state level, with state level measures outnumbering those on federal level. Final version May 2006 97 Best Practices in Broadband Development Policy Elements United States The largest Federal program supporting broadband development in rural and remote areas is the Federal Rural Broadband Access Loan and loan Guarantee Program started in 2003. About 1.4 billion US $ in loans and loan guarantees to provide broadband services in rural areas have been made available on Federal level. The program focuses on connection speeds of 200 Kbps and more, provided to communities with less than 20,000 inhabitants. Another Federal grant program was available for providers of broadband transmission services on a “community oriented connectivity” basis. Focus lies on connecting rural schools and other education centers, health care providers, other public institutions, as well as residents and businesses. In 2002, an amount $ 20 million was made available through the program. Most States have initiatives in place which focus on network rollout and on funding this expansion. Most of these networks are foremost for educational, governmental and medical usage, but in some cases private parties can connect as well. Priorities for citizens and enterprises Incentives for broadband growth Concerning the citizens, the US strategy aims at as low access prices as possible. Concerning the operators, the US strategy aims at improving the access to rights-of-way. Some of policies applied in United States regarding Broadband are the following: the setting up of facilitators (Broadband Authorities/Agencies), tax credits, state-owned (research and educational) networks, demand aggregation programs, funding programs, and public/private partnerships. Support of initiatives for broadband content development The US recognizes that the Internet and the electronic commerce could strengthen the broadband penetration. The US supports the wider distribution of information and content over the Internet, but recognizes also the consumers’ concerns with regard to the access to inappropriate content. With regard to the inappropriate content, the US supports a self-adjustable approach that is supported by advanced awareness of the users. A example of such initiative is the "GetNetWise" [279]. It is a web site that represents the collective efforts of a broad-based coalition of companies, public interest organizations, non-profits and trade associations all committed to empowering Final version May 2006 98 Best Practices in Broadband Development Policy Elements United States Internet users with the tools they need to keep their Internet experience positive, safe and secure. Support of R&D projects and programs for broadband services growth Broadband initiatives and programs are adopted on federal and state level, with state level measures outnumbering those on federal level. 3.3.3.6 Objectives United Kingdom United Kingdom The main vision is that if the UK is to thrive in the future, to succeed in competitive markets and to enjoy better and better services, all of its people need to be confident and comfortable, living and working in a digital world. Information and communication technology (ICT) has become all pervasive in the working lives and increasingly in the homes as well. How the people can adopt and use this technology will be crucial for the future prosperity of the country. Other goals are the following: To create a country at ease in the digital world. Where all have the confidence to access the new and innovative services that are emerging, whether delivered by computer, mobile phone, digital television or any other device, and where they can do so in a safe and secure environment. To bridge the digital divide especially with some groups largely excluded from benefiting from access to the Internet either due to the cost or because they do not see the relevance of the Internet to their needs. It should be promoted to these persons how ICT and broadband particularly can transform their lives. To make the UK a world leader in digital excellence with public services that are even more responsive, personalised and efficient than the leading companies that have so successfully deployed the Internet to serve their customers. To protect consumers from the dangers of the “darker side” of the digital world. To use ICT to minimise social exclusion. Policy Elements Final version May 2006 99 Best Practices in Broadband Development Policy Elements United Kingdom To ensure that the UK is the first nation to succeed in closing the digital divide. Objectives’ achievement schedule Since 1999, the main vision was the creation of a ‘digitally rich’ UK. Since 1999 there has been a transformation in the way the UK economy and civil society have embraced new technology and the UK has moved from bottom of the pack into the premiership of digital excellence. UK is the world-leader in digital TV and it has one of the most advanced and most competitive mobile phone markets in the world with 3G starting from 2005 to make a real impact. UK implemented the EU telecoms framework rapidly and in full, and with the advent of Ofcom it remains the leader in regulatory – and deregulatory – innovation. By the summer of 2005 over 99% of the population had broadband services available. The goal is to bridge the digital divide until 2008. Synergies between private-public sector for the development of broadband infrastructures and services The Government will launch, in collaboration with industry, a “Digital Challenge” awarded to a local authority and its partners – both public and private – to establish by 2008 universal local access to advanced public services delivered through and powered by information technology. The winner will have the opportunity to demonstrate the ability to transform service delivery through a holistic use of technology to deliver truly modern services for modern citizens. The Government will work with the ICT industries to create the safest possible online environment. Backed by the police, charities and the industry, the Home Office will set up a multi-agency national Internet safety centre to reassure the parents (about the internet usage by their children) as well as to deter criminals targeting the UK for Internet crime. The Government will work with the banking industry to make that sector a market leader in terms of online authentication. The Department of Trade and Industry will explore with industry how best to deal with unsuitable material, including more effective use of parental controls, firewalls and web blocking technology and to raise awareness on best practice in operating safely online. Prioritization of action lines UK has established eight (8) actions in order to achieve the above goals: Action 1: Transform learning with ICT. Action 2: Set up a “Digital Challenge” for Local Authorities to achieve both excellence and equity in ICT. Action 3: Make the UK the safest place to use the Internet. Final version May 2006 100 Best Practices in Broadband Development Policy Elements United Kingdom Action 4: Promote the creation of innovative broadband content. Action 5: Set out a strategy for transformation of delivery of key public services. Action 6: Ofcom sets out regulatory strategy. Action 7: Improve accessibility to technology for the digitally excluded and ease the technology use for the disabled. Action 8: Review the digital divide in 2008. Actions 1, 2, 3 and 4 aim at making the UK a world leader in digital excellence. Actions 5 and 6 aim at constructing a robust strategy to achieve the country’s vision. Actions 7 and 8 aim at tackling social exclusion and bridging the digital divide. Priorities for citizens and enterprises There is a clear rationale for government involvement in tackling the digital divide and minimising social exclusion; ensuring the correct national skills framework; regulating where there is market failure; and delivering responsive public services. There is now a strong rationale for a new emphasis in public policy towards harnessing the economic and social returns on these investments and doing so in a way which benefits all parts of society. Through the new national procurement scheme, the additional funding for schools in deprived areas and the E-Learning Foundation’s ‘Connect and Learn’ scheme, the state will aim to give parents and pupils the opportunity to benefit from access to computers at home. As part of the home IT leasing scheme for schools, the government will ensure that it equips all laptops and equipment leased to children with AV, firewall and parental controls as standard. There is a range of measures to improve accessibility to technology for the digitally excluded and ease of use for the disabled, including giving all attendants of basic skills courses an email address and account. There are further measures towards closing the digital divide by building on the network of UK Online centres and other communal access points – giving adult learners the support, incentives and skills they need to make the most of ICT. Measures toward Improvement of the accessibility of all government websites for people with disabilities, and people reluctant to use the Internet, by developing a radically simple interface. Incentives for broadband growth The Government will ensure that ICT is embedded in education to improve the quality of learning experience for all, re-engage those who have been disaffected and equip children with skills increasingly essential in the workplace. All learners will have their own virtual learning space where they can store and access their work. Final version May 2006 101 Best Practices in Broadband Development Policy Elements United Kingdom The Government will ask Ofcom to take account of the prospects for home broadband take up, with a particular focus on uptake amongst the more disadvantaged. The Government will also ask Ofcom to monitor take up across social groupings and age bands to give a clear picture of the development of the market and the prospects for widening access to broadband technologies. The role of the BBC will be critical in broadband service delivery. The BBC has the resources to experiment in ways that the commercial market cannot and to provide support, both through commissions and partnerships, for the nascent broadband content sector. Support of initiatives for broadband content development Support of R&D projects and programs for broadband services growth The Government will work to create the right environment for the creation of innovative broadband content. It will set out guidance on broadband content procurement by the public sector, informed by an industry perspective. The country is already a leader on mobile and wireless technologies. In this respect, the UK has to be a world leader in allowing people to use or reach any content, with any device, anywhere, anytime. Content, whether as a business tool, for entertainment, a community portal, elearning or generated by consumers themselves is the main driver for increasing the effective use of ICT. Through DTI’s Technology Programme, the Government is already providing funding to encourage innovation and research in developing broadband content. The Government is also working with the Regional Development Agencies (RDAs) and Devolved Administrations in implementing initiatives to promote high quality content, focusing on policy outcomes for the regions and nations in four key areas: business, learning, public sector and community. 3.3.3.7 Objectives The Netherlands The Netherlands Growing utilisation and the associated growth in capacity demand calls for the step to a new generation of networks. In order to achieve this ambition, the government aims to create the necessary conditions, so that the Netherlands can be among the leaders in the broadband field. As part of the Lisbon strategy, the government aims to be among the leaders in the field of broadband Europe-wide and worldwide by 2010. The key issue is how broadband can make an optimal contribution to the growth capacity of the Dutch economy, productivity growth, innovative capacity, competitiveness and solution of social issues. Policy Elements Final version May 2006 102 Best Practices in Broadband Development Policy Elements Objectives’ achievement schedule Synergies between private-public sector for the development of broadband infrastructures and services The Netherlands In order to achieve the above goals, the government aims to give a strong impulse to: The development and application of services and high-potential broadband applications in the private and public domain. The development of (a) high capacity connection network(s) with substantial national coverage by 2010. In addition to the priorities identified in the “The Broadband Paper: A Question of Pace and Better Utilisation” [16], Dutch facilitation measures focus on establishing dialogues between industry and governmental institutions and setting up of special broadband institutions. For example, the Smart Community International Network (SCIN), established in 2003 by the Dutch government, seeks to actively promote and support international exchange and co-operation, joint research and development activities. The Dutch market intervention measures take the form of private-public partnerships rather than “traditional” public interventions. The government takes the view that the market holds the primary responsibility for investments in further development of the new generation of broadband-type infrastructure and the development of accompanying services. It also takes the view that municipal and provincial authorities and housing corporations can play an important and useful role in the development of broadband, in partnership with market parties. Market distortions must be avoided here. Uniform government action is required. Gridforum.nl is a collaborative project between companies, universities and other public institutions. The project aims to be a focal point of Dutch Grid Computing and bring together expertise and innovative ideas from commercial and public sector. The GigaPort Next Generation Network is a joint project between the Dutch Government, the IT industry, as well as educational and research institutes. Funding comes from the State and accounts for € 40 million. The goal is to provide a bridge between the knowledge infrastructure and the market. Within GigaPort, a next generation (research) network is being developed (SURFnet6) and the optical switch in Amsterdam is being expanded. SURFnet6 is primarily intended for research institutions but companies can also connect in order to test new applications. Citynet Fiber Amsterdam is the owner of a passive optical access network and this ownership is shared with private investors. 450,000 homes and businesses should be connected to this network by 2010. The municipality expects that 53% of the inhabitants are willing to pay around € 50 for a connection. In Rotterdam, there is a city-owned (City Development Corporation) open access FTTH project which connects 5,000 homes, 2,000 apartments and 70,000 sq km of office space. Prioritization of 14 Actions are separated into four tracks (dialogue and research, co-ordination, stimulation and regulations) Final version May 2006 103 Best Practices in Broadband Development Policy Elements action lines The Netherlands Track One has two actions and relates to facilitating a dialogue between market players, municipalities and provincial authorities (see the setting up of specialized broadband institutions). Moreover, research relating to new institutional forms for administrative and operational activities and the protection of public interest are conducted. Also, costs and benefits of different regulation schemes are conducted within this action plan. Track Two has two actions (development of guidelines and regular formal administrative talks). In order to achieve a consistent government policy, guidelines are being developed for lower tiers of government and housing corporations. Those guidelines complement legislation and regulation. The development of broadband requires a certain degree of co-ordination among market participants and government institutions. Small scale initiatives within the public sector are prevented from taking place. In particular, administrative and technological fragmentation is avoided and the role of municipal authorities is to be strengthened. Track Three contains seven actions. Four actions focus on “services” (Holland Broadband Land, Broadband in four social sectors, conditions for use, Kenniswijk) and three on “infrastructure” (The Broadband Circle, Broadband in urban policy and access to government buildings). Generally, the goal is to form public-private partnerships (PPPs) which aim at the development and implementation of socially desirable services and products. In addition, access to public services is also promoted within this track. Lastly, Track Four contains three actions (implementation of the Electronic Communication Act, excavation rights and copyrights). In addition, focus lies on removing restraints in terms of legislation and regulation. Priorities for citizens and enterprises The government gives priority to the interests of consumers in regulating the broadband market. The government pursues a technology-independent broadband policy and it leaves the choice of technology to market parties. The government uses the new Telecommunications Act and the Open Network Provision regime as a framework for regulating the broadband market. It is aware that further development of new broadband infrastructures may raise new regulatory issues. In view of this, the government takes account of market developments that could lead to natural (regional) monopolies of new broadband-type connection networks. The government’s stimulation policy focuses on the development of services in the semi-public sphere, concentrating attention and resources on a limited number of socially relevant sectors. Co-operation between government and the private sector is needed in a structured approach in order to advance the development of services, and this co-operation will be intensified. The use of open standards should be promoted, to allow progressive development of multiplatform use without network Incentives for broadband growth Final version May 2006 104 Best Practices in Broadband Development Policy Elements The Netherlands integration problems. With regard to infrastructure, the government will focus primarily on access to public buildings. A specific government policy on the access of less profitable areas to broadband-type services is not necessary. One exception to this is education. It is desirable for every school to have broadband access. The government believes that there is no further need to start new infrastructure experiments in the current phase of development. Support of initiatives for broadband content development Support of R&D projects and programs for broadband services growth The government wants to provide a further stimulus by increasingly offering content via broadband, for example by offering historical audio-visual material. It is already working on systems to support this. The funding for the actions in 2004 accounts for € 13,300,000. Kenniswijk and Broadband in Four Social Sectors are the most funded projects (€ 9,000,000 and € 2,400,000 respectively) The Broadband Expert Group, established already in 2001, produced a report titled “Holland Broadband Land”. This report contains a shared market view of realistic development models for broadband in the Netherlands, a description of the level of ambition with the accompanying targets for the rollout of broadband and concrete recommendations for policy measures by the government and the market. After this report, the Cabinet produced a Broadband Action program focusing on stimulation, knowledge diffusion and the removal of obstacles in legislation and regulation. The Minister of Economic Affairs installed the Broadband Impulse Committee in order to steer the development of broadband policy. The Committee has a mandate to mobilise the market parties involved and government agencies to reach sustainable, durable choices for broadband. Finally, the ICT Research and Innovation Authority has been set up which ensures the structural increase in ICT research and the setting up of centres of excellence. One of the tasks is to draw up a national ICT research agenda. 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IP Symposium for ASP UNCC Bangkok, Thailand, 29-30 November 2005, http://www.unescap.org/icstd/events/IP_Symposium/presentation/IPenabled_services.ppt Internet activities in the European Union – Eurostat, Issue number 40/2005 http://epp.eurostat.cec.eu.int/cache/ITY_OFFPUB/KS-NP-05-040/EN/KS-NP-05-040EN.PDF "i2010 – A European Information Society for growth and employment", http://europa.eu.int/information_society/eeurope/i2010/docs/communications/com_2 29_i2010_310505_fv_el.doc 107 [197] InfoWorld, Report: China to start rolling out 3G by mid-2006 [198] InfoWorld, Report: Researchers work on low-cost 4G [199] [200] [201] [202] [203] [204] [205] [206] [207] [208] [209] [210] [211] [212] [213] [214] [215] Final version May 2006 Best Practices in Broadband Development [216] Internet 'father' calls for neutrality law, http://www.techworld.com/networking/news/index.cfm?NewsID=5324 [217] Telecom liberalisation: EU rules help to free up markets but much remains to be [218] [219] [220] [221] [222] [223] [224] [225] [226] [227] [228] [229] [230] [231] [232] [233] [234] [235] [236] [237] [238] [239] [240] [241] done, 07/02/2006, http://europa.eu.int/rapid/pressReleasesAction.do?reference=IP/06/125&format=HT ML&aged=0&language=EN&guiLanguage=en Regulatory Scorecard 2005, Edited by Jones Day and SPC Network for ECTA. Regulatory Scorecard 2005 (U.S. Annex) Edited by Jones Day and SPC Network Digital Denmark - Conversion to the Network Society, http://www.detdigitaledanmark.dk/english/ Denmark’s IT-status 2002, http://www.videnskabsministeriet.dk/fsk/publ/2002/denmarks_it_status_02/ Annual Report 2004, National IT and Telecom Agency, Denmark, http://www.itst.dk/static/publikationer-uk/annual_report_2004 / eEurope 2005 - A study of the degree of alignment of the New Member States and the Candidate Countries, http://www.sap.com/industries/publicsector/pdf/Misc_eEurope_2005.pdf eGovernment Factsheet - Denmark – Strategy, http://europa.eu.int/idabc/en/document/1355/390 International Telecommunication Union, Workshop On Promoting Broadband, Background Paper, Document: PB/037 Geneva, 9-11 April 2003 Recommendation of the council on broadband development”, OECD (adopted by the Council at its 1077th Session on 12 February 2004), http://www.oecd.org/dataoecd/31/38/29892925.pdf Rob Frieden, «Lessons from broadband development in Canada, Japan, Korea and the United States», doi:10.1016/j.telpol.2005.06.002, 2005 Elsevier Ltd Infosoc Magazine, November 2005, pp. 14 European Commission - Information Society - Telecommunications, Communications and Services - Current Spotlights - Art. 7 Task Force OECD productivity database, http://www.oecd.org/dataoecd/30/14/29861140.xls http://puck.sourceoecd.org/vl=3259653/cl=22/nw=1/rpsv/scoreboard/data/d01.xls OECD Broadband Statistics, December 2005, http://www.oecd.org/document/39/0,2340,en_2825_495656_36459431_1_1_1_1,00. html Directive 2002/21/EC, http://europa.eu.int/eurlex/pri/el/oj/dat/2002/l_108/l_10820020424el00330050.pdf Directive 2002/20/EC, http://europa.eu.int/eurlex/pri/el/oj/dat/2002/l_108/l_10820020424el00210032.pdf Directive 2002/22/ΕC, http://europa.eu.int/eurlex/pri/el/oj/dat/2002/l_108/l_10820020424el00510077.pdf Directive 2002/19/ΕC, http://europa.eu.int/eurlex/pri/el/oj/dat/2002/l_108/l_10820020424el00070020.pdf Directive 2002/58/ΕC, http://europa.eu.int/eurlex/pri/el/oj/dat/2002/l_201/l_20120020731el00370047.pdf Directive 2002/77/ΕC http://europa.eu.int/eurlex/pri/el/oj/dat/2002/l_249/l_24920020917el00210026.pdf Decision No. 676/2002/ΕC, http://europa.eu.int/eurlex/pri/el/oj/dat/2002/l_108/l_10820020424el00010006.pdf Decision No. 2003/548/ΕC, http://europa.eu.int/eurlex/pri/el/oj/dat/2003/l_186/l_18620030725el00430045.pdf Implementation of the electronic communications framework in the 25 Member States, http://europa.eu.int/information_society/policy/ecomm/doc/implementation_enforce ment/annualreports/factsheets/implementation.pdf 108 Final version May 2006 Best Practices in Broadband Development [242] 11th Report on the Electronic Communications Regulation and Markets 2005, http://europa.eu.int/information_society/policy/ecomm/doc/implementation_enforce ment/annualreports/11threport/com_2006_68_el.pdf [243] EU telecom markets: investments and innovation up, outlook positive, Référence: IP/06/188 Date: 20/02/2006, http://europa.eu.int/rapid/pressReleasesAction.do?reference=IP/06/188&format=PDF &aged=0&language=EN&guiLanguage=fr Final version May 2006 109 Best Practices in Broadband Development 3.5 WEBSITES FOR CHAPTER 3 [244] [245] [246] [247] [248] [249] [250] [251] [252] [253] [254] [255] [256] [257] [258] [259] [260] [261] [262] [263] [264] [265] [266] [267] [268] [269] [270] [271] [272] [273] [274] [275] [276] [277] [278] [279] [280] [281] [282] [283] [284] Final version http://titania.sourceoecd.org/vl=12421136/cl=55/nw=1/rpsv/scoreboard/gd07b.htm http://www.cia.gov/cia/publications/factbook/index.html OECD, http://www.oecd.org ITU World Telecommunication Regulatory Database, http://www.itu.int http://www.bmwi.de/Redaktion/Inhalte/Pdf/Gesetz/telekommunkationsgesetzen,property=pdf,bereich=,sprache=de,rwb=true.pdf http://www.bmwi.de/Navigation/root.html Broadcasting Act, 2001, http://www.gov.ie/oireachtas/frame.htm Communications Regulation Act, http://www.gov.ie/bills28/acts/2002/a2002.pdf http://www.odtr.ie/about_us/default.asp?S=2&NavID=129&M= http://www.dcmnr.gov.ie/Communications/Legislation/ http://www.nhh.hu Hungarian Ministry of Informatics and Communications, http://en.ihm.gov.hu/ http://www.anacom.pt Portuguese Ministry of Public Works, Transport and Communications, http://www.moptc.pt/ Australian Competition and Consumer Commission, http://www.accc.gov.au http://stats.oecd.org/glossary/detail.asp?ID=6757 http://www.investopedia.com/terms/l/longrunincrementalcost.asp Digital Access Index (DAI), http://www.itu.int/ITU-D/ict/dai/index.html World Economic Forum, http://www.weforum.org/ IEEE Standard 802.16, http://grouper.ieee.org/groups/802/16/ ETSI, http://www.etsi.org/ MediaNET IST project, http://www.ist-ipmedianet.org INTEL, http://www.intel.com/ HIPERACCESS, ITU Seminar, Busan, 10 Sept. 2004 ETSI BRAN Technical Committee, Mariana Goldhamer HIPERMAN, http://portal.etsi.org/bran/Summary.asp Internet Architecture Board – http://www.iab.org/ Internet Engineering Steering Group – http://www.ietf.org/iesg.html ANACOM, http://www.anacom.pt/template20.jsp?categoryId=105319&contentId=180332 ITU, Birth of Broadband, http://www.itu.int/osg/spu/publications/birthofbroadband/faq-en.html Networked Readiness Index Rankings, http://www.weforum.org/pdf/Global_Competitiveness_Reports/gitr2005_rankings.xls ITU, DOI, http://www.itu.int/itu-wsis/2005/DOI%20V2.pdf Broadband for All, http://www.cordis.lu/ist/so/broadband/home.html IEEE 802.11WIRELESS LOCAL AREA NETWORKS - The Working Group for WLAN Standards, http://grouper.ieee.org/groups/802/11/ Wi-Fi Alliance http://www.wirelessethernet.org/OpenSection/index.asp National Telecommunications and Information Administration, http://www.ntia.doc.gov/ GetNetWise, http://www.getnetwise.org/ SATIP6 project http://www.theregister.co.uk/2005/12/01/skype_voip/ http://www.ist-muse.org TeliaSonera, http://www.teliasonera.com/ Cable & Wireless, Germany, http://www.cw.com/ 110 May 2006 Best Practices in Broadband Development [285] [286] [287] [288] [289] [290] [291] [292] @home Benelux, http://www.home.nl/ Sunrise, http://www.sunrise.ch/ Vodafone-Libertel, www.vodafone.nl/ British Telecom, http://www.bt.com/ http://blogs.thedeal.com/2005/12/otellini_touts_.html http://news.zdnet.co.uk/communications/0,39020336,39238542,00.htm Internet World Stats, http://www.internetworldstats.com Legislation in Force (EU regulatory telecommunications framework) http://europa.eu.int/information_society/policy/ecomm/info_centre/documentation/le gislation/index_en.htm#dir_comp Final version May 2006 111 Best Practices in Broadband Development CHAPTER 4: CONCLUSIONS Final version May 2006 112 Best Practices in Broadband Development CONCLUSIONS This chapter presents briefly the conclusions that can be extracted from the overview of the broadband status on the international level, as well as from the analysis of the basic factors and best practices for broadband growth. 4.1 OVERVIEW OF INTERNATIONAL BROADBAND STATUS The results of the overview of the international broadband status can be summarized as follows: The number of broadband subscriptions, based on OECD data, continued to increase in the first half of 2005 from 119 million to 137 million. Broadband penetration in the OECD area grew by 15% in the first half of the year to 11.8 subscribers per 100 inhabitants. Given the fact that penetration grows, broadband providers in the OECD area increasingly offer voice and video services over this platform. The speeds offered by providers also increase. Regarding broadband technologies, from the survey on the international level, it appears that DSL stands as the leading broadband platform, followed by cable modem access. In particular DSL accounts for 61.2% and cable modem for 32.0%. Regarding other technologies (e.g. fiber, LAN, satellite and fixed wireless), they account for 6.8%. Alternative technologies are usually related to the morphology of each country, the percentage of rural and remote areas population, as well as the broadband penetration. In particular, countries with high penetration rate seem to adopt more advanced technologies, as for example fiber to the home (FTTH), while countries with a high percentage of rural population tend to use wireless or satellite technologies. Competition is driving fixed and mobile players to invest in new technologies in order to reduce costs and position themselves in a converged environment. Operators are beginning to offer portfolios of services, with different combinations of low-cost voice (including mobile), internet access and audiovisual content to attract and retain customers. After dipping significantly in 1999-2001, investment levels are recovering, with the capital expenditure for the sector as a whole to show an increase of approximately 6% compared to 2004. As far as it concerns the cost, it seems to present an important decline during the last two years, while it is strongly related to the variety and quality of provided services, as well as to the access speeds of these services. At this point it should be mentioned that the cost reduction is strongly related to the level of competition of the broadband market. In cases of countries where the level of competition is low or the marker is monopolistic, the cost is significantly higher, in relation to the GDP per capita. In the area of services, multiple play offers, which include voice, data and video services, seem to prevail representing the first stage in a two-part evolution of converged ICT service delivery. This first stage has seen video, voice and data services consolidated on a given infrastructure (e.g. cable networks). The second stage will include consolidation of access platforms on one IP network, allowing users to seamlessly access content while moving over a variety of wired and wireless networks. The policies that the countries adopt for the development and deployment of broadband is strongly related to the Internet and broadband penetration, as well as to the percentage of the population that live in rural or remote areas. In particular, countries with high penetration rates focus on the preservation and extension of these rates Final version May 2006 113 Best Practices in Broadband Development through policies for providing better quality of service and content, as well as on the wider coverage of the population. On the other hand, countries with lower penetration rates mainly focus on the development of the necessary infrastructure. 4.2 TECHNOLOGIES AND FACTORS THAT LEAD THE BROADBAND DEVELOPMENTS The main factors that lead the broadband developments could be summarised as follows: The structural changes in the ICT markets (e.g. higher level of competition, more privatizations, market deregulation, globalisation). The changes in the services and their use (e.g. rapid broadband penetration, VoIP, mobile telephony, 3G, WLAN, WiFi, WiMAX, digital television). The technological developments (e.g. creation of innovative, interoperable and open solutions for a IP environment, IPv6, optical networks, digitalisation, increase of PC’s computational power). The user’s need for fast content access. The cost . E(electronic)-readiness. It is generally observed that there is a tendency of application of policies that promote the broadband growth and the improvement of the national telecommunication regulatory frameworks. An example is the European strategy i2010 [215]. Furthermore (concerning the regulatory frameworks), there is an evident concern in Europe for the insufficiency of the regulatory frameworks in the telecommunications. Further trends are the deregulation of the telecommunication markets and the Internet neutrality. 4.3 FACTORS AFFECTING THE BROADBAND GROWTH According to the data presented in the previous chapter, as well as to an ITU’s report [293], broadband growth is correlated with (a) the promotion of broadband demand and (b) the promotion of the supply of broadband. Over and above differences in culture, landscape, and technological development, economies that have been successful in promoting broadband have several key factors in common. These four factors are first summarized below and then discussed in detail throughout the section. More specifically, a successful broadband economy will be characterized by: Informing the public about broadband. Efforts to promote demand for broadband depend largely on the target market being aware of the products available, and aware of what benefits broadband can provide them. Increased exposure to broadband should boost take-up rates. Growth should be rapid once penetration reaches a certain critical mass. Making effective use of broadband through applications and content. Broadband adoption is much higher in countries where users make full use of current broadband applications. This may include high usage of IP telephony, video/audio via broadband, online gaming, and telecommuting. Content in local languages also plays a key role. Policies that encourage these uses should boost penetration rates. An environment that fosters broadband innovation. Economies must have policies and incentives in place that create a fertile environment for broadband content and application development. This includes important issues such as thoughtful intellectual Final version May 2006 114 Best Practices in Broadband Development property protection, adequate government funding for Internet research, and consumers ready to participate in developing new, high-bandwidth applications. A competitive market structure that keeps prices low. There is no substitute for true market competition in broadband to reduce prices. Subsidies, grants, regulatory obligations and other financial support are only temporary fixes and cannot replace a well-functioning market. Efforts to ensure the efficient market operation will have the greatest effect on prices, and in turn on broadband adoption. Fundamentally, the objective of broadband supply is to provide all those who would like broadband with the opportunity to access it. A successful broadband economy can thus be characterised by: Having a competitive market structure. Strong inter-modal competition, as well competition among the same technologies leads to lower prices, increased feature offerings, and more extensive broadband networks. Cross-ownership by operators will decrease broadband penetration and should be remedied. Competition policy authorities must continually monitor the competitive structure of the market and must be empowered to take action when necessary. Having government programmes in place that focus on broadband. Local, regional and national initiatives have been successful in connecting communities to broadband. Direct infrastructure investment by governments can play a key role in developing broadband networks, especially in underserved areas. Tax credits, low-interest loans, subsidies and other government programs can also be important methods of stimulating broadband supply. Applying innovative ideas to expand the network. Existing networks must be utilized to their full extent alongside new network investment. Innovative broadband networks such as wireless, satellite, railway and electrical, can be used to supply broadband. Schools, hospitals, and community access centres can serve as initial broadband anchors in areas, eventually becoming the network access points from which future networks can expand. Additional factors that affect the broadband growth are the existence of broadband content and applications, the high level of Internet penetration, the extensive use of computers in the households and the maintenance of prices of broadband access in low levels (depending on the purchasing power of consumers). Finally OECD (by the RECOMMENDATION OF THE COUNCIL ON BROADBAND DEVELOPMENT, adopted by the Council on 12 February 2004, [294]) recommends that, in establishing or reviewing their policies to assist the development of broadband markets, promote efficient and innovative supply arrangements and encourage effective use of broadband services, the Member countries should implement: Effective competition and continued liberalisation in infrastructure, network services and applications in the face of convergence across different technological platforms that supply broadband services and maintain transparent, non-discriminatory market policies. Policies that encourage investment in new technological infrastructure, content and applications in order to ensure wide take-up. Technologically neutral policy and regulation among competing and developing technologies to encourage interoperability, innovation and expand choice, taking into consideration that convergence of platforms and services requires the reassessment and consistency of regulatory frameworks. Recognition of the primary role of the private sector in the expansion of coverage and the use of broadband, with complementary government initiatives that take care not to distort the market. Final version May 2006 115 Best Practices in Broadband Development A culture of security to enhance trust in the use of ICT by business and consumers, effective enforcement of privacy and consumer protection, and more generally, strengthened cross-border co-operation between all stakeholders to reach these goals. Both supply-based approaches to encourage infrastructure, content, and service provision and demand-based approaches, such as demand aggregation in sparsely populated areas, as a cycle to promote take-up and effective use of broadband services. Policies that promote access on fair terms and at competitive prices to all communities, irrespective of location, in order to realise the full benefits of broadband services. Assessment of the market-driven availability and diffusion of broadband services in order to determine whether government initiatives are appropriate and how they should be structured. Regulatory frameworks that balance the interests of suppliers and users, in areas such as the protection of intellectual property rights, and digital rights management without disadvantaging innovative e-business models. Furthermore OECD invites governments to encourage their private sector, in their broadband development activities, to take due account of the above recommendations. 4.4 MAIN BEST PRACTICE ELEMENTS According to the info presented in this report, as well as the results presented in refernece [295], there are many basic results concerning the best practices for broadband growth. ICT development, including investment in a robust broadband infrastructure, requires extensive coordination and cooperation among private and public sector players. Successful ICT development typically occurs if and only if both types of participants stick to roles proven to maximize benefits. For government the empirically proven role involves neither a laissez faire abdication of responsibility, nor intrusive, heavy-handed, command and control regulation that predominated when private or government monopolies largely controlled the roll out of ICT. Governments can enhance ICT development by articulating from the top a broad vision of what ICT can do for a nation and its citizens, while leaving to community champions the flexibility to propose specific, ‘‘bottom-up,’’ projects that aggregate the supply of services needed to support the build out of a telecommunications infrastructure. For the private sector, the proven role does not involve extensive litigation, and delayed investment, or the leveraging of ICT investment in exchange for even greater deregulatory relief. The private sector needs to make the necessary investments in ICT incubation, but government can create incentives for such investment by underwriting and guaranteeing loans, providing favourable tax treatment and financially supporting a portion of the necessary research, development and technology demonstration projects. Governments do not serve as a catalyst simply by throwing money at the ‘‘problem’’ of insufficient ICT development. Wasted investment in ICT development can occur if government relies on one category of private sector participant, e.g., incumbent local exchange telephone companies, to administer the major programs designed to promote universal access to basic telecommunication services. The incumbent develops a reliance on, and expectation for this funding source and has little incentive to achieve a universal service goal, as opposed to justifying an ongoing source of subsidies for preferred beneficiaries which include the carrier itself. Developing a recurring subsidy and funding mechanism, as opposed to relying primarily on ad hoc project funding, typically justifies the need for an extensive bureaucracy similarly keen on pursuing an ongoing mission, or expanding broad development goals. Ironically, the universal service funding mechanism in the United States, which Final version May 2006 116 Best Practices in Broadband Development promotes subsidized access to often unmetered basic telephony, has created disincentives for consumers to migrate to available, but unsubsidized broadband services. Nations achieving comparatively greater success in ICT development demonstrate the value in having a specific mission, achievable goals, and policies designed to achieve success. The governments of Canada, Japan and Korea articulated a vision of what ICT could do for both and public and private sectors beneficiaries. At the macro-level, these nations developed laws that: created incentives for risk taking and innovation, and penalized litigation and strategies to delay making necessary investment in capitalintensive projects. At the micro-level these nations linked public funding with private initiatives that: aggregated demand, generated matching funds, and justified the installation of ICT even in geographically unattractive locales. Nations exhibiting best practices in ICT development clearly show the benefit of a combination of public and private initiatives. An exception is the case of United States that has largely failed to match its comparative advantage in private ICT incubation, such as Silicon Valley, with similar world class governmental incubation, despite having achieved success in developing and then privatizing the Internet. The lack of success in recent governmental incubation efforts, e.g., in broadband market penetration, stems largely from the failure to appreciate the need to blend and integrate both private sector entrepreneurialism and public sector stewardship. Such stewardship involves active governmental involvement, as cheerleader, referee, loan guarantor, grant under and anchor tenant in a sector that many in the United States believe warrants little if any government involvement. Final version May 2006 117 Best Practices in Broadband Development 4.5 REFERENCES FOR CHAPTER 4 [293] International Telecommunication Union, Workshop On Promoting Broadband, Background Paper, Document: PB/037 Geneva, 9-11 April 2003 [294] Recommendation of the council on broadband development”, OECD (adopted by the Council at its 1077th Session on 12 February 2004), http://www.oecd.org/dataoecd/31/38/29892925.pdf [295] Rob Frieden, «Lessons from broadband development in Canada, Japan, Korea and the United States», doi:10.1016/j.telpol.2005.06.002, 2005 Elsevier Ltd Final version May 2006 118 Contact Information: OBSERVATORY FOR THE GREEK INFORMATION SOCIETY 33 Stadiou Str., 105 59, Athens, Greece Tel: + 30 210 3313080 Fax: + 30 210 3313086 info@observatory.gr www.observatory.gr