The ECTA Broadband Scorecard for Q3, 2006, released this week, shows that incumbents have clawed back market share in a number of key markets, including a substantial increase in Europe’s broadband hotspots, Denmark and Finland, as well as in France. Incumbents also maintain control of more than 50% of broadband lines in Spain, Italy, Luxembourg, Greece and Belgium.
Steen Clausen, Managing Director of ECTA, said, “The Scorecard shows that growth has stalled in a number of countries where we have seen the power of the incumbent on the increase, including Denmark and Belgium, which experienced a paltry 3% growth in broadband penetration, and France, which has fallen to 8th place in Europe, well behind the UK. In contrast, in Germany, Deutsche Telekom’s market share dropped below 50% for the first time, corresponding with a surge in growth in broadband penetration.”
Europe includes some of the world’s leading broadband countries. However, its position could be put at risk if regulators do not act to re-enforce competition and open markets, ECTA warned.
Clausen said, “This is extremely disappointing news from some of the countries which have traditionally been at the forefront of Europe’s broadband revolution. Until recently, France was the poster child for broadband with some of the most attractive triple play packages in Europe. It now needs to be vigilant if it is to maintain its position.”
Key findings of the report:
- Total broadband lines increased by 7% in the last six months from 64 million in Q1 to 68.4 million lines in Q3 2006, but growth has slowed dramatically since the previous half year (Q3 2005) where 23% growth was reported
- In the EU15, growth was particularly strong in the UK and Germany (both 15%), as well as in Ireland (30%) and Greece (63%), although in Greece growth is from a particularly low base
- Growth stalled in a number of countries including Denmark and Belgium, which experienced just 4% growth and France, where growth was 10% after a strong performance in 2005. Spain, Sweden and Austria also suffered a slow-down
On the positive side, broadband surged in Germany, where Deutsche Telekom’s retail share fell below 50% for the first time following recent action by the regulator, and in Ireland, where competition also intensified. The UK also exhibited strong growth, driven by entrants’ investment in unbundled local loops.
Clausen said, “It seems that the UK has learnt some of the lessons that propelled France up the league table, and is now reaping those rewards with a multitude of offers to consumers. Germany too is starting to show signs of progress which is very welcome after a slow start.”
The link between increased power for incumbents and stagnation has been confirmed by studies such as SPC Network ‘Broadband Markets in the EU: the importance of dynamic competition’, which concluded that Europe could gain an extra 20 million broadband lines by opening markets further to competition.
Clausen said, “This is a powerful warning for Governments not to protect national champions, either now or for the future. Monopolies have never been good for consumers, and in some industries Governments have to take action to let competition flourish. In energy for example, the Commission is proposing extra measures to open markets to competition. We believe this could provide some valuable lessons for telecoms.”