IP: New OECD study on Broadband Acces

[David Farber <dave () farber net>]

> From: CAnet-3-NEWS () canarie ca
>
> [Excellent report on ths state of broadband in the OECD countries. Thanks to
> Jason Cote for this pointer. Some excerpts follow - BSA]
>
>
> The Organization for Economic Cooperation and Development (OECD) released
> their
> latest study on the development of broadband access. Some of the data must
> have
> been available for the "Broadband blues" article in June issue of The
> Economist,
> but here is the full report:
> http://www.oecd.org/pdf/M00020000/M00020255.pdf
>
> [...]
>
> The development of broadband access to the Internet is gaining increasing
> prominence. This is occurring in
> fields that go well beyond communications policy. One reason for this is the
> role advanced communication
> capabilities may have played in generating higher growth in productivity
> rates, as well as new networkbased
> economic activities, in some countries over recent years. If, as many
> believe, new communication
> tools such as the Internet and wireless networks boosted growth in the
> latter half of the 1990s, and softened
> the current cyclical downturn, then the next steps toward broadband access
> are of critical importance that
> go beyond the communications sector.
>
> The current bottleneck to growth in the communications sector, and beyond
> for areas such as electronic
> commerce, is the limitations of local access networks. These limitations are
> not just technological. The
> inheritance of many decades of monopoly provision of access networks is that
> there is usually only one, or
> at best two, networks passing most homes and businesses in OECD countries.
> In some cases the same
> company still owns both these networks.
>
> [...]
>
> The analysis of the report leads to the following policy conclusions:
> ? The most fundamental policy available to OECD governments to boost
> broadband access is
> infrastructure competition.
> ? A second necessary step is to open up the network elements, of players in
> dominant positions,
> to competitive forces. Policies such as unbundling local loops and line
> sharing are key
> regulatory tools available to create the right incentives for new investment
> in broadband
> access. The evidence indicates that opening access networks, and network
> elements, to
> competitive forces increases investment and the pace of development. Nearly
> all OECD
> governments have already introduced such policies, or taken decisions to
> introduce such
> policies, in respect to telecommunication networks.
> ? Open access to cable networks, where it is warranted by market conditions.
> Arguably cable operators are in a less dominant position than incumbent
> telecommunication carriers. A
> case can be made for not subjecting new cable infrastructure to open access
> policies particularly where
> new entrants have little market power. The initial experience is that open
> access, for all mature platforms,
> increases the incentives for new entrants. On the other hand experience also
> indicates that the likely
> winners are those companies that own, manage and are responsible for their
> own infrastructures. Clearly,
> infrastructure competition is the best policy tool available but, the
> reality is that, it takes time to rollout
> competitive platforms. By not making those network elements that take the
> longest time to build available
> to new entrants, some countries risk missing the immediate additional
> competition this can bring to a
> market.
>
> [...]
>
>
> One of the key ingredients in why some countries are forging ahead, is
> whether there is competition
> between different networks and networks with different technologies. There
> is a significant correlation
> between the growth of cable modems and DSL services. (Figure 3). In some
> countries the main
> competition to DSL, the medium of choice for incumbent telecommunication
> carriers, comes from other
> technologies. This is either because cable networks have not been developed
> in these countries (e.g.
> Iceland and Italy) or because the incumbent telecommunication carrier owns a
> large part of the cable
> television infrastructure. In these countries competition is sometimes
> emerging on alternative platforms
> (smaller DSL or cable networks) and technologies (e.g. fibre to the
> residence, broadband fixed wireless).
>
>
> [...]
>
>
> Sweden. The country is
> home to some of the most innovative broadband developments in the OECD area.
> The leading technology
> used to connect users at the end of 2000 was neither cable modem nor DSL.71
> The broadband technology
> connecting the largest number of subscribers was Ethernet LANs or so called
> ‘property networks’. At the
> end of 2000, these networks connected 80 000 subscribers. By June 2001 they
> connected in the vicinity of
> 200 000 subscribers. The additional competition brought to the market via
> these networks has meant that
> Sweden has some of the lowest prices for broadband access in OECD area.
>
>
> As with the other Nordic countries, where DSL and cable modem growth is
> slower than might be expected,
> Sweden’s incumbent telecommunications carrier owns a cable television
> network. Telia’s cable network
> (ComHem) is the largest cable television operation with around 60% of all
> cable television subscribers.
> This has meant that the strongest competitive threat to Telia has had to
> come from beyond the cable
> television sector. Moreover the uncertain status of Telia’s ownership of
> ‘ComHem’ may have also
> impacted on Telia’s commitment to the development of cable modem services.
> It is worth looking at the
> take up of Telia’s cable modem services in Sweden and Denmark. In Sweden,
> where Telia markets DSL
> over its fully owned PSTN, the take up rate of cable modems is just 2.8% of
> its total cable television
> subscribers, as at June 2001. In Denmark, where Telia does not own the PSTN,
> the take up rate for cable
> modems services was 23.9% of its total cable television subscribers in June
> 2001. This appears to indicate
> that Telia is more strongly marketing cable modems where they compete
> independently with DSL.
> Telia, as with other European carriers, no doubt took stock of its ownership
> of a cable network when the
> European Commission began to look at structural separation of
> telecommunication and cable networks
> owned by incumbents. The question was posed again, towards the end of 1999,
> when the European
> Commission made cable divestiture a condition of the proposed merger between
> Telia and Telenor.
> Although this merger did not go ahead at that time, Telia subsequently
> announced that it would like to sell
> ‘ComHem’. By mid 2000, Telia said it would not sell ComHem but instead float
> the cable business. Telia
> subsequently reversed that decision and the ComHem operations were
> transferred to Telia Internet.
> UPC’s Stjärn cable network launched Internet services in one area in the
> City of Stockholm in April 1999,
> and introduced the ‘Chello’ broadband service in November 1999. High speed
> Internet services had been
> offered to approximately 75 000 connected homes, with 33 100 subscribers by
> the end of 2000. As of this
> date, Telia’s cable television network had 22 000 cable modem Internet
> subscribers. Telia also had 40 000
> subscribers connected to its DSL and high speed LAN networks. During the
> six-month period to June
> 2001, the number of DSL and LAN connections grew by 80 000 to 122 000, of
> which 14 000 were
> delivered to operators and service providers outside of Telia.
>
> One of Telia’s most innovative rivals is Bredbandsbolaget (B2). B2 provides
> broadband communications
> at 10 Mbps per second fibre-optic network access, and related broadband
> services primarily to residential
> as well as small and medium-sized business customers. B2 is currently
> rolling out a fibre-optic network
> linking key metropolitan areas in Sweden and Norway. Within metropolitan
> areas, B2 is extending fibreoptic
> networks to customers’ buildings and switched Ethernet networks within
> customers’ buildings.
> B2 was founded in 1998 and had its network installed in 67 400 homes as at
> 31 October 2000. By January
> 2001, B2 was connected to 103 000 homes. An important part of B2’s service
> is that it provides high speed
> symmetrical capabilities for users. B2 encourages users to host multi-media
> content and become their own
> ‘webcasters’. This is in stark contrast to the policies of many DSL and
> cable operators who set limits on
> the amount of content that users can upload to discourage them running
> servers. In the first half of 2001,
> B2 increased its subscribers from 12 000 to 32 000.
>
> Sweden has the highest penetration of broadband networks among the Nordic
> countries and some of the
> most innovative broadband services available. However these developments are
> relatively recent and the
> control of the country’s largest cable television network by the
> telecommunication incumbent has
> narrowed the competitive platforms available. Although Sweden has among the
> lowest prices for DSL
> access in the OECD area, it should be noted that Telia has announced price
> increases. In September 2001,
> Telia says it will increase the price for DSL services to individual
> households by 30%. This is the segment
> in the market in which Telia faces no competition from B2 (which only serves
> apartment buildings).72 The
> difference between the new price for DSL services to individual households,
> and the price Telia entered the
> market for apartments against B2, represents a 63% increase. It is the
> individual household segment of the
> market that would benefit from more competition being available if Telia’s
> cable network was
> independently owned.
> The Swedish government has a goal of ensuring that broadband connectivity
> reaches 98% of towns and
> villages by 2004. Between 1999 and 2001, Sweden's national fibre network
> increased by 13 000 kilometres
> and the number of communities and neighbourhoods connected quadrupled. For
> its part Telia say that 90%
> of the Swedish population live within 4 kilometres of an exchange and can
> therefore be served by DSL. By
> February 2001, Telia had upgraded 700 of its 7 200 telecommunication
> exchanges so that they could
> support DSL technology.
>
> [...]
>
> Canada
> At the end of 2000, Canada was ranked 2nd in the OECD in terms of overall
> broadband penetration. At that
> stage, Canada had 1.4 million subscribers to cable modem and DSL services.
> As with the other leading
> countries a key ingredient in Canada’s rapid development of broadband
> services is competition between
> different networks owned by independent actors. Canada was also one of the
> first countries to introduce
> unbundling for telecommunication networks and open access for cable
> networks.
> Canada has an established cable network infrastructure with 93% of homes
> being passed by a cable
> network, and 69% being subscribers, at the end of 1999.24 Canadian cable
> networks were some of the first
> to introduce commercial cable modem services with the launch of commercial
> services in some regions as
> early as November 1996. By the end of 1997 there were already 21 000
> subscribers.25 At the end of 2000
> this had increased to 918 000 cable modem subscribers. A survey conducted by
> the Canadian television
> association (CCTA) found that cable television networks can potentially
> provide high speed access to
> 6 million homes.
>
> The early launch of cable modem services in Canada spurred the
> telecommunication carriers to act. In
> fact, in November 1996, SaskTel became the first telecommunication carrier
> in the OECD to offer
> commercial high speed Internet service using DSL technology. By the end of
> 2000, Canada’s
> telecommunication carriers had 465 000 DSL subscribers. Data available for
> the fourth quarter of 2000
> show demand for DSL services was strongly increasing. TELUS and QuébecTel,
> for example, expanded
> DSL Internet subscribers by 20 500 in the fourth quarter of 2000, up 69%
> from the net additions one year
> before. For the year, some 57 000 new DSL subscribers were added by TELUS
> and QuébecTel. Canadian
> carriers are also investing to support this growth. In November 2000, Teleus
> announced a commitment of
> up to USD 321 million over the following five years to expand DSL Internet
> services in 38 communities in
> British Columbia and Alberta. In 2001, TELUS plans to invest USD 122 million
> on ADSL, with the goal
> to more than double the number of high-speed subscribers by the end of the
> year.26
> Canada is well placed to accelerate the use of broadband Internet access. In
> the first half of 2001, the
> number of DSL subscribers increased 51% and the number of cable modem
> subscribers by 30%. The
> Canadian Government has a commitment to achieving the goal of high-speed
> broadband access to
> businesses, and residents in every community in Canada by the year 2004. At
> the end of 2000, DSL
> services were available to 69% of Canadian households. By 2004 this is
> expected to increase to 78%.27
> Cable modem services were available to 60% of households at the end of 2000
> and this coverage will also
> increase. In addition broadband access via fixed wireless is expected to be
> available to 60% of households
> by 2004. Satellites are, however, the only broadband option expected to have
> universal coverage by 2004.
> The introduction of interactive broadband services, not requiring the PSTN
> for the return path, should
> prove a major boon for remote areas in Canada. One satellite broadband
> provider, WildBlue, plans to
> launch such a service over Canada in 2003.


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