Global Broadband: The Good, The Bad, and the Ugly

TeleGeography': Despite years of rapid infrastructure rollout, penetration rates for consumer broadband service still vary dramatically across global markets. The case studies presented below explore successes and failures in three markets: South Korea (The Good), Greece (The Bad), and Germany (The Ugly).

The Good: South Korea

Widespread proliferation of broadband services has helped elevate South Korea to the position of a world leader in terms of penetration; at the end of June 2005 the country was home to more than 12.2 million broadband users, a penetration rate of 25.4%. More than half of South Korea's broadband subscribers come from KT Corp.Intense competition and a maturing broadband internet access service market have put increasing pressure on operators' profit margins, leading to a degree of industry consolidation that will likely intensify in the future.

The Bad: Greece

Greece is near the bottom of European countries in terms of broadband adoption-- an infinitesimal 0.8% at the end of Q2 2005, on par with countries like Morocco and Vietnam and far behind many former Eastern bloc states. Much of this is due to the resistance of incumbent carrier OTE to unbundle local loops so that competitors can deliver service over their lines. The Greek government has established a commission to study the feasibility of providing low-cost internet access to educational institutions and others.Given the underdeveloped nature of the Greek broadband market, opportunities are ripe for any operator willing to seize the initiative. One of OTE's rivals, ForthNet, has made its intentions clear in this respect and in February 2005 it announced a significant investment in its internet network, to increase international capacity to 1,395Mbps. Elsewhere, Vivodi Telecom, one of the first private telecoms operators to begin providing advanced voice and data communications services to residential and business customers in Greece, has ramped up its activities in preparation for the fight with the former monopoly.

The Ugly: Germany

Formerly Europe's pioneer in the broadband internet access market, Germany has since fallen well behind its neighbors in terms of broadband penetration. Moreover despite its early start, it also has one of the lowest levels of DSL lines sold to alternative operators anywhere in Europe.

The reasons for Germany's fall from grace are complex, but a large portion of the blame must be shared by the incumbent Deutsche Telekom and its fixed line and online units T-Com and T-Online, for complacency and a degree of heel-dragging, and by the regulator, for formulating and implementing a vague and somewhat laisser-faire regulatory framework.

The German authorities are attempting to put their house in order, though. To accelerate the take-up of unbundled lines, German regulators recently rejected a request from DT to raise its monthly local loop rental charge, and instead ruled that it must cut the prices it offers competitors for access to the last mile by nearly 10% to EUR10.65. The response to the regulator's decision was less than exuberant, however. The president of Germany's association of local and regional telecoms carriers said that plans by its members for substantial DSL development investment in some 700 local areas had been put on hold since monthly local loop charges remained above EUR10.

GlobalComms and CommsUpdate Publ 20060109