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Steady broadband growth seen for Europe

Competitive markets see sharpest increases

Broadband service uptake has continued to grow in Europe despite obstacles posed by incumbent telecom companies, and is now entering a "third stage" of growth where advanced services such as Voice over Internet Protocol (VoIP) will become more readily available to consumers, according to a study released on Wednesday.

London-based research and consulting firm Strategy Analytics estimates that Europe will have 33.5 million broadband subscribers by the end of this year, representing 20 percent of all homes. By 2008, 41 percent of European homes will have broadband subscriptions, the researcher said.

"The growth is being driven primarily by countries that have strong competitors to the incumbent telecom network operator, such as the Benelux countries (Belgium, the Netherlands and Luxembourg), which have big cable operators offering broadband services, as well as Switzerland and Sweden, followed by Norway and Finland," said Martin Olausson, senior analyst at Strategy Analytics.

Sweden, Switzerland and Belgium, the countries with the strongest competition to incumbent telecommunication operators, are expected to have most aggressive broadband uptake by 2008 with penetration rates of between 55 and 60 percent, Strategy Analytics said.

Countries such as Germany, France and the UK, while experiencing a steady uptake in broadband services, are still somewhat hampered by strong incumbent telecomcompanies, such as BT in the UK, Deutsche Telekom in Germany and Télécom SA in France, according to Olausson.

"In Germany, you've got DT basically controlling all of the DSL (Digital Subscriber Line) market, for example," Olausson said. "Government regulation on unbundling has been important in those countries. It has certainly had an impact in France, though at this point, less so in Germany."

According to Olausson, broadband marketing is entering what he called the third phase of its evolution.

"Availability of broadband was the first stage, with the second stage moving to companies offering the highest speed at the lowest price. Now price tiering aimed at different user segments is widespread and we're moving into the third stage where successful service providers will be those that offer multiple broadband services such as VoIP and video," Olausson said.

Within the next three to four years, disruptive technologies such as VoIP will begin to have a real effect on the broadband market, Olausson said. "The more advanced operators, particularly the incumbents, are starting to see VoIP being as a clear migration path rather than simply a complementary service," he said.

Worldwide, the VoIP market will dominate the US$47 billion broadband value-added services market in 2009, accounting for $15.9 billion, according to a study released in March by Jupiter Research Inc.


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