European Broadband Use Doubled in 2002; Future Bleak for Cable

18 July 2003

European internet access via broadband connections nearly doubled last year, up 92% according to a new report from America’s Forrester Research.

Across the continent as a whole (including the offshore UK), broadband takeup is moving at orbital velocity. But last year’s increase is mere beans compared with the market as envisaged by Forrester five years hence.

By 2008, nearly one third (30% ) of all European homes will have broadband, accounting for 57% of all online households. But there will be a marked dichotomy along national lines – with a clear north/south bias.

Says senior Forrester analyst Lars Godell: “2008 [will see] penetration varying from 5% in Greece to 45% in Norway. Scandinavia and the Netherlands will dominate the ratings; German-speaking Europe, Belgium, Finland, and the UK will form a second tier; and Southern Europe and Ireland will continue to lag.

“2008 broadband penetration in France, Greece, Ireland, Italy, Portugal, and Spain will vary between 5% in Greece and 24 % in Italy,” he continued, “unsurprising given these countries’ lower overall levels of internet usage.”

ADSL will be the dominant platform because it reaches at least twice as many households as cable, and because its main backers – the reigning telecoms giants – benefit from superior financial positions, scale, scope, and brand strength. By 2008 ADSL will claim 71% of European broadband connections, dwarfing alternatives. Thirty-five per cent of UK households will be wired for broadband by then.

Godell then switched to Cassandra mode: “Cash shortages will kill cable’s momentum; fiber's business case remains daunting; and alternative technologies, like fixed wireless and two-way satellite, are too little, too late.”

Ratcheting-up the woe, Godell continued: “Cable's 36% coverage will never be able to match ADSL's 80 %+ without big investment. But with some of Europe’s biggest cablecos (UPC, NTL, and Telewest) all having gone through bankruptcy and debt restructuring, there's no cash to expand coverage, upgrade networks, or splurge on marketing to convert homes passed to subscribers. As a result, cable’s market share will drop from 53% in 2000 to 22% in 2008.

Forrester advises access providers to shift their focus from volume to profit growth over the next eighteen months, by expanding tiered services, abandoning their portals, and rethinking billing.

Data sourced from: Forrester Research; additional content by WARC staff