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Broadband Access Markets in Europe: Why Regulation should Promote Competition

Active competition between Europe’s cable and DSL providers of broadband access is good for broadband take-up: investors looking for market growth should also look at competitive intensity. Strategy and Policy Consultants Network Ltd (SPC Network) has developed an econometric model to test the importance of inter-modal competition as a determinant of broadband take-up in the EU. The model demonstrates that about half the variation in penetration rates can be accounted for by variations in the degree of market concentration.

The take-up of broadband in the Member States of the European Union varies significantly. At one extreme, Belgium has highest penetration with 30% of households having broadband whilst Luxembourg and Germany have just 8.8% and 12.1% respectively[1] (Table 1). We also see an even greater variation in the speed at which broadband is being taken up. In the ten quarters from Q3 2001 to Q4 2004 inclusive, broadband penetration grew by just 207% in Austria, but by a massive 1,506% in the UK (though the UK still has the fourth lowest penetration of the countries examined) (Figure 1).