Broadband Internet adoption slows in Europe

The take-up rate of broadband Internet access slowed sharply across Europe last year, while in some key markets, former monopoly operators are reclaiming market share lost to rivals in recent years, the European Competitive Telecommunications Association said in a statement Thursday. ECTA believes the two trends are connected.

Growth in the number of broadband subscriptions grew 7 percent in the third quarter of last year, compared with 23 percent in the third quarter of 2005, according to the ECTA Broadband Scorecard, a quarterly analysis of the market.

Growth almost stalled in a number of countries, including Denmark and Belgium, which experienced just 3 percent growth. France saw growth slow to 10 percent after a much stronger performance in 2005, the analysis found. Spain, Sweden, and Austria also suffered a slow-down, it said.

“The Scorecard shows that growth has stalled in a number of countries where we have seen the power of the incumbent on the increase, including Denmark and Belgium, which experienced a paltry 3 percent growth in broadband penetration,” said Steen Clausen, managing director of ECTA.

France has fallen to eighth place in ECTA’s scorecard, well behind the U.K. for the first time, he said.

“This is extremely disappointing news from some of the countries that have traditionally been at the forefront of Europe’s broadband revolution,” Clausen said.

“Until recently, France was the poster child for broadband with some of the most attractive triple-play packages in Europe. It now needs to be vigilant if it is to maintain its position,” he added.

In contrast, in Germany, Deutsche Telekom’s market share dropped below 50 percent for the first time in the third quarter of last year, and at the same time, it had a surge in growth in broadband penetration.

The U.K. also experienced faster growth in broadband subscriptions.

“It seems that the U.K. has learned some of the lessons that propelled France up the league table and is now reaping those rewards with a multitude of offers to consumers. Germany too is starting to show signs of progress, which is very welcome after a slow start,” Clausen said.

Europe is home to some of the world’s leading broadband countries. However, its position in the fast track of broadband take-up globally could be put at risk if regulators do not act to re-enforce competition and open markets, ECTA warned.

The link between increased power for incumbents and stagnation has been confirmed by studies, including one from SPC Network, which concluded that Europe could gain an extra 20 million broadband lines by opening markets further to competition.

“This is a powerful warning for governments not to protect national champions, either now or for the future,” Clausen said. “Monopolies have never been good for consumers, and in some industries, governments have to take action to let competition flourish. In energy, for example, the Commission is proposing extra measures to open markets to competition. We believe this could provide some valuable lessons for telecoms.”

European Union rankings in the third quarter of the last three years are as follows:

Ranking Q3 2004 Q3 2005 Q3 2006

1 Sweden Denmark Denmark

2 Denmark Netherlands Netherlands

3 Netherlands Finland Finland

4 Belgium Sweden Sweden

5 Finland Belgium U.K.

6 France France Luxembourg

7 Austria U.K. Belgium

8 U.K. Luxembourg France

9 Germany Austria Austria

10 Portugal Germany Germany

11 Spain Portugal Portugal

12 Italy Italy Italy

13 Luxembourg Spain Spain

14 Ireland Ireland Ireland

15 Greece Greece Greece

The ECTA Broadband Scorecard is available at the association’s Web site.