In May 2010, the European Commission adopted its Digital Agenda policy programme. It was one of the first flagship initiatives of the EU 2020 strategy. It set ambitious targets to provide all European households with ubiquitous coverage of 30 Mbps as a minimum and half of them with a subscription of 100 Mbps by 2020. Today, some are raising concerns that the goals of the Digital Agenda (DA) will not be reached in many Member States as the necessary expenditure is beyond reach, especially in the current economic situation…
In May 2010, the European Commission adopted its Digital Agenda policy programme. It was one of the first flagship initiatives of the EU 2020 strategy. It set ambitious targets to provide all European households with ubiquitous coverage of 30 Mbps as a minimum and half of them with a subscription of 100 Mbps by 2020. Today, some are raising concerns that the goals of the Digital Agenda (DA) will not be reached in many Member States as the necessary expenditure is beyond reach, especially in the current economic situation. This report focuses on the cost of reaching these ambitious goals and attempts to clarify what that will be for each country.
"In several European countries, the rollout of FTTH networks has started. Copper local loops will eventually be replaced by fibre, as this is the only medium that can guarantee an almost-infinite bandwidth capacity for the future. Nevertheless, good quality copper, especially in Western Europe, and the current economic situation, could lead some telcos to consider other alternative scenarios involving VDSL, LTE or even satellite in Ka band", says Roland Montagne, Director of the Telecom Business Unit at IDATE. He adds: "The adoption of a FTTH-oriented scenario by telcos will not only depend on the amount of CAPEX necessary but also on a viable business model. Telcos should be innovative not only on the services they propose but also on their pricing approach, as in tiered pricing."
Ranking of EU27 countries by their corrected FTTx household coverage rates (estimate of overlapping
architectures), end of 2011
Mostly FTTH Mostly FTTB Mostly FTTN+VDSL Mostly FTTLA
• Reaching the goals of the Digital Agenda, also known as the ‘Digital Agenda for Europe’ (DAE), will be challenging for Europe, not only with regard to coverage but also concerning the uptake of 100 Mbps access. Indeed, the number of 100 Mbps subscribers in EU27 at the end of 2011 is estimated at four million. This means that over 12 million new subscribers will need to be recruited each year in Europe until 2020.
• In order to build the theoretical model of the costs of reaching the DA goals, IDATE started by drawing up several assumptions about ‘overlapping’ in each country with the aim of establishing the ‘net’ number of FTTx homes passed, and thus the effective level of NGA coverage. Consolidating this in the EU27 gives a net NGA coverage rate of 40% of European households in late-2011. Among the four fixed NGN architectures considered (FTTH/B, FTTLA+DOCSIS 3.0, FTTN+VDSL and FTTx/LAN), it is estimated that European NGN coverage at that time was 23% for FTTH/B, 24% for FTTN+VDSL, and over 50% for FTTLA+DOCSIS 3.0.
• Using these coverage estimates as a baseline, IDATE modelled the investment required for each of the 27 Member States to reach the broadband objectives of the Commission's DA. It also took into account the national broadband or ultra-fast broadband plans already launched for each member state, with their associated objectives of coverage up to 2020.
• IDATE considered no duplication of infrastructure in our cost model. Indeed, the model's output shows the cost of reaching the minimum DA targets by rolling out one single network per coverage area.
• Four scenarios in different constellations have been modelled, including a full FTTH/B coverage scenario. Depending on the mix of technologies deployed, these scenarios will cost between 49 billion EUR and 274 billion EUR.
• These amounts, whilst certainly substantial, are within the expected range and therefore come as a confirmation of the ambitious nature of the broadband objectives of the DAE.
Comparison of scenario costs
*50% uptake Source: IDATE
NOTE: Scenario names are chosen to reflect main technological characteristics, but do not express a preference for any given technology to reach the broadband objectives of the Digital Agenda.
Base case = FTTH/B+FTTLA+VDSL2+LTE
Wireless = LTE+FTTH/B
Vectoring = FTTH/B+FTTLA+VDSL Vectoring+VDSL2+LTE)
90% FTTH/B = 90% FTTH/B only + 10% LTE
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