European broadband: today and to the end of the decade

Cable, fibre, copper, WiFi, satellite and LTE all in the mix

Europe is doing well. 5 of the top 10 ‘fastest’ markets worldwide are European, coverage is on a planned path (unlike many countries around the world) and many of the suppliers are showing useful financial stability and promise as revenues are increasing at least overall.

Planning the future of broadband in Europe (download PDF)

Broadband in Europe is doing  well.  5 of the top 10 ‘fastest’ markets worldwide are European, coverage is on a planned path (unlike many countries around the world) and many of the suppliers are showing useful financial stability and promise as revenues are increasing at least overall.

Figure 1: Top10 bandwidths around the world – October 2013
Bandwidth tests from Ookla

So what’s the fuss about?

We’re not pure fibre yet and won’t be for years or even decades.  Certainly an issue when it comes to straightforward delivery of bits to the consumer but is it a body blow?

Yes and no

Yes we’re going to have a hard time with some areas and it’s likely that we’ll be upgrading in a piecemeal fashion for years.  However it is an efficient reuse of existing resource and the prospects for that all important packet being delivered at a rate that’s meaningful are good.  Add to that the pace that the roll-out has managed to achieve, we can see the evidence above in the downstream bandwidths available to Europeans, and we are well placed for the moment…a question mark still hangs over the future.

Figure 2: EU technology growth in 2012

The state of play

Figure 3: European coverage by Next Generation Access technologies – end 2012

Next generation – whatever that means

Although satellite tariffs don’t currently meet the criteria for a next generation technology they will be capable of doing so in the next few years. LTE or 4G solutions face a similar path. Touted as the answer to (some) of Europe’s mobile data woes LTE has seen strong roll-outs in almost all member states in the last two years. Over 90% of the population of Sweden and Portugal can already get LTE coverage and the roll-out in other EU member states is accelerating. 4G faces its own particular issues however chief amongst them being cell size. The more users attempt to use a data connection in a cell the less everyone is allocated which has meant 4G/LTE has not been adopted as a next generation broadband technology by the EU. That said there are recent signals from the member states (and by extension the EU) that they may allow some relaxation of the definitions and requirements that will allow 4G/LTE operators to qualify for state aid if they provide coverage in underserved (white) areas of a market. 4G is capable of providing significantly better access for many when they’re on the move but it is still often the most expensive option for the consumer. Consumers have reflected their resistance to the pricing levels by ‘handing off’ data as often as they can to a wifi network. In fact over 70% and growing of mobile data doesn’t transit the mobile network at all and goes immediately via wifi to a fixed line (or equivalent). WiFi and WiMax will play an increasing role in providing coverage, often as an option but sometimes as a primary source, in the EU in the coming years. It has taken a while to move wifi/max into contention with low bandwidths and tricky installation (not so much technical difficulties, more about what can be utilised, where and under what conditions) playing their part. However as technology has improved they have become possible in-fill solution candidates as well as showing promise for backhaul with recent tests allowing transmission of 1Tbps if only for 20 metres. As we’ve noted above it is also the technology of choice when it comes to data access over mobile devices. Consumers will often wait until they are in range of a suitable wifi point before they initiate or complete data transfers, uploading videos or photos or streaming TV or downloading significant amounts. In the UK at least this has been noted and many local authorities are planning deployments that will cover large footfall areas. For widely dispersed rural populations however it isn’t yet available in enough areas to be considered as a general option.

The fixed mix

Fixed networks in Europe extend over more than 90% of the population, at least the copper element does. Certainly not everywhere however with 60.5% coverage in Poland and less than 50% in Estonia, Latvia and Slovakia. While this is the backbone of standard coverage in Europe it is only possible to (theoretically) achieve 24Mbps using an end to end copper solution and in most instances it is significantly less than that. At the end of 2012 more than 50% of the EU27 were in the next generation footprint. Cable and fibre, and hybrid networks with cable and/or fibre components, are the basic stock for the next generation soup that is emerging in Europe. While the original intention, in the heady days when credit was easy and austerity was just another noun, was for Europe to have fibre to the premises almost everywhere the subsequent economic turmoil has led to a more considered approach. Providers have been left largely to their own devices in urban areas and that has meant some penetration of end to end fibre in the cities, although still under 10% overall in 12 of the 27 member states. Most of those outside the densest areas however won’t have the option before the end of the decade. In fact many of the major markets have adopted a hybrid approach using fibre to a cabinet and then relying on the copper still in the ground to complete the local loop. This has significant financial advantages but does place some restrictions on who can get what bandwidth where. VDSL is the most rapidly growing fixed next generation technology. Add in recent developments and VDSL2, vectored, can provide up to 80Mbps if you’re in the right area. This is the major issue we face with an FTTc/VDSL solution. While 80% of the UK population and businesses are close enough to a cabinet to experience at improvement in their service that drops to 6% in France.

Figure 4: EU coverage by technology end 2012

It is outside the revenue dense areas that most attention needs to be paid in the coming years.  As we can see from the chart above there’s lots of room left for growth.

Rural Challenge

Most EU countries face a major future cost to bring the benefits of superfast broadband to their rural areas.  The investment per household will inevitably be high, far more than will be recovered by ordinary broadband charges, and the case for wider economic and social benefits is also more difficult to make.  On the other hand, the cost for providing rural NGA will vary hugely, depending very much on local circumstances and ingenuity.

Figure 5: the rural challenge for European next generation access coverage

Rural coverage remains the biggest problem for Europe and the approach to solving it will be dictated by financing and local conditions more than what we might or might not think is a suitable technical answer.

“Standard” broadband for all – even the ‘things’

The progress of standard (up to 24Mbps) and superfast or next generation broadband (30Mbps and above) has been steady throughout Europe in the last 15 years. With the introduction of the Digital Agenda and associated targets there is now a path to the end of the decade and in theory 100% availability of next generation access technologies to all European businesses and citizens. Standard coverage in 2013 is (within a whisker) of being complete. Fixed networks are being upgraded in many markets and while there is some increase in the footprint it has been, understandably, slow. The cost and logistical challenges of reaching many areas will see up to 10% or even higher of the EU28 outside the network of next generation fixed deployments by the end of the decade. Much of the coverage available outside the heavily urbanised areas is due to satellite and the new Ka band craft that are in orbit. These can provide, at the moment, 20Mpbs bandwidth but only to a small fraction of the potential audience. Capacity is an issue that is being, at least partially, addressed with more launches and better satellites joining the fleet on a regular basis. It is however a source of some frustration that while it has been obvious for some time that satellite would be the only route to complete coverage in Europe it is still not fully integrated into the broadband plans for many countries. It takes time to design, build, launch and test a new platform. Time that should have been factored in to the plans months or even years ago. Integrating smart cities, smart countries and ultimately a smart continent will also be an interesting task. The internet of things is already with us. On the downside, as far as planning and integration go at least, there’s a lot out there with potentially billions of devices needing to interact. On the upside it doesn’t look like it will take much bandwidth. This is perhaps the best application of white space broadband where the redundant analogue TV spectrum can be mapped and used for those applications that don’t need superfast to survive. Will Europe move towards a utility model for broadband? Will it become a ‘right’ enshrined in law and constitutions? What benefits could accrue if every citizen had the right, free or subsidised, to 5Mbps?

What will be the picture in 2020

After allowing for overlap, where multiple services are available in the same locale, we expect the coverage of Europe to be:

Figure 6: The fixed mix in Europe

With DOCSIS3.1 trailing today and into 2014 we’ll see cable networks (and HFC too) capable of gigabit range bandwidths at least downstream. Large scale increase in the overall footprint of cable networks is unlikely but it will be an important service for many consumers and provide important competition for hybrid and end to end networks. G.Fast is likely to be the next upgrade to the VDSL network. Again enabling bandwidths in the hundreds of megabits and closing in on the thousands it comes with some legacy problems however chief among them being signal decay over distance leading to a wider spread of achievable bandwidths than might be desirable. FTTP (FTTH and FTTB are included) is promoted as the ‘gold standard’ for broadband connections. If you can get it you’ll probably agree. With more flexibility for downstream and upstream than either cable or VDSL solutions it is more likely to be able to cope with significant growth in bandwidth demand particularly upstream. LTE/4 (and 5)G will be available across most of the land mass. Prices are likely to be lower and bandwidths higher by 2020 but given the deployment and pricing behaviour of operators to date it isn’t likely to be the flavour of choice for most data tasks. Satellite will continue to increase its capacity and boost bandwidth. It will suffer in direct comparison to a fixed service but it is so quick and (per person) cheap to deploy and getting cheaper as launch costs come down that it will be competitive in more areas than even today.

Coverage isn’t the only challenge that Europe will face

Broadband adoption has been slowing for a while now. As more and more of the market subscribes to a broadband line the remaining pool of more resistant consumers is harder to drain. Only a small, and dropping, fraction of the population doesn’t actually want a line. Citing privacy or security fears and sometimes saying that the internet ‘isn’t for me’ the non-adopters. There are approximately 2 million individuals in Europe, possibly more, who fall into this category. The remaining non-adopters however are going to be the next big challenge for policy makers. One of the following factors, or more often several in combination have been shown to predict the adoption (or not ) of residential broadband.

Figure 7: Home broadband adoption – basic causal loop

If income, education or availability move up then home internet adoption increases and we represent this with a (+) sign against the variable. Household composition can be divided into those with and without children. Where one or more children increases the probability of home broadband adoption. So we have take-up over 70% in many European markets, but getting that to 100% will be at least as hard and is likely to take at least as long.


Europe is well placed to take advantage of what is currently a strong position for broadband coverage. We have good bandwidth, at good prices, with good choice available to the majority of our population. With the Digital Agenda in place and many countries signed up to the objectives and publishing their own plans we have a good idea of what is intended and to an extent what is possible. A technology neutral, flexible approach will allow the EU along with other countries on the continent to continue to fill in the current gaps and we expect Europe to maintain its position in the top bracket of competitive broadband markets to the end of the decade. How the adoption problem is addressed and how we cope with the increase in bandwidth demand particularly towards the end of the decade will be the real test of European broadband.

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