March 30, 2005

As a whole, Western Europe trails North America in Internet high-speed and broadband adoption, but countries such as the Netherlands, Belgium, Switzerland, Denmark and Sweden registered broadband penetration rates equal to or higher than the United States at the end of last year.

Furthermore, recent broadband service offerings in France, Italy and the UK are as competitive and innovative as anything offered around the world.

"Europe is not following the US in broadband development," says Ben Macklin, eMarketer Senior Analyst and author of the new Europe Broadband report. "It is cutting its own path."

Broadband households in Western Europe increased by nearly 65% last year, a rate twice as fast as the US. The highest growth was in France, until recently an Internet laggard.

"Why are the French jumping on board the broadband bandwagon?" asks Mr. Macklin. "The surest driver of all: price. Worldwide, only Japan has cheaper bandwidth."

Mr. Macklin continues: "France is a good example of how differently broadband is developing, country by country. The French can now get a 20Mbps Internet connection, 100 digital TV channels and home video telephony from their telephone socket in the wall, all for under €30 per month. This service innovation has been an enormous catalyst for broadband growth."

Breaking down Internet users by broadband and dial-up (accessed from all locations) shows that nearly 60% of all French Internet users accessed the Internet from a broadband connection in 2004 compared with only 32.1% in Germany.

It is worth noting that ISDN (integrated subscriber digital network) technology is very popular in Germany (11 million subscribers) and typically provides the end-user with bandwidth of 128kbps — twice the rate of normal dial-up connections, which may go some way in explaining why dial-up still is enormously popular in Germany.

Recent data from Nielsen//NetRatings indicates that high-speed Internet users accessing the Net from home grew 60% throughout Europe in 2004, but France, the UK and Italy experienced growth far in excess of that.

"Broadband supply is half the story," says Mr. Macklin. "Broadband demand is the other half."

Looking across the globe, service innovation has proved to be an important factor in driving broadband adoption. In South Korea and China, online gaming and broadband go hand in hand.

In Japan, cheap voice over IP (VoIP) was a catalyst for explosive broadband growth in 2002 and 2003. In Hong Kong, Internet Protocol TV (IPTV) is an important service differentiator for the local telecom operator. What is driving adoption in Europe?

There is no single, simple answer. "Western Europe contains over 15 countries, each a unique market," says Mr. Macklin.

Source: eMarketer