Europe broadband to boom by 2005

There is a silver lining to the broadband fiasco, but to realise it telcos, regulators and service providers must work together
Written by Matthew Broersma, Contributor

Europe's rollout of high-speed, or broadband, Internet access may continue to be dogged by delays and bureaucratic bungling, but industry analysts see a silver lining -- namely, the £10bn of revenues the European broadband industry will be generating by 2005.

Telcos, cable companies and regulators have underestimated the complexity of rolling out broadband services, leading to a slower takeup than originally hoped for. In the meantime, other areas such as the US and Korea have hooked up a substantial proportion of the population to technologies such as ADSL and cable-modems.

Even so, within four years there will be more than 50 million broadband connections in Europe, generating revenues of nearly $15bn (about £10bn) according to figures released on Thursday by research firm IDC.

IDC believes broadband will soon begin to catch fire, and recommends network operators help things along by investing in broadband content such as interactive video, gaming and other new services.

"None of the problems faced by the industry are insurmountable in the medium term, and while it is true that certain factors, such as market sentiment, are seldom directly controllable, many other variables are," said Hamish Mackenzie, senior research analyst for IDC's European Telecoms Services programme, in a statement.

"Where finances permit, operators need to follow up their massive investments in networks and equipment with intellectual investment in creating the kind of added value content and services that will enable them to maintain and increase average revenue per user (ARPU) as basic broadband access begins to commoditise."

The positive projections arrive just as some industry leaders are questioning whether broadband will really transform the Internet market as much as has been hyped. At Microsoft's annual Chief Executive Summit in Redmond, Washington on Wednesday, Microsoft chairman Bill Gates said broadband will probably reach less than 20 percent of US homes by 2005.

"There is no hardware limitation that will affect what you want to do, but there is one exception and that is the cost of broadband communication, primarily to the home," Gates said. "That is an area where progress continues to be very slow."

Reuters contributed to this report.

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