ECTA identifies €25bn European digital deficit

4 Mar 2010

An Analysys Mason study on behalf of European telco group ECTA has found that there is a €25bn deficit in lost earnings by consumers and businesses every year in Europe due to restricted broadband speeds and continued dominance by incumbent telecoms operators.

“Many countries show high, and stable or even increasing market shares for the incumbent,” according to the report. “For example, in the fixed calls market, incumbents retain 60-70pc of the retail market by value whilst broadband retail market shares remain unbalanced.

According to Eircom’s recent financial results, the company’s share of the broadband market is now down to 50pc.

However, according to ECTA, broadband speeds are being restricted in many nations. “The continued dominance of incumbent telecoms is a major stumbling block for the continent’s economic recovery efforts.

“There is a direct correlation between the speed of internet connectivity and the level of competition throughout Europe. In countries, where a high level of competition exists, a residential customer can expect speeds of 8 Mbps.

“In Ireland, where the level of competition is noticeably low, residential customers receive only a quarter of this speed for the same spend with an average speed of just 2 Mbps,” ECTA said.

ECTA’s Irish member is ALTO, the association for Alternative Operators in the Communications Market.

“If new entrant operators can gain unencumbered access to key infrastructure it follows that facilitation of local jobs, local business, education and communication will result,” said chairperson Ronan Lupton.

Why is Ireland lagging in broadband?

According to ECTA, Ireland’s low proportion of unbundled line has caused it to lag behind in speed tables.

Regulation is not yet sufficiently protecting the interests of consumers. In particular, remedies aimed at promoting competition are lagging market realities and competition law enforcement has proved slow and ineffective in preventing abuse of dominance.

“While the regulator has assisted positively, matters have not progressed far enough. New entrant operators remain frustrated by the current levels of access, and this leads to lower choice and availability for consumers.”

Lupton called on Eircom to get real about providing fair and efficient access to infrastructure now.

“The incumbent needs to play its role in facilitating entrepreneurial growth, indigenous business and consumer choice, not only for the good of its competition but also for the good of the economy,” he said.

By John Kennedy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years