The European Comission published its Progress Report on the Single European Electronic Communications Market in 2007. It contains a comparison of fixed broadband penetration rates together with the speed of progress. Although in January 2008, Austria has a penetration rate near to the EU27 average of 20%, the country also showed the smallest increase in penetration rate over the previous year.
However, these figures may also be misleading due to the ongoing evolution in broadband technologies.
According to the EC study, broadband growth rates have been the highest in Finland, Germany, Sweden, Ireland and Cyprus. Whereas for Finland and Sweden, the growth figures follows on from an already advanced position, for the three other countries this represents a ‘catching-up’.
According to Eurostat, Austria showed less than half of the average growth of the EU27 in 2007. Based on these data it seems that Austria will be lagging behind not only the leaders, but also the ‘catching up’ countries in the coming years.
However, European statistics for broadband cover only fixed broadband access (ie: DSL, cable) and do not include mobile broadband. In the area of mobile broadband Austria, is one of the leaders in Europe. More than half of the new broadband subscribers chose mobile broadband in 2007, thus 28% of the total Austria’s broadband subscribers are using mobile broadband.
So, is slow down of fixed line broadband growth in Austria a sign of a technology shift towards mobile broadband?
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It’s interesting to consider what this really means. Presumably, the fixed-line broadband growth happening in Northern Europe has to do with home users - families, films, music and entertainment.
I would expect mobile broadband to be mainly about business users - road warriors with laptops or creatives working outside the office.
Is it possible that Austrians are now adopting mobile broadband as a substitute for installing a fixed-line connection to the home?
In Hungary the ads of mobile operators suggest daily to use mobile broadband as a substitute of fixed-line broadband.
As of summer 2008 a mobile net with 3GB data costs 17EUR/month providing an effective 1Mbps speed in the covered areas. An entry level fixed line broadband costs 13 EUR/month with 1Mbps speed.
So the price is nearly the same and in addition you get the freedom of movement.
However if you require higher speeds (currently 4-8 Mbps are common for fixed line), then fixed-line broadband is the right choice.
Latest statistics for the Czech Republic show that the growth of all types of broadband is slowing. The only exception is mobile broadband, represented by CDMA and UMTS/HSDPA, which experienced some growth. Also FTTx is specific, with no change in growth between 2006 and 2007.
But all other types of broadband – be it wired or wireless – are slowing their growth. Most significantly ADSL: 2Q2006 brought 43 thousand new connections, 2Q2007 only 25, and 2Q2008 just 13. The second most frequent type of broadband connectivity, by Wi-Fi, is also slowing down, but only slightly (or perhaps nobody really knows how, because all Wi-Fi numbers are just estimates). And cable is somewhere in between.
My explanation is simple: people who wanted the Internet (and have use for it) already have it. Their demand is almost saturated. The currently modest growth is supply-driven: operators try hard to persuade the others to buy the Internet. But this is a very difficult task. IMHO it is more a question of education, knowledge, age and overall economic climate, and not a question of marketing.
Austria is one of the countries with the highest rates of fixed line abortion, primarily with classical telephone connections. Former incumbent Telekom Austria is fighting bravely to compensate the dwindling subscriber rates with cheap offers for online TV, which is difficult because Austria has a high rate of cable subscriptions and people are reluctant to pay for streaming stuff.
The telecom competition in Austria is one of the toughest worldwide. I talked to Alcatel executives yesterday who said that Austria is the ideal test market for new applications and business models, for if a new model works here it works everywhere else.