Study: Broadband to surge in Europe

Nearly 72 million households in Europe will have broadband by 2010, according to projections released Wednesday by Forrester Research.

This will amount to 41 percent penetration of the total population and 67 percent of those expected to be online that year, the market researcher said.

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Broadband connectivity in Western European markets has been surging in the past two years. In the first half of 2004, European broadband market growth was below that of 2003, but full-year growth rates should be high, Forrester said.

In the first half of 2004, the company said, market growth was strong in France, Italy and the United Kingdom--up 34 percent, 45 percent and 38 percent, respectively.

"Massive price cuts are leading to a rapidly declining broadband premium," Lars Godell, principal analyst at Forrester, said in a statement. "This, combined with a continued strong supplier push, provides a major incentive to the consumer to make the switch to broadband."

The growth, however, will not necessarily mean big business for incumbent telecom carriers like BT Group and France Telecom, which are losing their dominant positions in the broadband markets, Forrester said. The research company attributes this trend to intense competition triggered by local loop unbundling--the opening to competitors of local carrier's lines into homes, and by an increased focus on the bundling of voice, video and data services.

Residential broadband penetration will be 54 percent in the Netherlands by 2010, Forrester said, while Europe's Big Five economies (France, Germany, Italy, Spain and the United Kingdom) will see penetration of between 35 percent and 45 percent. The growth in the Netherlands will be driven by online consumers, competition and falling broadband prices. In other European markets, lower online penetration and higher broadband prices will hamper growth, the study said.

The report also notes that in the first half of 2004, ADSL (Asymmetric Digital Subscriber Line) technology had market share of between 60 percent and 90 percent, except in markets that are dominated by cable, like the Netherlands.

Forrester analysts said that in the future, cable and other technologies, like fiber and fixed wireless technologies, will continue to make way for various forms of DSL, mainly because the companies promoting it, like TeliaSonera and Swisscom, have financial muscle.