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1 1 The views expressed in this paper are those of the author and do not necessarily reflect the opinions of the ITU or its Membership. Broadband competition: Penetration, speed and price Taylor Reynolds ITU Strategy and Policy Unit 26 September 2003
2 Broadband facts! 63 million subscribers worldwide (1% of the world) in over 80 countries (31 Dec 2002)! 94% of subscribers are in high-income economies! Speeds vary from Mbit/s to 100 Mbit/s! Nearly 60% of broadband is delivered over telephone networks, 40% over cable Broadband subscribers, millions, by region, Dec 2002 Asia: 25.1 Europe 12.5 Americas Africa: < 1 million Oceania: < 1 million
3 Leading broadband economies Broadband penetration, subs per 100 inhabitants, by technology, 2002 Korea (Rep.) 21.3 Hong Kong, China Canada Taiw an, China Denmark DSL Cable Other Belgium 8.4 Iceland 8.4 Sw eden Netherlands Japan United States Austria 6.6 Sw itzerland Singapore Finland 5.3 Source: ITU World Telecommunication Indicators Database
4 Just how far ahead is Korea? Broadband subscribers, end m 10.7m Denmark, Italy, Finland, Portugal, Spain, Ireland, Luxembourg & Greece 8 Austria Sweden Belgium 6 Netherlands UK 4 France Source: ITU World Telecom Indicators Database Rep. of Korea, Population 47 m European Union, Population 380 m Germany
5 Relative broadband speeds Broadband speed comparisons, Mbit/s, July 2003 Japan - ADSL (520x) Korea (Rep) - VDSL (400x) ITU (Leased line) (240x) USA - Cable (30x) Switzerland - ADSL (15x) Dial-up (1x) 5 Source: ITU research
6 Downloading DVD video! Time needed to download a DVD over each Internet connection (4 gigabyte file) 6 " Japan: ADSL (26 Mbit/s) 20 minutes " Korea: VDSL (20 Mbit/s) 26 minutes " ITU: Leased line (12 Mbit/s) 44 minutes " Belgium: ADSL (3 Mbit/s) 3 hours " Denmark: ADSL (2 Mbit/s) 4.5 hours " USA: Cable modem (1.5 Mbit/s) 6 hours " CH: ADSL (0.756 Mbit/s) 12 hours " Dial-up (0.056 Mbit/s) 7.5 days
7 Broadband prices 7 Broadband subscription charges, July 2003, US$ Japan Netherlands Austria United States Germany Belgium HK, China Cyprus Norw ay UK Israel Macao, China Denmark Korea (Rep.) Jordan France Sw eden Canada Sw itzerland Singapore Malta Lithuania Slovenia Iceland New Zealand Ireland Italy Portugal Luxembourg Australia Source: ITU research $24.19 $32.48 $32.59 $33.18 $33.93 $34.41 $38.21 $39.64 $40.61 Overall subscription charges are important $44.56 $45.20 $46.16 $47.63 $49.23 $49.72 $50.56 $51.46 $51.55 $51.82 $52.99 $53.34 $57.36 $57.84 $58.03 $58.27 $61.69 $73.59 $73.66 $79.54 $91.77 Cost of 100 kbit/s as % of monthly income Japan Korea (Rep.) Belgium Hong Kong, China Singapore United States Canada Netherlands Macao, China Germany Norw ay Israel Austria New Zealand Slovenia Italy United Kingdom Luxembourg Sw eden Australia France Ireland Portugal Sw itzerland Cyprus Iceland Lithuania Malta Jordan Denmark < 0.01% 0.03% 0.06% 0.06% 0.12% 0.13% 0.17% 0.17% 0.21% 0.23% But factoring in the speed of the connection and income is the more telling story 0.24% 0.30% 0.30% 0.34% 0.36% 0.39% 0.43% 0.48% 0.55% 0.55% 0.60% 0.61% 0.62% 0.80% 0.86% 0.88% 1.14% 1.36% 1.42% 1.55%
8 8 Asian competition Broadband in Korea and Japan is the world s fastest as well as the world s least expensive! Korea " Competitive ADSL provider (Hanaro) provides true facilities-based competition to the incumbent (KT). Cable and wireless providers also have a strong presence and wide coverage in the market. " Same-day ADSL hookup! Japan " Lowest loop access charges in the world Copper phone networks (US$ 1.40) Fibre to the home (US$ 43.33) " 47 ADSL providers in June 2002
9 Switzerland: Competition, but not on monthly price or speed Monthly subscription rate for 600 kbit/s service, CHF, Sept 2003 Bluewin (ADSL) Tiscali (ADSL) Tele2 (ADSL) Sunrise (ADSL) Cablecom (Cable) (12 months) Free: Installation, 6 months service (24 months) Free: Modem & installation (12 months) Free: Modem, installation, service until 2004 (12 months) 1/2 price monthly charge for 3 months (6 months) Source: ITU Research, length of required contract given in parenthesis
10 Why some economies succeed with broadband! Competition " There is no substitute for true market competition to expand networks and lower prices! Government involvement " Economies where the government is actively involved in broadband promotion have higher penetration rates! Integration of broadband applications in society " Korea has 25,000 cybercafés (open 24 hours) despite having the highest home broadband penetration in the world 10
11 ! ISDN European challenges & opportunities " Operators have been and are still unwilling to actively push lucrative ISDN customers to ADSL! Lack of effective competition in the market " Weak inter-modal or same-service competition. Competitive players often too weak to compete with the incumbent! Cross ownership issues " Forced divestitures have spurred growth! Government policies " EU and national policies are making broadband a priority! Consumer awareness " Europeans are becoming more aware of broadband s benefits through increased marketing and awareness programs 11
12 Thank you Taylor Reynolds 12
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