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The Whole of the EU Could Get Superfast Broadband for GBP69 Billion

Tuesday, May 21st, 2013 (8:29 am) - Score 1,207

A new report from Point Topic has claimed that the cost of making superfast broadband (30Mbps+) available to 100% of the UK and Europe could be just £69 billion (EUR 82bn), which is considerably less than the original estimate of up to £228 bn (EUR 270bn). The catch is it would be hybrid-fibre (FTTC/N) and not true fibre optic (FTTH/P).

Hybrid-fibre services, such as Virgin Media’s FTTN / EuroDOCSIS3.0 based mix of coax, copper and fibre optic cable or BT’s FTTC (VDSL) solutions, are admittedly much cheaper to deliver than FTTH as the latter requires you to dig a new fibre optic cable all the way into homes and businesses (hybrid solutions broadly re-use the existing copper or coax cables).

But hybrids are also slower and VDSL in particular can suffer from variable speeds, especially for those whom live furthest from their local street cabinet where the speeds can drop off to little more than 2-5Mbps. Never the less Point Topic’s report chose to use hybrid-fibre as its benchmark for modelling the cost of the superfast rollout in more densely populated areas, although some of its estimates still “assume much wider use of FTTH” than exists today.

Tim Johnson, Report Author, said:

Eighty billion euros is still a lot of money but we think our figure is more accurate than earlier ones. It’s more realistic and should be more acceptable.”

The report also adopted a new approach to separating out areas of high and low cost for the superfast rollout. “The methodology identifies the population density in every square kilometre across Europe and divides them into three sectors – urban, semi-rural and rural,” said the study.

The conclusion of this model is that only 14% of EU homes were found to be in “deeply rural areas” (i.e. less than 100 people per square kilometre), which is well below the earlier estimates of 19%. This is important because rural areas are significantly more expensive to cater for than urban ones (i.e. it takes a lot longer for ISPs to gain a return on their investment) and even with the new figure it would still cost the lions share (EUR 52bn) of that EUR 82bn to make the service available to every rural home.

rural superfast broadband challenge europe 2013

After that another EUR 22bn would be needed to cover the semi-rural sector (larger towns / villages – 100-600 people per square km) and the final EUR 8bn “should be enough” to bring superfast broadband to all the 148 million households (71% of the total) that make up Europe’s cities, towns and suburbs (more than 600 people per square km).

Report Extract:

The high cost of rural coverage dominates the picture as far as individual countries are concerned. Of Europe’s big four, France, as the most rural, has the biggest investment need at €17.5bn. The UK on the other hand, although similar in population, needs only €7.5bn.

Among the medium-sized countries Spain, Sweden, Greece and Ireland require relatively large investments. At the other end of the scale, countries which are relatively small, or highly urbanised, or both, have more modest needs, typically less than €350m, although that may still be high in terms of expenditure per head.”

The estimate of EUR 52bn for rural areas also assumes that any related investment will be “capped at an average of €2,000 per home” and most of that amount will have to be funded by the taxpayer. “We think that’s about as much as they will stand for,” said Johnson. It should be said that the funding estimates tend to assume a mix of both public and private investment (i.e. match funding).

In terms of the United Kingdom. Past studies have estimated that it would cost around £5bn to make FTTC services available to 90-100% of the country (this is more or less the path chosen by the current government – 90% target for 2015), while the predictions for a true fibre optic infrastructure (FTTH/P) tend to vary between £15bn and £30bn depending on differences in regulation, methodology, coverage/speed targets and technology mix.

Meanwhile the EU’s Digital Agenda aims to bring “basic broadband” (0.5-4Mbps) to all Europeans by 2013 and to ensure that, by 2020, all Europeans have access to much higher internet speeds of above 30Mbps and 50% or more of European households subscribe to internet access above 100Mbps. The first target has more or less been met in the UK but the second is expected to be more of a challenge, especially for that final 5-10% where a clear post-2015 strategy has yet to be defined.

Mark-Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook and .
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