Wednesday, August 25, 2010
European Broadband Speeds Up 20%, Prices Down 8% between December 2009 and June 2010
At the same time, access speeds continue to increase. Almost 20 percent of the tariffs tracked during the second quarter of 2010 offered downstream bandwidths of 30 Mbps or greater (although the proportion of subscribers that actually take these ultra-fast services is likely to be much lower than 20 percent).
There are several obvious implications. As we have come to expect, speeds keep increasing, while prices per megabit per second continue to fall. Given discussions about increasing U.S. broadband speeds, it is worth noting that where 30 Mbps service is available, at prices lower than we see in the United States, fewer than 20 percent of consumers choose to buy such services.
Also, mobile substitution is starting to become a bigger issue. That likely will have a "depressing" impact on typical or average speeds, even if consumers have their own rational reasons for choosing lower-speed services.
As a result, the average price per megabit per second has declined from 7.5 EUR in the fourth quarter of 2009 to just 5.8 EUR in the second quarter of 2010 (see Figure 1). Some service providers, such as Romtelecom in Romania, offer services at a rate as low as 0.1 EUR per megabit per second.
Service providers continue to charge a 24 percent premium for bundles that include a broadband service with a downstream speed of 30Mbit/s or greater. This ultra-fast broadband premium has remained steady over the first half of 2010, despite an overall decline in the price of fixed broadband bundles in Europe.
Competition from mobile broadband services also contributed to the downward pressure on fixed broadband tariffs during the first half of 2010.
However, the premium that providers charge for mobile broadband services is also eroding. Prepaid mobile broadband services with usage caps of 3 GBytes or more now undercut entry-level fixed broadband service propositions in most Western European countries.
Some broadband markets in Central and Eastern Europe, such as those of Poland and Estonia, are also approaching pricing parity for fixed and mobile broadband services.
The median speed of a DSL service in Europe has reached 8 Mbps for the first time, compared with 15 Mbps for cable modem and 50 Mbps for residential fiber-to-the-basement services.
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