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Finland’s Broadband USO an Inspiration for Europe

Europe’s governments are increasingly acting on the popular belief that the Internet should be a basic right, and that citizens not disposed to using IP-based services should nevertheless have access to its infrastructure. As such, governments either have already introduced legislation to this effect or are in the process of doing so. First off the block was Switzerland: from January 2008 Swisscom’s 10-year renewed USO (universal service obligation) has included the provision of broadband at a regulated price. In remote mountainous regions Swisscom may choose to service customers with a lower-speed mobile connection, but as HSPA technology improves there is no significant disadvantage in this. Given the country’s excellent DSL and cable infrastructure, the number of people who have been provisioned with broadband through the USO currently runs to less than three thousand. In Finland, broadband is now part of the USO (for some 26 operators in each geographical area), in Italy it will become so by the end of 2010, in Spain from January 2011. Other countries with similar legislation and plans include France and the UK. As for the EC, it envisages making the provision of broadband compulsory across the EU27 by 2013, with access of at least 30Mb/s required by 2020.

Finland’s approach may be a guide for other European governments and regulators. The country’s Communications Markets Act, amended in October 2009 and which came into force this month, requires telcos subject to a USO to provide broadband as a universal service at a reasonable price. Universal service is defined as technology-independent, meaning that broadband can be provided by a fixed-line or wireless connection. The revised Act increased the previous 30-50Kb/s Internet access rate required under the former USO to 1Mb/s. This speed increase means that the service must also be implemented with upgraded wireless solutions across rural areas of the country. The regulator is responsible for monitoring the price of broadband through the USO and to codify and list comparisons of these to the price levels of other telecoms services, but it does not have the power to lay down a price limit for a subscription before those services are available on the open market. It has, however, suggested a monthly fee of between €30 and €40 as appropriate. The government intends that universal access to broadband would be paid for by operators, and that no public funding was to be used. Nevertheless, the Communications Market Act provides that if the regulator deems that the cost to operators is excessive then they can be compensated from State funds.

The Act represents the first step in an ambitious program to make 100Mb/s broadband universal by the end of 2015, which of necessity anticipates 4G (LTE) mobile network upgrades to be widely available. The target may be ambitious, but since mid-2008 telcos, utilities and housing associations have ramped up their fibre network investments, extending fibre beyond the major cities and their suburbs to incorporate other communities as well. In smaller population centres fixed broadband is still predominantly provided via the copper network, though the inherent limitations of copper are rapidly being addressed: in September 2009 TeliaSonera, with equipment provided by Alcatel-Lucent, deployed the country’s first 100Mb/s hybrid FttB/VDSL2-based network. In sparsely-populated areas wireless broadband is currently provided by Digita’s network, utilising the 450MHz band. Naturally, the government has emphasised fibre as a solution for the future—the regulator estimated that by 2015 about 94% of household connections would be within 2kms of the national fibre network. The cost of connections was estimated at between €2,000 and €3,000 per household, with some more remote areas costing up to €10,000 per household.

The recent experience of TeliaSonera, Tele2 and Telenor with LTE in neighbouring Norway and Sweden is encouraging, for it augurs well for the provision of high-data mobile broadband in rural areas. TeliaSonera, of course, secured a world first commercial LTE service in Oslo and Stockholm in late 2009, and is currently working to expand the network to 25 cities in Sweden and four in Norway. Early adopters report that LTE provides realistic data rates of up to 70Mb/s when close to base stations—of which the company has deployed about 1,500 in Stockholm alone. Tele2 and Telenor—through their joint venture Net4Mobility—plan to deploy LTE in 100 Swedish cities by the end of 2011 after launching in Stockholm, Gothenburg, Malmo, Karlskrona and Lund before the end of this year. The operators expect to cover 99% of the population by the end of 2013.

In sum, during the next few years in Scandinavia, as well as in a few other choice European countries, there will be a healthy alignment between regulatory efforts to ease the expansion of fast broadband (both fixed-line and mobile) and the technologies to make this realisable in principle.

By Paul Budde, Managing Director of Paul Budde Communication

Paul is also a contributor of the Paul Budde Communication blog located here.

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