Europe's broadband growth slows

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BRUSSELS -- Broadband growth is beginning to tail off as the market matures, though the growth is still significantly higher in Western Europe than in North America, according to figures from the Point Topic data agency.

The figures show that both regions have followed a similar pattern over the past three quarters with both experiencing an increase in growth at the end of 2006 and falls in both the first and second quarters of 2007.

Western Europe saw 5.3% growth in the second quarter of 2007, down from 7.1% in the first quarter and 7.4% in the fourth quarter of 2006. For North America, the growth rate from April to June was 3.1%, down from 5.4% for January to March, and 6.3% for October-December 2006.

The annual growth rates show a similar pattern: Western European countries grew subscribers at an annual rate of 28.2% from July 2006 to June 2007, while North American countries grew subscribers by 21.9% over the same period.

Denmark still leads the tables with 35.1% of the population subscribed to broadband, the Netherlands moved up to second place to 34.3%. Eight out of the top ten broadband countries by population are European countries -- the exceptions are South Korea and Hong Kong with penetration rates of 29.9% and 27.9% respectively.

The reason for the tail-off is attributed to the increasing household broadband penetration and the fact that there are fewer dial-up users to convert to an always-on connection. Beyond them, there is also a hardcore of households who do not have, and possibly do not want, Internet access of any kind.

"Not only are there fewer dial-up users but the ones that are left are also more resistant to change," said Tim Johnson, Point Topic's chief analyst. "They have low levels of Internet usage, often for e-mail only, and see no reason to pay extra for broadband."

Analysts also have pointed to evidence of an over-crowded broadband playing field. "Significant consolidation in the next 12-24 months appears inevitable," said Ben Piper, director of the Strategy Analytics Broadband Network Strategies service.

He said broadband service providers had to do more to differentiate themselves in what is becoming an increasingly commoditized market, or risk becoming simple utilities. "As the market reaches commoditization, operators are faced with a critical decision: provide true innovation through services, branding or overall customer experience in their offerings, or risk getting squeezed out of the market," Piper said.
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