Broadband service uptake has continued to grow in Europe despite obstacles posed by incumbent telecommunication companies, and is now entering a "third stage" of growth where advanced services such as VoIP will become more readily available to consumers.
London research and consulting firm Strategy Analytics estimated that Europe will have 33.5 million broadband subscribers by the end of this year, representing 20% of all homes. By 2008, 41% of European homes will have broadband subscriptions.
"The growth is being driven primarily by countries that have strong competitors to the incumbent telecommunication network operator, such as the Benelux countries - which have big cable operators offering broadband services - as well as Switzerland and Sweden, followed by Norway and Finland," said Martin Olausson, senior analyst at Strategy Analytics.
Sweden, Switzerland and Belgium - the countries with the strongest competition to incumbent telecommunication operators - are expected to have most aggressive broadband uptake by 2008 with penetration rates of between 55% and 60%.
Those forecasts are in line with a similar study released by IDC last December, which stated that the number of broadband connections will grow from 13 million in 2002 and almost 24 million in 2003, to 63 million in 2007.
Additionally, revenue will grow from €.3.3bn 2002 to more than €22.2bn in 2007.
The IDC study identified Denmark as having the highest broadband penetration, ahead of Switzerland, Belgium, the Netherlands and Sweden.
The UK, Germany and France, while experiencing a steady uptake in broadband services, are still somewhat hampered by strong incumbent telecommunication companies, such as BT, Deutsche Telekom and France Télécom, according to Olausson.
"In Germany, you've got DT basically controlling all of the DSL market, for example," Olausson said. "Government regulation on unbundling has been important in those countries. It has certainly had an impact in France, though at this point, less so in Germany."
He also believed broadband marketing is entering what he called the third phase of its evolution.
"Availability of broadband was the first stage, with the second stage moving to companies offering the highest speed at the lowest price. Now price tiering aimed at different user segments is widespread and we're moving into the third stage where successful service providers will be those that offer multiple broadband services such as VoIP and video."
Within the next three to four years, disruptive technologies such as VoIP will begin to have a real effect on the broadband market. "The more advanced operators, particularly the incumbents, are starting to see VoIP being as a clear migration path rather than simply a complementary service," Olausson said.
The IDC study found that smaller operators are already attempting to differentiate themselves from the incumbent by packaging voice with their DSL services, especially in France and, more recently, in the Netherlands.
Worldwide, the VoIP market will dominate the €38.7bn broadband value-added services market in 2009, accounting for €13bn, according to a study released in March by Jupiter Research.
Laura Rohde writes for IDG News Service