Governments stall on European broadband - World News

CommunicationsWeek International, April 1, 2002 by Michelle Donegan

Despite all the promise of government funds and collaboration to stimulate broadband services in Europe, many of these projects are in danger of stalling before they even emerge from the planning stages.

Projects in France, the Netherlands and Sweden have been affected by the battering taken by the telecoms sector, a dearth of implementation experience at the local government level and the lack of convincing broadband applications and demand for services.

So far, only 5% of the funds available from one Swedish government initiative has been applied for by regional municipalities, largely because of a lack of demand for broadband services among the population. "We don't have strong demand from the majority of Swedish households yet," said Arne Granholm, a special adviser to the Swedish Ministry of Industry, Employment and Communications. "This lack of pressure from households is, of course, hampering the interest on the commercial side."

If things don't pick up, political funding at the national level may soon dry up.

"It's difficult to see how the general stimulation of demand should be done, because that would cost money," said Granholm, adding that it will be unlikely that the finance minister will dedicate more funds to broadband when so little has been used to date.

But some analysts maintain that the way to ensure strong broadband growth anyway is not through government projects or funding, but through a strong, competitive market.

"These broadband initiatives have had nothing to do with the growth of the [broadband] market," said Eric Paulak, vice president for Internet service provider and infrastructure markets at Gartner Group, based in Stockholm. "In Sweden, for example, good broadband penetration has more to do with basic competition and not the government initiative."

In the Netherlands, the Kenniswijk--or "knowledge neighborhood"--project in Eindhoven is, according to Dutch consultants close to the project, "a bit messy" and seems threatened by bureaucracy. The public-private partnership project has already attracted more than 40 partner companies, but the organization needed to bring together contractors, vendors, telcos or cablecos and service providers is proving more complicated than anticipated.

"The city simply does not have the knowledge to do this," said one consultant, who preferred not to be named.

This lack of experience in dealing with broadband projects is a problem facing other European countries at a local level. "Imagine a room full of monkeys all trying to learn how to type the Bible at the same time," said Allen Porter, an independent consultant with MaceCorp Ltd., in Reigate, England, describing one such project.

In France, the national project announced last summer to promote broadband in rural areas (see CWI, 16 July, 2001 p. 3), has seen very little progress. One consultant close to the project said the only money so far allocated of the [euro]220-million government fund has been spent on studies to determine how best to distribute or set conditions for projects. The first real work is scheduled to begin at the end of this year or early next year, but the fate of the project will be determined by the pending national presidential and government elections.

Both of Sweden's broadband initiatives have problems as well, according to Granholm.

"If nothing radical happens this year, then I'll start to get nervous," he said.

One of the projects, to connect all 289 Swedish municipalities to a national broadband network running along the state-owned electricity grid, has reached only between 70 and 100 municipalities. It is due to be completed by the end of this year, but this, said Granholm, "is not possible."

The other national program, for which [euro]600 million is available, is designed to help municipalities deliver broadband services to citizens and has been extended by one year because of a slower than expected start.

The law for regulating how the funds will be allocated to the municipalities was only finalized last summer. "We hope a number of municipalities will start to apply for money this year," said Granholm. "The downturn in the market took us by surprise and we had to change the rules, so we had some initial problems."

Many experts also believe there is a lack of convincing content to attract users to take up broadband services, even if the government is helping to build the infrastructure. "I don't think [the Swedish initiative] is progressing the way people have planned because there aren't the applications [available]," said Peter Linder, Santa Barbara, California-based director of business development, access networks, for LM Ericsson AB.

The Swedish government is currently studying how to spur demand among Swedish people for broadband. While Sweden has a major e-government initiative intended to provide broadband content, Granholm is among those who insist there will have to be more attractive content.

"I don't think that local authority content is an attraction for people to buy expensive lines--it's not enough. There have to be other sources," said Granholm.