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UNI ICTS FOR THE LONG-RUN BROADBAND: WHAT HAPPENED SINCE ATHENS 2007?

Prepared by Lorenzo De Santis, UNI Global Union, for the Inaugural UNI ICTS Conference, , October 2011 BROADBAND: WHAT HAPPENED SINCE ATHENS 2007? 1 Overview

Access to broadband has become es- In the US, a recent study sential for full participation in the economy and society at large. Fast broadband net- showed that every percent- works have the potential to create jobs and boost economic output. UNI global union age point increase in broad- and its affiliates have been very active in this field and their campaigns to influence band penetration leads to policy and action in this area are too nu- the creation of 300,000 jobs. merous to mention individually. 1 In the US, a recent study showed that every percent- age point increase in broadband penetra- tion leads to the creation of 300,000 jobs. is a vital utility for small businesses and According to the World Bank, in low-and broadband provision should be a universal 2 1 We know that unions such as middle-income every 10 percent- service obligation. Prospect, Ver.di, CWA, CWU-UK, age point increase in broadband penetra- CCOO, UGT, Dansk Metal, Pro and Sintetel are deeply involved in tion improves economic growth by 1.38 During the 2nd UNI Telecom World Confer- their respective national debates, among others. percentage points. And business agrees, ence held in Athens in 2007 we launched 2 Broadband: Steps for an incom- with the Federation of Small Businesses the “UNI Telecom for the long-run cam- ing Government (Federation of Small Businesses, May 2010). (FSB) in the UK arguing that broadband paign” which called for: 1 Universal and Affordable Service. 2 Fixed wired broadband subscriptions Quality Jobs and Service. per 100 inhabitants, 2000-2010 3 Financial Equity & Transparency. 30 Four years later it is time to give an update Developed 25 World on where we stand on these topics. Since Developing 2007 the world has considerably changed 20 together with the ICT industry. To reflect these changes the IT and Telecom sectors

15 are merging into one to form UNI ICTS. Additionally, the sector decided to focus PER 100 INHABITANT S 10 on the first two points and their evolution since 2007 as point number three is less relevant to the sectors’ strategy. 5

On a global level, the proportion of peo- 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 ple connected via wired broadband grew by 43% since the last UNI World Telecom The developed/developing classifications are based on the UN M49, see: http://www.itu.int/ Conference. The increase in the devel- ITU-D/ict/definitions/regions/index.html. Source: ITU World Telecommunication /ICT Indicators database.

2 UNI ICTS FOR THE LONG-RUN oping world (over 80%)3 has been more Active mobile broadband subscriptions impressive than in developed countries per 100 inhabitants, 2007-2010 Overview (29%). However, the penetration rate re- 50 mains much lower in developing econo- mies with 4.2% than in the developed world 45 Developed World with 23.6%. The proportion of households 40 Developing having access to broadband in the EU 27 and US reached more than 60% in 2010. 35 30 In comparison, active mobile broadband 25 subscriptions per 100 inhabitants tripled 20

worldwide since 2007. Although the pene- PER 100 INHABITANT S

tration remains low in the developing world 15 (5%) the increase has still been outstanding there with a penetration rate being 6 times 10 higher in 2010 than in 2007. In developed 5 countries this proportion “only” grew by 0 150% with almost half the population now 2007 2008 2009 2010 having mobile broadband access.4 Clearly The developed/ classifications are based on the UN M49, see: http://www.itu.int/ the growth in active mobile broadband sub- ITU-D/ict/definitions/regions/index.html. Source: ITU World Telecommunication /ICT Indicators database. scriptions is driven by the increasing use of mobile phones to surf the internet. to broadband while this share reaches In 2007 19% of mobile phone owners in 68% in cities. And the divide exists not the US used their phone to access the only among geographic areas but income 3 The proportion of fixed wired broadband subscriptions grew Internet, and by May 2010 the share had as well. Ninety-three percent of American from 18.3% to 23.6% in developed doubled to 38%. In the EU 27, the use of households earning more than USD 75,000 countries while it grew from 2.3% to 4.2% during the same period in mobile phones to access the Internet by annually have access to broadband com- developing ones. 4 individuals jumped from 7.4% in 2008 to pared to 40% of those earning below USD The number of mobile broadband subscriptions refers to subscrip- 13.8% in 2010. During the same period 20,000. In the UK, if market solutions were tions that have access to a high- speed mobile network. It must be of time, the number of persons using their the only options in place for broadband ac- used with caution and rather indi- mobile phones to access the internet more cess only two-thirds of households would cates a potential for Internet ac- cess since it does not necessarily than tripled in the UK. In Korea more than gain access to new superfast broadband. mean that subscribers are actual users of those services (they may 50% of wireless internet users declared to That is the reason why the UK government just be using their mobiles for tel- use their phone to surf the web in 2009. and more than 40 governments around ephone calls or SMS messages). 5 The 40 countries are: , the world now explicitly mandate access to , , , , , , broadband in their universal service defi- , , , Do- Universal service nitions according to the International Tel- minican Republic, , , , , , , 5 still a long way off ecommunication Union (ITU). , , , , , , Mo- The digital divide doesn’t exist only be- rocco, , , , tween developing and developed nations Governments have very diverse strategies , , , , , , Sri but also within a country between urban when it comes to funding. Funds specifical- Lanka, , , , , Trinidad & Tobago, and rural areas, rich and poor. In the US ly dedicated to Universal Broadband Ac- , . (ITU Stat- only 50% of adults in rural areas subscribe cess (UBA) are more prevalent in the de- shot January 2011 (www.itu.int)

BROADBAND: WHAT HAPPENED SINCE ATHENS 2007? 3 veloping world than in the developed. For aims at access for all by 2012 example, only 9 funds exist in developed through the creation of a certificate to be countries for UBA whilst in they are granted to those providers offering a mini- commonly used and funded through oper- mum of 512 Kbps at an affordable price of ator levies, government contributions and/ less than USD 48 per month. or donor funds. and have taken the Policies to implement UBA also vary great- initiative to fund and own broadband infra- ly from country to country: structure to guarantee maximum coverage.

Switzerland included broadband in USO6 UK the regulator threatened to shorten as a way to expand coverage (2008). The license validity, should coverage obliga- universal service provider charged with tions not be met. USO must provide a broadband connec- tion to the whole population, via DSL or Finally, infrastructure competition contin- satellite or other technologies. ues to prove efficient in Asian nations such as Korea, and China. Gener- Finland broadband access is a legal right ally speaking, alternative platforms like and by the end of 2015, 99% of permanent wireless networks have a crucial role to residences should have access if they re- play in the debate, since they can provide side within 2 kilometres of a fibre-optic or competitive services in remote areas. cable network. Significant investments are required to WiMAX7 operators also include re- achieve the ambitious targets set by gov- gional providers with the regulator plan- ernments. As the EU Commission de- ning to award additional spectrum to any clared, “action needs to be focused on new operator on the third-generation net- providing the right incentives to stimulate works. On the demand-side strategy has private investment, complemented by included programs for e-literacy, e-govern- carefully targeted public investments…” ment, and ICT diffusion. For example, by In the EU the amounts needed are difficult 2008, almost all municipalities had Internet to calculate but a review of recent stud- access, and 80% had Web sites. ies indicates that between EUR 38bn and EUR 58bn would be needed to achieve Malaysia the government is concen- the 30 Mbps coverage for all by 2020 and trating on third-generation WiMAX and between EUR 181bn and EUR 268bn to FTTH8 platforms to expand broadband provide sufficient coverage so that 50% adoption and the network will be rolled of households are on 100 Mbps services. out by Telekom Malaysia under a public- private partnership. Broadband speeds India the government’s plan includes: finan- Recently, particular attention has been cial support for infrastructure sharing, sup- given to the fact that actual speeds don’t porting backbone infrastructure, exemption match advertised ones. For example, in 6 Universal Service Obligation the UK, Ofcom11 reported that advertised 7 Worldwide Interoperability for Mi- from spectrum charges for niche operators, crowave Access discount on annual fees and spectrum fees speeds increased by nearly 50% between 8 Fiber To The Home linked to rural areas, and abandoning rights April 2009 and May 2010, while actual 9 New Generation Networks of way charges for rural networks. speeds delivered increased only by 27%, and averaged just 46% of the advertised will provide investors with a EUR speeds. A number of OECD countries 800 million credit line to develop NGNs9 (France, Korea, Portugal, and Spain)

4 UNI ICTS FOR THE LONG-RUN Table 1: Broadband public investment goals and targets, selected countries (2010)

Public Investment Goals Penetration targets Speed targets Australia Up to AUD 43 Creation of a National Broadband 90% of all homes and 100 Mbps for 90%, 12 Mbps for billion (USD 46 bil- Network businesses connected the remaining 10%. lion) over 8 years. by fibre Brazil R$ 13 billion (USD Reactivate the dormant optical 75% of households Minimum speeds of 1 Mbps with 8.1 billion) fiber network to connect 12 million prices starting at R$35 ($23). households to the internet at low prices by 2014. CAD 225 million To encourage the expansion and As many households 1.5 Mbps download (USD 230.1 mil- availability of broadband connectiv- as possible. lion) ity to as many currently unserved and underserved households as possible. EU-27 EUR 3.9 billion10 By 2020, all Europeans should 100% of households At least 30 Mbps for everyone (USD 5.6 billion) have access to internet. should have access to and at least 50% of households internet of above 30 with 100 Mbps connection. Mbps JPY 185 billion. Eliminating the digital divide, pro- Broadband: 100% by n.a. (USD 2.4 billion) moting the development of wireless 2010. broadband and fostering digital Ultra-high speed: 90% terrestrial broadcasting. by 2010. Korea KRW 1.3 trillion u-BcN based on All-IP network. 50-100 Mbps service to Fixed: 1 Gbps (maximum). (USD 1.2 billion) Mobilising further KRW 32.8 trillion 14 million residents by Mobile: 10 Mbps (average). over 5 years. from the private sector. 2012 (1 Gbps service by 2013). Malaysia USD 700 million Create a fiber optic network that n.a n.a will connect about 2.2 million urban households by 2012. United USD 350 million. The development and maintenance n.a. n.a. States of a national broadband map. Funding will be directed to high- quality projects that are designed to gather data at the address level on broadband availability, technology, speed, infrastructure, and average revenue per user (ARPU) across the project area.

USD 2.4 billion. The expansion of broadband ser- n.a. Two-way data transmission with vice in rural areas through financing advertised speeds of at least 768 and grants to projects that provide kbps downstream and at least access to high-speed service and 200 kbps upstream to end users, facilitate economic development in or providing sufficient capacity in locations without sufficient access a middle-mile project to sup- to such service. port the provision of broadband service to end users.

To extend broadband access to n.a. Two-way data transmission with unserved areas, improve access advertised speeds of at least 768 to underserved areas, and expand kbps downstream and at least broadband access to a wide range 200 kbps upstream to end users, of institutions and individuals, in- or providing sufficient capacity in cluding vulnerable populations a middle-mile project to sup- port the provision of broadband service to end users.

Source: OECD Information Technology Outlook 2010, European Commission 2010 and the World Bank 2010. NB: Exchange rates based on www.xe.com on August 31st, 2011. 10 We used planned expenditure of EU ERDF structural funds on broadband when government sources were not available.

BROADBAND: WHAT HAPPENED SINCE ATHENS 2007? 5 In the UK, Ofcom reported that advertised speeds increased by nearly 50% between April 2009 and May 2010, while actual speeds delivered increased only by 27%, and averaged just 46% of the advertised speeds.

consequently developed a framework to average advertised download speed of measure and report the quality of broad- up to 85.6 Mbit/s but the median was 12.3 band services. Regulators in the US, Den- Mbit/s. Similar gaps were seen in Portugal, mark, , and Korea are pro- the Slovak Republic and . Across viding consumers with tools to measure all OECD countries, the median advertised the speed of their broadband lines directly. download speed was 15.4 Mbit/s in Sep- An OECD data collection revealed that tember 2010, compared to the average the average advertised speed of all plat- advertised download speed of 37.5 Mbit/s. forms increased by more than 20%, from October 2009 to September 2010 due to As for real observed average speeds initiatives to upgrade broadband by many they have increased by 6.1% from 2009 network operators. to 2010 with Korea leading the way in the OECD with 16.6 Mbit/s while Mexico had Advertised vs. Observed Speeds the slowest connection with 1.5 Mbit/s. An In September 2010, France and Japan earlier analysis, based on a commercial had the fastest median advertised down- sample of home computers during the first load speed of up to 100 Mbit/s. Korea was half of 2009, suggested that median and third with up to 50 Mbit/s of median down- average advertised download speeds for load speed. Some countries presented a purchased services were about 7 Mbit/s 11 Independent regulator and large gap between average speeds and and 8 Mbit/s respectively, while the medi- competition authority for the UK telecommunications industries median speeds. had the fastest an and average experienced speeds were about 3 Mbit/s and 4 Mbit/s.

The comparison between advertised Observed and advertised average connection speed and observed ones below has to be speeds, selected OECD countries, Q2 2010 viewed with care as it doesn’t necessarily show that providers are not furnishing the Korea service they advertise. In fact, it may well

Japan be that those differences are mainly due to the fact that the majority of people choose slower connections than those advertised for cost reasons which make the adver- United States Average connection speeds (Mbps) in Q2 2010 tised speed a questionable measurement. Average advertised download speeds, September Speed is crucial for important innovations

United Kingdom such as online applications in fields like Tele- medicine and Educational services which France can’t be used without high-speed broadband connection as shown in table 2. Those coun- Mexico tries that do not put in place the necessary

0 10 20 30 40 50 60 70 80 90 infrastructure to offer sufficient connection Source: OECD Communications Outlook 2011 speeds to its citizens will lose out.

6 UNI ICTS FOR THE LONG-RUN Table 2: Speed ranges needed for various online Applications

Upstream and Down- Applications Upstream and Down- Applications stream Speed Range stream Speed Range 500 kbps – 1 mbps Voice over Internet Protocol Telemedicine telephony 10 mbps – 100 mbps Educational services Basic email Broadcast video SD and some Web browsing (simple sites) High Definition Streaming music IPTV-High Definition Low quality video (highly com- High quality telepresence pressed) High Definition surveillance Smart/intelligent building control

1 mbps – 5 mbps Web browsing (complex sites) 100 mbps – 1 gbps High Definition telemedicine Email (larger size attachments) Multiple educational services Remote surveillance Full High Definition Broadcast video IPTV-Standard Definition (SD) Full IPTV channel support (1-3 channels) High Definition Video on Demand File sharing (small/medium) Gaming (immersion) Digital broadcast video (1 channel) Streaming music

5 mbps – 10 mbps mbps File sharing (large) IPTV-Standard Definition (multiple channels) Broadcast Standard Definition video Video streaming (2-3 channels) High Definition video downloading Medical file sharing (basic) Remote diagnosis (basic) Remote education Building control and management

Source: California Broadband Task Force, The State of Connectivity: Building Innovation Through Broadband, Jan. 2008 (available at www.calink.ca.gov/pdf/CBTF_FI- NAL_Report.pdf)

BROADBAND: WHAT HAPPENED SINCE ATHENS 2007? 7 Network neutrality characteristics and terms and conditions of The network neutrality debate started in their broadband services; prevent blocking the early 2000’s and encompasses several of lawful content, applications, services or subjects such as the openness of the Inter- non-harmful devices; and ensure there is net to certain types of content, applications no unreasonable discrimination in transmit- or equipment depending on the definition ting lawful network traffic. considered. The central issue for regulators is to decide whether access providers can Finally, the Canadian Radio-television and prioritise some types of traffic over others Telecommunications Commission issued or slow down traffic, according to certain a decision that establishes a framework to criteria12; or whether Internet traffic should guide ISPs in their use of Internet traffic be treated as “neutral”. Generally, neutral management practices. means that access providers should not treat third-party service providers differently than the services of their own subsidiaries. Conclusion Broadband adoption has dramatically in- The European Commission launched a creased since we last met in Athens in 2007 consultation process which covers the and is more than ever a central issue for convenience of ISPs12 adopting traffic the ICT industry. Nonetheless, many efforts management practices; any possible harm and coordinated investments both from for users; impact on competition in con- governments and the private sector are still junction with the new European regulatory required to achieve universal service and framework; and whether the EU needs to develop broadband infrastructure without act on this issue. The EU’s view is that the threatening the neutrality of the Internet. Internet should be neutral and open. It is crucial that unions ensure citizens and Recently Chile’s Parliament passed an workers are at the centre of this debate, amendment, stating that ISPs must not especially when it comes to the (re) skilling interfere, discriminate against or hinder of the workforce and the creation of good access to content, application or services, quality jobs. This is particularly relevant for except for security reasons. UNI Global Union affiliates now that we have a merged sector formed by members Last year, a US Federal Appeal’s Court representing both IT and Telecom workers. judged that the FCC14 had limited authority Additionally, UNI and its affiliates should to prevent a company from treating traffic in promote high-speed broadband. Speed a non-neutral manner. After that decision, matters when it comes to job creation, en- the FCC adopted an “Open Internet Order”, hancing economic growth, and supporting

12 e.g. bandwidth management, which encompassed three basic rules that high-tech innovations in various sectors of willingness to pay, etc are designed to: promote transparency by the economy. The high-speed broadband 13 Internet Service Providers requiring providers to disclose their net- debate is essential for UNI ICTS to break 14 Federal Communications Commission work management practices, performance through in a digital world.

UNI GLOBAL UNION is the Global Union for skills and services. We represent 900 trade unions and 20 million workers worldwide.

UNI ICTS - Information and Communication Technology and Services Department: [email protected] Tel: +41 22 365 21 00 www.uniglobalunion.org

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