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Broadband Status in Finland 4 March 2004 DRAFT Ilkka Tuomi / IPTS Broadband Status in Finland Broadband Status in Finland..........................................................................................1 Introduction............................................................................................................1 Broadband Access..................................................................................................1 Broadband Prices ...................................................................................................5 Broadband Competition.........................................................................................8 Use of Broadband ................................................................................................10 Business use.....................................................................................................15 Policy Initiatives ..................................................................................................16 Open policy issues ...............................................................................................18 FUNET backbone ................................................................................................18 Broadband Rollout Scenarios ..............................................................................19 Infrastructure cost estimates ............................................................................19 Actors...............................................................................................................21 Current traffic patterns.........................................................................................22 Ongoing and planned broadband pilots ...............................................................22 Introduction This report summarises the current status of broadband in Finland. The case study is aimed at locating the types of information that could be gathered to assess the EU broadband situation, and to develop solid empirical foundations for creating broadband deployment scenarios. Broadband Access According to the Finnish Ministry of Transport and Communications, the number of broadband connections was 500,000 in January 2004. This exceeds previous forecasts. About 85 percent of the households were within the reach of broadband services, and 21 percent of households subscribed to broadband in January 2004.1 The number of broadband connections almost doubled in 2003, and the growth increased in the second half of the year. In September 2003, Finland had the fifth highest number of broadband connections per capita in the EU, after Denmark, Belgium, Netherlands, and Sweden. In the last third of the year, the number of broadband connections per inhabitants grew about 2 three times faster in Finland than in the U.K. 1 http://www.laajakaistainfo.fi/laajakaista_tanaan/index.php. Earlier estimates stated that there would be about 400,000 connections and about 15 percent of households would be connected by the end of 2003. The recent data from the Ministry of Transport and Communication and service provider annual and SEC reports shows that the growth speed has increased since the mid-2003. 2 From 6.9 to 9.6 percent per inhabitants. The U.K. broadband connections grew from 4.4 at the end of September 2003, calculated from ECTA broadband scorecard, to 5.3 percent, calculated from Ofcom January 2004 Internet and Broadband Update. 2 At the end of the year, the broadband penetration reached almost ten connections per hundred inhabitants. In September 2003, only Korea, Canada, Iceland, Denmark, Belgium and the Netherlands had reached this level. The leading EU countries, Denmark and Belgium, seem to be about 6 months ahead in the penetration curve, and the next ones, the Netherlands and Sweden about 3 months. Behind these countries, Finland now seems to be close to the U.S. penetration rates. The growth of different broadband technologies can be seen in Figure 1, which also shows the total number of access lines to households. The decrease in the household access lines is largely caused by the increasing use of mobile phones. Already 36 percent of households used only mobile phones in February 2004. About 16 percent of mobile phone users were able to use internet or WAP services through their mobile phones. There were 87 mobile subscriptions per 100 inhabitants in Finland at the end of 2002. In November 2003 approximately 3.6 million Finns or 92 percent of those aged 15-74 had a personal mobile phone. Almost 74 percent of the Finnish population in that age group sends text messages weekly.3 According to the operators, the standard analogue subscriber lines are also increasingly being replaced by DSL lines that are used to carry Voice over Broadband. 2,500,000 2,000,000 Access lines for residential use 1,500,000 ISDN subscribers - basic rate DSL Lines Cable Modem Internet subscribers Other broadband access technologies to Internet 1,000,000 Total broadband 500,000 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Figure 1. Broadband growth in Finland.4 From Figure 1 it is clear that DSL technologies have been driving broadband growth. They have also substituted basic-rate ISDN and leased lines. The growth has been very rapid, as commercially DLS became available in Finland only in year 2000. 3 Data provided by Juha Nurmela, Statistics Finland. 4 Based on data from OECD, ECTA, Finnish Ministry of Transport and Communications, and year 2003 annual results of broadband providers. The OECD year 2002 estimate for “other” is adjusted (from 68,000 to 20,000) as it is apparently too high. According to the Ministry of Transport and Communications, the share of FTTH/LAN, PLC, and satellite was about 6.5 percent in 2003. The broadband numbers do not include leased line connections. 3 Figure 2. Estimated broadband connection growth (households and firms). IDC / OECD 2003. Due to the rapid growth in 2003, the existing estimates for future broadband penetration appear to be conservative. The IDC estimates published in 2003 are shown in Figure 2. The estimates for household penetration are shown in Figure 3. It seems that the estimate for 2004 was reached already in February 2004. Figure 3. Finnish households with broadband access. IDC / OECD 2003. According to IDC5 and ECTA6 estimates, cable modems represented about one fifth of broadband connections in Finland in 2003. The total number of connections, however, seems to be too low in the ECTA estimates, which may mean that the relative share of cable is exaggerated. The ECTA DSL scorecard, for example, shows only 1000 broadband connections that are not DSL or cable connections in Finland at the end of September 2003. This is clearly too low, at least if end users are counted. According to FICORA7, there were a couple of thousand WLAN subscribers and 600 PLC subscribers in Finland at the end of 2003, and there were also more than 4000 FTTC/Ethernet connections in one local network in Espoo. IDC, on the other hand, 5 IDC 2003: European Broadband Access Services Market Analysis, 2002-2007. 6 ECTA 2003: DSL scorecard, end of September 2003. 7 Finnish Communications Regulatory Authority 2004: Päätösluonnos huomattavasta markkinavoimasta tukkutason laajakaistapalvelujen markkinoilla, 127/934/2004, 19.2.2004. http://www.ficora.fi/suomi/document/M12_Keikyan_Puhelinosuuskunta_KK1.pdf 4 seems to have too low household penetration numbers, and Informa gives a 18 percent ratio of cable to DSL, implying perhaps 14 percent cable modem share. The share of cable modems therefore appears to be somewhere between 15-20 percent of total broadband connections at the end of 2003. There were also at least two satellite broadband providers, although their relative share remains low, partly because marketing and installation services for satellite broadband equipment have started only recently. Figure 4. Household broadband access by technology in Finland. IDC 2003. The diffusion speed of broadband is potentially limited by the capabilities of the basic telecommunications infrastructure. In Finland this does not seem to be a major issue, as the country has an advanced digital telecommunications infrastructure. For example, Finland has been among the first countries to digitalise its telecommunications networks, as can be seen in Figure 5. 5 100 90 Finland 80 Sweden United States 70 Korea Spain 60 50 percent of total percent 40 30 20 10 0 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Figure 5. Percent of digital access lines.8 There were more than 250,000 digital TV receivers and set-top boxes in the Finnish households in February 2004, or 11 percent of all households. During the next six months 15 percent of households were planning to purchase digiTV set-top boxes.9 The Finnish Government made a decision in March 2004 that television broadcasting will move to digital broadcasting by the end of August 2007. This will make DVB-T a potential distribution channel for wireless datacasting, and increase the availability of broadband services through interactive TV and mobile devices. Broadband Prices According to ITU, a typical monthly broadband subscription cost in July 2003 was 2.93 percent of average income in Finland.10 This was the tenth highest in the EU, after UK, Belgium, Germany, Denmark, Sweden, Austria, Netherlands, France and Luxembourg.11 8 OECD, Telecommunications Database 2003. 9 Statistics Finland, 2004: Tilastouutisia 3.3. 2004, Kuluttajabarometri: Digiboksi yli 250 000
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