More than three years ago, NSR first stated in its Broadband Satellite Markets studies that government efforts to require universal access to broadband services would be a boon to the European market for broadband satellite Internet access services. Such initiatives never come about as quickly as service providers would like, but it now appears that Europe is truly setting itself upon this path.
A number of new universal access programs have come to light since NSR's Broadband Satellite Markets 7th Edition study was released in June 2008, including:
The above are just a number of the more recent universal broadband access programs and do not include earlier programs such as in Switzerland, which was won by Swisscom, and numerous smaller, regional programs in parts of the UK and other nations in the EU. NSR is seeing real momentum being attained in these universal access programs and fully expects that many other countries in the EU will announce additional projects in the coming years.
NSR does recognize that it takes time for governments to formulate these policies and even more time to hold competitions among various service providers to decide who takes on the mandate and how it is filled. Nonetheless, the current timing of these efforts appears to dovetail fairly well with efforts among European satellite operators to launch new satellites starting in 2010 that help bring down the cost of offering a satellite broadband service while greatly improving service quality by lowering the cost per delivered byte to consumers.
- The France Numerique 2012 plan has entered the competitive phase with several potential service providers, including SES Astra and Eutelsat as well as Orange, seeking to furnish broadband services to the estimated 1.7% of the population that falls into aDSL "white spaces". The goal is to offer broadband services at a speed in excess of 512 Kbps and a price (including equipment) of less than 35 Euros per month by the end of 2010.
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The Irish Ministry of Communications, Energy and Natural Resource launched a ten-point plan in July 2008 including the delivery universal broadband access to the estimated 10% of households not served in Ireland between late 2009 and early 2010. A competition was launched, and a winner was recently announced.
- In October 2008, the European Union issued a report calling for the mandating of universal broadband access in all EU countries. The current goal is to begin the consultation and discussion process so as to introduce said legislation by 2010. Many issues need to be addressed including defining what are minimum acceptable broadband speeds and what, if any, EU funding will be used to aid counties in meeting the universal access mandate.
As illustrated in the European single site satellite broadband Internet access services forecast for the BBSM, 7th Edition study, NSR currently projects a more than twenty-fold increase in subscribers through to 2017, and a large part of the gain can be traced back to the universal broadband services access efforts underway in Europe.
With this being said, NSR also issues a strong warning to the industry that success in bringing satellite broadband services to market is by no means guaranteed. Many in the satellite industry possess certain hubris that satellites are the de facto means for addressing the lowest population density segments of each country and to bring broadband services to the aDSL "white spaces".
In one sense the Irish National Broadband Scheme (NBS) competition would tend to prove this out. After extensive study, BT Ireland pulled out of the NBS competition because they could not find a means to offer an economically viable WiMAX service to meet the government requirements. With a limit of 10 MHz of spectrum offered by the government, BT Ireland concluded that too many WiMAX base stations would be needed, and it was not possible to close their business plan. The large number of WiMAX base stations typically required to address rural markets is one of the key issues that satellite broadband service providers like to raise when pointing out the benefits of satellites ability to reach nearly any underserved household.
Yet, a satellite broadband service did not win the NBS competition and, in fact, a satellite broadband service provider was not even allowed to submit a bid for the NBS contract. National Broadband Ltd (NBL), in partnership with SES Astra, brought a legal challenge to the Irish High Court, which was eventually lost, when the Irish Minister of Communications refused to accept any bids that made use of satellite services. Among other issues raised in defending its position, the Ministry stated that it had been in contact with the European Commission since 2006 and had been informed by the Commission that satellite broadband was not seen as a viable mass market product.
In the end, it was just recently announced that 3 Ireland had won the NBS bid with a proposal to use a HSDPA 3G solution. This is particularly galling because most in satellite circles (and NSR agrees) would contend that 3G solutions will tend to be even more costly on a per byte delivered basis than WiMAX or satellite broadband, and there will still be coverage issues related to rural areas that cannot be adequately reach with 3G services.
In many ways, NSR lays squarely on our own doorstep the false perceptions that have been created outside the satellite sector on what satellite broadband can and cannot do. Too often the satellite industry has either been over confident in its assumption that satellite is the "only" solution or it has undermined its credibility by making false or deceptive promises.
High on the list, in NSR's opinion, has been the current marketing of satellite broadband services that do not clearly explain to the typical user issues related to "Fair Access Policies" and what that means to typical usage. Worse are marketing claims that satellite broadband services can offer "unlimited" download packages. This last issue has been particularly damaging in NSR's view because, even if technically true, the simple fact is that while subscribers to these plans are never shut off (hence can download "unlimited" amounts of content), the reality is that the FAP slows their service to a point that it becomes essentially unusable over a substantial amount of time (up to 30 days if one "FAPs out" in the first day of the monthly period). Most potential subscribers are not sophisticated enough to understand these issues, and the end result is creation of very negative perceptions on the quality of satellite broadband services that show up in many different forums. This, in turn, eventually gets translated into ill-informed public policy decisions such as in the Irish case. In Europe, NSR feels that there is a significant window of opportunity for satellite broadband service providers to ride on the wave of universal broadband access initiatives and to secure a long term role in providing broadband access services to a large fraction of the unserved market. Yet, that window can be slammed shut very quickly in no small measure due to overconfidence in our industry about satellite being the "best" option and poor marketing efforts at all layers, including the current set of distributors, that create false perceptions about what satellite broadband can (or will) do for the average subscriber. Perhaps it is time for all European players in the market...satellite operators, equipment manufacturers and distributors...to at least partially set aside their differences and to work together to get the marketing messages in line with reality, rapidly address and correct misinformation among key policy making bodies, and to fairly lay out the development path for the segment. Some small common measures may well play an immeasurable role in guaranteeing the future for the satellite broadband market in Europe.
Information for this article was extracted from the NSR report entitled: Broadband Satellite Markets, 7th edition. For more information go to: www.nsr.com
