Project Number: FP6-IST-507554 Project Title: BROADBAND in ...

Project Number: FP6-IST-507554
Project Title: BROADBAND in Europe for All: A Multidisciplinary Approach
CEC Deliverable Number: FP6-IST-507554/JCP/R/Pub/D2.2-3.2
Contractual Date of Deliverable to the IS DG: 30/06/2005
Actual Date of Delivery to the IS DG: 01/08/2005
Title of Deliverable:
Workpackage contributing to the Deliverable:
Nature of the Deliverable R – Report
Second report on the multi-technological analysis of the
‘broadband for all’ concept, focus on the listing of multitechnological
key issues and practical roadmaps on how to
tackle these issues.
WP2: Multi-technological analysis
WP3: Techno-economic, socio-economic and policy studies
Editors: JCP: Point J. C. JRC: Ulbrich M. IMEC: Van Daele P.
Contributors:
Voluntary contributors:
IMEC De Turck F., Dhoedt B., Pickavet M., Vlaeminck K., Stevens T.,
Lannoo B., Colle D., Demeester P.
UEssex O’ Mahony M., Politi T., Bray M.
COM Falch M., Schneider M., Sigurdsson H., Skouby K. E., Berger M.,
Christiansen H., Ruepp S., Soler J.
GET Erasme D., Minot, C., Temoori H., Bristiel B.
HHI Faber J., Grosskopf G., Patzak E., Helmolt C.v., Langer K,
Vathke J.
TELSCOM Rao S., Vogel P.
JCP Guillemot C., Million P.
Hadjifotiou T. (University of Essex), Grace D. (University of York),
Tuomi I. (Meaning Processing)
Abstract:
This report is the second deliverable of the FP6-project “Broadband in Europe for all: a multi-disciplinary approach project
(BREAD)”. It is a multi-technological analysis of the ‘broadband for all’ concept, with an update of the listing of multitechnological
key issues, a first gap analysis and first roadmaps on how to tackle these issues.
The deliverable also contains information on ongoing regional and national broadband initiatives in Europe (EU25) and
around the world. The information includes an analysis of the broadband market in these countries with overview of available
technologies, infrastructures, operators, pricing,…. It also includes a summary of the broadband policy in these countries.
This document builds further on the overview of the state-of-the-art on broadband issues, summarized in the first BREADdeliverable
(available via www.ist-bread.org)
Out of the country studies, an analysis is presented factors affecting broadband development first from a classical theoretical
framework, which is composed of the supply/demand - infrastructure/content matrix. However, when drawing on the
elements which were identified in the country studies, it then uses a framework composed of four categories, i.e. country
configuration, legacy situation, competition, and public policy, where the key criterion is the susceptibility of the factors
affecting broadband to be themselves influenced by broadband policy. This approach allows identifying those areas where
government action can really make a difference. Finally a quick look is taken at some potential inhibitors of broadband
development and at broadband applications and user needs.
This document does not claim to be complete, but is intended to give directions, indications and current trends in the field and
will evoke input on new projects, new technologies and new developments to be included in the next editions of this
deliverable..
Keyword list:
Broadband for All, multi-technological, multi-disciplinary analysis, socio-economic

Disclaimer
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The information, documentation and figures available in this deliverable, is written by the BREAD (“Broadband
in Europe for all: a multi-disciplinary approach project (BREAD)” – project consortium under EC co-financing
contract IST-507554 and does not necessarily reflect the views of the European Commission

1. Executive Summary
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FP6-IST-507554/JCP/R/Pub/D2.2-3.2
This report is the second deliverable of the FP6-project “Broadband in Europe for all: a multi-disciplinary
approach project (BREAD)”. It is a multi-technological analysis of the ‘broadband for all’ concept, with an
update of the listing of multi-technological key issues, a first gap analysis and first roadmaps on how to tackle
these issues.
The deliverable also contains information on ongoing regional and national broadband initiatives in Europe
(EU25) and around the world. The information includes an analysis of the broadband market in these countries
with overview of available technologies, infrastructures, operators, pricing,…. It also includes a summary of the
broadband policy in these countries.
This document builds further on the overview of the state-of-the-art on broadband issues, summarized in the first
BREAD-deliverable (available via www.ist-bread.org)
Out of the country studies, an analysis is presented factors affecting broadband development first from a
classical theoretical framework, which is composed of the supply/demand - infrastructure/content matrix.
However, when drawing on the elements which were identified in the country studies, it then uses a framework
composed of four categories, i.e. country configuration, legacy situation, competition, and public policy, where
the key criterion is the susceptibility of the factors affecting broadband to be themselves influenced by
broadband policy. This approach allows identifying those areas where government action can really make a
difference. Finally a quick look is taken at some potential inhibitors of broadband development and at broadband
applications and user needs.
This document does not claim to be complete, but is intended to give directions, indications and current trends in
the field and will evoke input on new projects, new technologies and new developments to be included in the
next editions of this deliverable.

2. Table of Contents
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DISCLAIMER........................................................................................................................................2
1. EXECUTIVE SUMMARY..........................................................................................................3
2. TABLE OF CONTENTS.............................................................................................................4
3. LIST OF ABBREVIATIONS......................................................................................................9
4. INTRODUCTION......................................................................................................................12
5. RELATED PROJECTS AND STANDARDISATION ...........................................................14
6. ICT CONVERGENCE ..............................................................................................................16
6.1 Convergence of services.............................................................................................................16
6.2 Convergence of networks ..........................................................................................................17
6.3 Convergence of terminals..........................................................................................................18
6.4 Convergence of markets ............................................................................................................19
6.4.1 Vertical Integration 19
6.4.2 Market convergence across industries 19
6.4.3 Convergence in markets for content and services 19
6.4.4 Convergence between distributing companies 20
6.4.5 Convergence between equipment manufactures 20
6.4.6 Divergence of markets 21
6.5 Convergence of regulation.........................................................................................................21
6.5.1 General Societal Importance 21
6.5.2 Access to Networks and Content 21
6.5.3 Technology Neutral Regulation 22
6.5.4 Network and media concentration 22
6.5.5 Converging Content Regulation and other content issues 22
7. BROADBAND TECHNOLOGIES SUMMARY ....................................................................24
7.1 HOME NETWORK (wireless)..................................................................................................27
7.1.1 Introduction 27
7.1.2 Home Networks: Technologies / Standardisation 28
7.1.3 Issues and Trends / Gap analysis 31
7.1.4 Home Networks Roadmap 32
7.2 ACCESS NETWORK................................................................................................................34
7.2.1 Power Line Communications 34
7.2.2 Cable 40
7.2.3 Broadband Wireless Access 47
7.2.4 Mobile 53
7.2.5 Satellite 55
7.2.6 xDSL 59
7.2.7 FTTx 61
7.2.8 DVB-T 67
7.2.9 HAP 69
7.3 GENERAL TOPICS IN ACCESS............................................................................................72
7.3.1 Convergence in networks and services 72
7.3.2 Video and Broadband networks 76
7.3.3 Physical access Architectures 84
7.3.4 Signalling 85

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7.3.5 IPv6 86
7.3.6 Physical layer aspects 89
7.3.7 Disturbance in PLC, Cable and DSL access networks 95
7.4 CORE AND METRO ................................................................................................................97
7.4.1 Optical Network - The interface between network segments 97
7.4.2 Optical metro/CWDM 97
7.4.3 Optical Backbone 103
7.4.4 Grid networks 115
7.5 END-TO-END ..........................................................................................................................120
7.5.1 Security 120
7.5.2 Overall management and control 126
7.5.3 IPv6 134
8. MARKET DEVELOPMENTS & POLICY ASPECTS........................................................137
8.1 Introduction..............................................................................................................................137
8.1.1 Broadband indicators 137
8.1.2 Broadband market developments 138
8.1.3 General regulatory aspects 141
8.2 European Union .......................................................................................................................142
8.2.1 Introduction 142
8.2.2 The broadband market 142
8.2.3 Broadband policy 143
8.2.4 Conclusion 143
8.3 Austria.......................................................................................................................................144
8.3.1 Introduction 144
8.3.2 The broadband market 144
8.3.3 Broadband policy 148
8.3.4 Conclusion 148
8.4 Belgium .....................................................................................................................................149
8.4.1 Introduction 149
8.4.2 The broadband market 150
8.4.3 Broadband policy 151
8.5 Cyprus.......................................................................................................................................152
8.5.1 Introduction 152
8.5.2 The broadband market 152
8.5.3 Broadband policy 152
8.6 Czech Republic.........................................................................................................................153
8.6.1 Introduction 153
8.6.2 The broadband market 153
8.6.3 Broadband policy 153
8.6.4 Conclusion 154
8.7 Denmark ...................................................................................................................................155
8.7.1 Introduction 155
8.7.2 The broadband market 155
8.7.3 Broadband policy 157
8.7.4 Conclusion 162
8.8 Estonia.......................................................................................................................................163
8.8.1 Introduction 163
8.8.2 The broadband market 163
8.8.3 Broadband policy 163
8.8.4 Conclusion 164
8.9 Finland ......................................................................................................................................165
8.9.1 Introduction 165
8.9.2 The broadband market 165
8.9.3 Broadband policy 177
8.10 France........................................................................................................................................181
8.10.1 Introduction 181
8.10.2 The broadband market 181

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8.10.3 Broadband policy 184
8.10.4 Conclusion 184
8.11 Germany ...................................................................................................................................185
8.11.1 Introduction 185
8.11.2 The broadband market 185
8.11.3 Broadband policy 188
8.11.4 Conclusion 188
8.12 Greece........................................................................................................................................191
8.13 Hungary ....................................................................................................................................192
8.13.1 Introduction 192
8.13.2 Demand 192
8.13.3 Broadband policy 194
8.14 Ireland.......................................................................................................................................195
8.14.1 Introduction 195
8.14.2 The broadband market 195
8.14.3 Broadband policy 195
8.14.4 Conclusion 197
8.15 Italy............................................................................................................................................198
8.15.1 Introduction 198
8.15.2 The broadband market 198
8.15.3 Broadband policy 198
8.15.4 Conclusion 199
8.16 Latvia ........................................................................................................................................200
8.16.1 Introduction 200
8.16.2 The broadband market 200
8.16.3 Broadband policy 200
8.16.4 Conclusion 201
8.17 Lithuania...................................................................................................................................202
8.17.1 Introduction 202
8.17.2 The broadband market 202
8.17.3 Broadband policy 202
8.17.4 Conclusion 203
8.18 Luxembourg .............................................................................................................................204
8.18.1 Introduction 204
8.18.2 The broadband market 204
8.18.3 Broadband policy 208
8.19 Malta .........................................................................................................................................209
8.19.1 Introduction 209
8.19.2 The broadband market 209
8.19.3 Broadband policy 210
8.20 Poland........................................................................................................................................211
8.20.1 Introduction 211
8.20.2 The broadband market 211
8.20.3 Broadband policy 211
8.20.4 Conclusion 212
8.21 Portugal.....................................................................................................................................213
8.21.1 Introduction 213
8.21.2 The broadband market 213
8.21.3 Broadband policy 213
8.21.4 Conclusion 214
8.22 Slovakia.....................................................................................................................................215
8.22.1 Introduction 215
8.22.2 The broadband market 215
8.22.3 Broadband policy 215
8.22.4 Conclusion 216
8.23 Slovenia .....................................................................................................................................217
8.23.1 Introduction 217
8.23.2 The broadband market 217

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8.23.3 Broadband policy 217
8.23.4 Conclusion 218
8.24 Spain..........................................................................................................................................219
8.24.1 Introduction 219
8.24.2 The broadband market 219
8.24.3 Broadband policy 221
8.24.4 Conclusion 221
8.25 Sweden ......................................................................................................................................222
8.25.1 Introduction 222
8.25.2 The broadband market 222
8.25.3 Broadband policy 225
8.25.4 Appendix 227
8.26 The Netherlands .......................................................................................................................228
8.26.1 Introduction 228
8.26.2 The broadband market 228
8.26.3 Broadband policy 230
8.26.4 Conclusion 231
8.27 United Kingdom .......................................................................................................................232
8.27.1 Introduction 232
8.27.2 The broadband market 232
8.27.3 Broadband policy 233
8.27.4 Conclusion 233
8.27.5 Appendix 234
8.28 Non-EU country studies: United States..................................................................................240
8.28.1 Introduction 240
8.28.2 The broadband market 240
8.28.3 Broadband policy 247
8.28.4 Conclusion 250
8.28.5 ANNEX State Broadband Initiatives (Resources (taken from the 2004 APT report) 250
8.29 Non-EU country studies: Japan..............................................................................................254
8.29.1 Introduction 254
8.29.2 The broadband market 254
8.29.3 Broadband policy 262
8.29.4 Conclusion 262
8.30 Non-EU country studies: South Korea...................................................................................263
8.30.1 Introduction 263
8.30.2 The broadband market 264
8.30.3 Broadband policy 278
8.30.4 Conclusion 280
8.30.5 Annex: Broadband diffusion factors in various studies. 283
8.31 Non-EU country studies: Canada...........................................................................................284
8.31.1 Introduction 284
8.31.2 The broadband market 284
8.31.3 Broadband policy 288
8.31.4 Conclusion 290
8.32 Non-EU country studies: Iceland............................................................................................291
8.32.1 Introduction 291
8.32.2 The broadband market 291
8.32.3 Broadband policy 294
8.32.4 Conclusion 295
9. HOW TO ACHIEVE BROADBAND FOR ALL..................................................................296
9.1 Introduction..............................................................................................................................296
9.1.1 Supply of content 296
9.1.2 Supply of infrastructure 297
9.1.3 Demand for content and infrastructure services 298
9.2 Factors influencing broadband development ........................................................................299
9.2.1 Country configuration 299

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9.2.2 Legacy situation 301
9.2.3 Competition 303
9.2.4 Public policy 305
9.3 Inhibitors ..................................................................................................................................308
9.4 Conclusion ................................................................................................................................309
10. BROADBAND APPLICATIONS AND USER NEEDS .......................................................310
10.1 Introduction..............................................................................................................................310
10.2 Reasons why end users should benefit from broadband applications.................................310
10.2.1 High bandwidth as factor of efficiency and convenience of internet applications. 310
10.2.2 High bandwidth as necessary prerequisite for effective use of applications: 311
10.3 Extent to which broadband applications are already available or may be expected
in future.....................................................................................................................................311
10.3.1 Available applications benefiting from broadband access because of high efficiency and
convenience 311
10.3.2 Available applications benefiting from high bandwidth as necessary prerequisite for their
effective use 313
10.3.3 Potential future applications benefiting from high bandwidth 315
10.4 Reasons that threaten usability and usefulness of broadband applications .......................316
10.5 Measures to ensure usability and usefulness as prerequisites of demand for
broadband applications ...........................................................................................................318

3. List of abbreviations
3R Re-Amplification, Re-Timing and Reshaping
ADSL Asymmetric Digital Subscriber Line
AH Authentication Header
APD Avalanche Photo Diode
APON ATM Passive Optical Network
ASE Amplified Spontaneous Emission
ASON Automatically Switched Optical Network
ATDMA Advanced Time Division Multiple Access
ATM Asynchronous Transfer Mode
ASTN Automatic Switched Transport Network
AWG Arrayed Waveguide Grating
BER Bit Error Rate
BFWA Broadband Fixed Wireless Access
BPON Broadband PON
BS/PS Burst Switching/Packet Switching
BWA Broadband Wireless Access
BWDM Band Wavelength Division Multiplexing
CAPEX CAPital EXpenditure
CC Congestion Control
CDMA Code Division Multiple Access
CDR Clock Data Recovery
CO Central Office
CPN Consumer Premise Network
CSPF Constrained Shortest Path First
CS-RZ Carrier Suppressed Return to Zero
CWDM Coarse Wavelength Division Multiplexing
DCCP Datagram Congestion Control Protocol
DCF Dispersion Compensation Fibre
D-CWDM Dense – Coarse Wavelength Division Multiplexing
DES Digital Encryption Standard
DFB Distributed Feedback Laser
DGD Differential Group Delay
DML Direct Modulation Laser
DMT Discrete Multi Tone
DPSK Differential Phase Shift Keying
DSF Dispersion Shifted Fibre
DWDM Dense Wavelength Division Multiplexing
DXC Digital Cross Connect
EAM Electro-Absorption Modulator
EDC Electronic Dispersion Compensation
EDFA Erbium Doped Fibre Amplifier
EDWA Erbium Doped Waveguide Amplifiers
EFM(A) Ethernet in the First Mile (Alliance)
EML External Modulated Laser
EPON Ethernet PON
ESA European Space Agency
ETDM Electrical Time Domain Multiplexing
FDD Frequency Division Duplex
FDL Fibre Delay Line
FDMA Frequency Division Multiple Access
FEC Forward Error Correction
FGL Fiber Grating Laser
FP Fabry Perot
FSAN Full Service Access Network
FTP File Transfer Protocol
FTTB Fibre to the Building
FTTC Fibre to the Curb
FTTCab Fiber to the Cabinet
FTTH Fibre to the Home
FTTN Fiber to the Node
FTTP Fibre to the Premises
FTTx Fibre to the x
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FWA Fixed Wireless Access
FWM Four Wave mixing
GEO Geostationary Earth Orbital
GFP Generic Framing Procedure
(G)MPLS (Generalised) Multi-Protocol Label Switching
GPON Gigabit PON
GPRS General Packet Radio System
HAP High Altitude Platform
HDSL High Bit-Rate DSL
HDTV High Definition TV
HFC Hybrid Fibre Coaxial
HOM Higher Order Mode
HSCSD High Speed Circuit Switched Data
IETF Internet Engineering Task Force
InP Indium Phosphide
ISDN Integrated Service Digital Network
IP Internet Protocol
ITU International Telecommunication Union
LAN Local Area Network
LCAS Link Capacity Adjustment Scheme
LCG Large Hadron Collider Computing Grid
LEO Low Earth Orbital
LHC Large Hadron Collider
LMDS Local Multipoint Distribution System
LN-MZM Lithium Niobate Mach-Zehnder Modulator
LSP Label Switched Path
MAC Medium Access Control
MAN Metropolitan Area Network
MEM Micro-Electronic Mechanical System
MEMS Micro-Electromechanical Systems
MGCP Media Gateway Control Protocol
MG-OXC Multigranular Optical Cross Connect
MiMo Multiple Input Multiple Output
mm Millimetre
MSA Multi-Source Agreement
MUX/DEMUX Multiplxer/Demultiplexer
MVDS Microwave Video Distribution System
MZ Mach-Zehnder (modulator)
NGN Next Generation Network
NG-SDH Next Generation Synchronous Digital Hierarchy
NRZ Non Return to Zero
OAM Optical Absorption Modulator
OADM Optical Add and Drop Multiplexing
OBS Optical Burst Switching
OCDM Optical Code Division Multiplexing
OE Opto-Electronic
OFDM Orthogonal Frequency Division Multiplexing
OFDMA Orthogonal Frequency Division Multiple Access
OIF Optical Internetworking Forum
OLT Optical Line Terminal
ONT Optical Network Termination
ONU Optical Network Unit
OPEX Operating Expenditure
OPS Optical Packet Switching
OSI Open Systems Interconnection
OSPF Open Shortest Path First
OTDM Optical Time Division Multiplexing
OXC Optical Cross Connect
PAN Personal Area Network
PDH Plesiochronous Digital Hierarchy
PHY PHYsical layer
PIN Positive-Intrinsic-Negative
PKI Public Key Infrastructure
PLC Power Line Communication
PMD Polarisation Mode Dispersion
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PON Passive Optical Network
PSD Power Spectral Density
PSTN Public Switched Telecommunication Network
PtP P2P Point-to-Point
P2P Peer-to-Peer
P2MP Point to Multipoint
QoS Quality of Service
RAU Remote Access Unit
RF Radio Frequency
ROADM Reconfigurable Optical Add Drop Multiplexer
RPR Resilient Packet Ring
RT Remote Terminal
Rx Receiver
RZ Return to Zero
SAN Storage Area Network
SCM Sub-Carrier Multiplexed
SDH Synchronous Digital Hierarchy
SDH/SONET Synchronous Digital Hierarchy/Synchronous Optical Network
SDM Space Division Multiplexing
SDTV Standard Definition TV
SIP Session Initiation Protocol
SOA Semiconductor Optical Amplifier
SOHO Small Office / Home Office
SONET Synchronous Optical Network
SME Small and Medium Enterprise
SNI Server Network Interface
SPF Shortest Path First
SSMF Standard Single Mode Fiber
TCP/IP Transmission control protocol/Internet protocol
TDD Time Division Duplex
TDM Time Division Multiplexing
TDMA Time Division Multiple Access
TFF Thin Film Filter
Tx Transmitter
UA User Agent
UAC User Agent Client
UAS User Agent Server
UNI User Network Interface
UWB Ultra Wideband
VC Virtual Container/Virtual Concatenation
VCAT Virtual Concatenation
VCSEL Vertical Cavity Surface Emitting Laser
VDSL Very-High Data Rate DSL
VIPA Virtual Imaged Phased Array
VO Virtual Organisation
VoD Video-on-Demand
VOIP Voice Over IP
WAN Wide Area Network
WBXC Waveband Cross Connect
WDM Wavelength Division Multiplexing
WiFi Wireless Fidelity – Any Kind of 802.11 Network
WiMax Worldwide Interoperability for Microwave
XFP Small Form Factor Pluggable
XPM Cross Phase Modulation
Z/LWPF Zero/Low Water Peak Fiber
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4. Introduction
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This report is the second deliverable of the FP6-project “Broadband in Europe for all: a multi-disciplinary
approach project (BREAD)”. It is a multi-technological analysis of the ‘broadband for all’ concept, with an
update of the listing of multi-technological key issues, a first gap analysis and first roadmaps on how to tackle
these issues.
This document builds further on the first BREAD-deliverable (available via www.ist-bread.org). This
deliverable (D2.1-3.1) focused on the multi-technological and multi-disciplinary analysis of the ‘broadband for
all’ concept with emphasis, and restricted to the ‘state of the art’ in the multi-technological domains and ‘what’s
happening now’ in some of the countries of importance to the broadband deployment. That first deliverable
collected information on ongoing regional and national initiatives in Europe and around the world. In addition,
the deliverable identified initiatives, which the project team intended to contact for further collaboration and
exchange of ideas and information. The document also evoked new contacts which were fed into the present
deliverable.
After some more general remarks concerning the projects and organisations involved in the “Broadband for
All”-concept (section 5 on “Related projects and standardisation”) the convergence of services, networks,
terminals and markets is discussed in section 6 on “ICT convergence”. The convergence of different
technologies, platforms and access possibilities and how the overall ICT convergence trends will influence the
broadband development is discussed with a view to the regulatory and market challenges implied by
convergence.
The BREAD project has now updated the information on all major technologies involved, which were already
identified in its first deliverable. This information is based on the contacts and input from other sources (FP6projects,
national projects, international organisations,…) and is presented in section 7 on “Broadband
technologies summary”. Some of these technologies need, to our opinion, a closer look, because of their general
importance (e.g. security,…) or because it is considered as a major technological solution (cable, FTTx,…).
These areas are worked out in more detail and are presented in a separate section in “Annex 2 – More
information”. For all areas discussed in section 7 on “Broadband technologies summary”, an overview is given
of the (updated) “state-of-the-art” in that area, a short summary of the socio-economic issues, together with a
listing of projects and organisations involved in this specific area. For all these areas also a first “gap analysis” is
presented, together with a first “roadmap”. This deliverable also synthesises these multi-technological areas and
identifies and derives a list of common issues that need further attention and interaction (security, management
& control, …).
The relative importance of the various technical bottlenecks identified in the BREAD vision depends to a large
extent on the evolution of actual usage patterns. The evolution of these patterns, in turn, is based on the available
and emerging applications and technologies, underlying social behaviour, and social and organisational practices
that create communication and information processing needs. Social, economic and technical forces are
interdependent and create a complex field of development where technological opportunities become articulated
and implemented, first in the laboratory or in field trials, and then on a societal scale. Only at that point of wide
societal use, new technologies become "real" in the broader economic and societal sense. Accurate localisation
of the critical bottlenecks of the BREAD vision as well as its effective realisation will therefore require a good
understanding of the socio-economic and technological drivers of the alternative developmental paths.
Benchmarking and comparative analyses of broadband development practices and schemes in an international
context are also an important study item, to identify current and future roadblocks.
This multi-disciplinary aspect of the “Broadband for all”-concept becomes clear in section 8 on "Market
developments & policy aspects”. In this section, all EU25 and some other interesting non-EU countries are
being studied. This section contains a general description of the market developments within electronic
communication networks in particular broadband networks. Furthermore general regulatory aspects and the
implications of these are described. In addition a number of country cases are included. The purpose of these
country cases is to provide insights both in regional success stories and failures and to enable a further analysis
of the reasons for why some countries have been more successful than others. This includes identification of
drivers, barriers, bottlenecks and technologies impacting the penetration of broadband.
An analysis is presented with factors affecting broadband development first from a classical theoretical
framework, which is composed of the supply/demand - infrastructure/content matrix. However, when drawing
on the elements which were identified in the country studies, it then uses a framework composed of four
categories, i.e. country configuration, legacy situation, competition, and public policy, where the key criterion is
the susceptibility of the factors affecting broadband to be themselves influenced by broadband policy. This

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approach allows identifying those areas where government action can really make a difference. This information
is presented in section 9 on “How to achieve broadband for all” identifying those “Factors influencing
broadband development” and potential “Inhibitors” of broadband development.
Finally in section 10 on “Broadband Applications and User Needs” a start is made of identifying reasons why
end users should benefit from broadband applications and to which extent broadband applications are already
available or may be expected in the future. This section also identifies threats to usability measures that can be
taken to ensure this usability.
All the information presented in this deliverable will further feed into the development of some general
roadmapping activities in the remainder of the BREAD-project. This bottom-up approach for identifying
roadblocks and roadmaps from technological point of view, the information derived from the country studies
will be combined with a top-down approach followed by a “Broadband Think Tank” group. The activities of this
“Think Tank”, were initiated in the beginning of July 2005 and discuss a broad range of matters and areas
involved in the “broadband for all”-concept, but with a high-level approach encompassing all the multidisciplinary
aspects of the concept. The information of this “Broadband Think Tank” will be summarized and
added to this deliverable and presented at different occasions, as e.g. at the Broadband Europe event (December
2005).

5. Related projects and standardisation
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The construction of a broadband infrastructure in Europe is part of the network evolution happening in all
directions and creating different kinds of technologies to address user requirements and developing appropriate
business cases in the competitive global communication area. In this development standards and the
standardization process are important components as they are serving as a foundation for interworking and
interoperability of different networks, products and services that are key elements in realization of broadband
based communication. As part of the development the concept of standards and process of standardization are
changing from an ‘old regime’ based on national sovereignty, joint provision and interoperability via standards
to a ‘new regime based on liberalization, privatization and deregulation.
In the old regime national sovereign states, usually represented by state monopolies met in organizations as ITU
and CCITT to agree on standards that typically were enforced via the participating national entities as nationally
rules that met at the borders. Interoperability was typically ensured via standardization of interfaces, nationally
based on a symbiosis between operators and equipment manufacturers.
In the new regime the old organizations are transformed into stakeholder for a and new organizations are
created - broad as ETSI or more specialized one-issue organizations- where members discuss standards to be
recommended (de facto). This is followed by a change in the interoperability mechanisms now characterized by
a deepening of standardization based on end-to-end considerations, where the elements in focus are companies /
technical systems and not national entities.
There are different types of organizations, which are partly substituting to the legacy standard bodies:
• some are created when temporary needs occur; examples of that is DAVIC (Digital Audio-Visual
Council from 1993 till 1998), or DVB (Digital Video Broadcasting, still well alive) created with the
advent of digital video.
• Some committees have reached stability and now are recognized as standard bodies in their area, like
IETF, or IEEE.
• Some Forum or organizations like PLC Forum, ECCA, CableLabs, DSL forum,WIMAX have specific
objectives, and sometimes a broader scope then producing standards.
This change in regime has created new dynamic possibilities, but also bottlenecks and barriers creating obstacles
to the development of broadband
The major advantages of such approach are:
• to create a natural consensus between all the actors of the delivery chain, and allow them all to
contribute and defend their own interest; this on one end facilitate the adoption and endorsement of the
produced standards, and on the other end to create a dynamic process as everybody will have common
objective to support and deploy the standard
• to clarify the market situation: as operators are committing to the process, vendors can have a clearer
view on their interest
• to allow a fast specification delivery process; once the specifications are agreed , there is no need,
except sometimes a regulatory constraint, to have the specification adopted officially
• an additional de facto advantage is the openness of most the consortium to every actor, whereas
classical legacy standard associations have sometimes strict rules which can prevent all interested
parties to contribute efficiently
Major issues to solve are:
• The potential proliferation of competitive committees on the same areas, leading to a general confusion
and leading more to proprietary solutions rather then largely adopted standards. This has already
occurred in practice in some areas where standard bodies like ETSI are ratifying competitive standards
addressing the same area.
• Legacy standardization bodies have a solid experience of maintaining and upgrading standards, and
ensuring practical interoperability and conformance to the standard, therefore the transition between
specification production and standard stabilization phase can be very difficult.
• Some particular consortium interest (geographical for example) can prevent specifications to reflect
worldwide requirement, and therefore create an unbalanced situation

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• Where committees like ETSI and ITU can have a global overview of the telecommunication landscape,
and set-up a global strategy, the consortia or forum only have a part of the picture; at the time where
convergence has to occur between the video, data and voice standardization worlds, this new de-facto
organization is not ideal
If we try to summarize, some major bottlenecks have to be solved in order to clarify and optimize the
standardization landscape:
• The new role the legacy standard bodies have to play has to be clarified; will their role reduce to
ratifying specifications produced elsewhere, like it occurs in some ETSI or ITU instances? Or will they
be able to federate the different actions undertaken by the different initiatives in the areas.
• How should these bodies transform to reach these objectives; should the participation and working
rules be adapted to this new world?
• As a major aspect of standardization will be convergence between video and data / voice worlds, on
one end all the expertise required has to be concentrated in these bodies, and on the other end the
objective have to reflect a consensus on market trends on a balanced way.
• What is the new role of Europe, and European projects in standardization? How to federate the
contributions of European projects towards standardization?
The analyses of these bottlenecks and barriers are a key component in the future work of the project.

6. ICT convergence
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Convergence is a key concept in development of a broadband infrastructure. Broadband networks become more
economic viable, if the same network can be used for a wide range of purposes and thereby replace a number of
different networks. In addition a broadband infrastructure may be based on an existing dedicated network
infrastructure, e.g. a cable TV network, which is upgraded to support other types of broadband services as well.
On the other hand the availability of broadband access for a substantial number of customers will promote
development of converging services. For instance depends interactive Internet TV on Internet connections with
sufficient capacity to support on-line transmission of live pictures.
Convergence is not only a technical challenge, but involves technical as well as market and regulatory issues,
which has to be addressed in order to facilitate the objective of broadband for all. Thus convergence includes at
least five different dimensions:
• Convergence of services – the same content are supplied at different platforms
• Convergence of networks – different services supplied via the same network
• Convergence of terminals – multifunctional terminals that can support different services (that might be
supplied through different networks)
• Convergence of markets – the same companies supply their products and services in different sectors
• Convergence of regulation – the same regulator and the same set of rules apply in different sectors.
These dimensions include both technical and economic aspects as well as regulatory aspects. The technical
development is often seen as the driving force enabling convergence. Although the technology is important this
is not entirely true. It was possible to supply the same content at different platforms before the digitalisation, but
the technology developments has made this a lot easier. In many countries (e.g. in the US) broadcast and
telecommunication have been regulated by the same regulatory authority long before convergence of
broadcasting and telecom technologies. On the other hand convergence in technologies does not per se lead to
convergence in markets and in regulation. All of these five aspects of convergence will shape development of
broadband networks and are described more in detail below.
6.1 Convergence of services
Convergence in services implies that the same content can be reached from different types of technical platforms
(e.g. either through the Internet accessed via the telecom network or through a digital video broadcast (DVB)
service delivered through a broadcasting network). This will lead to increasing competition between different
platforms. Customers may, therefore, face a convergent market for various types of information services.
Digitalisation of content is one of the major drivers of convergence. In the digital world, the same content can be
transmitted across different networks, and different services can be offered based on the same content. The
synergy achieved goes far beyond the electronic communication forms and includes among others the printing
press. However, in this context the most important content services to consider are: Internet based services,
broadcasting services and mobile content services.
Capacity-per-user problems and problems associated with return paths in broadcasting networks will influence
the development of data services that will be available in the broadcasting networks. Examples of interactive
services offered in broadcasting networks without using a return path include:
• Download of software: The broadcasting networks are mostly used in the daytime and evening hours.
The transmission capacity during the night-time can be used to download, e.g., new versions of
software to set-top boxes.
• Download of newspapers: In a similar way, newspapers can be downloaded to set-top boxes.
• Internet on TV: Access to the Internet in current TV communication networks is not possible because
of capacity-per-user problems of digital TV networks. A partial solution can be to broadcast a limited
version of Internet.
TV and radio services offered on the Internet are examples of broadcasting services provided on the Internet.
Such services are often taking the advantage of the interactive facilities of the Internet to provide access to
archived radio and TV transmissions and other interactive services.
Mobile content services are developing along with increased bandwidths for mobile services. Mobile services
can provide the same content as delivered on the Internet or via broadcasting networks – for instance on-line

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video of sporting events. However, content will often need to be tailored according to specific demands related
to use of mobile terminals and limitations in bandwidth.
Convergence of services presents new possibilities for end users and new market potentials for producers, but it
also presents new regulatory problems that have to be solved. One of the problems is related to the provisions
for public service in the broadcast area. Should such provisions be extended to the Internet web, or should
convergence on the content level lead to an abolition of public service rules? Another issue relates to the
extended access to different kinds of illegal or harmful information, for instance racist propaganda, which the
Internet facilitates. What are the possibilities for countries to retain control of this? Yet another problem is
related to the provisions for media responsibility that exist today for print and broadcast media but do not apply
to Internet media.
6.2 Convergence of networks
Traditionally, different infrastructures have been used to transmit and deliver specific information and
communication services. Examples regularly mentioned in the literature include: dedicated telephony
infrastructures for transmission of Plain Old Telephony Services (POTS) and broadcasting networks for casting
Plain Old TV Services (POTVS). These infrastructures have been dimensioned and optimised to meet the
specific requirements of their respective services.
The technology of information and communication services has, however, been subject to radical changes
during the last 20-30 years. Technological developments have resulted in the emergence of new infrastructures
and better integration of services across infrastructures mainly due to digitalisation.
Integration and convergence occur at different speeds in different levels of the network. Core networks have
other characteristics than access networks resulting in different conditions for their levels of convergence.
Convergence has developed more slowly in access networks than in backbone networks.
Telecom networks and broadcast networks differ in capacity offered, switching capabilities and availability of a
return channel. Broadcast networks traditionally do not have the return path necessary for interactive services.
Digital broadcast networks, however, have a return path, either integrated in the network or using other
networks.
Telecom networks have been built to provide point-to-point services resulting in network architectures where
the network resources between the user and the first switch in the networks are not shared. This enables the
service providers to offer customised services to individual users. However, the cost of operation and
maintenance of these networks is high and the increase of capacity at end user sites is developing slowly,
making it impossible in the short-term to integrate all kinds of services. Developments in audio/video
compression technology and new access technologies such as DSL make it possible to offer new services in
these networks.
Broadcast networks connect users to distribution points in the network and share the network resources. The
capacity allocated to a broadcast service is dimensioned to give a good technical quality of the service; however,
the Capacity per User (CpU) is very low. These types of networks are not optimised for point-to-point services
but are well-suited for services with common interest.
Transmission of broadcast services over switched/routed networks is not necessarily an efficient way of utilising
network resources, especially when ‘broadcast service’ denotes a service that is transmitted to many users and
these ‘many users’ demand the service. All switches and routers in the network will then do a simple job of
connecting the same input to many outputs, which is an inefficient way of using a switched/routed network.
To a certain degree, this is in line with the experiments in the UK in the early 1980s, where the cable companies
implemented switched cable networks. The cable companies observed that the vast majority of users watched
the same kinds of programs for most of the time, reducing the function of the expensive switches to a wire
connecting these inputs to all outputs.
A precondition for Internet TV (TV delivered over the Internet) becoming comparable to traditional (digital) TV
is an exponential increase in transmission capacity to end user sites. By using a simple assumption that two or
three services must be available for a household (different family members must have the opportunity to watch
different programs at the same time, and be able to record a program on VCR), the necessary capacity will be
about
40-60 Mbit/s in the case of HDTV and 8-12 Mbit/s in the case of SDTV.
For some time to come, the broadcasting networks with their one-to-many structure will be the most optimal
way of transmitting broadcasting services to the vast majority of end users. However, when capacity is sufficient
to provide broadcasting services over the Internet other parameters like the way services are used can limit the

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provision of broadcasting over Internet. If a service is used by the majority of people, it is a waste of resources
to provide it through a switched/routed network, as it can easily be broadcast to all people using broadcast
networks.
One scenario might be that Web-TV (world-wide web pages delivered over broadcast TV) co-evolves with
digital TV and exists as a complementary and competitive platform to other delivery networks. As a
complementary platform, special types of services that will not be provided on other platforms can be provided
on the Internet. As a competitive platform, special narrowcast types of services provided on cable and satellite
delivery networks could be provided on the Internet and compete with these infrastructures for some broadcast
services.
One of the major barriers for convergence relates to the transport and delivery part (i.e. the infrastructure part) of
the value chain. It has been shown that although digitalisation is a major parameter, it is still only one amongst
several parameters that influence convergence at the infrastructure level. It is also important, to emphasise that
the success or failure of convergence is not directly connected to the capability of one infrastructure to integrate
all services.
None of the infrastructures available can integrate all the services in their current state. While integration of the
back-bone parts of the networks have had better conditions to evolve, integration of the last mile coverage has
been shown to be dependent on many different parameters. However, some infrastructures have better potential
to be upgraded to integrate more types of services. Cable TV networks are examples of this. On cable networks,
it is possible to offer several broadcasting services of acceptable quality and at the same time deliver Internet
and basic telecom services. Also new LAN types of networks in residential areas (and different wireless
solutions coming onto the market) can provide acceptable performance levels. However, when upgrading cable
TV networks and establishing new networks large additional investments must be made, and it is often not
economical to do so.
One way of implementing convergence and delivering ‘convergence services’ is to utilise the synergy between
different networks and consequently to utilise the strength of different networks. In this way, different
components of the same service can be transported over different networks. This organisation of heterogeneous
networks can be totally seamless for the end-user and function like an integrated network.
There are, therefore, choices to be made between a pure integration model and a heterogeneous network model.
This choice depends partly on the characteristics of the types of communication in question and the
characteristics of different kinds of networks and partly on the history of network development in different
countries. There is a certain path dependency in the possible choices countries make, hinging on the former
history of network development. Convergence of networks implies a development where the same services will
be offered through different types of networks (e.g. UMTS, FWA and copper-based or optical wired networks).
6.3 Convergence of terminals
Terminal convergence denotes the coming together of consumer devices such as fixed and mobile phones, the
television and the personal computer. Penetration of TV sets is much higher than PC terminals. TV sets are by
far the most universal household communication terminal. Providing interactive services, including Internet, on
TV can potentially benefit especially the ‘information poor’ and thus reduce the ‘information gap’ in many
countries. This is an important implication of convergence, as a major part of the population of many countries
will only benefit from new broadband services of network economies if it can receive the Internet services on
TV.
The PC terminal is developing into a real competitor to the TV set as an access device to broadcast services.
Additional low cost TV tuner cards are needed to be able to see traditional broadcast services on a PC. The PC is
a well-designed medium for consumption of Internet services and is a good medium for convergence of a wide
variety of services. But here also the way of use will be a vital parameter that determines the services for which
the PC terminal and TV set will be substitutes.
The development in the past five years shows, however, that the direction of convergence is not only bringing
together traditional services provided over different consumer terminals. There is also a trend towards the
development of a variety of different access terminals for dedicated services and applications. The trend to
service integration is being paralleled by a trend towards a new diversification.

6.4 Convergence of markets
6.4.1 Vertical Integration
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Telecom services markets were generally highly vertically integrated up to about 1980. The telecom operators
focused on delivery of end-to-end services and they either produced their own equipment or had a close
relationship with national equipment suppliers. During the 1980s much of equipment production was divested
from service operations. This was partly a consequence of the emerging liberalisation of the telecom sector. The
equipment manufacturers wanted to sell their products to incumbent operators as well as new entrants. Too
strong links with one operator would limit this potential and most manufacturers therefore benefited from a
position as independent companies. However, many operators still maintain, substantial R&D departments,
mainly in software and service development, in order to create a competitive edge through provision of the most
advanced and innovative services. So, for innovation some integration between the production of technology
and service production still persists.
For terrestrial broadcasting, equipment production and service production have in general been two separate
activities. However, distribution and content production is highly integrated. For satellite and cable there is some
vertical integration between content and distribution, as well as equipment production. The basic distribution by
cable or satellite may be separated from content production, but most broadcasters act both as gatekeepers and
producers of content although they also buy content from others.
Many telecom operators are supplying new content services over their networks. This can be seen as a
continuation of the end-to-end philosophy that has dominated the telecom sector, but it is facilitated by new
technical opportunities enabled through a wider penetration of broadband or semi-broadband facilities. In
addition convergence with other media has drastically increased the market opportunities for delivery of various
sorts of content via the telecom network.
6.4.2 Market convergence across industries
Convergence across industries can take place at all of the three horizontal levels: equipment/hardware,
transport/software, and content/services. Each level is related to one of the technical dimensions of convergence:
• Convergence in content production is related primarily to services convergence;
• Convergence in distribution is related to network convergence;
• Convergence in equipment production is related to terminal convergence.
Convergence in equipment production is also related to a convergence between different network technologies,
as equipment suppliers produce equipment for use both in production and distribution as well as consumption of
content.
6.4.3 Convergence in markets for content and services
Convergence in markets for content and services does not imply that the different platforms will be used for
provision of the same services – a degree of specialisation is likely to remain. But the former boundaries
between IT, telecom, broadcasting and other mass media companies are going to be redefined and less visible.
Even if a broadcasting company chooses to remain basically a broadcaster, it will be necessary to become visible
on other platforms as well. New service integrating elements from IT, telecom, broadcasting or other mass
media will continuously be developed. These new services will not always be a source of creation of new
companies but will contribute to the blurring of boundaries between the different industry sectors.
Services convergence implies that content providers will become cross-sectional in the sense that they provide
content to more than one sector. Most content providers are, however, still rooted in one sector and their new
activities are mainly in the new sectors. This is seen most clearly in content provision to the Internet. Both
newspapers and TV broadcasters have developed their own web-sites, where they exploit the economies of
scope related to provision of the same content to different platforms.
These activities may expand in such a way that this will lead to a convergence between providers of content to
the Internet and either newspapers or broadcasters. But it is also possible that provision of news services to the
Internet will develop into separate entities that may be spun off as independent companies. Or the market will be
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An important barrier to the development of cross-sectional content providers is that it is not enough to provide
the same content on different platforms. In order to remain competitive, content must be designed in a way that
takes the potentials and limitations of each platform into consideration. As long as the technical capabilities vary
across platforms and networks, there will always be scope for development of content designed for a particular
platform.
Another trend is the entry of telecom operators into the broadcasting sector. In Denmark, for instance, the
incumbent operator TDC (formerly TeleDanmark) tried to establish its own TV channel in the mid 1990s;
Telecom NZ has bought a stake in Rupert Murdoch’s Sky Network Television; and British Telecom has recently
applied for a broadcasting license.
These examples deal both with horizontal and vertical integration. The philosophy is to ensure content to the
networks. For example, BT (formerly British Telecom) seeks to distribute its broadcasting service via its own
broadband network. However it is not yet clear whether these attempts at convergence will be successful. BT
has yet to make its broadcast service profitable.
6.4.4 Convergence between distributing companies
The most important trend in convergence of distribution networks is between the telecom networks (which also
provide the infrastructure for many IT services) and the broadcasting networks. The telecom networks are used
for telephony as well as data, and now Internet services. Broadcasting services are still mainly distributed over
separate networks, but some broadcasting can also take place via the Internet. On the other hand, cable-TV
networks can offer telecom services as well. In the UK, US and some other countries, cable operators have
upgraded their cable networks to provide telephony, and cable modems are used to offer Internet access in many
countries.
In some countries, the incumbent operators have from the very beginning been among the major cable-TV
operators. This has tended to slow down convergence as telecom operators have been hesitant to introduce new
services in the cable network (such as cable-modem access to the Internet) that compete with services delivered
in the telecom networks. In the US, through its acquisitions of leading cable operators TCI and MediaOne,
AT&T became one of the two major cable-TV operators. Since its divestiture from its local operating companies
in 1984 AT&T has lacked a direct network access to its customers. Through this acquisition it sought to regain
direct access.
Another trend is convergence between communication network operators and operators of other types of
networks. In particular electricity companies have been active in rolling out communication facilities in
conjunction with their power lines. This has in many cases proven to be a cost effective way to provide fibre to
the home (FTTH).
6.4.5 Convergence between equipment manufactures
Convergence in equipment production is not a new phenomenon, but is essential to achieve in particular
terminal and network convergence. Many industrial corporations such as Philips and Siemens are involved in
many different industrial activities in most of the ICT and media sectors. The reasons for this relate primarily to
strategy of conglomeration and the synergies between equipment production of different types of electronic
equipment that existed before the digitalisation opportunities arose.
During the past decade, convergence has been most visible in the IT and telecom sectors. The liberalisation of
the telecom sector has made it possible for new entrants from IT hardware, software and consumer electronics to
start up production of telecom equipment. At the same time, the technical convergence between IT and telecom
equipment has made it economical to enter the telecom market. One prominent example is Cisco which supplies
routers to private data networks as well as public telecom networks (in particular IP-networks).
Convergence is not only a matter of utilisation of synergies in development and production. It is also a question
of developing new types of equipment with features originating from different industries. This is clearly seen in
the development of terminals for digital TV. These terminals not only combine broadcasting and IT technologies
in their technical design. The services they provide are also a result of the convergence between the different
industries.

6.4.6 Divergence of markets
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There is, however, also a trend towards divergence. Mobile communication, for instance, has emerged as a new
sector. The largest player on the market for mobile communications, Vodafone, is an independent company with
a focus on mobile businesses. In addition, some of the fixed operators are divesting their mobile activities. The
explosion in mobile services around the world has been driven by independent competition made possible by the
separation of mobile from fixed network operators, not its integration.
Another divergence trend is the increasing separation of supply of telecom services and operation of the physical
network structure. Today a number of telecom operators base their operations in part on access to other
operators’ networks through leasing and interconnection agreements. In addition, a number of infrastructure
providers have emerged. These are often public utility companies, which are in possession of their own telecom
infrastructure but do not have any intentions of entering the retail market for telecom services. The financial
crisis following the UMTS auctions may be an additional factor prompting this development, as some of the
incumbent operators may be forced to sell off their infrastructure in order to reduce their debt. Among others,
BT has received offers for their infrastructure from at least two different consortia. Although these offers have
been rejected, analysts observe that BT (as well as other debt burdened telecom operators such as KPN,
Deutsche Telekom and France Telecom) must decide whether they want to be pure network operators or service
providers in the future.
The emergence of broadband networks, which in principle are able to provide all types of communication
services previously provided through separate network infrastructures, does not seem imply creation of
converged market actors present in all parts of the value chain and delivering all types of services. But borders
between existing industries will be redefined and new business models will emerge. The ability of the industry
to adapt to this new environment will be crucial for development of broadband infrastructure and applications.
6.5 Convergence of regulation
From a policy and regulatory perspective, convergence trends in the ICT and media areas raise a number of
issues, which are relevant for development of broadband infrastructures. These issues include the general
societal importance of a convergent broadband infrastructure, access to networks and content, technology
neutrality, problems of network and media concentration, and issues related content regulation. At the content
level, there are a large number of issues to be resolved, including the question of whether all content areas can
be treated in similar ways regarding, for instance, what it means for public service provisions in the broadcast
area and what it means for media responsibility rules. Other questions deal with privacy protection, security,
consumer protection, intellectual property rights, and illegal information.
6.5.1 General Societal Importance
The general societal importance of convergence policies lies in the growing importance of ICT and media
industries in terms of size of the industries themselves and the broader social implications. ICT elements are
integral components of products and services in many sectors, and information and communication systems
constitute infrastructures for many functions in society. Information and communication infrastructures are, for
instance, crucial in importance for the many services activities that play an increasing role in social
developments. Many countries have, therefore, devised information/network society visions and plans to take
advantage of the potential applications of the new information and communication technologies and services,
and many countries strive to establish the best possible economic and regulatory framework conditions for the
development of a broadband infrastructure and innovative applications.
6.5.2 Access to Networks and Content
Access to networks and content has become an increasingly important issue. Many countries have some form of
universal service rules in telecom, or are in the process of developing such rules. Many countries also have
provisions for access to public service broadcasting, even though in some countries there is an unfortunate
conflation of public service and government propaganda broadcasting. The policy question is whether and to
what degree such access provisions should be extended to broadband networks and services, reflecting
developments relating to convergence, Internet, public information services, etc.
The arguments in favour have centred on the issues of overcoming the social divides and the economical and
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the industrial growth potentials made possible by a broad diffusion. Arguments against have been concerned
primarily with creating a situation where the mass of users are forced to support the most advanced early
adopters of new technologies, and the dangers and inefficiencies of subsidising technologies that are quickly
made obsolete by new and more powerful technologies. However, some countries have gone beyond the mere
provisions for universal service in basic telephony and there is generally open-mindedness in relation to the
possible inclusion of some sort of universal access provision, e.g. broadband access.
6.5.3 Technology Neutral Regulation
With respect to information and communication infrastructures, there is a general trend in policy discourse
towards uniting the regulation of the different infrastructures. Most countries have operated with different rules
applying to fixed networks, mobile networks, and broadcast networks. But with the technical convergence
developments and the increasing possibilities for conveying similar services over different networks, the
foundation for differences in regulatory rules are being questioned. The principle is here that regulation should
not favour use of a particular technology for provision of broadband services.
Many countries, therefore, are seeking to harmonise regulatory frameworks of different communications
infrastructures based on the principle of technology neutrality. However, there are some problems attached to
this approach. There are for instance a number of special rules protecting users of fixed telephony, which do not
apply for similar services provided via the Internet. Also, the levels of competition in the different infrastructure
areas may differ, for instance, with greater competition in mobile services than in fixed.
6.5.4 Network and media concentration
The balancing of benefits and problems in relation to complementarities and market power is not a new issue.
Public policies have been seeking to strike such balances in many areas for a long time, and asymmetric
regulation has been used to increase competition between telecom operators, and incumbent telecom operators
have been forbidden to offer cable TV services and have been requested to divest such activities. On the content
side, many countries have for years had regulations limiting cross media ownership. However, technological
developments including digitalisation of different media content, policy developments in the direction of
increasing liberalisation and a less stringent view on economic power concentration, and increasing business
internationalisation leading to larger corporations and political support for such tendencies, have altered the
former balance points between the benefits and problems associated with common ownership of broadcasting
and telecom networks and with media concentration. Network competition needs to be ensured also on a
converging market for broadband services and there is still a need to ensure plurality in media. There is today a
widespread political trend toward loosening the restrictions on media concentration, including cross media
ownership provisions, in order to take advantage of the new complementarities between media. However, the
policy issue is still there and just a important as it ever was. New balances have to be struck in view of benefits
and drawbacks in loosening and restructuring regulations on media concentration.
6.5.5 Converging Content Regulation and other content issues
Adaptation of content regulation is crucial for development of broadband. In some areas for instance
broadcasting existing regulation may pose barriers towards development of converging services, and users may
be reluctant to use services if consumer protection is inadequate. Both issues may hamper service development
and demand, and delay roll-out of a broadband infrastructure.
It is an open issue as to the extent regulation in the different content areas should converge. In the broadcast
area, many countries have public service provisions of some kind, though they may be very different from one
another. Some broadcasters have responsibilities for providing services under certain quality obligations but
have, at the same time, a number of privileges in terms of, e.g., frequencies for terrestrial transmission. In other
media areas, for instance print media, there are no such arrangements. And when content can be used across
different infrastructure platforms, the question is what the implications will be for the specific public service
provisions in the traditional broadcasting area. It will surely be more difficult to maintain a central position for
public service broadcasters, but will public service provisions necessarily disappear? Conversely, is it possible
and desirable to extend public service provisions to the Internet web in the sense that public service broadcasters
become obliged to develop web pages with a public service type of content?
Another example of a similar question relates to the media responsibility rules for print and electronic mass
media. Authors/journalists and editors are in most countries responsible for what is printed and broadcast.

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However, such rules seldom apply to information on the web, and the issue is whether it is possible and
desirable to uphold such rules in a situation with a growth of information spread over the web, or whether it is
possible and desirable to extend rules for content responsibility to new media platforms at all.
Privacy protection takes on a new dimension in a converged Internet environment. Not only is it much easier to
transmit files with personal information, it also becomes much easier to collect information about people, their
interests and buying habits by means of automatic registration. Security problems involve both the security of
information transmitted on networks, i.e. that personal information is not disclosed or tampered with, for
instance, and the security of payments made on electronic networks. Consumer protection is also an important
issue. When buying goods and services on networks, consumers must be protected against shoddy quality
products, late delivery or simple fraud. In some countries, there are actually stricter rules protecting customers in
e-commerce than ordinary commerce, but this does not apply to the great majority of countries where consumer
protection is less, and there are certainly special problems in relation to international transactions.
Intellectual property rights constitute another area where a converged Internet environment creates many new
problems. The Internet provides new possibilities for spreading cultural products – which is a great advantage.
But for the holders of intellectual property rights, these new possibilities create new problems with respect to
protecting their rights against infringements. Finally, illegal information such as racist utterances and child porn
can be spread much wider on the Internet, and the question is how to protect citizens against such information
and how to hinder people from spreading it in an international Internet context.
These issues are not new. They have not been created by the development of convergence in the media and
Internet areas. However, convergence and the Internet create a new environment in which these known issues
acquire major new dimensions.
It follows that convergence pose a number of issues of technical, economic and regulatory character, which
needs to be taken into consideration in defining policies for promotion of broadband. Actors active on this
market must realise that borders between various market segments are being redefined, and regulation must be
reshape according to changes in technology and market conditions in order to facilitate development of
converging infrastructures and market.

7. Broadband technologies summary
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The objective of this chapter is to produce a summary of the different technologies and trends in the broadband
for all areas, which considers different inputs:
• The user, market and convergence trends described in the rest of the document
• The technology state of the art and trends, which have been produced in coordination with the other
involved IST project, as well as with external projects and initiatives
• The future inputs of a think tank initiative which is set-up by the project.
The methodology (shown below in Figure 1) adopted to build a coherent set of requirements and roadmaps in
the different areas of interest follows an hybrid top-down / bottom-up approach.
THINK
TANK
High level vision
COMMON FIELDS
IN ACCESS
Gap analysis
SOA in different
technologies
Implementation
Roadmap
Technology roadmap
End to End topics
BREAD GENERAL METHODOLOGY FOR ROADMAP BUILDING
Figure 1: BREAD General methodology for Roadmap building
Some technical requirements are well known, and a complete framework (bold in Figure 1) can be derived
A high level vision, and the pre-study of the state of the art analysis in the different technical domain covered by
“Broadband for All” will allow to refine the gap analysis and the technology roadmap derived.
The initial set of requirements which has been considered in the analysis is being segmented between the
Application/Service Provider, the Network Operator, and the User (Figure 2).
These can be translated in a set of technical requirements and trends, which are considered for the establishment
of the gap analysis and roadmaps in the following chapters. The study of these technical requirements and trends
require to segment the Broadband for all into technical areas which are shown in Figure 3.

A/SP
•Access to user
•Security
•Session mobility
•Content processing/
indexing
•Content packaging
•Billing
•Configuration
•Interface to service
provider / network
operator
•Security
•Billing
•QoS
•Connectivity
•Configuration
•Content processing
•Multimedia applications
(video/voice, data;
broadcast + unicast)
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user
•Seamless access to
content/applications/services
•Preferences: QoS, security
•End to end connectivity
•Billing control / unique
interface
•security
•Nomadicity
•Mobility
•Content processing
Figure 2: The initial set of requirements which has been considered in the analysis is being segmented between
the Application/Service Provider, the Network Operator, and the User
content
signalling
QoS, billing, security, authentication, …
backbone
Security, management and control
metro
IPV6, QoS,
Common phys
Common MACs
Security
Provisioning
Billing
Interworking
handover
Security, signalling
mobile
PLC
DSL
FTTx
cable
satellite
wireless
Figure 3: Segmenting the Broadband for all into technical areas
The breakdown between domains tries, to align to the separation between networks and actors of the broadband
chain: there is a natural separation between Home network, Access technologies, Metro Network on one end,
and horizontal boundaries between the network operator, service / application providers, and content providers
on the other end (the latter domain being out of scope of the document).
“Home network” has its own technical and business constraints and there are complex objectives in the area of
“Home network” which are not fulfilled yet (the present version focuses more on the physical aspects, and
wireless issues) such as:
HAP
Home

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• High bit rate transport through heterogeneous clusters (including wireless, cable, PLC) and
interworking between fixed and mobile clusters; handover between networks owning to different
operators
• QoS framework including in-home QoS management, and interworking with access network
• DRM framework to support multiple providers, and local storage
• Introduction of storage in the network
• Coherent content discovery and selection framework
“Access technologies” have all their own issues, common denominators being the need to increase dramatically
the average capacity and upstream per user with the introduction of video in the services provided, and the
increase of user created content and Peer to Peer communication. Common trends appear between access
technologies like decentralised architectures and common optical transport, new physical and MAC layers,
common IP architectures (including QoS, charging, device provisioning and security) between access
technologies, and between fixed and mobile networks. The progressive introduction of IPv6 in the access, then
in the backbone is also developed.
“Backbone and Metro” has similar trends with different constraints and roadmaps; the clear recent tendency is
an evolution towards lower CAPEX & OPEX architectures with “multiple services centric” rather then “voice
centric services”. A clear trend is a progressive evolution of SDH technology which remains clearly dominant in
that field. Trends developed further in this chapter are dynamic networking, more efficient robust modulation
and transport format, the reduction and implication of protocol stacks, multiprotocol support with GMPLS, and
the progressive apparition of Ethernet in the Metro.
Interfacing between application, signalling and network layers is a natural technical requirement; the openness
of these interfaces is driven by the trend of network operator, services operator and application provider being
distinct.
Interworking between networks becomes an important issue for ensuring optimal end to end transmission which
respects the initial QoS and security, billing and initial users’ preferences settings (e.g. preferred operator). This
introduces important additional constraints like:
• Uniformity or QoS and signalling infrastructures
• Requirement for dynamic networks reconfigurability
Requirement for a ubiquitous nomadic or mobile service to the user introduces requirements for unique user
identification, capabilities and preferences description; these information must be accessible on a standard way
to allow terminal provisioning. The same kinds of requirements exist for the content, i.e. unique ways to
identify, locate and describe the content.
On the content and applications layers, video is being aggregated with voice and data into content offers, and
there is a general need for unification between data, voice and video frameworks on the different topics of
content description, security, content adaptation.
Crucial topic is security, where the requirements are very dependant on the type of content and application, and
where the legacy situations are very different; for example a news event and a telephone call will have
significantly different protection requirements; moreover the legacy security systems have to deal with the
particular environment (broadcast one way, or always on line). As security functionalities can have a major
impact on service cost, and seamless access to use is required, a defined and interoperable security and content
protection framework, that can rely on lower layer security mechanisms (scrambling, user and terminal
authentication) is needed.
More generally there are 2 main requirements concerning content and application delivery: a requirement for
standard content encoding, aggregation, description and adaptation mechanisms, and a second general
requirement , driven by the separation between content, application and network providers, is the need for
defined interfaces between all the actors which allows to communicate the content description, session, security,
QoS characteristics, so that the service provider and the network operator can fully exploit and transmit the
content.
The requirement to use terminals with different capabilities introduces additional important constraints on
content scalability; this scalability can be static (i.e. signalled at the start of an application between the end user
terminal and the content provider), or dynamically, i.e. the content would have to support a varying QoS legacy
environment, and adapt dynamically to this environment; this is particularly critical in multicast application
where the content has to be consumed simultaneously by different kind of terminals with different capabilities.
Another important requirement is for uniformity of content coding and representation, so that ideally a terminal
with limited capabilities can use any content, or that affordable transcoding can be provided within the network.

7.1 HOME NETWORK (wireless)
7.1.1 Introduction
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Home networks are based on wired and wireless technologies (Figure 4). Applications are home control,
communication, infotainment, and entertainment. The most challenging topic yet to be addressed in the Home
Network environments is interworking and interoperability, as well as the seamless provision of services,
independent of the underlying networks. Fixed Home Networks require cabling between the devices using
existing wires like phone lines, power lines, etc.. Premium performance is obtained when using broadband
media like twisted pair, coaxial wires or optical fibres. In contrast to wired networks, wireless systems are far
easier to deploy, however, the performance of these systems strongly depends on the constraints which are given
by the environmental conditions. Propagation loss, shadowing, absorption, multipath propagation effects due to
reflections at obstacles and Doppler spread may limit the maximum distance and transmission speed. From
cordless phones to cellular handsets, consumers are now unwiring their laptops, PDAs and other electronic
gadgets with narrowband short-distance solutions such as Bluetooth and IEEE 802.xx / ETSI standards. Thus
driving forces for ongoing R&D activities are the cellular growth and the enterprise markets of wireless local
area networks and wireless personal area networks (WLAN/WPAN).
Home Network Technologies
Cabled Wireless
Copper Fibre Radio
Infrared: kb/s...Mb/s
Telephone line: 100 Mb/s (VDSL)
Twisted pair: < 1 Gb/s
Power line: < 2...14 Mb/s (shared)
MM fibre: fibre:
SI MMF:

7.1.2 Home Networks 1 : Technologies / Standardisation
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High-speed Internet is spreading. Homes that used to have little communication technology in the past now have
multiple computers, peripherals like printers and scanners, televisions, radios, stereos, DVD players, VCRs,
cordless telephones, PDAs, and other electronic devices.
Home networks link the many different electronic devices in a household by way of a local area network (LAN).
The network can be point-to-point, such as connecting one computer to another, or point-to-multipoint where
computers and other devices such as printers, set-top boxes, and stereos are connected to each other and the
Internet. There are many different applications for home networking. They can be broken into five categories:
resource sharing, communications, home controls, home scheduling, and entertainment/information.
Resource Sharing
Home networking allows all users in the household to access the Internet and other applications at the same
time. In addition, files (not just data, but also audio and video depending on the speed of the network) can be
swapped, and peripherals such as printers and scanners can be shared. There is no longer the need to have more
than one Internet access point, printer, scanner, or in many cases, software packages.
Communications
Home networking allows easier and more efficient communication between users within the household and
better communication management with outside communications. Phone, fax, and e-mail messages can be
routed intelligently. Access to the Internet can be attained at multiple places in the home with the use of
terminals and Webpads.
Home Controls
Home networking can allow controls within the house, such as temperature and lighting, to be managed though
the network and even remotely through the Internet. The network can also be used for home security monitoring
with network cameras.
Home Scheduling
A home network would allow families to keep one master schedule that could be updated from different access
points within the house and remotely through the Internet.
Entertainment/Information
Home networks enable a multiple of options for sharing entertainment and information in the home. Networked
multi-user games can be played as well as PC-hosted television games. Digital video networking will allow
households to route video from DBS and DVDs to different set-top boxes, PCs, and other visual display devices
in the home. Streaming media such as Internet radio can be sent to home stereos as well as PCs.
The speed of home networks is also important to consider. Most home networking solutions have speeds of at
least 1 Mbps, which is enough for most everyday data transmission (but may not be enough for bandwidthintensive
applications such as full-motion video). With the development of high-speed Internet access and
digital video and audio comes a need for faster networks. Several kinds of home networks can operate at speeds
of 10 Mbps and up. Digital video networking, for example, requires fast data rates. DBS MPEG-2 video requires
3 Mbps and DVD requires between 3 and 8 Mbps. HDTV requires more speed than current home networks have
but that should change in the future, as home networks get faster and as technology develops and adapts to new
Internet appliances and digital media.
In general, the home networking standards can be divided into two large groups: in-home networking standards,
that provide interconnectivity of devices inside the home, and home-access network standards, that provide
external access and services to the home via networks like cable TV, broadcast TV, phone net and satellite.
Additionally, there are the mobile-service networks that provide access from mobile terminals when the user is
away from home. Currently there is no dominant wired home networking standard, and networks are likely to be
heterogeneous. A comprehensive compilation of the standards for multimedia networking is given in the
MEDIANET2 project.
1 Future Home, http://dbs.cordis.lu/ IST-2000-28133
2 MediaNet, http://www.ist-ipmedianet.org/home.html

7.1.2.1 Cabled Home Network
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Many in-home networking standards require cabling between the devices. One option is to install new cabling in
the form of galvanic twisted-pair or coaxial wires, or optical fibres. The alternative is to use existing cabling,
such as power-lines and phone-lines.
Using existing cabling in the home is very convenient for end-users. For in-home networking via the phone-line,
HomePNA 3 has become the de-facto standard, providing up to 10 Mbit/s (240 Mbit/s is expected). For powerline
networking, low-bandwidth control using and (high) bandwidth data transfer using CEBus 4 and HomePlug 5
are the most prominent ones, offering from 10 kbit/s up to 14 Mbit/s.
New cabling requires an additional effort of installation, but has the advantage that premium-quality cabling can
be chosen, dedicated to digital data-transport at high rates. The IEEE-1394a standard (also called Firewire and
i.Link) 6 defines a serial bus that allows for data transfers up to 400 Mbit/s over a twisted-pair cable, and
extension up to 3.2 Gbit/s using fibre is underway. Similarly, USB 7 defines a serial bus that allows for data
transfers up to 480 Mbit/s over a twisted-pair cable, but using a master-slave protocol instead of the peer-to-peer
protocol in IEEE-1394a. Both standards support hot plug-and-play and isochronous streaming, via centralised
media access control, which are of significant importance for consumer-electronics applications. The
disadvantage is that this sets a limit to the cable lengths between devices. Another major player is the Ethernet,
which has evolved via 10 Mbit/s Ethernet and 100 Mbit/s Fast Ethernet using twisted-pair cabling, into Gigabit
Ethernet, providing 1 Gbit/s using twisted-pair cabling or fibre. Ethernet notably does not support isochronous
streaming since it lacks centralised medium-access control. Also it does not support device discovery (plug-andplay).
It is, however, widely used, also because of the low cost.
7.1.2.2 Wireless Home Network
As opposed to wired networks, wireless systems are far easier to deploy. This is due to the smaller installation
effort (no new wires), and due to a lower cost of the physical infrastructure. A wireless home network is
configured with an access point that acts as a transmitter and a receiver connected to the wired network at a
fixed location. The access point then transmits to end users who have wireless LAN adapters with either PC
cards in notebooks, ISA or PCI cards in desktops, or fully-integrated devices. A wireless home network allows
real-time instant access to the network without the computer having to be near a phone jack or power outlet.
Installation is easy because there is no cable to pull as with conventional Ethernet. The devices do not have to be
in line-of-sight but can be in different rooms or blocked by walls and other barriers. Finally, all of these services
are secure as they use encryption technologies.
However, regulation by law and associated licensing fees may seriously affect the actual cost of the wireless
connection. Additionally, the governmental regulations vary widely throughout the world. Especially for the
license-free spectrum-bands, the issue of signal interference that limits usable bandwidth has to be solved. This
is one of the reasons that there are so many wireless standards that it is becoming difficult to keep track. From
cordless phones to cellular handsets, consumers are now unwiring their laptops, PDAs and other electronic
gadgets with narrowband short-distance solutions such as Bluetooth and IEEE 802.xx / ETSI standards. Driving
forces for ongoing R&D activities are the cellular growth and the enterprise WLAN market. In tables 2, 3 the
wireless technologies and wireless standards are summarized.
In some cases there exist an overlapping application between wireless home networking, wireless access
networks, and cellular systems. Within the IST-Future Home 8 project three wireless technologies have been
addressed: IEEE-802.11 (WLAN), HiperLan2 and Bluetooth (WPAN). These have been selected for the
following reasons:
• the technologies are complementing from the usage point of view;
• they are in a different phase of maturity and can be also compared against each other;
• these different technologies provide the heterogeneous environment that can be used as a model of a
future residential network;
• they all can be used as substitutes of wired connections and therefore are suitable for an IP network
environment.
3
HomePNA, http://www.homepna.com/, http://www.homepna.com/HPNA-DLINK-Kit.html-ssi,
4
CEBus, http://www.cebus.org/
5
HomePlug, http://www.homeplug.org
6
1394 Trade Association, http://www.1394ta.org
7
USB, http://www.usb.org
8
Future Home, http://dbs.cordis.lu/ IST-2000-28133

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In this chapter on Home Networks additionally cellular and cordless systems have been integrated, because the
largest and most noticeable part of the telecommunications business is telephony. The principal wireless
component of telephony is mobile (i.e., cellular) telephony. In recent years the development of 3G thirdgeneration
cellular i.e. IMT2000 and other wireless technologies have been key issues, like wireless
piconetworking (Bluetooth), personal area network (WPAN) systems, and local area networks (WLAN).
However, wireless metropolitan area network (WMAN) systems (IEEE 802.16 standards, called WiMAX**
systems) are described in the chapter on Wireless Access.
Wireless
Metropolitan Area
Network, WMAN
DAB
DVBT
ETSI HiperMAN
ETSI HiperACCESS
IEEE 802.16
Cordless
Systems
DECT
Cellular mobile
radio
2G GSM
3G IMT2000
Wi-Fi*: Wireless Fidelity
WiMAX**: Worldwide Interoperability for Microwave Access
Table 1: Wireless technologies
Wireless Local Area
Network,
WLAN
ETSI HiperLAN
MMAC
IEEE 802.11
Wireless Personal
Area Network,
WPAN
HomeRF
IEEE 802.15
UWB
Bluetooth
ZigBee
Area IEEE ETSI Forum/Alliance
WAN 802.20 3GPP, EDGE
LAN 802.11 HiperLAN Wi-Fi*
MAN 802.16 HiperMAN, HiperACCESS WiMAX**
PAN 802.15 HiperPAN WiMedia
Table 2: Global wireless standards
Due to page constraints the reader is referred, for more technical details, to Annex 2.

7.1.3 Issues and Trends / Gap analysis
7.1.3.1 Technical trends
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7.1.3.1.1 Cabled Home Network
While the optical fibre based 10 Gigabit Ethernet is running, the copper cable based 10 Gigabit Ethernet will
come: In September 2004 IEEE has completed its 10GBASE-T draft (802.3an Draft 1.0), which will be accepted
most probably in mid 2006. The copper cable based 10 Gbit/s Ethernet is expected to considerably drop the
costs of the interface compared to the optical fibre based version. Distances of 15m will be supported.
7.1.3.1.2 Wireless Home Network
In the UMTS cellular network HSDPA (High Speed Downlink Packet Access) and HSUPA (High Speed Uplink
Packet Access) are the most recent enhancements. While HSDPA has been standardized in 3GPP Release 5,
HSUPA is not yet fixed.
HSDPA is a packet-based data service in the W-CDMA downlink with data transmission up to 8-10 Mbps over
a 5MHz bandwidth. HSDPA implementations includes Adaptive Modulation and Coding up to 16QAM, Hybrid
Automatic Request (HARQ), fast cell search, and advanced receiver design. Multiple-Input Multiple-Output
(MIMO) systems are the work item in Release 6 specifications, which will support even higher data transmission
rates up to 20 Mbps.
HSDPA is likely to arrive in Asia in 2005, in phones, handhelds, and PC cards. It will arrive in Europe and the
U.S. soon after.
In January 2004 IEEE announced that it will develop a new standard IEEE 802.11n for wide-area wireless
networks. The real speed would be 100 Mbit/s (even 250 Mbit/s in PHY level). As projected, 802.11n will also
offer a better operating distance than current networks. The standardization progress is expected to be completed
by the end of 2006. IEEE 802.11n builds upon previous 802.11 standards by adding MIMO (multiple-input
multiple-output). The additional transmitter and receiver antennas allow for increased data throughput through
spatial multiplexing and increased range by exploiting the spatial diversity through coding schemes like
Alamouti coding.
7.1.3.2 First gap analysis
In the area of wireless communication we see the following items, which have to be tackled:
• Mobile networks / high capacity radio interface
- Improving spectral efficiency of the radio link by multi-antenna- (MIMO-) and adaptive signal
processing techniques
- MIMO algorithms and protocols for high mobility
- Scalable PHY layer and protocol stack design up to 1 GBit/s
- Smart scheduling
- Cross layer design
- Interference coordination
- software radio
• Ad hoc networks
• Meshed and multi-hop networks
• Sensor networks

7.1.4 Home Networks Roadmap
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The wired home network technology offers presently data rates up to 1GBit/s (Figure 5) which seems to be
sufficient for the most applications.
wired
Ethernet 10Mb/s, 100Mb/s, 1Gb/s
Firewire (iLink) 100, 200, 400, 800Mb/s
USB, 1.5, 12, and 480 Mb/s
CEBUS, Home Plug

Figure 6: Wireless technology roadmap
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7.2 ACCESS NETWORK
7.2.1 Power Line Communications
7.2.1.1 Introduction
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Europe is delivering today electricity for all, so that all citizens can harness the richness of electronic appliances
to improve the quality life. The next phase of comfort is the provision of universal Internet services. To this
end, the electricity distribution network could be used.
The use of the power grid has been the subject of research over a number of years for provisioning the telecom
services, but so far have not showed the expected success: The compliance to all regulatory requirements (low
electro-magnetic radiations limits), data rate and cost related features.
This market growth of worldwide demand for broadband services is partially met in the 42 most developed
countries of the world. The remaining 150 countries account for only 16% of telephone lines and 10% of
Internet users.
The emerging countries would have an urgent need for PLC technology due the low phone and internet
penetration and the fact that telecommunication companies should make a great investment in infrastructure
where the electricity companies already have their own proprietary electricity grid.
Deregulation is another key factor. Power utilities are looking for ways to become more competitive and to
expand their business. PLC is for them a significant opportunity to increase their revenues through the
introduction of new services such as Internet, telephony and security.
7.2.1.2 State of the Art/ Existing Technologies
PLC uses the low voltage (230 /400 V) mains network for data transmission purposes. The two application
fields for the PLC technology are
• access networks and
• customer premises or home networks.
Figure 7 shows a simplified PLC access and home network. The access (outdoor) part of the network goes from
the service node interface (SNI) up to the user node interface (UNI). The PLC line termination equipment (PLC
LT) is usually collocated with the transformer which is the starting point of the low voltage power line network
(PLN) going up to the demarcation between the utility owned outdoor (access) PLN and the in-house PLN. The
access PLN has a reach of up to several 100 meters and covers up to a few 100 households.
Power Line Communication (PLC) has been around since many decades. The use of the power grid for data
communications was first employed in the so-called CENELEC band. The achievable data rates have been low,
but sufficient for many remote control applications.
Since a few years, high data rate communications are offered in the HF frequency band (from 1.8 MHz to 30
MHz). The data rates of the PLC equipment on the market range from 2 Mbps to 45 Mbps. Higher data rates to
up to 200 Mbps have been announced recently.
The basic problems encountered during the deployment of these PLC equipment, are:
• electro-magnetic radiations,
• interferences in the frequency bands allocated to other users and
• high costs.
The market for broadband communications is growing and broadband over power lines has the promise to offer
low cost broadband communications over the ubiquitous power grid. The technology has a big market potential
and a PLC technology solving the open issues will undoubtedly allow the realization of “Broadband for All”.
The main advantage of PLC over the other broadband technologies is that no extra cables are required as in
every building, be it offices, apartments or houses, the electricity distribution is already installed

SNI
(Optical)
Core
Network
PLC LT
Outdoor
Medium Voltage
Power Line
Network
C
Transformer
Station
Power Line
Coupler
Low Voltage (230 V)
Power Line Network
C
Meter
C
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PLC NIC
PLC Modem
PLC NT
Gateway
Inhouse
Inhouse
Power Line Network
Figure 7: PLC access and home network
7.2.1.2.1 Characteristics of PLC
Characteristics of the transmission medium and achievable bit-rates
At first glance the ubiquitous power line network seems to be an excellent installed base for an access network.
Particularly attractive is the fact that practically each house offers an in house power line network which covers
perfectly all rooms.
However, the typical access and in-house PLN is a very bad transmission medium for RF signals. The PLN is
hampered by a bad and time variable frequency response, a high and unpredictable noise level, and high
radiation.
Lots of taps with bad and time variant line terminations produce a complex and time variant channel transfer
function with lots of notches and peaks in the frequency domain and reflections in the time domain respectively.
There are many noise sources of very different nature.
• Electromechanical noise sources as brush motors and switches produce predominantly intensive burst
noise.
• Dimmers and switching power supplies produce impulse noise with pulse frequencies related to the
50/60 Hz power cycle or to the switching frequency respectively.
• RF – interference as e.g. caused by short wave transmitters may generate significant narrow band noise
signals.
UNI

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On the other hand strong radiation - or in other words the relatively high antenna gain - of a PLN impose strict
limitations on the power spectral density (PSD) of the broadband PLC transmitters in order to keep the
disturbing influences on radio services - operating in the same frequency band - within acceptable limits. As a
consequence, the signal to noise ratios at the PLC receivers are reduced, resulting in a relatively low spectral
efficiency (bit-rate per Hz).
In order to get an idea of the bit rate which can be transmitted over the outdoor (access) PLN, the maximum
capacity of typical powerline reference channels including realistic ingress noise and using acceptable PSD
masks have to be estimated. From 9 we take the results based on defined reference channel models, frequency
bands, transmit power spectral densities (PSD) and a noise scenario, taken from typical channel measurements.
Reference channel models
• RC1 Link as shown in Figure 8a), length L ≈ 100m without branches, only few reflection points
(attenuation ≈ 18 dB @ 10 MHz, relatively flat)
• RC2 Linear link as shown in Figure 8b) with 6 branching cables of similar lengths, similar
distances between branching points and total length L ≈ 110m (attenuation ≈ 40 dB @ 10 MHz,
notches)
• RC3 As RC2 but 8 branches and total length L ≈ 210m (attenuation ≈ 95dB @ 10 MHz, deep
notches)
• RC4 Power line access network with numerous branches, but without significant regular structure,
as typically found in residential areas (attenuation ≈ 100 dB @ 7.5 MHz, no deep notches)
7.2.1.2.2 Frequency bands
Figure 8: Reference topologies
• Band A: 0.5 to 20 MHz
• Band B: 0.5 to 10 MHz (above 10 MHz reserved for in-house PLC, ETSI PLT)
• Band C: C1 + C2 + C3
- C1: 1.6 to 3.5 MHz
- C2: 4.2 to 5.8 MHz
- C3: 7.4 to 9.4 MHz
(avoids the frequency bands of the main public and amateur radio services in Germany)
Frequency Band
Mbps A B C
RC1 453.7 242.9 146.4
RC2 272.7 164.2 98.7
RC3 92.3 92.0 55.5
RC4 45.4 45.4 26.9
Table 3: Theoretical channel Capacity (Transmit PSD = - 53 dB (V 2 /Hz)) 9
9 P. J. Langfeld, "The Capacity of typical Powerline Reference Channels and Strategies for System Design", Institute of Industrial
Information Systems, University of Karlsruhe, Germany

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As an example, for the frequency band B the theoretically achievable bit-rate lies in the area between 45 and 240
Mbps, depending on the power line network. The capacity figures in Table 3 are rather too optimistic because
the transmit PSD of –53 dB (V 2 /Hz) might be rather higher than the value which probably will be fixed in the
final regulations for Europe. The estimated capacity is the total available once for the aggregated upstream plus
downstream traffic produced and consumed by all the users sitting on the same PLN.
The available capacity per user may be significantly smaller than this estimated total capacity, particularly if
many users are online and active simultaneously.
7.2.1.2.3 Modulation schemes and protocols
Bad channel transfer functions and high noise levels are challenges for advanced modulation and coding
schemes which can be realised by complex digital signal processing. For data communications, the power line
network acts as a shared transmission medium which calls for a multiple access protocol and security
encryption. Each node of the PLC network has to be configured and monitored for the network management
system. All the vital and supporting functions of a PLC system are realised in chipsets - available on the market
– in conjunction with software packages. Standardisation will drive the volume of such chipsets up and as a
consequence the prices down. Typical characteristics of state of the art PLC chipsets are as follows:
• Application: access and in-house
• Orthogonal Frequency Division Multiplexing (OFDM), like Discrete Multi Tone (DMT) for ADSL,
with up to 1280 carriers
• Configurable to operate in the whole frequency band for BB PLC (1.6 – 30 MHz)
• Multiple modulation schemes of the carriers: (D)BPSK, (D)QPSK, etc.
• Up to 36 Mbps symmetrical bit-rate
• Forward Error Correction (FEC)
• Security encryption (e.g. DES, 56-bit)
• Medium Access Control (MAC) protocol, e.g. Master/Slave or CSMA/CA (Carrier Sense Multiple
Access with Collision Avoidance)
• Supporting different QoS priority classes
• Supporting unicast, multicast and broadcast
• Supporting of up to 254 nodes
7.2.1.3 Socio Economic issues
The digital divide issue is one of the major issue in the European Union policy issues and solving this problem is
a challenge to Europe and to make the dream of ‘ Broadband for All’ a reality. PLC solution provides one such
possibility, since the powerline reaches all homes across Europe and the electricity provider companies have the
infrastructure in place. Once the problem of EMC, high bandwidth provision and standards are solved, PLC will
have very potential to be well accepted access technology by the citizens. Europe has pioneered the PLC
technology and the know-how is in place. However, the lack of agreed standards and agreements with other
operators for seamless communication across the networks is still in waiting. Once such problems are solved
introduction of e-services to reach all citizens can become reality and the quality of life can improve
considerably with e-Govt, e-learning, e-health services as well as work at home kind of environment with smart
house concept will tend to bridge the gaps of demographical situations and the skills of citizens in all fields of
business either related to culture, art, commerce etc... can be fully utilised and exploited, bringing the economic
progress to all regions of Europe.
7.2.1.4 Supporting organisations, Standards
Refer to annex for a detailed description; among the organisations, the main ones are PLC Forum
(www.plcforum.org), the PUA (PLC Utility Alliance) in Europe, which are dealing with regulatory, technology ,
and business matters, and HomePlug PLC alliance in the US (www.homeplug.org), which is more concentrated
on standards.
Main standards are:
• TS 101 867: Defines the splitting of the HF spectrum for PLC in the access and home domains
• TS 101896: PLT (Power Line Telecommunications) reference network architecture
• TR 102049: QoS for in-home TLP

Band Frequencies (kHz) Application
A 9 to 95 Out of house transmission
B 95 to 125 In house transmission
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C 125 to 140 In house transmission based on a specific multiple access protocol
D 140 to 148.5 In house transmission
E From 150 Radio bands, …
Table 4: CENELEC Bands for Data Transmission over 230/400 V Power Line Networks
(transmitter power ≤ 5 mW)
7.2.1.4.1 Frequency allocations
ETSI and CENELEC have partitioned the HF frequency band (from 1.8 MHz to 30 MHz) into two parts:
• from 1.8 MHz to 12 MHz is allocated for Access PLC
• from 12 MHz to 30 MHz is allocated for In-House PLC
7.2.1.4.2 Projects
The 2 main European projects covering PLC are:
• FP6 project: OPERA: covering all the aspects of PLC
• FP5 project: 6power: covering Ipv6, QoS & POWER line integration (concluded)
More detailed description of these projects is given in Annex.
7.2.1.5 Issues and trends
There are some recent publications, which demonstrates that inherent problems can be solved by adopting new
modulation technologies such as multi-carrier modulation (MCM) and of use digital filter banks (DFB) instead
of OFDM to obtain high level stop-band attenuation (larger than 100 dB) to ensure that the technology do not
have a power leakage in the frequency bands allocated to other users of the HF band. This new technology, uses
peer to peer communications instead of the commonly used master-slave communications to keep the
electromagnetic radiations as low as possible. The MAC (medium access control) allows ad hoc networking and
self-organization. The results of computer simulations have shown that this new technology can meet NB30
requirements under normal operations. High data rates (up to 300 Mbps) both interactive (IP services) and
broadcast (DTV) services can be offered.
The main PLC players (those that have known customers and whose technology has been proven in the field)
are:
• Ascom: It is based on a 2 Mbps GMSK technology. Ascom develops both the core technology and the
equipment. The used frequency bands are compatible with European standards. However, Ascom is no
more active in the commercial field.
• DS2: 1280-carriers OFDM technology can provide up to 45 Mbps in a 10-MHz range. DS2 targets
both access and home networking markets. Its frequency allocation is compatible with European
standards. They have announced a new generation of PLC equipment having up to 200 Mb/s, but the
technology is not yet proven in the field. DS2 equipment does not meet the CENELEC and NB30
standards with respect to radiations and interference.
• Intellon: the HomePlug standard is based on their technology (84-carriers OFDM, 14 Mbps theoretical
data rate, 6-8 Mbps actual data rate). Intellon is exclusively focused on the home networking market
(it’s technology does not support repeaters, which precludes it from being used in long-distance access
scenarios). It’s inefficient frequency allocation (from 4 to 20 MHz) is incompatible with European
standard regarding access and in-home coexistence.
• Itran: 2 Mbps CDMA technology. It is not compatible with European standard regarding coexistence
between access and in-home. Its main customer is the Israeli company Mainnet.

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7.2.1.5.1 Gap Analysis
Most of the PLC equipment on the market relies on a master-slave communications. Thereby, the master has to
reach all slaves in order to allow them to register and ask the master for transmission permission. The transmit
power of the master has therefore be high enough to reach all the slaves. High transmit power leads to high EM
radiations. There is also a mismatch between given topology of electric energy distribution and the used masterslave
scheme. If an additional master is needed for scalability, the new master has to be synchronized to the
master already in use, otherwise they are going to interfere with each other. The problems are: 1) high electromagnetic
radiations (usually above the limits requested by the regulatory) and 2) no scalability (or difficult
scalability).
The hot debates today concern the radiation levels and frequency bands of PLC. In Europe data transmission
over the so called “low voltage” (230V) power line network is regulated very restrictively by CENELEC
(European Committee for Electrotechnical Standardization). The CENELEC bands for data transmission over
low voltage power line networks are shown in Table 3. For out-of-house (access) transmission the band A with a
bandwidth of 90 kHz is available, which only allows low bit-rates. For broadband PLC the frequency band from
1.6 to 30 MHz is required. This makes the short-wave-radio community step in, because they see traditional and
important services sensitively disturbed by unintentional, cumulated radiation from many PLC systems. The
short-wave-radio community, which is represented by many organisations, want to achieve very low radiation
field strength limits in the regulations for broadband PLC systems. This would bring the signal-to-noise-ratio at
the PLC receivers and consequently the bit-rates down. The technical arguments of the short-wave-radio
community can’t be denied because short waves enable long distance radio services for many users (military,
police, secret service, embassies, airlines, maritime, public radio, radio amateurs, etc.) based on reflections at the
ionosphere. The received signals are typically weak, therefore the noise level must be very low.
Finally, in order to be cost-competitive with other broadband technologies like xDSL, cable, VDSL, WiFi,
WiMAX and FTTH, the PLC solution has to provide high data rates and be of reasonable complexity. To
achieve high data rates, the signal-to-noise ratio (SNR) must be high enough to be able to use multilevel codes.
This means that the path loss must be such to allow high SNR. Another way to achieve high data rates is to use
larger frequency band. This is the reason why FCC has decided to allocate to BPL communications a frequency
band from 1.8 MHz to 80 MHz.
7.2.1.6 Roadmap
PLC technology has long way to go and it is expected with ETSI and PLC forum working hand-in-hand in
developing the agreed standards will lead a way towards early deployment of competitive technology in
different countries of Europe. Once, the hurdles of EMC, and bandwidth provisions with QoS; and security
functionalities are in built into the PLC technology, the deployment can spread very fast across Europe and the
globe. The potential of PLC and its exploitation by the European industries can be compared to the GSM
technology, if successful both in political and technical levels.
OPERA project is expected to provide solutions to the problems identified and next 10 years will be important
time scale for PLC industries and service providers.

7.2.2 Cable
7.2.2.1 Introduction
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Cable networks have so far been utilised mostly for broadcast TV applications in Europe, but high HFC network
installation and maintenance cost make it hardly competitive with satellite if used for broadcast services only. A
cable network is an ideal medium for converged services delivery as it can convey broadcast, multicast and
single-cast services. Broadband access via cable has approximately a rough 40% world-wide market share, and
has now the challenge to remain a viable alternative to other access technologies.
7.2.2.2 State of the art / current Technologies
7.2.2.2.1 Cable networks current architecture
The view below (Figure 9) summarises the architecture of a modern HFC (Hybrid Fibre Coaxial network).
Many variants can exist but in general the architecture includes several levels:
• A Main Head-end (Central Node) where all broadcast services are aggregated. The main HE feeds the
secondary Nodes (or Local Nodes), generally through secured fiber optic links.
• The local nodes feed medium size cities or small regions; many variants like shown in Figure 9 can
apply. The local node serves a number of coaxial areas via fiber links using usually analogue
transmission. The boundary node between fiber and each coaxial area is called a Fiber Node. The
coaxial area size will determine the ultimate traffic capacity available per user.
• The coaxial area architecture can be either a star network with different levels, or more commonly a
tree and branch network; this part becomes critical when very high bit rates have to be conveyed
Figure 9: Example of HFC architecture
The HFC specific part of the network begins at the Local node (the MAN or WAN between the DN and the LNs
not being specific to HFC); optical transport is usually analogue, transmitting transparently the upstream and
downstream spectrum.

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The RF spectrum allocation downstream and upstream are 88-860 MHz and 5-65 MHz respectively (many local
variants exist), the downstream spectrum is occupied by analogue broadcast TV carriers and digital QAM 64 or
QAM256 carries conveying digital TV MPEG signal or data payload.
The ultimate cell capacity (assuming that digital switchover has occurred) can be up to 4 Gbps downstream, and
200 Mbps upstream; this capacity can be shared between broadcast, unicast and multicast traffic. In practice,
when taking into account the broadcast analogue channels, the unicast downstream available capacity is
significantly lower (several hundreds of Mbps), as shown in Figure 10.
Figure 10
These figures show that very high bit rate access is possible at the expense of segmenting the network into small
cells, which introduces a series of technical challenges.
In summary Cable access provides an interesting alternative to XDSL, as it offers the same range of capacity,
and allows in addition to deliver multicast / broadcast services; it provides an interesting cost effective
alternative to FTTH. The problem is to find good evolutionary scenarios for cable network in order to increase
significantly their capacity, on an economical way.
7.2.2.2.2 Current upstream physical and MAC layers:
The standard of choice for upstream physical and MAC layer is DOCSIS (standardised in the USA by
CableLabs) and its European variant, Eurodocsis, standardised in ETSI as EN 201 488.
There are 3 versions of the standard: 1.0, 1.1, and 2.0 (Table 5).
Parameter (E)DOCSIS 1.0 (E)DOCSIS 1.1 (E)DOCSIS 2.0
Channel width/downstream capcity 6-8 MHz/ 27-56 Mbps 6-8 MHz/ 27-56 Mbps 6-8 MHz/ 27-56 Mbps
Channel width/upstream capacity 3.2MHz/ 10.24 Mbps 3.2 MHz/ 10.24 Mbps 6.4 MHz/ 30.72Mbps
Per flow QoS support No yes Yes
security BPI BPI+ BPI+
Packet fragementation No Yes Yes
Table 5: (E)DOCSIS standards
Version 2.0, which has been designed to mitigate efficiently the plant disturbances uses both single carrier
TDMA and SCDMA access techniques, the maximum bit rate per RF carrier being 30 Mbps.
As the Cable network is a shared medium, the MAC layer is a point to multipoint type of MAC layer, where the
subscribers are sharing an upstream channel using ATDMA; the slot allocation is determined by the central
station, called AN (Access Node), which is the interface between the HFC network and the backbone.
The standard is based on IP packet transmission, but IP packet fragmentation is possible to respect the jitter
constraints of services like IP telephony, when mixing data and voice services. Eurodocsis defines also a per

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flow QoS description, which allows to support both an Intserv and diffserv type of architectures in the access
network (a mapping between RSVP QoS parameters, and the MAC layer QoS parameters is defined).
Multicast connection and mapping with IGMP are also described at the MAC level; furthermore the standard
includes layer 2 unicast and multicast encryption and authentication tools to ensure subscriber privacy, and
prevent terminal cloning.
Security is therefore supported both for unicast and multicast sessions.
The requirement for evolving the standards are a higher capacity downstream (200 Mbps +) and upstream (100
Mbps +), in order to accommodate video related services.
7.2.2.2.3 IP architecture
A complete IP architecture (Figure 11) is defined in the access network for voice communication, and could be
extended in general to multimedia services requiring QoS.
Signalling is based on a centralised architecture and thin client model (MGCP), and mostly applicable to
telephony services. 2 QoS models are defined: the most applicable one (called dynamic QoS) relies on Intserv,
and define the access QoS architecture using RSVP, or more generally a per flow resource reservation. Another
variant assumes a diffserv architecture. COPS is the protocol of choice for communication between the CMTS
(Or Access Node) and the CMS for policy and authorisation purpose.
Interdomain signalling defines SIP or H248 for signalling between different domains; interdomain QoS is
obviously not precisely defined yet, but some recommendations exist.
This centralised architecture is well adapted to a telephony case, but not really scalable to multimedia.
Figure 11: IP-architecture for cable networks

7.2.2.3 Socio Economic issues
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Marketwise, HFC is a major technology both for digital broadcast content delivery (with satellite and terrestrial),
and for broadband access (with DSL).
Some historical background is necessary to understand HFC networks situation and trends in Europe. Cable
networks were deployed either by Private or mixed private-public operators (like in Belgium, Netherland, Spain,
France for some parts), or were owning (eventually partly) to the public telecom operator (Germany,
Switzerland, France in some parts, Portugal).
HFC was used exclusively for broadcasting until 1995, and the development of broadband access was slower as
compared to other countries like USA and Canada for instance. The following reasons:
• Public operators were not keen to promote a competitive technology on HFC as they had to sell the
HFC networks
• Some complicated situations like in Germany where the networks are divided in different levels with
different owners
• Many small size operators, making broadband access and IP telephony difficult to develop
In particular HFC network bi-directionalisation was not pushed in some countries, where still large investments
are necessary to make the HFC plant ready for 2 ways communications [figure IDATE in “how to achieve
broadband for all”]. It is particularly the case of Germany where the cable market potential is high, but only a
small percentage of connections are ready for broadband.
The factors favouring the developments of broadband are mainly to create operator having the capacity to make
the necessary investments to increase the network capacity and operate the new services:
• Solve the cable operators fragmentation by:
- creating a common unique operators for the service (like Telenet in Belgium), whereas the cable
network operators are remaining independent
- Having a local and international concentration of operators merging into pan-European operators
• The ownership and operation of a dedicated backbone, which can become a critical factor to master the
price of communications
• Independency from the incumbent telecom operator
The second major issue for cable is to provide nomadic and mobile access to the subscriber as a complementary
services; therefore cooperation/ competition with mobile networks will be a trend for the future.
Some regulatory threats are the obligation of open access, which can pose technical economical issues.
The development of cable is mainly driven, following and taking advantage of the economy of scale of the US
cable broadband market.
The advantages inherent to HFC are its capacity, and capability to transport simultaneously broadcast and
broadband services.
Besides XDSL and cooperative networks (XDSL-DVB-T or XDSL/satellite networks), WIMAX will probably
be the main competitor to HFC, as WIMAX technology has a definitive cost advantage especially in rural and
sub-urban areas.
The challenge of WIMAX is the spectrum available, and also the necessary initial investment to deploy the
technology in a highly competitive environment.
The main challenge of HFC is to provide the same capacity as its 2 competitors at a competitive cost by solving
the technology issues described in this document.
7.2.2.4 Issues and trends / gap analysis
The first priority issue is to offer more bandwidth per customers in a more efficient and cost effective way, and
to integrate video services in the broadband offer; this can be translated in a set of trends / issues:
• Increase downstream capacity per subscriber, including both network capacity and terminal capacity
• Increase upstream network capacity, including more efficient use of the upstream
• Allow flexible sharing ratio between upstream and downstream traffic
• Load balancing between upstream and downstream capacity
• Evolve to a full IP architecture including video services, and supporting QoS, billing, security.
• Extend the framework to home network

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Another important issue of cable network is the interconnection of HFC networks in hybrid infrastructure.
Connection with a broadcast media is not required, as HFC network supports broadcast services, but the
interconnection of HFC the following networks is required:
• Mobile networks to provide subscriber and session mobility between the cable and the mobile network
• Wireless networks like WIMAX to cover non-cabled areas
Different alternatives to fulfil the requirements of future HFC networks are developed in annex 2:
On the infrastructure side, different paradigms can be developed to increase the network capacity, the main
ones being:
• Keep analogue transport in the fibre part of the network and a centralised architecture (routers are
placed in a Local Node)
• Upgrade the fibre network to digital transport in a decentralised architecture where the routers (CMTS)
are serving small subscriber areas (50-200)
• Hybrid infrastructure with analogue transport for broadcast services and digital transport for interactive
traffic.
Higher capacity downstream and upstream will require the definition of more optimised physical and MAC layer
standards adapted to these architectures:
• Much higher peak bit rate downstream (> 200 Mbps) and upstream (> 100 Mbps)
• Capacity to manage efficiently the resources between video, voice and data traffic
• Load balancing between downstream and upstream channels
On the security and content protection aspects, converged VOIP and data frameworks have been defined
within Packet Cable and Packet Cable Multimedia, allowing significant cots savings. This must now converged
with the video security framework, and mobile security frameworks to enable seamless access and mobility.
Different solutions coming from DVB, OMA, MPEG21, have now to be defined, integrated and set-up.
Different paradigms from full system definition and standardisation (like OMA) to the definition of
interoperable interfaces between different security systems (in the continuation of DVB-CA activities).
The operator has to analyse how to extend its domain to the home network on the following aspects:
• End to end quality of service
• Security
• Mobility (session mobility and user mobility), seamless handover
This implies the definition of boundaries and the related interfaces between the home and the cable network, and
also the management and provisioning of home network devices. A first example (but not yet deployed)
example of such architecture is CableHome (see annex 2).
A second example of investigation is the usage of cable network in the home to convey broadcast and interactive
AV services, and to interconnect WLANs in the home.
Besides security, the IP architecture framework including signalling, QoS, devices provisioning, charging has
to evolve to include video and broadcast services, and to ensure a convergent architecture with mobile networks.
Packet Cable and Packet Cable Multimedia are a good basis for this evolution, to cope with multiple signalling
schemes (including SIP and RSTP), and multicast/broadcast support. Instead of defining signalling schemes, the
tendency is more to define cross layer interfaces between application layer devices and network layer devices.
This ensures an openness and clear separation between network, services and applications. Therefore an
evolution of current packet Cable multimedia architecture to support triple play appears to be the logical trend.
This also allows to interconnect easily fixed and mobile networks for QoS admission and control purpose. The
other aspects of fixed mobile convergence are related to a more general framework independent of cable.
Hybrid infrastructures like HFC/W infrastructures with wireless cells are desirable to provide an optimal
infrastructure. Beside a common IP archtitecture, and common provisioning mechanisms, common MAC layer
can be imagined as well as the medium have identical point to multipoint topologies.

7.2.2.5 Roadmap
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To define the requirements produced by the services, applications, or regulatory constraints is necessary to build
a coherent technology roadmap. This is still more pertinent since these requirements are evolving rapidly;
examples of such changes are the rapid deployment of VOIP, the explosion of high bit rate access with a rapid
increase of the bit rate, and the increasing demand for nomadic and mobiles services. Figure 12 represents a first
sketch of requirements and their effect on technology roadmap.
High speed data access: Both Peer to Peer application or fast download, and competition between operators are
pushing the average bit rate offered to the subscriber to a rapid increase; a basis for the average bit rate per
subscriber can be taken from the MUSE project [MUSE MA 2.4 road mapping] (Figure 13).
Figure 12: Effect of requirements on the technology roadmap
Figure 13: Evolution of bit rate

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Different technological choices are possible, mainly based on an evolution to centralized or decentralized
architectures:
• A centralized architecture corresponds to today cable access networks implementations, and has the
following classical advantages:
- Network easy to maintain and reliable, as all the “intelligent” (layer 3 and above) elements are
centralized
- Cheap user terminal, as the signalling protocols are very light (like MGCP for instance)
- A network capacity increase can be imagined under these assumptions.
• The current trend is to evolve to a decentralized architecture where the network elements are placed
closer to the subscriber. It is based on peer to peer signalling paradigms like SIP. The current
economical drawbacks of this architecture (reliability and maintainability, network elements and
terminal costs) will no longer apply in the future, and the complexity is compensated by the scalability
of the architecture.
Figure 14: Technology roadmap related with network capacity
Different technology roadmaps (Figure 14) can be deduced according to the 2 categories of paradigms which
will prevail in the future (centralized or decentralized), corresponding to different application scenarios (peer to
peer will most probably lead to decentralized architectures, whereas client server types of applications would
lead to centralized architectures).
Note that upper layer and lower layers centralized and decentralized architecture can be uncorrelated (upper
layer decentralized model can be implemented over a centralized architecture).

7.2.3 Broadband Wireless Access
7.2.3.1 Introduction
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Today a large variety of wireless technologies is being offered (Table 6). Each one is designed to serve a
specific usage segment: Personal Area Networks (PANs), Local Area Networks (LANs), Metropolitan Area
Networks (MANs), Cordless/Cellular mobile radio systems. The requirements for each usage segment are based
on a number of variables, including: bandwidth needs, distance needs, power, and mobility of the user. There are
mainly three standards organizations: Institute of Electrical and Electronics Engineers (IEEE), European
Telecommunications Standards Institute (ETSI), and the Third-Generation Partnership Project (3GPP). The
IEEE and ETSI standards are interoperable and focus primarily on wireless packet-based networking. The 3GPP
standard focuses on cellular and third-generation mobile systems. Open standard radio technologies—including
802.11, 802.16 and future standards—offer advantages to WISPs and users. Wireless Fidelity (Wi-Fi)
revolutionized the market for unlicensed client-access radios in a wide variety of applications. Starting in 2005,
Worldwide Interoperability for Microwave Access (WiMAX) certification of the IEEE 802.16- 2004 standard
for fixed-position radios will do the same for point-to-point and point-to-multi-point wireless broadband
equipment in both the licensed and unlicensed bands. In 2006, the IEEE 802.16e standard for portable operation
is expected to be ratified, thus standardizing client radios in unlicensed and licensed bands.
UWB Bluetooth Wi-Fi Wi-Fi Wi-Fi WIMAX WIMAX Edge
CDMA2000/
1xEV-DO
WCDMA/
UMTS
Standard 802.15.3a 802.15.1 802.11a 802.11b 802.11g 802.16d 802.16e 2.5G 3G 3G
Usage WPAN WPAN WLAN WLAN WLAN
WMAN
Fixed
WMAN
Portable
WWAN WWAN WWAN
Up to 2
Up to 75 Up to 30
Up to 2.4 Mb/s (up to
Throughput
110-480
Mb/s
Up to 720
Kb/s
Up to 54
Mb/s
Up to 11
Mb/s
Up to 54
Mb/s
Mb/s
(20 MHz
Mb/s
(10 MHz
Up to 384
Kb/s
Mb/s
(typical 300-
10 Mb/s
with
BW) BW)
600 Kb/s) HSDPA
technology)
Range
Up to 30
feet
Up to 30
feet
Up to 300
feet
Up to 300
feet
Up to 300
feet
Typical 4-6
miles
Typical 1-3
miles
Typical 1-5
miles
Typical 1-5
miles
400, 800,
Typical 1-5
miles
Frequency 7.5 GHz 2.4 GHz 5 GHz 2.4 GHz 2.4 GHz Sub 11 GHz 2-6 GHz 1900 MHz
900, 1700,
1800, 1900,
2100 MHz
1800, 1900,
2100 MHz
Table 6: Available wireless technologies (Source: Intel)
In this chapter the focus is mainly on WMAN-systems. Usually WLAN and cellular systems are also attributed
to access systems and should be described here. However, due to some overlapping applications with services
used at indoor networks these systems have been reported in the chapter on “Home Networks”.
7.2.3.2 State of the art / Existing technologies)
7.2.3.2.1 Wireless metropolitan area networks (WMANs)
An implementation of the IEEE 802.16 10,11 standard, WirelessMAN TM and the European ETSI 12
HiperAccess/HiperMAN provide metropolitan area network connectivity e.g. (stationary) point-to-point and
point-to-multipoint broadband wireless access systems.
Applications are:
• filling the gaps in cable and digital subscriber line (DSL) coverage in residential areas
• for underserved rural and outlying areas with low population density providing multiple services in a
metropolitan area network (MAN).
• the deployment of 802.11 hotspots and home/small office wireless LANs, especially in those areas
where the local telephone company may have a long lead time for provisioning broadband service.
10 http://grouper.ieee.org/groups/802/16/
11 C. Eklund, et al., IEEE Standard 802.16: A Technical Overview of the WirelessMAN Air Interface for
Broadband Wireless Access, IEEE Communications Magazine • June 2002
12 http://www.etsi.org/

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IEEE 802.16 addresses the "first-mile/last-mile" connection in wireless metropolitan area networks. It focuses
on the efficient use of bandwidth between 10 and 66 GHz as well as the 2 to 11 GHz region with PMP and
optional Mesh topologies. It defines a medium access control (MAC) layer that supports multiple physical layer
specifications customised for the frequency band of use.
The 10 to 66 GHz standard supports continuously varying traffic levels at many licensed frequencies (e.g., 10.5,
25, 26, 31, 38 and 39 GHz) for two-way communications. It enables interoperability among devices, so carriers
can use products from multiple vendors and warrants the availability of lower cost equipment. The draft
amendment for the 2 to 11 GHz region will support both unlicensed and licensed bands.
Broadband wireless access (BWA) transmission is via free space, and is subject to attenuation and distortion by
various matter such as vegetation, buildings, precipitation and vehicles, which move and change unpredictably.
IEEE Standard 802.16 recognizes this and includes mechanisms to make robust links for PMP BWA systems
with line-of-sight. Obstructed line-of-sight and non line-of-sight transmission are considered in the 2-11 GHz
draft amendment.
Mechanisms in the WirelessMAN MAC provide for differentiated QoS to support the different needs of
different applications. For instance, voice and video require low latency but tolerate some error rate. By contrast,
generic data applications cannot tolerate error, but latency is not critical. The standard accommodates voice,
video, and other data transmissions by using appropriate features in the MAC layer, which is more efficient than
doing so in layers of control overlaid on the MAC.
The standard also supports both frequency and time division duplexing (FDD and TDD). Frequency division
duplexing (FDD), the legacy duplexing method, has been widely deployed in cellular telephony.
The original standard IEEE 802.16-2001 supports access with the following specifications: Frequency range:
10 – 66 GHz, RF bandwidth (MHz): 28 MHz in Europe, 20, 25 MHz in USA, Range: up to some miles,
Modulation, single carrier: 32 Mbit/s QPSK, 64 Mbit/s 16 QAM, 96 Mbit/s 64 QAM.
The IEEE 802.16a-2003 standard which was approved in 2003 specifies three physical layers for services:
A single-carrier access method (SCa) for special-purpose networks which operate at frequencies between 10 and
66 GHz.
Multicarrier methods offering higher data rates and higher flexibility with respect to wireless access are
operating between 2 and 11 GHz:
• 256-carrier orthogonal frequency division multiplexed (OFDM) for mainstream applications;
• OFDMA with 2048 carriers for selective multicast applications, and advanced multiplexing options.
(Further details of the specifications, see Internal Delivery IC2.1 IST-MediaNet 13 and Intel Whitepaper
“Understanding Wi-Fi and WiMAX as Metro-Access Solutions 14 )
The Task Group 802.16e will extend the standard to support subscriber stations moving at vehicular speeds and
will specify a system for combined fixed and mobile broadband wireless access. It intends to fill the gap
between very high data rates WLANs and very high mobility cellular systems. The standard will provide fixed,
nomadic, portable and, eventually, mobile wireless broadband connectivity without the need for direct line-ofsight
with a base station. The technology will be incorporated in notebook computers and PDAs, allowing for
urban areas and cities to become “MetroZones” for portable outdoor broadband wireless access.
ETSI HIPERACCESS15 provides long range and fixed radio 25 Mbit/s connections to customer premises. It is
used in outdoor environment for residential and small to medium-sized business applications with a coverage of
up to 5 km (Point-to-Multipoint). It provides wireless access to private networks and public operators (urban and
rural). The focus is on frequency bands at 40.5 - 43.5 GHz, 31.8 - 33.4 GHz, 27.5 - 29.5 GHz, 24.5 - 26.5 GHz,
etc. The channel size is 28 MHz, Baudrate is 22.4 MBaud. FDD mode is used at fixed asymmetric rates in paired
bands, while the TDD mode is applied in unpaired bands using adaptive asymmetric rates.
ETSI HIPERMAN16 will be an interoperable broadband fixed wireless access system operating at radio
frequencies between 2 GHz and 11 GHz. The HIPERMAN standard is designed for Fixed Wireless Access
provisioning to SMEs and residences using the basic MAC (DLC and CLs) of the IEEE 802.16-2001 standard.
It has been developed in very close cooperation with IEEE 802.16, such that the HIPERMAN standard and a
subset of the IEEE 802.16a-2003 standard will interoperate seamlessly. HIPERMAN is capable of supporting
ATM, though the main focus is on IP traffic. It offers various service categories, full Quality of Service, fast
13 http://www.ist-ipmedianet.org
14 http://www.intel.com/
15 HIPERACCESS, ITU Seminar, Busan, 10 Sept. 2004 ETSI BRAN Technical Committee, Mariana Goldhamer
16 HIPERMAN, http://portal.etsi.org/bran/Summary.asp

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connection control management, strong security, fast adaptation of coding, modulation and transmit power to
propagation conditions and is capable of non-line-of-sight operation. HIPERMAN enables both PMP and Mesh
network configurations. It also supports both FDD and TDD frequency allocations and H-FDD terminals. All
this is achieved with a minimum number of options to simplify implementation and interoperability.
7.2.3.2.2 WiMAX: IEEE 802.16a compatible wireless standard, for serving metropolitan area networks
(MAN)
802.16a, also known as WiMAX, is a wireless networking standard that offers greater range and bandwidth than
the Wi-Fi family of standards, which includes 802.11a, 802.11b and 802.11g. While Wi-Fi is intended to
provide coverage over relatively small areas, such as in offices or hot spots, WiMAX can transfer around 70M
bit/sec over a distance of 30 miles (48 kilometres) to thousands of users from a single base station. Approved in
January, 2003, 802.16a provides wireless, last-mile broadband access over the frequency bands below 11 GHz
to connect homes, businesses and wireless LAN hot spots. WiMAX greatly improves non-line-of-sight
performance, and it is the most appropriate technology available when obstacles such as trees and buildings are
present. Stations can be mounted on homes or buildings rather than towers on mountains.
With throughput up to 75Mbit/sec, the wireless standard gives companies another way to get business-quality
broadband service. While it could take several months for a carrier to provision a T-1 line, service providers
could provision wireless service in a matter of days.
WiMAX provides flexibility not possible with wired services, such as high-speed backhaul for events such as
trade shows, with hundreds or even thousands of 802.11 hot-spot users. On-demand connectivity also could
benefit businesses such as construction companies that have sporadic or nomadic connectivity needs. The
802.16e extension to 802.16a introduces nomadic capabilities that let users connect while roaming outside their
home service areas.
The technology also offers privacy and Triple-DES encryption features to support secure transmissions and
authentication.
In a typical enterprise deployment, laptop and desktop computers are connected via wired Ethernet or 802.11
Wi-Fi access points located throughout the campus. A WiMAX directional antenna provides the connection
from the business to a service provider's cell tower. Even if there is no line of sight between the antenna and the
tower, signal still can be received after it reflects off buildings or other obstructions and reaches the tower
indirectly. At the base station, WiMAX technology correctly interprets the information even though reflections
distort the radio frequency signal. Backhaul to the Internet is then provided via wireless 802.16 point-to-point
links or by traditional wired backhaul networks.
Technical aspects of 802.16a that are instrumental in powering robust performance include:
• Support for licensed and license-exempt band operation below 11 GHz.
• High spectral efficiency, which reduces carriers' costs and improves users' experience.
• Forward error correction, for more reliable transmission.
• Support for advanced antenna techniques to improve range and capacity.
• Space/time coding to enhance performance in fading environments.
• Adaptive modulation support, which allows for trade-off of bandwidth for range to reach customers up
to 30 miles away.
802.16a technology also provides low latency for delay-sensitive services such as circuit-switched voice traffic
or voice over IP, optimised transport for video, and prioritisation of data traffic. This is especially important for
businesses that want voice in addition to data services from their broadband service provider.
Operational issues of WiMAX
WiMAX's channel sizes range from 1.5 to 20MHz as well, and offer a WiMAX-based network the flexibility to
support a variety of data transmitting rates such as E1 (2 Mbps) and higher data transmitting rates of up to
70Mbps on a single channel that can support thousands of users. This flexibility allows WiMAX to adapt to the
available spectrum and channel widths in different countries or licensed to different service providers.
WiMAX supports ATM, IPv4, IPv6, Ethernet, and VLAN services. So, it can provide a rich choice of service
possibilities to voice and data network service providers. In addition, WiMAX provides an ideal wireless
backhaul technology to connect 802.11 wireless LANs and commercial hotspots with the Internet.
The WiMAX-based solution is set up and deployed like cellular systems using base stations that service a radius
of several miles/kilometres. The most typical WiMAX-based architecture includes a base station mounted on a

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building and is responsible for communicating on a point to multi-point basis with subscriber stations located in
business offices and homes. The customer premise equipment (CPE) will connect the base station to a customer
as well; the signal of voice and data is then routed through standard Ethernet cable either directly to a single
computer, or to an 802.11 hot spot or a wired Ethernet LAN.
WiMAX-based solutions include many other advantages, such as robust security features, good QoS (Quality of
Service), and mesh and smart antenna technology that will allow better utilization of the spectrum resources.
Also, the WiMAX-based voice service can work on either traditional Time Division Multiplexed (TDM) voice
or IP-based Voice (VoIP).
WiMAX Connectivity and Solutions
WiMAX allows equipment vendors to create many different types of IEEE802.16-based products, including
various configurations of base stations and customer premise equipment (CPE). WiMAX also allows the
services provider to deliver many types of wireless access services. The WiMAX can be used on a variety of
wireless broadband connections and solutions:
"Last Mile" Broadband Access Solution—Metropolitan-Area Networks (MAN) connections to home and
business office, especially in those areas that were not served by cable or DSL or in areas where the local
telephone company may need a long time to deploy broadband service. The WiMAX-based wireless solution
makes it possible for the service provider to scale-up or scale-down service levels in short times with the client
request.
Backhaul networks for cellular base stations, bypassing the Public Switched Telephone Network (PSTN); the
cellular service providers can look to wireless backhaul as a more cost-effective alternative. The robust WiMAX
technology makes it a nice choice for backhaul for enterprises such as hotspots as well as point-to-point
backhaul solutions.
Backhaul enterprise connections to the Internet for WiFi hotspots. It will allow users to connect to a wireless
Internet service provider even when they roam outside their home or business office.
A variety of new business services by wireless Internet service provider.
Who Are Working on WiMAX?
The WiMax Forum17 is a non-profit organization formed in 2001 by Nokia Corp. and Ensemble
Communications Inc., etc. Right now, the WiMAX Forum has more than 110 members of equipment,
semiconductor suppliers, and services providers such as Alcatel, AT&T, Fujitsu, Intel, Nortel, Motorola, SBC
and Siemens, and so forth. The WiMax Forum aims to support wireless metropolitan-area networking products
based on IEEE 802.16, like the Wi-Fi Alliance has done for wireless LANs and IEEE 802.11. The WiMAX
Forum has most recently been working to promote the adoption of IEEE 802.16-compliant equipment,
certification, and interoperability testing. In 2003, Intel Corp. became a major supporter of the WiMax Forum.
In order to bring interoperability into MAN, the WiMAX Forum is focusing its efforts on establishing a baseline
protocol that allows equipment and devices from multiple vendors to interoperate and that also provides a choice
to buy equipment and devices from different suppliers.
Currently, there are no WiMax-certified products yet available in the market, but the race is already on. At the
Intel Developer Forum in September 2004, Intel showed off its first samples of a WiMAX chipset that has been
named Rosedale. Intel is planning to offer WiMax transmitters by 2005, and expects to ship WiMax devices for
the home and office to take off by 2006. Also, Intel hopes that notebooks will begin to incorporate WiMAX
technology during 2006, and by 2007, handsets for mobility will be available. Intel has already signed up
Proxim and Alcatel to develop WiMAX base-station and CPE (Customer Premises Equipment) kits. Fujitsu
Microelectronics America Inc. in early 2005 expects to introduce a new WiMAX-based single-chip solution for
deployment in base stations and subscriber stations as well; the product integrates both PHY and MAC
functionality. Siemens Information and Communication Mobile also plans to build complete WiMAX-based
solutions for establishing fixed, broadband speed metropolitan area wireless radio networks.
17 http://www.wimaxforum.org/

7.2.3.3 Socio Economic issues
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Broadband Wireless technology as meant here encompasses all technologies that do not depend on fixed lines
and are used for broadband accesses. Thus this summary on wireless technologies is related to WLL, Satellite,
FWA, etc. Cellular technologies (2G) are not considered
In January 2004, DSL represented 74% of total connections and cable reached 22%. Wireless technologies are
still in the early stages with few subscribers but increasing their presence 18 .
The diagram in Figure 15 shows an overview on penetration of technologies enabling the broadband access in
the EU15 countries. As shown in the diagram, in seven of those countries wireless technologies are not used at
all by now (Belgium, France, the Netherlands, Austria and Portugal). In Luxembourg and Greece their usage is
at a non notable level. In most of the other countries only small percentages of the population have access to
wireless bb technologies. There two exceptions:
• Exception 1: In Italy (not included in the diagram because of problems of graphical presentation) a
remarkable usage could be observed. There is no cable TV network available in the country and, as a
consequence, no broadband cable modem services are provided. The bb market is dominated by DSL
while the remaining share is split between FTTH and other technologies, with the 3G platform starting
to have a significant number of subscribers. There are 337400 connections via 3G and 91402 via
Satellite.
• Exception 2: In Germany Satellite technology is used far above average.
50000
45000
40000
35000
30000
25000
20000
15000
10000
5000
0
Wireless Broadband Penet rat ion in t he EU15*
WLL 3G Satellite Other
B F NL A P L G IR DK UK F S ES D
Countr i es
Figure 15: Wireless Broadband penetration in EU15 (Source: Commission Staff Working Paper, Connecting
Europe at High Speed: National Broadband Strategies – Annexes
Additionally, it is evident, that wireless technologies in some non EU countries grow more rapidly than in EU
countries (except Italy, see above). Thus in the United States wireless or fixed-satellite access accounts are
increasing from 3% in 2003 to 4% in March 2004. In Japan “fixed-line subscribers”, hotspots and wireless
access points are also increasing (from 1624 to 5350 at the end of 2003) and the use of hot spots increased to
9.5% up from 0.7% in 2002.
Particular governmental measures appear to strengthen the growth of wireless technologies. Thus the current
Korean information society strategy is to develop the broadband convergent network which will be used for
video, data and voice and which will seamlessly combine wired and wireless access. And all together a
catalogue of measures containing 174 issues was designed in order to gain a technological competitive edge in
the world market including wireless communications.
Additional drivers of wireless technologies appear to be (1) the necessity to fulfill demand for broadband
connectivity in rural areas and (2) the demand for broadband content and communication in residential and work
environments.
One of the main obstacles to an increase of wireless access accounts is, as technologies providers in Finland
claim, that WiFi, 3G, and WiMAX will compete against one another and high investment risks therefore can not
be avoided.
18 Connecting Europe at High Speed: National Broadband Strategies, May 26, 2004
http://europa.eu.int/information_society/eeurope/2005/doc/all_about/broadband/com_broadband_en.doc

7.2.3.4 Issues and trends / Gap analysis
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• The WiMax Forum certification processes will start in July 2005, therefore the first WiMax certified
products are expected for the end of 2005. The certification is related to IEEE 802.16-2004 equipment
in the 3.5GHz band for TDD and FDD with 3.5 MHz channel width.
• Intel, Texas Instruments and Fujitsu have launched volume production of their 802.16-2004 chipsets.
This gives the opportunity for cost reduction now.
However the migration path to 802.16e, which includes mobility, remains still unclear. All related parties agree,
that the long-term success of WiMax relies on 802.16e to enable portable/mobile personal broadband access.
This is seen as complement to the 3GPP long-term evolution path. The problem is, that the final specification of
the IEEE 802.16e standard is still open. The integration of the Korean WiBro into the 802.16e process brings
new technical approaches. Especially the introduction of the Scalable OFDMA (SOFDMA) technique is not
backward compatible with 802.16-2004.
7.2.3.5 Roadmap
The roadmap for wireless access is shown in Figure 16
portable
fixed
802.16-2004
WiMax Forum
Certification process
Chipset
Mass production
802.16-2004
ratified
(802.16d)
WiBro
Integration
Pre 802.16e 802.16e into PCs
802.16d+ broad deployment
2005 2010
Figure 16: Roadmap for Wi Max
There exist two strategies to enable mobility with WiMax. One is that there is a period of at least two years
before 802.16e achieves volume, and that the upgrade path will be complex. That means the priority is to make
802.16-2004 as impressive as possible in order to drive short term sales and increase confidence in WiMAX.
This will mean creating a so-called 'd+' technology that goes beyond the basic functions of the fixed standard,
with a focus on aspects such as quality of service for voice and video, and portability with consumer grade
subscriber equipment. (Source: Wireless Watch, 2005)
The other view is that the market needs to move to mobility more rapidly, by offering pre-standard networks that
provide most of the functionality promised for 'e'. This strategy rests on the belief - or hope - that the mobile
standard will come to market rapidly and that the leap from its predecessor will be a simple one. (Source:
Wireless Watch, 2005)
Nevertheless the WiMax integration into PCs is seen for 2009.

7.2.4 Mobile
7.2.4.1 Introduction
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Ubiquitous access to the Internet is a much-vaunted feature. The hard part is squeezing the capacity required to
support the desired services into the limited bandwidth available. A number of network technologies are
available: Mobile networks are characterized by lightweight terminals, a cell based network and advanced,
network based mobility management functions. The systems vary considerably in capabilities mainly due to
different radio access methods.
7.2.4.2 Current technologies
7.2.4.2.1 GSM
Global system for Mobile (GSM) is the most widespread mobile communication system in the world. It is
currently in operation in 100+ countries. It was designed for voice communication, but has limited data
communication capabilities as well. GSM uses a rigid TDMA/FDMA radio access scheme. A number of
extensions are available for improving the data communication capacity. GSM can be upgraded with HSCSD
(High Speed Circuit Switched Data) and GPRS (General Packet Radio Service). HSCSD simply combines a
number of GSM channels to achieve higher data rates. GPRS offers packet switched access to the radio medium
and is as such a way of doing statistical multiplexing of the radio interface.
7.2.4.2.2 EDGE
Enhanced Data Rates for GSM Evolution is an GSM upgrade consisting of replacing GSM’s GMSK modulation
by 8PSK, thus increasing the radio capacity by a factor 3. EDGE offers capacity enhancements to as well circuit
as packet switching. It offers up to 384 kbps and is an attractive solution for operation without any UMTS
license.
7.2.4.2.3 UMTS
Universal Mobile telecommunication system (UMTS) is a WCDMA - wideband CDMA - based cellular system
and is the European standard for 3 rd generation (3G) mobile. UMTS is characterized by up to 2Mbps downlink
capacity under special conditions. The CDMA scheme combined with a new channel concept makes UMTS do a
very flexible and efficient use of radio resources. UMTS uses a number of new macro diversity techniques. One
possibility – called soft handover – enables the mobile to connect to several base stations at the same time. This
vastly improves the link quality.
7.2.4.2.4 TETRA
Terrestrial Trunked Radio is the mobile communication system of choice for e.g., police and fire department. It
fits a high number of voice channels into limited spectrum and offers limited data transmission capabilities as
well. TETRA can operate in an infrastructure mode (similar to normal cellular operation) and in a direct mode in
which the terminal can communicate directly with each other.
7.2.4.2.5 4th generation mobile
The most precise definition of 4 th generation (4G) mobile is that it is what comes after 3 rd generation (3G). Some
people believe it is yet another radio interface with vastly increased capacity, some believe it is rather a mixture
of existing technologies. In the technology mix scenario, the various technologies are envisaged as layers
starting at personal level (using e.g., Bluetooth), through WLAN and UMTS technologies and ending at satellite
level.

7.2.4.3 Issues and Trends
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There are number of issues related to interconnection of various networks. The network must be able to track the
mobile terminal and seamlessly transfer calls / sessions to the mobile’s location.
7.2.4.3.1 Protocol issues
Calls sessions can be handled a various protocol levels. One option is to handle connection mobility at the IP
level, which is described in the section on IP mobility below. Another option is to make use of application level
signalling.
7.2.4.3.2 Mobile IP
“The unplugged internet”. The mobile IP method supports transparency above the IP layer, including the
maintenance of active TCP connections and UDP port bindings. The technology is based on the assignment of
two IP addresses (home address and care-of address) to each mobile terminal. The MobileIPv4 has been
standardized as an addendum to IPv4 technology. The MobileIPv6 protocol is fully integrated into IPv6.
Mobile IP issues:
• security (AAA, compatibility with firewalls),
• routing inefficiencies and waste of bandwidth (handoff latency, packet loss, control overhead in core
network)
• reliability and QoS
• adequate use and management of IP addresses (home address, care-of address)
The IP micro-mobility concept has been developed to overcome some of the disadvantages of the mobile IP
technology. It covers the movement of a mobile node within each wireless domain. Several protocols and
mechanisms are under study such as Hierarchical mobile IP, Fast Handoff, Proactive Handoff, TeleMIP,
Cellular IP, Hawaii and EMA.
7.2.4.4 Possible future activities
There are a number of issues related mainly to combining technologies.
4G challenges
• High-capacity radio interfaces
• Software radio
• Vertical handover

7.2.5 Satellite
7.2.5.1 Introduction: Fixed satellite access in broadband for all
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Fixed GEO Satellite delivery had until recently well positioned in broadcast digital video delivery thanks to their
wide geographical coverage, which make it very attractive compared to terrestrial technologies. Moreover
digital video MPEG2 and H264 (or equivalent) coding schemes have allowed to increase significantly the
capacity and decrease the cost per program.
Using Satellite for broadband access (and transport) has some inherent advantages as compared to other access
technologies:
• First GEO satellite have a very good subscriber coverage, as satellite networks simply overcome most
of the geographical obstacles due to their angle of elevation; therefore for isolated subscriber,
mountains, rural areas with scarce population, the technology is very competitive. Moreover for some
important applications like in-flight access, satellite can be the only affordable solution.
• The access architecture is scalable to a certain extent, as adding a user when he is under the coverage of
satellite is easy; moreover network segmentation can be imagined when the capacity increases, with
some technical issues.
• Satellite is inherently a cheap broadcast media, so it can support a mixed unicast -multicast scheme for
broadband delivery, especially for video services.
• We can distinguish between different categories of architectures where satellite can be deployed:
• First category is cooperative networks: an ideal access technology is the one which can combine in a
flexible way broadcast, multicast and unicast delivery; as satellite is very competitive for broadcast and
multicast, building a cooperative network between satellite and terrestrial appears like an optimal
solution, although issues like cost models and subscriber installation cost have to be investigated.
Architecture and protocols at the application level have to be investigated as well.
• Second category is hybrid satellite-terrestrial system with satellite being a feeder for terrestrial wireline
or wireless cells; various architectures can be imagined from direct feed to distributed storage
architecture.
• Third category is direct broadband subscriber connection (for professional and consumer applications);
this type of access is now starting in areas not covered by other technologies.
• 2 main ranges of technologies are of consideration:
• GEOs which are used for Broadcast (Ku Band), and which use either Ka band, or a mix of Ku and Ka
bands for interactive communications;
• LEOs for interactive communications, which were used so far only for specific applications.
7.2.5.2 State of the art
The GEO fixed satellite systems can use 2 types of architectures:
• The first one, shown in Figure 17, called Bentpipe satellite, just retransmit the RF carriers (after
frequency conversion), and does not perform any signal processing; they are technology agnostic and
well suited for broadcast and many interactive applications, except those having low latency
requirements. The physical layer used is DVB-S for downstream transmission; DVB-RCS is utilized
for interactive layer 1 and 2. Framing is based on MPEG or ATM.
• The regenerative satellite architecture (Figure 18) uses on-board processing, which allows to reduce the
latency to 250 ms in the case of GEO satellites. Same transport layers and protocols are used as in
bentpipe. The issue of regenerative satellite is upgrade and limited processing capacity of the on-board
function, which introduces additional constraints on the technical choices.

Figure 17: Bentpipe satellite architectures (from SATIP6 project)
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Figure 18: Regenerative satellite architectures (from SATIP6 project)

7.2.5.3 Issues and trends
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On the other end, satellite has to overcome major issues for broadband deployment:
The initial upfront investment of launching a satellite is significant, and requires a clear market model for
interactive services deployment, and subscription fee.
Another major issue of satellite is its limited capacity (limited by the frequency bands used, the transmitting
power, and the size of the cells covered), making the bandwidth cost relatively high; as mentioned above,
satellite is a broadcast medium well adapted to broadcast/multicast architecture, but not really for large unicast
traffic flow for each subscriber. This cost has to be decreased to make the technology more affordable.
Other issues inherent to satellite are:
• The GEO large roundtrip delay introduces latency for time sensitive interactive services like telephony,
visiophony, and data services (this is partly solved by using on-board processing described below).
This large roundtrip delay can also significantly affect data transmission using TCP for example.
• More generally physical layer issues can affect upper layer performances and require specific solutions;
resources allocation and fading counter measures are critical. As examples of issues created by physical
transmission medium variation, the MAC layer and Call Admission and control have to dynamically
adapt to variation of the satellite capacity.
In summary the main issue of satellite usage in broadband communication is the cost for a given capacity; this
cost may be reduced by reducing the cost of satellite itself, better use of the existing capacity, better intra and
inter-network connectivity.
In the short – medium term, providing broadband services with QoS via satellite implies a number of technical
issues to address (often related to each other):
On the physical layer side, a major issue with satellite is to optimize dynamically the channel capacity according
to propagation condition, and the user location within a cell; in principle this optimization possible with the new
DVB-S2 mechanisms.
In the case of hybrid satellite terrestrial network, interworking between these networks is an issue to address, as
minimal processing is desired at the gateway location, use of unique physical and MAC layers can be desirable.
On the QoS aspects, it is necessary to define a QOS architecture well adapted to the satellite channel, which
implies a focus on different functional layers often related to each other:
• At the application level different mechanisms have to be analyzed like the definition and evaluation of
distributed storage architectures, and specific coding mechanisms to cope with the channel capacity
variation (especially in the case of video). In the particular case of cooperating network interaction and
signaling between the 2 networks has to be analyzed.
• Control and bandwidth allocation algorithms have to match with the dynamic capacity situation: CAC,
scheduling, flow control, routing are topics of research.
Other issues are Mobility management in LEO, specific security solution coping with limited on board
processing power, transport protocols behaviour on the satellite channels, and new solutions (TCP splitting, new
transport protocols)
Multicast handling and signalling in the different cases of satellite architectures (cooperating network,
distributed storage) is of major importance, since satellite bandwidth has currently an inherent greater cost then
other terrestrial technologies.

7.2.5.4 Roadmap
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The short term vision for fixed satellite access is a conservative evolution of current systems, which introduce
requirements on the optimisation and standardisation of current systems (more efficient physical and MAC
layer, adaptation to 2 ways communications, standardisation of interface of hybrid satellite systems, increase of
on-board processing).
The rapid deployment of concurrent access technologies and the extension of these technologies for video
transport may lead to more rapid changes and evolution towards a longer term target vision:
• Distributed architecture: the tendency is towards in space ad-hoc networks, which can be enabled by
the production of smaller and much cheaper satellites
• All IP network in the sky: the above makes possible all IP network constellations
• Hybrid orbits: the major technology has been GEO so far; hybrid orbits with interorbital links with
LEO’s and HEO’s will bring significant gain in terms of connectivity, coverage and service routing.
• Hybrid networks: Satellite can be combined with terrestrial or more specifically lower orbit
technology like HAP for fixed and mobile access.
• Distributed storage: CDN architecture is particularly efficient in a satellite environment, where a
combination of multicast and storage is an optimum solution.
More specifically satellite can be used as the broadcast/multicast pipe in cooperation with 3G networks for
mobile multimedia access, or with terrestrial fixed point to point networks for broadband access.
Figure 19: 2 configurations of satellite in an hybrid network [SATNEX]
Research issues reflecting the considerations above for Broadcast/ broadband satellite systems are:
• Integration of satellite and terrestrial broadband (cooperative network)
• IP security support
• Mesh based and ad hoc environment
• ACM and advanced modulation in the air interface
• Improvement of physical layer efficiency
• Interference mitigation on satellites
Cheaper and higher capacity satellites will imply the different research areas related to satellite technology:
• Larger deployable antennas in the Ka band to decrease the cell size
• Higher power satellites
• Flexible Beam Forming Networks and On Board Processing
• Packet based switching
• Increase of OBP capacity with lighter / smaller DSPs
• Wireless on board connections

7.2.6 xDSL
7.2.6.1 Current technologies
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The existing copper twisted pair infrastructure has been installed in the past for the public switched telephone
network (PSTN). A first upgrade that enabled improved speed and the simultaneous transmission of data, while
making use of the installed base of twisted pair, was ISDN (Integrated Services Digital Network). However,
increased demand for faster Internet access lead to the introduction of Digital Subscriber Line (xDSL, where x
stands for the different flavours of DSL, see below), using more advanced technologies and allowing to further
increase the speed. The advantage of xDSL is that it reuses the existing copper infrastructure, in contrast with
e.g. FTTx, which requires new fiber optic cabling.
user terminal
...
modem
DSLAM
L2 switch BAS
edge
router
Home network Network access provider Network service
provider
DSLAM: Digital Subscriber Line Access Multiplexer
BAS: Broadband Access Server
Figure 20: A typical xDSL access network
router
application
server
Application service
provider
xDSL is thus a cost-effective solution to provide broadband Internet access. Moreover, almost every household
is connected to the telephone network, in contrast with e.g. the television cable network, whose penetration rate
differs between various regions in the world. Worldwide, the number of xDSL subscribers reached 63.8 million
by March 2004 19 . Besides these factors, xDSL has the advantage that it offers a dedicated amount of bandwidth
to the users (with a cable network, the bandwidth is shared between a group of users).
xDSL allows the simultaneous transmission of voice and data traffic. In the past, only a small portion of the
available bandwidth was used for the transmission of voice traffic. With xDSL, the frequency spectrum is
divided in a frequency band for voice, a frequency band for uploaded data traffic and a frequency band for
download traffic (Figure 21). The exact frequency band used depends on the deployed xDSL flavour. The
achievable speed depends on the distance between the user and the DSLAM, on the wire gauge, and on the used
xDSL flavour.
Voice Upload Download
4 kHz
Figure 21: Voice, upload and download data traffic are separated
into different frequency regions.
19 DSL forum, http://www.dslforum.org/PressRoom/news_3.2.2004_WesternEU.doc

The different types of xDSL are summarized in Table 7.
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Name Meaning Data Rate Mode Application
DSL Digital Subscriber Line 160 Kbps Duplex ISDN services, voice and data
ADSL Asymmetric DSL 1.5 to 10 Mbps Downlink Internet Access, VoD, interactive
multimedia
HDSL High bit-rate DSL 1.544, 2.048 Mbps Duplex LAN access, server access
SHDSL Single pair High-speed DSL 1.544, 2.048 Mbps Duplex Same as HDSL + access for
symmetric services
VDSL Very-high data rate DSL 13 to 52 Mbps Downlink Same as ADSL and HDTV
Table 7: xDSL technologies 20
Figure 22: Bandwidth versus reach of xDSL technologies) 21
ADSL is the most popular xDSL technology for the moment. Due to its asymmetric nature, it is very suited for
e.g. web browsing and other typical Internet application where the downstream traffic is usually larger than the
upstream traffic. ADSL and ADSL2+ are two improved versions of ADSL. The improvements of ADSL2 over
ADSL are an increased speed, an increased reach (allowing more users to use xDSL technology), and several
technical issues that allow cost savings. ADSL2+ increases the bandwidth by extending the useable frequencies
on the line.
SHDSL connections are suited for connecting servers, and for the (business) use of services that requires high
speed in both directions. Unlike ADSL, SHDSL cannot carry voice traffic besides the data traffic, since the low
frequency band is used to extend the upload band.
VDSL is the newest and fastest DSL flavor. It allows for much higher speeds than the other xDSL technologies,
but the disadvantage is the limited reach. This implies that the cable network has to be rolled out further into the
access, and that VDSL is more suited for densely populated regions than rural areas. VDSL can already been
seen as a hybrid fibre DSL solution for broadband access.
7.2.6.2 Introduction to trends and issues to be followed during the course of BREAD
• Available bitrate and achievable reach
• Penetration and usage of different xDSL flavours worldwide
• Architectural options and evolution
• DSLAM options and evolution
• IPv6 awareness of DSL access networks
20 S. Rao, “NGN Drivers: Access and core Networks, legacy services migration issues”, Workshop on "Next Generation Networks: What,
When and How ?" July 2003, Geneva, http://www.itu.int/itudoc/itu-t/workshop/ngn/s3_02_pp7.ppt
21 P. Vogel, “Bridging Towards Broadband Access Technologies”, IST OPTIMIST workshop “The Roadmap towards Optimised Access
Network Solutions”, September 2003, Rimini, http://www.ist-optimist.org/pdf/workshops/ECOC2003/ECOC2003_Vogel.pdf
23 www.ist-athena.org

7.2.7 FTTx
7.2.7.1 Introduction
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“All-Optical” is the vision for future wired networks, where we use fibre for all wires in the WAN, MAN and
Access. Nowadays, optical fibres are ubiquitous in the backbone network, and an extension to access networks
is the logical next step. An optical fibre based access network offers of all available technologies by far the
highest speed and can support an unlimited set of services. FTTx (Fibre to the x, where x stands for Curb or
Cabinet (C), Premises (P), Building (B), Home (H), Desk (D)) would thus be a future-proof access solution.
With FTTH or FTTB the optical connection reaches the home of the building of the end-user. This implies a
tremendous investment. Fibre to the Curb or Cabinet (FTTC) will bring the optical fibre to a service node in a
nearby location outside the customer premises, which is a more cost-effective solution. Combinations of a fibre
optic access network with a traditional twisted pair or coax access network (HFC) or a wireless access network
(FWA) are intermediate solutions.
Traditionally, an optical fibre access network was not realistic due to the very high installation and equipment
cost. Dropping cost of the end equipment and new roll-out techniques will make FTTx however a feasible
option. At the moment, optical components are getting cheaper but are still relatively expensive, and it is
important the service fees meet the consumer price points.
Finally, are their sufficient applications for the huge bandwidths that come available with FTTx? There are some
potential drivers, but their extent of demand is not clear: e.g. Video Conferencing, Multimedia Entertainment,
Long Distance Learning, Gaming, Video on Demand. And will increasing bandwidth spur on new applications
or will new applications spur bandwidth? Speed seems the most important driver for new applications,
according to the view of the leading broadband countries in Asia.
7.2.7.2 State of the Art
7.2.7.2.1 Architecture
The ultimate goal is to bring the fibre to the home user by replacing the existing copper/coax cables. The
evolution of the network will therefore be limited to the part going from the central office (CO) to the home
user. In an optical access network, the CO contains an optical line terminal (OLT), which provides the networkinterface
to the user, and this OLT is connected to one or more optical network units (ONU) at the user-side.
The replacement of the links in an access network by an optical cable leads to numerous possible topologies.
An important distinction is the choice between point-to-multipoint (P2MP) and point-to-point (P2P)
connections (more or less corresponding to the distinction between passive and active). Nowadays, the most
important point-to-multipoint configuration of an optical access network is a (power splitting) time division
multiplexing (TDM)-based passive optical network (PON). A PON is made up of fibre optic cabling, of
passive splitters and couplers that distribute an optical signal through a branched "tree" topology to connectors
that terminate each fibre segment. A PON has some important advantages:
• Point-to-multipoint deployment requires less fibre layout to cover a given area than its point-to-point
counterpart using individual fibres to each customer (the fibre complexity for (C)WDM PON
architectures is comparable).
• The equipment at the CO is also lower cost since one optical interface services an entire network
instead of one dedicated user.
• The PON approach, with its lack of active devices along the fibre route, means that power is needed
only at the fibre’s termination (home user and CO).
Compared to other access technologies, PON eliminates much of the installation, maintenance, and management
expenses needed to connect to customer premises. However, a power splitting TDM-PON has also some
important inherent drawbacks:
• The same bandwidth has to be divided between several users.
• The optical splitter divides the optical power among its output ports, which causes large insertion
losses. This limits the maximum transmission distance possible between OLT and ONUs.
• All the ONUs connected to the same optical splitter receive the same optical signal. This is a benefit in
case of multicast traffic, but in case of unicast traffic this raises some concerns about network security.
Thus, a good encryption is of great importance.

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• A PON demands that only one ONU is active at each time, but a malicious user that emits light
continuously can corrupt the entire upstream transmission.
• Upstream bandwidth is not broadcast. To catch upstream traffic, there will be a need for an intelligent
time division multiple access (TDMA) protocol.
Current TDM-PON standards specify the line rate up to 2.5 Gb/s and maximum link reach of 20 km, and
typically with a split ratio of 1:32.
In the first-generation optical access networks, the major thrust has been economical deployment, and a power
splitting PON was the most opportune solution. Nowadays, the cost of optical devices has decreased a lot, and
design considerations other than cost will become important. To overcome some of the demerits of a pure power
splitting TDM-PON, some different types of PONs are also available: WDM PONs, WDM power splitting
PONs, WDM PONs with overlay for broadcast. Thanks to the use of WDM, a PON can also set up a virtual
point-to-point connection. WDM has been considered an ideal solution to extend the capacity of PONs without
drastically changing the currently deployed fibre structure. Further, it also shares many benefits of TDM-PON:
e.g. by using an arrayed waveguide grating (AWG) the signal path can still be completely passive.
Instead of having a PON, it is also possible to deploy an active network, which looks very similar to a PON,
however with some important differences. The most fundamental one is to replace the passive, unmanageable
splitters in the field by an active node. An important consequence is that a power line between the CO and the
active node will be necessary. Second, instead of sharing bandwidth among multiple subscribers, each end user
is provided a dedicated connection that provides full bi-directional bandwidth. This can be implemented using
the SDM (Space Division Multiplexing) or WDM (Wavelength Division Multiplexing) technique. Because of its
dedicated nature, this type of architecture is also referred to as point-to-point (P2P). The third architectural
difference between PON and active node is the distance limitation. In a PON, the furthest subscriber must be
within 10-20km from the CO, depending on the total number of splits (max. 1:32). An active network, on the
other hand, has a distance limitation of ca. 80km, regardless of the number of subscribers being served. The
number of subscribers is limited only by the switches employed, and not by the infrastructure itself, as in the
case of PON. The active node will typically be an Ethernet Switch, and the available bit rate is now up to 10
Gbps.
Also hybrid PONs are being developed; they are a literal combination of an active node and a PON
architecture. The reachable distance is higher than in case of using a power splitting PON, and this with a
simpler infrastructure than a completely active topology.
7.2.7.2.2 Transmission Protocol
The transmission protocol used by a FTTx network will be either Ethernet or ATM. Ethernet represents today
90% of the installed interfaces for LAN. It offers large spectrum of data rates, from 10 Mbit/s and up to 10
Gbit/s for the last evolution. This predominance leads to very low cost: 100 Mbit/s Ethernet interfaces are more
than 10 times cheaper than 155 Mbit/s ATM interfaces used for metropolitan and core networks. Moreover,
Ethernet is based on a simple protocol, while offering advanced services: quality of service (QoS), good
granularity, high throughput … Systems based on ATM standards are slower (reach only 622 Mb/s) and have
more expensive components than Ethernet based ones, but they offer higher quality of service and are
connection oriented, while Ethernet is connectionless. Two groups are working on standards: IEEE 802.3ah
(EFM: Ethernet in the First Mile) and FSAN (Full Service Access Network).
The challenge for EFM is to enable effective Ethernet network designs for subscriber access networks that can
deliver quantifiable enhancements to current offerings at a reasonable cost. Using Ethernet for FTTH seems to
be a good solution. Nevertheless, the actual Ethernet standards do not offer a reachable distance compatible with
this application (hundred meters while up to 20 km is needed). Aware of this problem, new fibre based standards
providing point-to-point connections up to 10 km and point-to-multipoint connections up to 20 km are being
developed. The EFM task force has targeted three subscriber access network topologies: point-to-point on
optical fibre, point-to-multipoint on optical fibre and point-to-point on copper. The first two of them lead to two
important standards for FTTH deployment:
• The EFM objective to standardize Gigabit Ethernet (1000BASE-X) optics to operate point-to-point
over a single strand of single mode will enable cost-effective, high-performance broadband access.
Point-to-point gigabit networks offer incredible flexibility and scalability for the future. When the
business case exists to deliver not just high speed Internet access, but other services such as voice and
video, point-to-point Ethernet over optical fibre is an excellent solution.
• The EFM objective to support passive optical networks (EPONs) is based on a number of economic
advantages. The OLT supports a minimum of 16 subscribers per port by means of a passive optical

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splitter. Thus the Ethernet PON minimizes the number of fibres that need to be managed in the CO and
also minimizes the equipment required in the CO, compared with a point-to-point topology. This
economic benefit is significant. The EPON physical layer specification will support distances between
the OLT and ONU up to 20 kilometres depending on split ratio and optical link budgets.
FSAN defined requirements for APON (ATM PON), BPON (Broadband PON) and GPON (Gigabit PON), and
they feed their recommendations into ITU–T G.983 and G.984 family:
• The initial PON specifications defined by the FSAN committee used ATM as their layer 2 signalling
protocol. As such, they became known as ATM-based PONs or APONs.
• Use of the term APON led users to believe that only ATM services could be provided to end-users, so
the FSAN decided to broaden the name to Broadband PON or BPON. BPON systems offer numerous
broadband services including Ethernet access and video distribution.
• In 2001 the FSAN group initiated a new effort for standardizing PON networks operating at bit rates of
above 1 Gb/s. A new solution has emerged into the optical access market place: Gigabit PON or
GPON, offering unprecedented high bit rate support while enabling transport of multiple services,
specifically data and TDM, in native formats and at an extremely high efficiency.
7.2.7.3 Socio Economic Issues
By the end of June 2004, there were approximately 550000 FTTx subscribers in Europe (EU25 + Norway &
Iceland) (Figure 23). This means only between 1.5% and 2% of the broadband connections are provided by
FTTx. Furthermore, FTTx is today mainly concentrated in a limited number of European countries. More than
95% of the current FTTx subscribers are located in only 4 countries: Sweden, Italy, Denmark and The
Netherlands. In Sweden approximately 18% of the broadband connections are delivered by FTTx, while in Italy
this percentage is nearly 5%, in Denmark 9% and in The Netherlands 2%.
250,000
200,000
150,000
100,000
50,000
0
Austria
FTTx subscribers by the end of June 2004
Belgium
Denmark
Finland
France
Germany
Italy
Netherlands
Spain
Sweden
UK
Others EU
17
Figure 23: FTTx subscribers by the end of June 2004 (Source: IDATE)
In June 2004, the situation in Europe (EU 25 + Norway & Iceland) was as follows: there were 167 locations
where FTTx initiatives have been launched, and 103 players were involved in (Table 8). Among them, nearly
70% are municipalities or power utilities. Furthermore, approximately 60% of these deployments are at
commercial phase, 20% are pilots and 20% are at a project phase.
Incumbent operators 8 7,8%
Municipalities / power utilities 72 69,9%
Alternative operators / ISPs 9 8,7%
Housing companies & Other 14 13,6%
Table 9: Players involved in FTTx initiatives in Europe
Iceland
Norway

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In Sweden as well as in the Netherlands, to a large degree, the FTTx success can be attributed to government
action plans and national and regional funding schemes. Both central government and municipalities are
supporting several FTTx initiatives. Their common purpose is to create a positive economical environment,
which will stimulate the regions where the initiatives are taken.
The success of FTTx in Italy can be mainly attributed to FastWeb, a joint venture of several power utilities in
the Milan region. Originally, they only operate in the Milan region, but nowadays they deploy their fibre
network also in several other Italian cities.
In Europe, the participation of incumbent operators in the deployment of FTTx is not very high. The roll out of a
complete fibre network is still rather expensive (20 to 50 EUR/meter, dependent on rural or urban areas) and
most of them do not see a profitable advantage in deploying such a network.
Outside Europe, important FTTx countries are Japan, South Korea and Hong Kong, they are the world leaders in
the field of FTTx. There, the incumbents are very well involved in FTTx. FTTx is mainly Fibre to the Building
in these cases, and by the concentration of population in few urban centres and in multi-dwelling units, the
investment in a fibre network will be cheaper per resident.
Finally, an important point to stress is that most of the FTTx deployments in Europe (e.g.: Sweden: Stockholm,
Italy: Milan, The Netherlands: Eindhoven, Amsterdam) as well as in Japan, South Korea and Hong Kong, are
installed in densely populated cities. In the USA, we see most of the FTTx deployments are rather in rural areas,
especially in green field areas. The distinction between the USA and the rest of the world can be declared by the
fact that the size and population distribution of the USA is distinct from the other countries. The subscriber loop
lengths are typically longer in the USA, and by consequence the cost per resident to roll out a FTTH network is
higher. This declares why in the USA FTTx is mainly attractive in green field, but not in more densely
populated areas.
7.2.7.4 Issues and trends / Gap analysis
7.2.7.4.1 FTTH Deployment
In Europe, more than 95% of the FTTx subscribers are concentrated in 4 countries: Sweden, Italy, The
Netherlands and Denmark:
• In Sweden, to a large degree, the FTTx success can be attributed to government action plans and
national and regional funding schemes. The government is also actively investing in fibre
infrastructure: e.g. Stokab, a dark fibre provider in the Stockholm county, is wholly owned by the City
of Stockholm. Their purpose is to stimulate positive growth in the Stockholm region by creating
favourable conditions for IT development.
• Also in The Netherlands, there is a lot of government support: central government as well as
municipalities. Kenniswijk is an experimental environment in the Eindhoven area where FTTH
connections are deployed, and the project is supported by the central government. The intention is that
the developments within the Kenniswijk-area are, on average, two years ahead of the rest of the
Netherlands, resulting in a "consumer market of the future". Besides, a lot of municipalities also invest
in FTTH realizations, and today there are many fibre pilots: Almere, Amsterdam, Appingedam,
Enschede, Rotterdam, Amersfoort, Nuenen, Groningen, The Hague, Dordrecht...
• The success of FTTH in Italy can be mainly attributed to FastWeb, which is a joint venture between
the Milan publicly owned gas and electric utilities and a private group known as e.Biscom. Originally,
they only operate in the Milan region, but nowadays they deploy their fibre network also in several
other Italian cities.
The participation of incumbent operators in the deployment of FTTx is not very high in Europe. The roll out of a
complete fibre network is still rather expensive and most of them do not see a profitable advantage in deploying
such a network. The success in some European countries is mainly the consequence of a lot of government
support (central government as well as municipalities). But also, in a lot of European countries (UK, France,
Spain, Belgium), the FTTH deployment is very low or totally not available.
Outside Europe, important FTTx countries are Japan, South Korea and Hong Kong, they are the world leaders in
the field of FTTx. There, the incumbents are very well involved in FTTx (e.g: Japan: USEN, NTT West, NTT
East; South Korea: KT). FTTx is mainly Fibre to the Building in these cases, and by the concentration of
population in few urban centres and in multi-dwelling units, the investment in a fiber network will be cheaper
per resident. In the US, FTTx deployment is rather limited. It is also remarkable the FTTH deployments in the

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US are mainly in rural areas and less in major cities, while in Japan and Europe, FTTH appears in densely
populated areas.
The two most important technologies within the scope of FTTx are Ethernet in the First Mile over Point-to-Point
Fibre and Passive Optical Networks (EPON, APON, BPON, GPON). Beyond the USA, PON deployment is
very low, in a lot of other countries (Japan, Sweden, Italy…), the FTTx networks are mainly based on EFM over
Point-to-Point connections.
7.2.7.4.2 Gap analysis
Technologically, there are two important challenges for the future:
• To increase capacity.
• To extend the distance between CO and user.
The extension to WDM-PONs gains interest. WDM efficiently exploits the large capacity of optical fibre
without much change in infrastructure. Gigabit-capable passive optical networks (GPON) are now standardised
and commercially available, which means that PONs are approaching bit rates where one could consider using
them for metro as well as access applications. To use a PON for long reach access needs three new features:
reach extension to ~100 km, a high split ratio (>64); and ideally WDM should be used. Nowadays, there is a lot
of research in this domain.
Another important topic is the cost of the optical components, especially for the ONUs. Maturity of optical
components and large-scale integration/manufacturing of ONU have dropped the prices. To keep the cost of the
ONU low, there is also a lot of interest for colourless ONUs. This means there is no laser available in the ONU,
however in the OLT an optical carrier for upstream signals is generated, and the upstream transmission is then
provided by externally modulating these signals.
Finally, considering the deployment of FTTx, the following factors are essential:
• Policy/regulatory support, either active participation by the government by financial support (cf.
Sweden, The Netherlands), or passive by creating a positive regulation climate (cf. Japan, South
Korea).
• The interest of the incumbent telecom operators (cf. Japan, South Korea), this can be stimulated by a
clear government policy.
• Advanced (new) services that can create a clear revenue opportunity.
7.2.7.5 Roadmap
FTTB and FTTH can be regarded as the logical endpoint of an ongoing evolution. In the pre-fibre days, Telco
COs were interconnected by coax and microwave, while cable head ends were fed by microwave or satellite.
The first step in “fiberizing” the entire system was Hybrid Fibre Coax (HFC) (being widely deployed by the
cable industry today), in which the node becomes an optical network unit. HFC serves several hundred homes
per fibre end, each using copper (coax) in both directions between “node” and subscriber, but with limited bit
rate and very demanding design rules.
The slowly emerging Fibre to the Curb (FTTC) systems split each upstream or downstream fibre into 10-100
subscriber copper paths. It is not clear that FTTC systems offer any economic advantage over full FTTH/B,
which is just the logical extension of HFC to FTTC to a single subscriber per fibre. Because of its non-optimum
economics, FTTC is likely to be overtaken by the clean passive-all-the-way FTTH option, i.e. PON.
The current PON technology mainly uses power splitting PONs, but (C)WDM is another important PON
approach, which will gain more and more interest in the future. When deploying a PON, a technological choice
between either ATM-based (APON or its successors BPON, GPON) or Ethernet-based (EPON) has to be made.
It really makes little difference architecturally whether the internals of the PON speak Ethernet or ATM, since
the interfaces to the user and to the CO equipment are identical in both cases. The important issue will be cost to
the end user and speed of acceptance. In view of the superior component cost for Ethernet chips compared to
ATM chips, perhaps the only thing that will give the race to APONs is that, if the large incumbent local
exchange ever get moving with PONs, they may cling to ATM because of its familiarity and its existing
certifications. One predicts that in the long run APONs will go the way of ISDN – not completely dead, but a
minority player.
Another all-fibre solution is the active architecture, which gains more and more interest. Active Ethernet is
quietly becoming the preferred choice among leading service providers worldwide for their fibre deployments.
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to a fraction of what they were just a few years ago. And also some technological developments have an
important influence:
• The completion of the IEEE 802.3ah Ethernet in the First Mile (EFM) standard that defines, among
other things, a method for delivering Ethernet over a single strand of fibre.
• The evolution of environmentally hardened Ethernet devices that can be placed in the outside plant.
Prior to the availability of this type of gear, network operators would have to pull the fibre from every
subscriber all the way back to their CO. Then at the CO, a large electrooptic port count was needed.
An Active architecture has one arguable drawback from a deployment perspective, and that is the requirement
for power in the outside plant. However, Active electronics in the field are nothing new and many Telco’s have
already powered electronics in the field.
Most FTTx products today use point-to-point Ethernet or power splitting PON solutions. Some people also
believe the PON approach for deep fibre deployments is geared more toward Telco’s who have traditionally not
had power in the field. For people like cable operators and utility companies that already have power in the field,
it’s not a big issue.

7.2.8 DVB-T
7.2.8.1 Introduction:
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There are major differences between Telecommunications and Digital Broadcasting sectors. However, the dream
of service providers is to provide a single network to provide both entertainment (broadcast) and
telecommunication services. A notion of convergence has been recently achieved at technological and service
level, through DVB-T broadband access technologies
This convergence was mainly empowered by the work carried out in the field of ‘Interactive Broadcasting’,
which was the subject of innovative work carried out by a number of Research and Development projects in the
5th European Framework Programme. The ultimate goal of these projects was to provide new affordable
services to the users, fulfilling two observed tendencies: i) the personalisation of services, that cannot be offered
by traditional one-to-many broadcasting networks, and ii) the consumption of bandwidth hungry multimedia
services that cannot be offered by existing communication networks especially on the move. The objective of
further development of the subject of Interactive Broadcasting was confronted by the European commission in
identifying the technological and service issues which require further R&D including: i) video and audio
delivery to mobile terminals, ii) traffic symmetry/asymmetry, iii) market prospects of the introduction of new
services and applications, vi) regulatory and spectrum issues, and finally, and most predominant, the need of
synergy (better than convergence) between broadcasters and telecom operators towards the introduction of the
next generation networks (NGN).
The major obstacle towards digital switchover is the spectrum valuation and the sharing of frequencies,
especially in the UHF band. Telecom operators require part of the UHF band to be allocated for mobile
communication, while broadcasters proclaim their ownership of the entire frequency band.
7.2.8.2 Current status of DVB-T
Most of the countries across the world have adopted the DVB-T technology for digital broadcast of video
programmes. The details and statistics can be seen at the DVB forum web site www.dvb.org
The deployment status and plans vary from country to country. The DVB forum is also a good resource for
country specific status of DVB-T deployment.
7.2.8.3 Trends and Future of DVB-T
Taking into account the networking aspect of the new digital television (regenerative DVB-T stream) the
creation of a common Ethernet backbone, present in the entire city via the DVB-T stream, and accessed by all
citizens via wireless (i.e. WLAN, Optical, UMTS) and/or wired channels (i.e. PSTN, ISDN, xDSL) is being
addressed. The proposal is the use of the regenerative DVB-T stream in a backbone topology for the creation of
a single access broadband physical infrastructure with multi-service capabilities, able to interconnect NGN IP
nodes of a city (and/or individual users), besides accommodating broadcast services (digital TV programmes).
7.2.8.4 IST projects involved:
ATHENA project 23 is addressing DVB-T technology as a solution for broadband for all concept. The system
architecture envisaged in the projects is shown in Figure 24.
The overall architecture of such an infrastructure comprises two core subsystems: I) a number of Cell Main
Nodes (CMN), and II) a central broadcasting point. Each CMN enables a number of simple users
(geographically neighbouring the CMN) to access IP services hosted by the network. The communication
between the simple users and the corresponding CMN is achieved via broadband point-to-multipoint links (i.e
WLAN). The CMN gathers all IP traffic stemming from its users, and forwards it to the central broadcasting
point (UHF transmission point visible by all CMNs) via dedicated point-to-point links (uplinks). IP traffic
stemming from all CMNs is received by the broadcasting point, where a process unit filters, regenerates and
multiplexes them into a single transport stream (IP-multiplex) along with digital TV programme(s), stemming
from the TV broadcaster(s), forming the final DVB-T "bouquet". The regenerated/ combined traffic is then
broadcasted via the UHF channel at high data rates following the DVB-T standard.

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Figure 24: Sytem architecture for the ATHENA project, addressing DVB-T technology
as a solution for broadband for all concept

7.2.9 HAP
7.2.9.1 Introduction
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High altitude platforms (HAPs) have the potential to cost effectively deliver broadband services. A HAP is an
airship or plane which operates 17-20km above the earth’s surface and provides a platform for communications.
HAPs are planned to provide high capacity to users (as with terrestrial networks), but provide a high coverage
(as with satellite systems). The CAPANINA project 24 intends to demonstrate systems capable of providing
wireless bursts of data to users of up to 120Mbit/s to approximately 1000X the number of users per unit area
serviced by satellite systems. The cost is eventually expected to be in the region of 10% of that of a satellite
system and the low amount of infrastructure coupled with its potential amortisation across 1000s of users will
also make these systems cost competitive with terrestrial systems.
In the first instance it is expected that the services will be available to geographically fixed users. Developments
will rapidly allow access by mobile users travelling at 100s km/hr e.g. on trains.
The wide coverage is coupled with a low infrastructure cost, will enable cost effective provisioning for remote
and rural areas. Wireless remote sensing (e.g. of atmospheric CO2 conditions) will be possible, as will
navigation and surveillance applications.
Dynamic provisioning of services and bandwidth is an important facet and will allow novel uses, such as
disaster relief communications provision. Expectations are that HAPs will be communicating with fixed users in
the 3 to 5 year time period, and to mobile users about 2 years after that.
7.2.9.2 Platforms
The HAP will be a solar powered airship, or plane operating in the stratosphere 17-20 km above the earth’s
surface. The platform will be quasi-stationary. An airship will be located within a cube of side 1 km. A plane
will orbit a fixed point using a radius of 1-3 km.
The platforms will be unmanned, but unlike satellites may be returned to earth for periodic maintenance. Thus
the reliability constraints (and costs) on components may be less stringent than those for satellites in orbit.
Figure 25: Line of sight coverage of a 20 km HAP situated over London 25
24 http://www.capanina.org/ - most information in this report is gathered from this web-site
25 http://www.capanina.org/CAPANINA-Overview.pps

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The 17-20km altitude will allow a wide coverage area e.g. Figure 25 shows the line of sight radius of coverage
of a HAP situated 20km over London is greater than the distance to Land’s End (total ~500km).
Some developers are also proposing the use of tethered balloons as platforms. Although these are not strictly
speaking high altitude, the technology is similar and should be considered as an alternative method. The
discussion available implies that this may be an interim step which is realisable in a shorter term than the
stratospheric solution.
The environment in the stratosphere will have impact on the requirements of the payloads. As an example of this
the Capanina-project is paying attention to avoiding discharge in rf antennas, caused by low air pressures.
Similarly, the thermal design of the payload must take into account the low air temperatures and wide variations
in solar radiation from one side of the payload to another.
For the HAP solution, the predictable challenges include power supply budgeting and unmanned navigation
(ascent, station maintenance and descent):
• Although solar powered platforms are intended for long term deployment, early trials for short term
deployment may involve a platform taking up its own power supply. Although a stepping stone, this
solution may have some practical applications such as short term (~1 month) deployment for disaster
recovery communications. Since the power supply is required both for flight/station keeping and
payload purposes, power budgeting needs to take a holistic view.
• Although unmanned flight/station keeping has been demonstrated, there have been several mishaps26 .
These are considered to be learning opportunities, but are expensive in terms of lost resources.
7.2.9.3 Connections
Figure 26: Vision of HAP connections 27
Figure 26 shows the predicted connections for a HAP. A variety of beams will be available from the earth facing
antennas. For broadcast services such as HDTV low gain, low directivity antennas will be employed to provide
maximum coverage. Medium gain antennas will be employed to provide bi-directional broadband fixed wireless
26
Del Frate J.H.: "Developing Technologies for High Altitude and Long Endurance", 5th Stratospheric Platform Systems Workshop,
Tokyo, Japan, Feb 23-24, 2005
27
http://www.capanina.org/CAPANINA-Overview.pps

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access cells for fixed users. Steer-able high gain antennas will allow dynamic allocation of large capacity for
purposes such as emergency communications during a disaster, and will also service high speed mobile users.
mm-Wave are expected for platform to user connections. As well as broadcast, these may provide burst data
connections of up to 120 Mbit/s. Free-space optical communications, allow higher capacity (622 Mbit/s) in clear
conditions and will be used for inter-HAP communications and to supplement mm platform to ground backhaul
communications.
Connections to satellites and ground based hubs for back haul purposes will be provided. Inter-HAP connections
will reduce the demand for terrestrial backbone network capacity and will also allow migration of highbandwidth
optical connections to the ground from links which are obscured by rain or clouds to links with clear
weather. The lack of clouds at stratospheric altitudes prevents inter-HAP optical connections from being
obscured.
Some of the major technological challenges here are the development of the steerable antennas and the ability to
point acquire and track the links both for optical and mm-wave transmission. The likely solutions appear to be a
mixture of mechanical and phase array techniques.
7.2.9.4 Roadmap
Dr David Grace of CAPANINA has projected the following timeline for deployment:
Near Term
Suitable platforms are already developed such as NASA’s pathfinder plus aircraft. The initial deployments are
expected to be temporary (>2Mbit/s to each individual.
This is the application which is requires most progress to be realised. The main developments to be made here
are to do with tracking antennas. Other issues which need to be solved are the Doppler shifts of the signal and
mitigation of obstructions (tunnels etc) and potential multipath fading. Various methods might be used to solve
these. For example with broadcast the train may cache enough data for a tunnel passage. For interactive
communications the HAP might talk to a fixed receiver which then uses WiFi to re-broadcast along the tunnel.
Dr Grace believes that the HAPs would integrate with other transmission methods. For example, in large cities
like London the trains may receive their signals from ground based transmitters whereas when the train left the
city the HAP may take over. In this case handover strategies would be necessary.
28 D. Grace, J. Thornton, G. Chen, G.P. White, T.C. Tozer, Improving the System capacity of Broadband Services Using Multiple High
Altitude Platforms, IEEE Transactions on Wireless Communications, To appear, Spring 2005

7.3 GENERAL TOPICS IN ACCESS
7.3.1 Convergence in networks and services
7.3.1.1 Seamless mobility Introduction
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Seamless mobility is expected to be achieved through IP- based networks that support portability for seamless
interoperation across converged networks working across wireless, mobile, fixed and satellite communication
networks. The technologies of WLAN, Mobile networks and various fixed network technologies are covered in
the previous sections of this document. In this section, the service aspects are considered assuming the
deployment of various access technologies deployed.
7.3.1.2 State of the Art / Existing technologies
7.3.1.2.1 WLAN Services
Through deployment of WLAN service, users can be provided with the same level of multimedia service in a
wireless environment as they have been provided in a wired environment. However, despite its high data
transmission rate and low price, WLAN service can be provided only in a limited coverage. So the possibility
that the user will be provided with the data service like the Internet at any time and anywhere is limited.
The interest in providing service continuity through mutual interworking between mobile and WLAN systems is
growing towards the evolution to all-IP networks in mobile communication to enable the services that can
operate in different networks.
7.3.1.2.2 Horizontal and vertical mobility
A multimedia service that provides voice, data, and images services through wired, wireless and satellite
environment and a global roaming service that can transmit all over the world are the concepts behind the 3G
mobile communication system. The future broadband mobile communication system aims to achieve a seamless
global roaming service through inter-system handover (vertical handover) designed to enable handover between
different technological systems and different bandwidth frequencies
One of the biggest problems in providing wireless service to fast moving subscribers is service continuity.
Unlike the 3G mobile communication developed to date, future broadband mobile communications set the goal
of ensuring high frequency efficiency and high transmission rate to a moving terminal providing various types
of QoS, etc. The development of future broadband mobile communications is expected to centre around the
micro/pico cell.
In the existing mobile communications system, transmission of voice traffic is most important. Therefore,
services are provided on the basis of protocols for voice calls, and the handover technology is limited to
handovers between cells or between mobile switching centres (MSC). However, as the demand for data traffic
increases and connections to the wired network server for the World Wide Web (WWW) or FTP service become
more frequent, not only is handover between cells and between MSCs needed, but so is mobility in the upper
layer. In addition, because all systems on the mobile communications network are moving to an ALL-IP or pure-
IP structure, mobility in the IP layer and handover have become a major issue requiring consideration.
The Internet Engineering Task Force (IETF) has defined mobile IP to support host mobility. Using the concepts
of home agent (HA) and care-of address (CoA), it enables a packet incoming to a moving terminal to be
transferred to CoA via HA through tunneling. Further enhancements are being discussed in IETF to improve the
routing and security with Mobile-IPv6.
To support mobility of the terminal in an IP network, the most easy and hierarchical method is to provide
transparent handover to the upper layer using Mobile IP that supports mobility in the IP layer.
7.3.1.2.3 Broadband mobile convergence network
With 3G networks, connectivity of up to 2 Mbit/s, terminal mobility and multimedia services can be
provisioned. Mobile operators and application developers are continuing to seek new applications and services
that could generate additional revenues and increase usage. The vision of future mobile networks in the
converging environment will be the provision of broadband access, seamless global roaming, widely available
multimedia, and utilization of the most appropriate connectivity technology.

7.3.1.3 Socio Economic Issues
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The convergent networks lead to the provision of seamless and ubiquitous services, which is the fundamental
requirement of information society. The ubiquitous services have lead to the ambient intelligence concept that is
being promoted currently by FP6 European research framework. The ubiquitous services can be very well
exploited by the citizens to improve their quality of life and can contribute significantly to productivity and
hence competitiveness, which contributes to general economic growth which is the primary of concern of all
societies.
There is a common vision of the information society, which includes that “everyone can create, access, utilize
and share information and knowledge”. Even in remote places in Africa it is today possible to talk to other parts
of the world through wireless networks. The dynamic development of new information and communication
technologies is thus contributing to narrowing the gap between the haves and the have-nots in the emerging
knowledge economy, where the digital access to knowledge has become a central factor in the quality of life.
Ubiquitous services and applications across convergent networks are beneficial and a user need in all
circumstances. In fact, ubiquity leads to a de-facto blurring of work/home boundaries. The vision of the future
has also been developed in particular ways by ISTAG (Information Society Technologies Advisory Group) and
WWRF (Wireless World Research Forum) scenarios. Existing telecommuting technologies such as laptops and
mobile phones with Internet capabilities, and remote access to office servers, already form the beginnings of an
era of ubiquitous services and applications. Ubiquitous services involve convergence of three technologies:
ubiquitous computing, ubiquitous communication, and intelligent user-friendly interfaces. Seamless service
provisions will create some tremendous business opportunities and challenges to telecommunications operators
and service providers, with the need to consider value chains, market dynamics and how portable devices can be
usefully incorporated into user centric service offerings
7.3.1.4 Issues and Trends
From the service perspective, mobile network architecture will become flexible and versatile, and new services
will be easy to deploy. The new architecture would be based in IP-based core network components that are
access technology independent, and access network components which are technology dependent, consisting of
functional components such as control functions and transport functions.
The next-generation convergence network incorporates the provision of a common, unified, and flexible service
architecture that can support multiple types of services and management applications over multiple types of
transport networks. There are essential attributes of this next-generation service architecture such as layered
architecture, open service interface, and distributed network intelligence. It has characteristics such as open
network architecture for ease of deploying new services; All-IP based integrated transport networks, integrated
services and billing management, heterogeneous access network and multi-function terminals.
Figure 27: Convergence Network scenario

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7.3.1.4.1 Gap analysis, Interworking and Interoperability
The future broadband mobile communications requires interoperation not only with WPANs or WLANs, but
also with the 2G or 3G mobile communication system. Interoperability means the availability of well-defined
gateway points and functions between networks. Interoperability is a key technical issue to ensure widespread
adoption of services. From the perspective of system interoperability, the future mobile network will be required
to support global standards such as standardized interfaces between networks, effective and user-friendly
operation, administration, maintenance and provisioning (OAM&P) facilities, and backward compatibility with
existing legacy mobile networks.
Next-generation broadband mobile communications, beyond 3G (4th generation) will be able to provide diverse
multimedia convergence and ubiquitous service. The new generation of mobile multimedia applications in IP
environments will provide synergy between the mobile world and the Internet.
The WWRF is driving a single open mobile wireless Internet architecture that enables seamless integration of
mobile telephony and Internet services, meeting the needs of network operators and Internet service providers.
Although IP is widely accepted protocol, it still weaknesses, like limited address space, lack of mobility and
QoS mechanisms, and poor performance over wireless links. IPv6 movement for a next-generation may resolve
some of these problems.
Cellular network operators are integrating WLAN into their cellular data networks to exploit the bandwidth and
roaming facilities, in provisioning the cost-effective seamless services.
7.3.1.4.2 Digital Broadcasting Networks
Convergence of communications and broadcasting occurs as demarcation between these services becomes
obscure. Cooperation of mobile network operators with the broadcasting network will open up new applications
such as navigation, traffic information, and interactive multimedia services. A performance improvement by the
broadband mobile convergence network will create the basis for providing various multimedia contents in the
future and lay the groundwork in advance for a converged mobile communications broadcasting service. The
convergence technology is also able to show the interactive data broadcasting service in terrestrial and satellite
DMB systems. It is suitable to transmit entertainment and information programmes as well as traffic information
and events into cars, buses or trains.
7.3.1.4.3 Mobile Ad-Hoc Networks
Ubiquitous computing can be realized with the mobile ad hoc networks, which are being experimented
currently. A mobile ad hoc network does not involve the use of existing networks, and it can be constructed
even in extraordinary conditions like a disaster. In a mobile ad hoc network, nodes communicate with each other
without the help of any pre-existing structure. The network is autonomously formed among many nodes such as
PDA, laptops with varying functionalities and power levels. It will be the enabler for ubiquitous computing as
well as perform significant functions during natural disasters where pre- existing infrastructure may be
destroyed. The most representative ad hoc network is the multi-hop mobile ad hoc network based on IP
(MANET) that is being standardized by IETF. The most conspicuous features of the mobile ad hoc network are
dynamic network topology change associated with node mobility, which directly affects the routing protocol that
manages the routes.
7.3.1.5 Roadmap
In general, there is a movement towards integration and convergence of heterogeneous wireless access
networks. This includes cellular network but also emerging systems, such as WLAN, WPAN, wireless sensor
networks (WSN), mobile ad-hoc networks, digital broadcasting networks, and the Internet, which will
complement or expand current and next-generation cellular networks. It is envisioned that the network
environment for future broadband mobile communications will consist of an IP-based packet network
infrastructure offering converged services.
The convergence can ultimately provide seamless and high-quality broadband mobile communication service
and ubiquitous service through wired and wireless convergence networks without spatial and temporal
constraints, by means of connectivity for anybody and anything, anytime and anywhere.
Various mobile wireless access systems will coexist to provide integrated services. Satellite, cellular, WLAN,
digital broadcast, and other access systems will be connected to provide integrated and seamless services via a
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Figure 28: Evolution of seamless services across heterogeneous Networks
Research centres such as the Wireless World Research Forum (WWRF) 29 are working on the direction of future
strategic research in the wireless fields, and to generate, identify, and promote research topics and technical
trends for mobile wireless system technologies. It is thus intended to contribute to the work done within the
UMTS forum, ETSI, 3GPPx, IETF, ITU and other relevant bodies in relation to commercial and standardization
issues deriving from the research.
7.3.1.6 More information:
• ITU-R; Broadband Mobile Communications towards a converged world, March. 2004
• P. S. Henry, “Wi-Fi: What’s Next?”, IEEE Communications Magazine December 2002.
• Theodore Zahariadis and Demetrios Kazakos, “(R)Evolution toward 4G Mobile Communication
Systems”, IEEE Wireless Communications, August 2003.
• Yungsoo Kim et al: “Beyond 3G: Vision, Requirements, and Enabling Technologies”, IEEE
Communications Magazine, March 2003.
• Willie W. Lu, “Fourth-Generation Mobile Initiatives and Technologies”, IEEE Communications
Magazine, March 2002.
• Theodore B.et al, “Global Roaming in Next-Generation Networks”, IEEE Communications Managine,
Next-Generation Broadband Wireless Networks and Navigation Services, Februrary 2002.
• http://www.3gpp.org.
29 http://www.wwrf.org

7.3.2 Video and Broadband networks
7.3.2.1 Introduction
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Because of its connectionless and stateless nature, guaranteeing QoS in all-IP networks is a complex issue.
Architectures for supporting QoS in packet networks include a set of complementary mechanisms often
clustered in three logical planes (control, data and management planes) distributed across different layers of
communication architectures. This document focuses on state-of-the-art functions and technologies, on issues
and trends for building broadband QoS aware multimedia systems and for quality of service (QoS) support in
all-IP networks.
7.3.2.2 State of the art / existing technologies (including standards)
7.3.2.2.1 Data plane mechanisms
Coding:
The emergence of the Internet, of mobile applications over narrowband networks has given the impulse for
pursuing standardization of audio-visual compression solutions beyond MPEG-2, and giving rise to MPEG-4
version 1 in 1999, version 2 in 2000 and more recently to MPEG-4 part 10 known also as H.264, which is a
result of a joint effort between ISO and ITU. The performance gap of H.264 with respect to MPEG-4 versions 1
and 2 is such that it is likely to impose itself on the market for all applications in need of compression efficiency.
Transport protocols:
Interactivity requirements precluding the usage of TCP, UDP and RTP have become the protocols of choice for
the transport of multimedia continuous streams on the Internet. They are widely used in existing products for
multimedia transport (see Apple’s quicktime streaming server, Microsoft windows media server, Real networks
helix universal server, etc… ). Multimedia streaming over RTP/UDP has been also widely investigated in part
IST FP5 projects and is being retained by initiatives such as ISMA (Internet Streaming Media Alliance).
QoS mechanisms in the application layer:
The application-layer mechanisms are intended to adapt –dynamically- the flow to the network characteristics,
which may vary in time. The delivery of multimedia streams, due to their real-time nature, cannot make use of
responsive and reliable protocols such as TCP. For this reason, so far, they had to make use of unresponsive
transport protocols, e.g., User Datagram Protocol (UDP) and/or Real-time Transport Protocol (RTP). The fact
that these protocols do not embed any congestion control mechanism raises major concerns: not only multimedia
sessions such as video sessions require more bandwidth, but they are also unresponsive, i.e., they do not back
off their rate when congestion occurs as TCP does. First, fair share of the network resources is no longer
maintained. Second, as more and more greedy sessions are established across the network, the goodput of the
network decreases because unresponsive sessions typically send data packets at full rate even if these packets are
later dropped inside the network. While the first point is a threat to TCP-based applications, the second one may
potentially lead to network collapse.
To cope with the above issues, it has been envisaged to enhance UDP-based video communications with some
kind of congestion control. Congestion control strategies dedicated to continuous streams, which reflect at best
multimedia QoS requirements, yet at the same time be almost sufficiently reactive in order to maintain some
fairness between traditional data exchanges and multimedia sessions have been designed. The goal of congestion
control implemented in the application layer (e.g., at the level of the streaming functions) is thus to avoid a
possible network collapse and minimize the impact of the network impairments on the quality of the received
signal. Experiments have already shed light on the benefits of such adaptation mechanisms. By handling delay
jitter (delay adaptation), packet loss (forward error correction, error concealment), and variable source rate
availability, Congestion control, rate control, forward error correction, scheduling in the application layer
allow to improve the quality of multimedia communications over best-effort networks. They can be regarded as
complementary solutions to the problem of optimum stream adaptation to network varying bandwidth, loss rate
or delay characteristics.
Congestion control is used mostly so far with multi-rate switching techniques in streaming servers. The
multimedia content is pre-encoded at a selection of bit rates. The different streams are stored on the streaming
server. In streaming solutions supporting multi-rate switching, the streaming server automatically detects the
user’s Internet connection speed, e.g., using bandwidth prediction techniques described in the above section, and
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stream. Multi-rate switching is implemented e.g., in the Microsoft windows media server and in the SureStream
technology of the RealNetwork Helix media server.
Some streaming media products:
The most widely adopted streaming media products are:
• Apple’s QuickTime Server
(http://www.apple.com/quicktime/products/qtss/). QTSS facilitates live broadcasting, simulated live, as
well as end-to-end on-demand streaming, with QuickTime and MPEG-4 media formats, delivery over
RTP, streaming control with RTSP, RTP/RTSP tunnelling over HTTP, fast start delivery over HTTP
which is a type of pre-fetching to be used jointly with appropriate buffer management and playback on
the client side; It also supports stream relay functionality.
• Microsoft’s Media Services
Complete end-to-end multimedia system including encoders, video-streaming servers and multimedia
players. The protocols supported are UDP, in Unicast and Multicast, RTP/RTCP, RTSP, and
HTTP/TCP. It supports its own encoder and video-audio file format (Windows Media Format). Its
encoder is based on the MPEG-4 standards, however not compatible to MPEG-4. It also supports
Multi-rate encoding and corresponding intelligent streaming. Depending on the network state
(congestion state, bandwidth), the server decides which bit rate to stream. It also supports stream
thinning: This is a process that eliminates video frames from a video feed in order to protect the audio
feed.
• RealNetworks’ Helix Universal Server
(http://service.real.com/help/library/guides/helixuniversalserver/realsrvr.htm). The server is capable of
live and on-demand content delivery of most major file formats, including RealMedia, Windows
Media, QuickTime and MPEG-4. It supports UDP, TCP, RTP, IP-multicast, the MMS (Microsoft
proprietary) protocol, RTSP, PNA (Realnetworks proprietary protocol); It supports Microsoft’s
Multiple Bit Rate (MBR) encoding technology. Encoder, transmitter, receiver support the relay
functionality; It also incorporates SureStream technology that allows to detect changes in the bandwidth
or packet loss conditions and to translate these changes into stream switching.
• PacketVideo
(http://www.packetvideo.com/) develops solutions for transmitting multimedia streams over wireless
networks low bitrate (mainly Smartphones and PDAs). The leading product is pvServer. It supports
MPEG-4 and Windows Media formats. Players are available for most mobile devices under Symbian
and Microsoft’s PocketPC. It supports RTP/RTCP, RTSP over UDP and HTTP, FastTrack,
FrameTrack mechanisms.
• Envivio
(http://www.envivio.com/) maintains a collection of media delivery products. The 4Sight streaming
server is an MPEG-4 server conforming to both ISO and ISMA standards. The software version is
available for Microsoft Windows, Linux and Irix. End-user clients can use either the standalone
EnvivioTV player or install the EnvivioTV plug-in into RealNetworks Player, Windows Media Player
or Apple’s QuickTime. Supported protocols are standard RTP/RTCP, RTSP over UDP
(Unicast/Multicast) or through HTTP tunnelling. The hardware version of Envivio’s streaming server
supports stream switching and includes load-balancing mechanisms.
• Dicas
(http://www.mpegable.com/) specializes in developing MPEG-4 related products for the Microsoft
Windows platform. Its product line includes an encoder, a streaming server and a player. The Mpegable
Broadcaster can take either live input or any Windows supported media format and output MPEG-4
compliant streams. Protocols supported are RTP/RTCP, RTSP. Multicast is also supported.
Integrated and differentiated services:
Evolutions are taking place in the network infrastructures, that should allow to better meet QoS requirements of
multimedia applications. The IETF has defined two QoS architectures: the Integrated Services (IntServ) and
the differentiated services (DiffServ).
IntServ has been proposed by the IETF to reserve resources in advance, so that selected flows can be treated
with guaranteed resources. The goal was in particular to enable real-time applications as well as bandwidth
sharing between different traffic classes. Two types of services have been defined for IntServ and can be
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• Guaranteed Service: This service is intended for real-time intolerant applications. It offers a strict
guaranteed service providing firm bounds on end-to-end delay, assured bandwidth for traffic
conforming to reserved specifications.
• The second type is a controlled load service providing for a better than best-effort and low delay
service under light to moderate network loads. It is intended for applications that can tolerate a limited
amount of losses and delay. The traffic parameters of importance are the average rate, peak rate and
burst size. The end-to-end delay cannot be determined in a deterministic manner.
The Resource Reservation Protocol (RSVP) has been designed as a signalling protocol for setting the traffic
parameters, i.e. for resource reservation and for admission control. The application must know the characteristics
of its traffic beforehand. RSVP can then be used to signal the intermediate network elements the application
traffic parameters.
IntServ allows per-flow QoS but at the expense of per-flow state and signalling at every hop. As a consequence,
IntServ presents a certain number limitations, among those a problem of scalability. The DiffServ architecture
has been introduced to solve the IntServ scalability problem. It defines classes of services (CoS) corresponding
to aggregates of flows. The key idea advocated by the DiffServ group of the IETF consists, by using a priority
mechanism, in offering services with gradually increasing performances. In the DiffServ architecture, traffic is
classified, metered and marked at the edge of the network. Traffic with similar QoS requirements is marked, by
setting the diffserv code point (DSCP) in the header of each IP packet, and is treated in an aggregated fashion in
the core routers. The DSCP specifies a per-hop behaviour (PHB) to be applied to the packets of a given class
within a provider’s network (in the core network). A PHB denotes a combination of forwarding, classification,
scheduling, and drop behaviours at each hop. Two PHB’s have been standardized so far: the Expedited
Forwarding (EF) PHB for support of delay and jitter sensitive traffic and the Assured Forwarding (AF) set of
PHBs. The set of AF PHBs is intended to provide different levels of forwarding assurances for IP packets at a
node and to be used to support multiple priority service classes. Therefore, the core routers do not need to
maintain per flow states, but use instead scheduling and buffer management for aggregates of flows. PHBs
provide means for allocating buffer and bandwidth resources at each node among competing traffic.
While DiffServ is gaining broad support to enable “soft” QoS through prioritization of processing of traffic by
service provider routers, MPLS is being deployed in service provider networks to enable delivery of a number of
value-added services.
MPLS – Multiprotocol label switching:
The growing demand for bandwidth, and at the same time efficient bandwidth utilization and QoS support,
requires also high performance switching and routing solutions. This motivated the design of simple forwarding
methods combining traffic management features of traditional switches with routing functions, exemplified by
MPLS.
MPLS is an IETF initiative that aims at integrating Layer 2 information about network links (bandwidth,
latency, utilization) into Layer 3 (IP) in order to simplify and improve IP-packet exchange. The goal is
eventually to provide efficient switching and give flexibility to route traffic around link failures, congestion, and
bottlenecks. From a QoS standpoint, MPLS should allow to manage different kinds of data streams based on
priority and service plan. MPLS can be regarded as a technology forcing application flows into connectionoriented
paths and providing mechanisms for traffic engineering and bandwidth guarantees. To enable traffic
engineering, MPLS must be combined with technologies enabling class-specific treatment, (e.g. RSVP with
tunnelling extensions, DiffServ). A key advantage of MPLS is thus the close integration with the IP networking
stack.
Current trends consist in combining Diffserv and MPLS as defined by the DiffServ-aware MPLS traffic
engineering framework defined by the IETF (see in Section 2.2 below).
7.3.2.2.2 Control plane mechanisms
QoS signalling
The implementation of QoS mechanisms require appropriate QoS signalling protocols in different logical
planes. QoS signalling is a key component of an end-to-end QoS architecture. It is necessary to establish,
maintain, and remove reservation states in network nodes. The goal of QoS signalling protocols is to provide
packet-switched networks with a similar behaviour as in circuit-switched networks. The application must thus
signal to the network the desired service, e.g. in terms of traffic profile, bandwidth and delay requirements.
Some of these QoS signalling protocols operate in conjunction with session management protocols, e.g., SIP,
SAP, SDP, RTSP, H.323/H.245.

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QoS mechanisms in the network
The routers today already support certain QoS mechanisms such as congestion avoidance and congestion
management.
• Congestion Avoidance: Congestion avoidance mechanisms are intended to anticipate and avoid
congestion. The main strategies are tail drop and random early dropping (RED). Tail drop simply
drops an incoming packet if the output queue for the packet is full, or enqueue the packet otherwise.
The main disadvantage is possible TCP global back-up synchronization: Taildrop can drop packets
from many hosts at the same time. A RED gateway detects congestion by monitoring the average
queue size and randomly discards packets if the average queue size exceeds some lower bound so as to
notify connections of incipient congestion. The dropping probability increases with the average queue
size. RED has been shown to successfully prevent global synchronisation, to reduce packets loss ratios
for sufficient buffer size. A queue management algorithm called RIO - RED with IN and OUT – has
been defined, as an extension of RED, in order to discriminate low priority (out-of-profile) packets
from high priority (in-profile) packets in times of congestion. By supporting two RED algorithms with
different levels of dropping probability, RIO allows to perform preferential dropping of out-of-profile
packets over in-profile packets.
• Congestion Management : Congestion management mechanisms are methods implemented in core
routers in support of different classes of service. They include
- the different queues assigned to the different classes of traffic
- the algorithms for classifying incoming packets and assigning them to the different queues.
- Scheduling packets out of the various queues and preparing them for transmission.
RED is already used in routers to anticipate on possible congestion. Some congestion management mechanisms
are already available on commercialized routers, however not fully exploited in deployed networks. In addition,
extra network QoS mechanisms are under investigation (see section 2.2 below).
7.3.2.2.3 Session and application level signalling
The first problem to be addressed in the design of multimedia systems is audio and video streams establishment
and negotiation of QoS parameters. The IETF has defined the Session Initiation Protocol (SIP) as a standard
protocol used for session initiation and for negotiating its parameters in the Internet. SIP is neither a session
description protocol nor a resource reservation protocol. These functions are provided by other protocols such as
SDP and RSVP respectively SIP is an application-layer transaction “request-response” protocol designed to
establish, modify, terminate Unicast and multicast multimedia (voice and video) sessions in an IP network for a
large range of multimedia applications. The protocol has been specified by the MMUSIC WG as a proposed
standard in 1999 (IETF RFC 2543) and was updated by the SIP WG in 2002 (IETF RFC 3261).
A lot of effort has already been devoted to the interaction of SIP with the QoS mechanisms in IP networks. This
includes SIP extensions (such as SDP (Session Description Protocol)), QoS extensions and resource reservation
interactions with SIP) in order to increase QoS in SIP-based networks. One characteristic of SIP that actually
increases QoS is the ability to indicate in a SIP INVITE, via SDP (the Session Description Protocol, text-based
media description format allowing to describe multimedia sessions), which codecs are supported before a
session begins and the desired QoS.
Possible SIP applications and usage scenarios are under investigation in the Session Initiation Proposal
Investigation (SIPPING) WG. SIPPING describes the requirements for any extension to SIP (see Section 2.3).
7.3.2.2.4 Content delivery networks and content adaptation
Content delivery networks (CDN) also aim at providing added-value services, such as improved QoS, i.e., better
performance in the sense of faster response time, more efficient bandwidth utilization through caching and/or
replicating content. Better QoS support is assured via three main types of services: redirection services,
distribution services, accounting services.
A CDN can be regarded as an overlay network of strategically placed surrogate servers (or edge servers) built
upon an IP network. The surrogate servers store the frequently requested content closer to the clients. CDN are
deployed on behalf of the web site providers and can be hosted in networks of possibly different ISPs. The
goals and benefits of CDNs are, by bringing the content near network edges, to reduce bandwidth consumption,
network traffic including upstream bandwidth usage, congestion, response time, origin server load, and to
improve reliability in situations where the remote server may be unavailable. The content load is distributed
among servers close to the clients. CDN thus allow improving web performance beyond proxy caching. CDN

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allow in addition access to content that is usually un-cacheable in classical caching proxies, such as secured
content, streaming content, or dynamic content. They thus contribute to bringing value-added applications at the
edge of the network, i.e. at the backbone NAP (Network access point) or at the ISP POP (Point of Presence).
Multimedia streaming in a CDN is a difficult problem due to the significant traffic and bandwidth consumption,
the necessity for the CDN provider to ensure proper AAA for each client, and to guarantee quality for live video
or VoD for each client, according to his preferences and demands. Some current CDN service providers (listed
below) already provide streaming services, but there is yet a lot to be done on this field.
• Adero (http://www.webvisions.com)
• Akamai (http://www.akamai.com)
• Mirror Image (http://www.mirror-image.com)
• ActiVia Networks (http://www.activia.net)
The trend is to evolve from caching and replication only to more added value services such as localized and
personalized content, secure access, and content adaptation (see Section 2.4).
7.3.2.3 Issues and trends
7.3.2.3.1 Data plane mechanisms
Coding:
Notwithstanding this large number of solutions, compression at low bit rates remains a widely sought capability
for audiovisual communication over voice-band and wireless networks. However, even if compression remains a
key issue, this is not the only one that has to be taken into account. Scalability and error resilience for
transmission in heterogeneous environments with non guaranteed delivery QoS have become important features
of compression solutions for a large number of applications (see annex), even if scalability versus simulcast is
still at the core of the debates in some standardization bodies (ISO). Multiple description coding and joint
source-channel coding are solutions under investigation to minimize the impact of losses or errors on the quality
of the reconstructed signal.
3D interactive TV transforming TV watching into an immersive interactive experience with technology
capitalizing on advances in Digital TV broadcast, 3D-visualisation, image processing, and efficient
communication of rich interactive multimedia material has become an important target to create new revenues in
the broadband arena. Interactivity in this context is understood in the sense that the user can navigate within real
word audio-visual scenes and freely choose a viewpoint and/or view direction.
Transport protocols:
The RTP/RTCP protocols now used for multimedia delivery offer no delivery guarantee and have no notion of
connection. Unresponsive usage of these protocols gives rise to severe threats for the media QoS, as well as for
the network QoS. As the number of unresponsive data flows increases, congestion inside the network with its
devastative effects on multimedia delivery and interaction (large packet losses and end-to-end delays) becomes a
major concern. This has motivated the introduction of a large set of technologies specifically dedicated to the
problem of optimum end-to-end QoS support, mostly proprietary.
The desire to have a standardized way of supporting congestion control end-to-end has motivated recently the
creation of a group within the IETF called DCCP. The DCCP working group aims at defining a new protocol
called DCCP (Datagram Congestion Control Protocol), combining some of the features of UDP and TCP,
offering a choice of congestion control mechanisms without making use of some of the TCP features which are
not compatible with delay constraints. DCCP is intended for applications which have preference for delivery of
timely data over in-order delivery or reliability. Many of the applications targeted by DCCP (e.g., streaming
multimedia) currently use RTP over UDP. DCCP is intended to be a standard way to implement congestion
control and congestion control negotiation. This protocol is intended to be used by applications such as
streaming multimedia.
In infrastructures with mobile and wireless access, QoS support requires in addition the delivery technologies to
allow for high spectrum efficiency as well as robustness against errors. This has led to the creation of the
ROHC working group within the IETF and to initiatives such as UDP-Lite which should allow a more efficient
bandwidth usage. The Robust Header Compression (ROHC) working group of the IETF addresses key
requirements in existing and future mobile and wireless networks, namely spectrum efficiency and robustness
against errors. The incentive arose from links with significant error rates, long round-trip times, and bandwidth
limited capacity. The goal was to design robust and efficient header compression based upon a flexible and

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extensible framework. The ROHC WG has developed a header compression framework on top of which
various profiles can be defined for different protocol stacks, or for different compression strategies. UDP-lite is
a lightweight version of UDP. UDP-lite provides increased flexibility in the form of a partial and adaptable
checksum.
QoS mechanisms in the application layer:
Congestion control can take different forms: one finds solutions relying on bandwidth prediction mechanisms,
such as the TFRC algorithm now introduced in DCCP. The bandwidth prediction must then be coupled with
rate control performed either by a real-time encoder or by the streaming server. In streaming servers, so far,
simple strategies such as multi-rate switching are generally considered (see e.g., the windows media server).
Alternative solutions to multi-rate switching consist in making use of a scalable representation of the
multimedia signals. The specification of a scalable video coding standard is – at the time of writing - under
progress within ISO/MPEG-21.
Mechanisms – complementary to congestion control - such as loss control with possibly retransmission
schemes for delay tolerant applications, such as loss-resilient encoding techniques, are also envisaged to reduce
the impact of network congestion on the quality of the rendered signals. The transmission of encoded video and
audio data over IP-based networks causes primarily packet erasures in current network architectures. Several
techniques are in general considered to combat packet losses, i.e., to improve the apparent quality of the
transmission: forward error/erasure correction, retransmissions schemes (e.g., ARQ - Automatic repeat Request -
or a mixed of the two techniques, i.e., ARQ used in combination with forward error/erasure correction), and
interleaving. The latency that the application can tolerate is a key element in the choice of a loss control or
repair technique. The efficiency of the loss control scheme depends on the tolerable latency.
Solutions for rate-distortion optimized streaming of media packets are also studied. The streaming system
decides which packet to transmit based on the packet deadline, the channel statistics, the feedback information,
the packets inter-dependencies and the reduced distortion resulting from a correct reception and decoding of the
packet. Optimized packet schedules can be computed at the sender, the receiver or at a proxy-server on the
network edge. Buffer management on the receiver, by allowing for local caching and playback, can also
contribute to reduce the impact of network congestion on the quality of the rendered signals. Client side
buffering coupled with intelligent pre-fetching and playback provides means to “absorb” network bandwidth
varying conditions. Media data is buffered at the client to protect against playout interruptions due to packet
losses and random delays. However, while the likelihood of an interruption decreases as more data are buffered,
the latency increases. In today’s streaming technologies, buffering delays often range from 5 to 15 seconds for a
good balance between delay and playout reliability.
The implementation of end-to-end congestion control in network infrastructures with wireless access requires a
capability of differentiating losses due to network congestion from losses resulting from UDP or UDP-lite paket
discard after error detection. This is known as a loss differentiation problem.
Integrated and differentiated services:
DiffServ is gaining broad support to enable “soft” QoS through prioritization of processing of traffic by service
provider routers. However, the implementation of IntServ and DiffServ QoS models further requires the
specification of marking strategies, the deployment of active queue management, traffic classification and
shaping techniques as well as of scheduling mechanisms in the network nodes. Note that these functions act
directly upon the user data packets, hence can be classified as data logical plane functions.
7.3.2.3.2 Control plane mechanisms
The implementation of IntServ and DiffServ requires mechanisms of
• admission control e.g. in the edge nodes, which will control the traffic admitted into the network;
• QoS routing that will select a path satisfying the flow QoS requirements; This can rely on forwarding
methods combining traffic management features of traditional switches with routing functions, as in
MPLS. Efficient bandwidth utilization and QoS support require also high performance switching and
routing solutions.
• Resource reservation mechanisms.
These mechanisms act upon the paths - and their associated resources - followed by the user data but not directly
on the data itself, hence the name control plane functions. The control plane functions are usually driven by
some policies. Policies can be regarded as a set of rules defined by the provider for managing and controlling
access to network resources. They may reflect an agreement between the provider and the customer, possibly

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including QoS requirements. The policies implementation involves also management functions such as traffic
metering and service level agreements.
QoS signalling:
RSVP has been designed for QoS signalling in an IntServ architecture and not for general-purpose signalling.
However, RSVP is known to suffer from excessive transport and processing overhead, of some weaknesses in
terms of mobility. Extensions to RSVP have been defined in order to cope with these limitations and in order to
meet requirements of other applications which also require state-establishment protocols.
The problem of signalling and in particular of QoS signalling is currently being addressed by the IETF NSIS
(Next Steps In Signalling) working group. The NSIS group is in particular defining requirements as well as an
architecture and a next-generation signalling protocol. the goal is “to develop a transport layer signalling
protocol for the transport of upper layer signalling” and when doing so “to re-use, where appropriate, the
protocol mechanisms of RSVP, while at the same time simplifying it and applying a more general signalling
model.” To allow for a more general signalling protocol which could be used accommodate different services or
resources, such as NAT & firewall traversal and QoS resources, a two layer model separating the signalling
transport from the application signalling is considered. The general-purpose CASP (Cross-Application
Signalling Protocol) protocol has been proposed in this context to accommodate general signalling applications.
QoS mechanisms in the network
In order to guarantee the different services, the network must implement a certain number of functions such as
congestion avoidance and congestion management already supported in IP routers and mentioned earlier. Full
deployment of QoS strategies such as Intserv, Diffserv and MPLS also requires the development of policy
management, admission control, traffic shaping and traffic engineering strategies and technologies.
• Policy management and admission control: In IntServ, the policies to be applied to flows can be
stored in directory or policy servers. When receiving a RSVP message, the RSVP module requests the
LPM (Local Policy Module) for a decision to be taken for the request. The LPM is the module
responsible for enforcing policy driven admission control on any policy aware node. The LPM
interacts with a PEP (Policy Enforcement Point), which in turn contacts a PDP (Policy Decision Point)
with a request for a policy decision on the packet and then sends the packet to the RSVP module. The
PEP is a network device that is capable of enforcing a policy. It may be inside the source or destination
or on any node in between. The logical entity which interprets the policies pertaining to the RSVP
requests & formulates a decision is called the PDP (Policy Decision Point). PDP and PEP communicate
with a standard protocol called COPS (Common Open Policy Service). It is a request-response
protocol which relies on TCP for reliable delivery, and possibly IPSec for security.
• Traffic shaping and policing: Edge routers perform traffic conditioning and assign the DSCPs on the
basis of an SLA – Service Level Agreement – negotiated between the customer and the network
provider. The classifier reads the DSCP and/or other field (source IP, destination IP, source port,
destination port, etc.), selects and routes packets to a Traffic Conditioner (TC). The role of the traffic
conditioner is to ensure that the flows are in line with the SLA, by monitoring the temporal traffic flow
of each packet stream (meter) to see if it is within the required profile and by triggering re-marking,
dropping, or shaping, if it is out of profile.
• MPLS and traffic engineering: MPLS together with constraint-based routing can guarantee
bandwidth for a forwarding equivalence class but does not support class-based treatment of flows (i.e,
forwarding or discarding and scheduling). The DiffServ-aware MPLS traffic engineering framework
defined by the IETF aims at combining these complementary technologies in the direction of QoSenabled
networks. MPLS separates data forwarding from the control and signalling mechanisms used
for routing and label management. A variety of control and signalling mechanisms can thus be
considered for MPLS. The IETF has defined two signalling mechanisms for establishing LSPs in an
MPLS environment: LDP with some extensions, and RSVP-TE. Improved QoS through use of
mechanisms, such as DiffServ and MPLS, and the corresponding control plane mechanisms, is a key
factor behind the promise of broadband interactive business-quality IP video.

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7.3.2.3.3 Session and application level signalling
In order to provide complete services (e.g., IP telephony, IP videoconferencing, etc,…), SIP must be used in
conjunction with other IETF protocol standards, e.g.
• with RSVP which will reserve the required network resources for a given targeted/negotiated QoS, or
with the COPS (Common Open Policy Service) protocol for supporting policy control over QoS,
• with RTP (Real Time Transport Protocol) for the transport of real time data,
• with RTSP (Real Time Streaming Protocol) for controlling the delivery of streaming media,
• and with SAP (Session Advertisement Protocol) for advertising multimedia sessions via multicast.
Different types of SIP-QoS architecture are under investigation, i.e.
• either supported end-to-end with additional complexity on the terminals, the user application must be
aware of the QoS mechanisms used in the access network and the corresponding QoS signalling
protocol (e.g. RSVP, COPS, or other),
• or scenarios based on QoS aware SIP servers, i.e., which amounts to moving QoS related functions to
SIP servers that will control both call setup and resource reservation, thus relieving the terminals from
extra complexity.
7.3.2.3.4 Content delivery networks and content adaptation
The deployment of relay or caching media servers at the network edges is also among the mechanisms
considered for avoiding overload of the core network. Streaming servers are thus positioned at the edge of the
distribution network These proxy or caching servers can then fetch the requested media and serve it as if the
content was locally available. This contributes to removing the load from the central server. The architecture of
relay servers then implements what is commonly referred to as Application Layer Multicast, leading to overlay
content delivery architectures.
Content delivery networks (CDN) can be seen as overlay networks of content servers distributed geographically
to enable the end-users to have rapid and reliable access to the content. CDNs use technologies such as caching
to place replicated content close to the network edges. Load balancing can then ensure that the users are
transparently routed to the “best” server. Several practical CDN solutions already exist and are listed in Section
1.4. The trend is also to evolve from caching and replication only to more added value services such as localized
and personalized content, secure access, and content adaptation.
To cope with the growing diversity and heterogeneity of networks, devices and content consumption, the
content may need to go thru adaptation processes: transcoding, scaling, content adaptation to small devices, e.g.,
like markup language transformation for wireless devices (PDAs, cell phones), content filtering, personalization
(e.g., human language translation, modality transformation), location-aware data insertion, prioritisation, virus
scanning, ad insertion.
Content adaptation in open environments requires the definition of protocols, interfaces and syntax and
semantics for capability exchange, for specifying the adaptation requested, feasible or allowed The MPEG-21
standard and in particular MPEG-21 DIA is aiming at “enabling universal multimedia access” with interoperable
and transparent access to MM content. The ICAP (Internet Content Adaptation Protocol) protocol is a point-topoint
protocol which has been designed in support of distributing the processing load required for content
adaptation among specialized application servers, actually dedicated servers. This in turn allows to scale up the
web servers to meet the increasing demand.
Syntax and semantics to express user preferences and device capabilities have also to be specified. The
specification of the corresponding syntax and protocols is being done within the IETF ConNeg working group.
The IETF Content Negotiation working group has developed the “Media Feature Sets” standard to allow for
protocol-independent content negotiation.

7.3.3 Physical access Architectures
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The network operators are faced with the need to provide a very high bit rate access to the subscriber, and a
combination of voice data and video (including multicast and broadcast services), Common issues arise when
considering the evolution of the different legacy access technologies (with the exception of FTTH):
The point to point (XDSL) or point to multipoint architectures are very centralised for historical, economical and
operational reasons:
• Cable, terrestrial and satellite architectures were originally conceived for broadcast applications mainly,
so there was no need for very decentralised architecture with high bit rate dedicated per subscriber;
DSL architectures are based on POTS where a Central Office can feed a considerable number of
subscriber, and support distances up to 5-6 km.
• Obviously it is much more economical to reduce the number of locations were active/signal processing
equipment is present; moreover maintenance and network availability can be affected by the
decentralisation of active equipment in the network.
We can briefly mention the architectural challenges of the different infrastructures:
On the XDSL part, current architectures are point to point directly from the central office to the subscriber, and
the total capacity downstream and upstream are in the order to 1-2 Mbps downstream, and 256-500 kbps
upstream for the maximum distances. Therefore even non real time video services cannot be delivered on a
efficient way. 2 Basic kinds of upgrades are possible, which require a FTTC/B architecture:
• VDSL type of upgrade where the DSLAM function is pushed closer to the subscriber
• To reduce the length of the copper wires by digitising and multiplexing the downstream and upstream
bands at the boundary point between copper and fiber in the FTTB/C architecture.
Alternative solutions can be imagined, but they all require the upgrade to FTTB/C; The problems being to
support the “broadcast video” bit rate requirement, as several video programs can be consulted simultaneously,
and to provide the increasing upstream traffic due to peer to peer applications, and the deployment of home
servers.
Other research areas is related to storage architectures, and multicast: in order to decrease the overall traffic,
storage can be placed in different places in the network (CO, DSLAM, subscriber) and content or parts of a
content can be multicast to different storage areas in the network.
On the cable and wireless architectures the problems are similar: video broadcast and multicast can be delivered
on a cost effective way, but the unicast traffic is creating a problem. The advantage of a point to multipoint
architecture is it ability to share the overall bandwidth per channel between the subscribers, taking advantage of
statistical multiplexing, and scarse bandwidth usage. The introduction of video is significantly changing the
average bit rate provisioned per subscriber, and therefore require significant architectural modifications, the
alternatives being:
• To continue to feed coaxial or wireless cells via transparent fiber links, like it is done now, and split the
coaxial or wireless cells
• To digitise the fibre transport part of the network, and either decentralise the Access node part, or
digitise the whole upstream and downstream bands.
The same kind of issues with storage and multicast exist like in XDSL, the difference being that multicast can be
used up to the subscriber whereas multicast will stop at the DSLAM for XDSL.
In summary a lot of common areas are to be investigated for the evolution of the different access architectures,
common topics being the impact on the FTTC/B architectures, investigations of the different FTTX solutions,
network reliability, impact on network operation, multicast architectures and signalling, distributed storage
architecture and related signalling.

7.3.4 Signalling
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This section focuses on application level signaling. It is likely that a variety of signaling protocols will co-exist,
based on either centralized or decentralized paradigms. Information required for actions like session set-up,
release, control (in streaming application), session description, and security information is conveyed by these
protocols. Rather then standardizing a single protocol, the issue is more to define a unique description for this
information, so that it can be conveyed between layers and network entities. Application level signaling is being
some attention due to its ability to run on top of heterogeneous networks regardless of underlying transport
technologies.
There are a number of options for application level signaling, SIP, H.323 and MGCP being the main ones. These
options are briefly considered in this section a long with a short introduction to migrating IN and IP networks.
7.3.4.1 SIP
The Session Initiation Protocol (SIP) is an application-layer control signaling protocol for creating, modifying
and terminating sessions with one or more participants. SIP has attracted a lot of attention because of its
simplicity and ability to support rapid introduction of new services, mainly due to its URL based addressing
scheme and its support for MIME type data. There are two major architectural elements to SIP: the Server, and
the User Agent (UA). There exist three different server types, a redirect server, a proxy server, and a registrar
server. The UA resides at the SIP end station, and contains two components: a User Agent Client (UAC), which
is responsible of issuing SIP requests, and a User Agent Server (UAS), which responds to such requests. It is in
the realm of SIP where most of the discussions on IN services in VoIP networks and interoperability with legacy
SS7-IN is happening.
SIP for Telephones (SIP-T) focuses on how SIP should be used to provide ISUP transparency across PSTN-IP
interconnections. This is achieved using both translation and encapsulation of ISUP messages into SIP
messages. At SIP-ISUP gateways, SS7 ISUP messages are encapsulated within SIP. Intermediaries like proxy
servers that make routing decisions for SIP requests cannot be routed.
7.3.4.2 H.323
H.323 is not a single protocol but an umbrella covering a wide range of protocols. Initially targeted to
multimedia conferences over LANs that do not provide guaranteed quality of service QoS, ITU-T H.323 has
evolved towards the MAN and WAN environments. A typical H.323 network is composed of a number of zones
interconnected via a WAN. Each zone consists of a gatekeeper (GK), a number of terminal endpoints (TE), and
a number of multipoint control units (MCU) interconnected by a LAN or MAN. The GK is an H.323 entity
providing address translation and control access to the network for the rest of elements. The MCU is an endpoint
providing the capabilities for multipoint conferences. MGCP
7.3.4.3 MGCP
Traditionally Telecom signaling schemes have been based on a centralized model, where the intelligence and
call control stand in the network entity rather then in the communication endpoints; this paradigm has been
extended for VoIP applications with the MGCP (media Gateway Control Protocol) protocol and its variants (it is
used for example in the IPCABLECOM architecture, and called Network Control signaling). A Media gateway
controller takes care of application signaling, and transits simple commands to the user terminal. Some
extensions of MGCP could be imagined for multimedia applications, however it does not scale very well, SIP
and H323 being better alternatives.
7.3.4.4 Services, migration and interconnection to legacy networks
Today, the signaling system of choice in the telephone network is SS7. SS7 together with IN services are
providing advanced features, which are desirable in future IP based networks also. There is work in progress on
how to integrate existing signaling and IN services to other networks, mainly IP based networks.
The Services in the PSTN/IN Requesting Internet Services (spirits) Working Group of the IETF Transport Area
addresses how services supported by IP network entities can be started from IN (Intelligent Network) requests,
as well as the protocol arrangements through which PSTN can request actions to be carried out in the IP network
in response to events (IN triggers) occurring within the PSTN/IN. The SPIRITS architecture was born as a
response to a previous work called PSTN/Internet Internetworking (PINT) in support of the services initiated in
the reverse direction – from the Internet to PSTN.

7.3.5 IPv6
7.3.5.1 Introduction
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The principal benefit of IPv6, and the main reason for initial deployment, is a vastly increased address space
compared with its predecessor IPv4. IPv4 has a 32-bit address space, theoretically providing for 2 32
(approximately 4 billion) unique Internet node addresses. In contrast, IPv6 has a 128-bit address space,
providing 2 128 (2 32 x 2 32 x 2 32 x 2 32 ) unique addresses.
The fact that these addresses are unique and globally-routable is very significant. Growing numbers of popular
applications, such as file-sharing and instant messaging, are built on a peer-to-peer model that requires end
nodes to have unique, globally-routable addresses. Nodes addressed in this way are able to establish unmediated
communications with each other, between any two points on the Internet (between 'peers', hence 'peer-to-peer').
Users whose ISPs provide them with connectivity via Network Address Translation (NAT – a commonly
deployed solution to overcome IPv4 address shortages) will have difficulty in using these popular applications
precisely because they do not have unique addresses.
For some business organisations, globally-routable address space may not be important, and they may choose to
implement a privately-addressed network with NAT devices at the borders. This will be an effective solution in
the short term. However, such organisations must understand the risks inherent in this strategy. It may be
impossible to merge a privately-addressed network with another privately-addressed network, requiring instead
a complex and costly network renumbering operation. Choosing private-addressing now also closes the door to
deploying peer-to-peer applications or any other end-to-end services (e.g. IPsec) in the future 30 .
7.3.5.2 State of the art
Research relating to IPv6 has received strong emphasis from the EU, resulting in a number of interesting
projects. European IPv6 test bed initiatives include:
• 6NET (http://www.6net.org/): A native IPv6-based network connecting 16 countries in order to gain
experience of IPv6 deployment and migration from existing IPv4-based networks;
• Euro6IX (http://www.euro6ix.org/): European IPv6 Internet Exchanges Backbone. Its goal is to support
the rapid introduction of IPv6 in Europe.
• GEANT2 (http://www.geant2.net/): A pan-European research network offering native IPv6 (actually
dual stack) connectivity;
Also, important initiatives are taken in the Asian-Pacific region:
• APAN (http://apan.net/org/ipv6.htm) aims at the deployment of a gigabit native IPv6 production
service and promotes IPv6 development and applications;
• The IPv6 Deployment Field Trial in Japan (http://www.v6trans.jp/en/) is a real-life experiment for
switching to an IPv6-based Internethttp://www.v6trans.jp/en/index.html.
• CERNET2 (http://www.edu.cn/) is a nationwide academic network in China using IPv6 technology.
The most widely used IPv6 access to emerging IPv6 cores is via tunnel-broker type services. A list of such
tunnel brokers can be found at The IPv6 Portal (http://www.ec.ipv6tf.org). Examples in Europe include:
• http://tunnel.be.wanadoo.com (Belgium),
• http://www.sixxs.net (The Netherlands),
• http://tb.ipv6.btexact.com (UK),
World-wide examples include:
• http://tunnelbroker.net (USA, California),
• http://www.hexago.com (Canada),
• http://tunnelbroker.ipv6.net.au (Australia),
• http://tb.6test.edu.cn (China),
• http://www.iij.ad.jp/en/IPv6/zikken-e.html (Japan),
IPv6 remains a hot topic in European Research. Notably, in the access area IPv6 might introduce new
opportunities and services. This area is covered by the European FP6 Integrated Project MUSE 31
30 Matthew Ford (BT Exact), “IPv6: Questions Answered”, http://www.ipv6.btexact.com/tutorials/ipv6qa.html
31 Multi Service Access Everywhere (MUSE), http://www.ist-muse.org

7.3.5.3 Issues and Trends
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The IPv6 Deployment Field Trial, a real-life experiment for switching to an IPv6-based Internet in Japan 32 ,
identifies three major approaches for IPv6 Introduction in the Access Network in the MIC’s IPv6 Deployment
Guideline 33 .
RAS BAS Router
PSTN /
ISDN
Tunnel
Router
IPv4
IPv4 / IPv6
Access
ADSL /
CATV / Leased Line
FTTH
Figure 29: IPv6 over IPv4 tunnel between a tunnel router and the CPN
The first approach is depicted in Figure 29: an IPv6 over IPv4 tunnel is set up between a tunnel router and the
Customer Premises Network (CPN), without changing the existing IPv4 access system configuration.
Advantages of this approach include:
• The ability to maintain the stability of the existing access connections;
• Limit new installation costs thanks to the shared use of equipment;
• No special awareness of tunneling is required other than by the devices terminating the tunnel (one in
the CPN, one in the access network edge).
However, the use of tunneling has its own inherent issues:
• Packet transfer efficiency is worse due to the longer length of encapsulated packets;
• Decreases the MTU.
As mentioned in the previous section, this approach is already being deployed all over the world.
RAS BAS Router
PSTN /
ISDN
IPv4 IPv4 / IPv6
Access
ADSL /
CATV / Leased Line
FTTH
Figure 30: Dual stack access routers instead of the existing IPv4 access routers
A second approach, depicted in Figure 30, is to upgrade (the software of) existing access equipment to provide a
dual stack. This method enables the existing equipment to be used to implement access to an IPv6 backbone and
accommodate the existing IPv4 access.
The advantage of this approach is that it is possible to implement IPv6 access using existing equipment, thus
incurring little cost. However, a big concern is that configuring dual stack in devices that previously only
provided IPv4 access may have a negative impact on the operating stability of the existing IPv4 services.
The third and final approach is depicted in Figure 31: new IPv6 (or dual-stack) access routers are installed in
parallel with the existing IPv4 access routers. This approach allows implementing an IPv6 access connection
while maintaining the configuration and stability of the existing IPv4 access. A major drawback of this approach
32 “IPv6 Deployment Field Trial”, http://www.v6trans.jp/en/index.html
33 Ministry of Internal Affairs and Communications (MIC), Japan, “IPv6 Deployment Guideline” (draft),
http://www.v6trans.jp/en/10.html

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is of course the cost associated with installing the new equipment and managing and maintaining it in parallel
with existing equipment.
RAS BAS Router RAS BAS Router
PSTN/
ISDN
ADSL/
CATV/
FTTH
Leased
Line
Access
PSTN/
ISDN
IPv4 IPv4 / IPv6
ADSL/
CATV/
FTTH
Leased
Line
Figure 31: IPv6 (or dual stack) access routers in parallel with the existing IPv4 access routers
7.3.5.4 Gap Analysis
There are no real technical limitations preventing the large-scale introduction of IPv6 in access networks.
However, operators currently are reluctant to start offering IPv6 connectivity to their customers. Without new
applications and clear customer demand, requiring the introduction of IPv6, operators judge the financial risk of
upgrading their equipment cannot be justified.
7.3.5.5 Roadmap
Near Term
A questionnaire, distributed among European operators participating in the IST MUSE project 34 , indicates a
consensus that access devices should become IP-aware. Motivations for this approach include increased
scalability and flexibility, offloading the edge node (by performing more tasks on the access node), QoS and
service support. At the same time, more and more European operators are acquiring large IPv6 prefixes 35 :
• TeliaSonera (http://www.teliasonera.com/) 2001:2000::/20
• Cable & Wireless, Germany (http://www.cw.com/) 2001:5000::/21
• @home Benelux (http://www.home.nl/) 2001:1c00::/23
• Sunrise (http://www.sunrise.ch/) 2001:1700::/27
• Vodafone-Libertel (www.vodafone.nl/) 2001:1600::/31
• British Telecom (http://www.bt.com/) 2001:618::/32
However, there is a reluctance of introducing IPv6 in the Access without clear market demand and first
generation IP access devices will most likely be IPv4 (according to the MUSE operator questionnaire mentioned
above).
Medium Term
Once IPv6 introduction begins (within a few years, current estimates for IPv4 address exhaustion range from
2010 and beyond 36 ), IPv6 and IPv4 will co-exist for many years to come while existing IPv4-based services will
gradually being fazed out.
Long term
Eventually we’re going to a full-IPv6 Internet, where end-users receive 48-bit prefixes (Internet Architecture
Board – http://www.iab.org/ – and Internet Engineering Steering Group – http://www.ietf.org/iesg.html –
policy). This allows for arbitrarily complex customer premises networks, where network devices include
intelligent home electronics, sensors, cameras and other home security devices in addition to computers and
other multimedia devices and of course home routers.
34 Multi Service Access Everywhere (MUSE), http://www.ist-muse.org
35 John King and Matthew Ford (BT Exact), “BT & IPv6”, February 28, 2005, http://www.ipv6.btexact.com/presentations/
36 Matthew Ford (BT Exact), “IPv6: Questions Answered”, http://www.ipv6.btexact.com/tutorials/ipv6qa.html

7.3.6 Physical layer aspects
7.3.6.1 Introduction
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The physical layer, which corresponds to Layer 1 of the OSI reference model, is concerned primarily with the
representation, interpretation, processing, regeneration and transfer of signals from a source to a destination or
an intermediate system via so-called transport media according to agreed conventions. This layer can be
furthermore divided into the sublayers PHY and PMD (physical media dependent) including the physical
medium. Being the bridge between the upper OSI Layer 2 entities and PMD devices, the PHY sublayer deals
with parameters that support transmitting, receiving and managing of data including modulation, multiplexing,
and CDR. Upcoming additional functionalities are EDC and FEC. The main PMD sublayer functionalities
comprise transmitting and receiving of signals at predefined wavelengths, voltages, data rates and target
distances. Hardware to perform these tasks in the optical domain include optionally amplifiers, isolators, filters,
(de)multiplexers, dispersion compensation, directional couplers, connectors etc. In the case of e/o-conversions,
lasers, photodiodes, preamplifiers and laser drivers also are a part of the physical layer. Physical media could be
optical fibres, copper cables such as twisted pair and coaxial lines. For wireless interconnections the transport
medium is free space.
The term broadband isn’t defined very well. DSL, and wireless solutions or even ISDN are often considered to
be broadband. Indicated by several roadmaps 37 38 , and statements of various organisations, the peak link data
rate to realise truly broadband access links should be at least 100 Mb/s (symmetrical) for private customers
(already offered e.g. in Japan) and 1 to 10 Gb/s for business applications.
technical
general
Parameter Remarks
peak data rate
>100 Mb/s (private customers)
N x 1 Gb/s up to 10 Gb/s (business, WDM)
transmission distances typ. < 10 km, max. 20 km, e.g. for alternative network topologies
temperature range
controlled: + 10 °C to + 50 °C
uncontrolled operation in buildings: - 5 °C to + 85 °C
uncontrolled operation in the field: - 33 °C to + 85 °C
triple play
low capital expenditure (CAPEX) and operational expenditure (OPEX)
long lifetime
humidity and vibrations (shock) have to be considered at non-weatherprotected locations
no optical amplifiers in the field
no optical dispersion compensation
Table 10: Optical access network requirements
When building-out broadband access networks a unique set of requirements have to be considered, (Table 10).
Currently, the loop length to reach the majority of customers can vary between 2 km in Asia and 10 km in the
USA but alternative optical access network topologies (e.g. rings), which differ from the traditional star
topology, induce larger transmission distances of up to 20 km. There are also unique environmental operating
conditions. Depending on the place of installation in the field, operating temperatures can vary between – 33 °C
up to + 85 °C. The ability to deliver voice, video, and data over a common media (triple play option) as well as
low CAPEX and OPEX are also essential topics.
37 European Roadmap (http://www.ist-optimist.org/tech.asp)
38 OITDA Roadmap (http://www.oitda.or.jp/main/nl/news_letter-10.html)

7.3.6.2 State of the art / existing technologies
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Physical transport layer entities define the representation of the signal to be transported. Besides analog SCM,
simple NRZ based digital transmission is commonly used in optical access networks. To describe accurately
communication links with respect to PHY, PMD and their medial infrastructure, a multitude of additional
parameters have to be considered which specify the corresponding link transparency. P2P and P2MP are widely
implemented communication link architectures typically deployed in star type or ring topologies which may also
incorporate some form of active or passive switching/routing/splitting facilities.
Beyond ATM often used in DSL deployments, the prevalent LAN communication technology Ethernet is
becoming more popular in the access domain. In the framework of the Ethernet standardisation process IEEE
has specified a collection of PMDs, in particular the EFM task force (IEEE 802.3ah) has released viable P2P (up
to 10 km) and M2MP (up to 20 km) FTTB/P interfaces that complete legacy Fast Ethernet, Gigabit Ethernet and
10 Gb/s Ethernet solutions. IEEE task force 802.3aq (10GBase-LRM) has also begun standardisation efforts for
EDC supported transmission at 10 Gb/s. To accelerate the Ethernet progress IEEE and other standardisation
organisations including ITU, DSL Forum and Metro Ethernet Forum, currently aim at extended carrier grade
Ethernet standards to ensure reliable and manageable end-to-end communication incorporating all network
domains (LAN, Access, Metro, WAN) and for all services and media.
7.3.6.3 Active access networks (FTTCab)
Telecom providers invest currently in DSL roll-outs in order to upgrade their telephone networks. The number
of xDSL lines worldwide increased to 100m (as of 31 December 2004) including emerging ADSL2+
connections with 25 Mb/s top downstream speeds over maximum 2 km. Recently, advanced VDSL transceivers
were announced offering fibre-like speeds up to 100 Mb/s symmetrically over maximum 200 meters. Hence, to
boost the reach of broadband DSL, carriers increasingly adopt FTTN strategies characterised by running fibres
between CO and active remote cabinets that are placed close to the residential neighborhood while still using the
present twisted pair lines to connect the customers.
Another FTTN type is HFC. Here, hybrid fibre coaxial systems are used to transport signals from the cable
operators headend to remote nodes that convert these signals to radio frequency carrier signals and connect
residential customers via upgraded two-way coaxial cable networks. The number of HFC lines worldwide
increased to 50 million (as of 31 December 2004). Recently, advanced HFC systems were announced providing
up to 1 Gb/s downstream based on the wideband protocol for DOCSIS. However, insufficient upstream data
path capabilities will remain the major limitation of HFC networks.
The use of hybrid media FTTN structures is also likely in conjunction with wireless access schemes. Several
operators are trialling e.g. WiMax networks based on the fixed wireless standard 802.16d as a potential
(temporary) ADSL replacement. WiMax is expected to offer high-throughput broadband connections (shared
capacity up to 70 Mb/s) over distances up to 3-12 km or even more.
It can be concluded that FTTCab represents merely an option rather than an evolutionary step to delivering
broadband services to end users. Here, the most striking disadvantages are the need for temperature controlled
remote outside nodes and active hardware that operates reliable over extreme temperature ranges, electric power
needs (at least powering via spare copper pairs), as well as increased CAPEX (expensive and complex
hardware) and OPEX (reliability and maintenance). A compromise could be to run the fibre network to a nearby
node outside the customer premises creating a form of FTTC in combination with simple and inexpensive node
equipment. However, there is a widespread consensus that the outside plant of access networks should be
constructed preferably using passive optical components only. Key components of optical networks are fibres,
connectors/splices, filters, splitters, lasers, photodiodes and transceivers, respectively. In addition, to construct
the fibre infrastructure cost-effective installation methods are required in particular for the distribution and drop
network portion. Potentials and technical barriers to make pure optical access infrastructures mainstream and to
outperform hybrid xDSL, DOCSIS and fixed wireless outside solutions using complex cabinets will be
discussed in the following chapters.

7.3.6.4 Key components of optical access networks
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In Europe sparely existing fibre routes in the access domain are mainly composed of SSMF recommended in
ITU G.652, 39 . However, the undefined attenuation performance in the water peak region at 1383 nm restrict
signal transmission operation in this range to short haul applications. Hence, upcoming fibre implementations
should be based preferably on Z/LWPF compliant to ITU G.652d 40 enabling permanently future proof full
spectrum operation in the optical long wave range over the required distances at a maximum loss of 0.4 dB/km
and without extra costs, while providing full backward compatibility with the legacy SSMF plant. Considering
analog video signal transmission, enhanced fibre designs based on this standard are also available featuring
improved stimulated Brillouin scattering thresholds. Moreover, fibres compliant to 41 with a reduced bending
radius less than 10 mm can be applied advantageously to cut space requirements in modules and cabinets.
Installing the optical fibre infrastructure in the feeder, distribution and drop portion of an access network is a
challenging task due to technical and economical reasons. Implementation directly in the ground (direct-burial),
into ducts and aerial implementations are the cable installation techniques mainly used in practice for both
greenfield applications and to redesign legacy networks. Considering duct techniques, conventional pulled
cabling shows several disadvantages compared to blown fibre techniques that can be used to jet microducts into
old ducts even when occupied with resident cables. Furthermore, fibre bundles can be jetted into newly installed
microducts that however require some form of trenching, plowing and sewer or aerial installation to create the
initial tube network. Microduct diameters e.g. range from 16 mm for up to 120-fibre cables down to 4 mm for up
to 4-fibre cables while spliceless blowing distances can exceed 6 km. Midspan access can be applied at any
place and any time. Having implemented the initial tube network, blown fibre can be considered as a pay-asyou-grow
approach that only needs investments in optical fibres when customers request a connection.
Connectors have to be used in access network facilities where testing and configuration are required. Standard
size connectors as well as small form factor connectors may reliably deployed even in the outside plant portion
of the fibre infrastructure e.g. in outdoor cabinets and meet the demands resulting from non-weather-protected
operation. To avoid corrosion effects there is a preference for connectors with full ceramic ferrules and sleeves.
As far as splicing is concerned, fusion (mass) splicers especially designed for cost sensitive FTTx applications,
can be applied economically for both single fibres and ribbon cables that represent a viable option to facilitate
fibre management problems.
In order to set-up CWDM schemes, (de)multiplexers and OADMs based on TFF technologies are favoured due
to their maturity and excellent filter characteristics. Key performance metrics for passive components include
insertion loss, crosstalk isolation, and ambient temperature. The insertion loss of a multiplexer-demultiplexer
combination may be maximum 3.5 dB for 16 channels. The crosstalk figure is better than -28 dB and quite
sufficient for system applications but can be improved using a more complex filter design if necessary. CWDM
standard OADMs have the tendency of generating unwanted passband ranges typically 150 nm to 200 nm away
from their specific bandpass frequency. Hence, for full spectrum operation, ultrablocking filters are increasingly
available featuring low transmittance outside their passband area. However, further progress has to be made with
respect to thermal stability because most filter modules do not perform over the extended temperature range but,
it is expected that packaging technologies will advance quickly on demand.
Compact uncooled transmission modules are becoming increasingly important considering cost-effective access
network implementations. PMD entities for use in line cards and network terminations (ONU, ONT) are often
arranged in the form of transceivers implemented in preferably compact modules. MSA based small-form-factor
pluggable (SFP) is the most compact form factor specified for transceivers enabling a simple installation
procedure. Modules are offered that incorporate different kinds of photo diodes (PIN, APD) and lasers (DFB,
FP) providing optical power budgets up to 30 dB enough to span some tens of kilometres, and speeds up to
2.7 Gb/s for standard applications and up to 4 Gb/s e.g. or use in storage area networks. First modules are
designed to work in uncontrolled temperature extremes of - 33 °C to + 85 °C and recently transceivers became
available that extend the SFP modules to accommodate cooling entities needed for DWDM operation. In any
case, the SFP design incorporates only PMD functionalities while PHY oriented devices have to be arranged
externally on optical line cards. Additionally, various types of MSA compliant 10 Gb/s transceivers have been
introduced that operate over a wide range of link distances in accordance with IEEE 802.3ae via serial optical
links and, incorporating CWDM miniature (de)multiplexers, via four different lanes working at 3.125 Gb/s in
the 1300 nm region to mitigate transmission impairments 42 . Some PHY functionalities are incorporated in the
39
ITU-T Recommendation G. 652, Characteristics of a single-mode optical fibre and cable
40
ITU-T Recommendation G. 652, Characteristics of a single-mode optical fibre and cable, Table D
41
IEC 60793-2-50 Annex G
42
IEEE Standard 802.3.ae-2002, 10GBASE-LX4

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designs, including EDC as low-cost alternative to the CWDM solution. The most compact XFP module likely
have to compete with SFP modules that are expected to provide also 10 Gb/s interfaces in the long run.
Due to their poor spectral characteristics the deployment of low-cost FP type lasers is almost restricted to simple
short-haul transport systems. Up to now, inherently more expensive uncooled DFB type DMLs are the
workhorse for intermediate reach applications in particular for CWDM systems. Here, low cost 10 Gb/s DML
recently became available. However, to mitigate high-rate transmission impairments at longer wavelength
associated with the chirp behaviour of directly modulated DFB lasers, more advanced, dispersion tolerant lasers
e.g. FGL may be needed. In order to span access network distances long wavelength range VCSEL may become
a cost-effective alternative light source since current technological issues including single mode output power,
temperature dependency, reliability and manufacturability can be overcome.
7.3.6.5 Optical access networks with passive outside plant
Home run is the most straightforward passive approach using dedicated fibres between CO and each customer
for both transfer directions. Thus, signal transparency is not restricted to any parameter important for simple data
transmission, including upgrade capabilities up to 10 Gb/s. However, despite the availability of very low-cost
transceivers and media converters, this high fibre count approach involves massive fibre infrastructure
investments and may imply severe fibre management problems in particular in the feeder segment of access
networks.
Different multiplexing techniques are expected to provide cost savings to the optical infrastructure by
simplifying the fibre infrastructure due to a reduced number of needed fibres, connectors, splices etc., however,
at the expense of higher performance transceivers and additional signal processing devices in the transmission
path. BWDM and CWDM are currently the most important WDM schemes in access networks.
BWDM uses only a single strand of fibre per customer to accommodate bidirectional up and down traffic using
either widely spaced wavelengths or even the same wavelength. Signal separation can be implemented without
adding expensive optical multiplexers resulting in marginally more expensive transceiver modules vs. single
channel operation. 10 Gb/s upgrade potentials are dependent on the realised wavelength regime. Generally, this
concept reduces system costs, doubles capacity per fibre, and simplifies fibre management efforts.
CWDM compliant with ITU G.671 is another promising WDM scheme enabling a more efficient utilization of
the fibre bandwidth. ITU G.694.2 defines a CWDM wavelengths grid 43 that covers 18 wavelengths over the
entire optical spectrum between 1270 nm and 1610 nm with 20 nm channel spacing. Additionally, CWDM
applications 44 are described in the ITU recommendation G.695. CWDM is a highly transparent, protocol
agnostic WDM scheme designed for use with uncooled DMLs. Components are increasingly available for full
spectrum operation. For reference purposes, a simple power budget associated with a straightforward 16 channel
Mux
Transmitter Receiver
20 km ZWPF
Demux
20 km ZWPF... .. 8.0 dB
4 connectors.... . 2.0 dB
10 splices ....... .. 1.0 dB
DeMux combin.
16 ch. TFF.......... 3.5 dB
Margin................ 2.5 dB
Total..................17.0 dB
Figure 32: Schematic of a straightforward CWDM system and assumed typical values for loss and margin. Due
to the passive nature of the involved optics this system may be also operated bidirectionally
CWDM system using ZWPF and TFF (de)multiplexers is shown in Figure 32. Assuming a receiver sensitivity
of – 23 dBm (BER of 10 -10 @ 1.25 Gb/s), a laser output power of minimum – 6 dBm is needed that
corresponds very well even with modest DFB laser capabilities.
Switched Ethernet is another P2P option mainly used for FTTP applications that ensures a dedicated bandwidth
to each switching node. Here, a single fibre strand interconnects the CO and an aggregation Ethernet access
switch located in the basement of MDUs or MTUs that provides the connectivity to the end users.
43 ITU-T Recommendation G. 694.2 “Spectral Grids for WDM Applications: CWDM Wavelength Grid”, June 2002
44 ITU-T Recommendation G.695, Optical Interfaces for Coarse Wavelength Division Multiplexing

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PONs are P2MP options for FTTP applications employing mostly a common feeder fibre along with a passive
single or cascaded signal splitter in a nearby location outside the customer premises and individual fibres to
connect the customers. In order to compete with cable operators, triplexer transceivers can be incorporated in the
system to provide cable TV services at a dedicated additional wavelength. Important characteristics of this
approach include: No need for electrical power at the remote node, transport capacity typically shared among up
to 16 to 32 subscribers, infrastructure adjustments in the future when customer bandwidth demand grows,
optical power is splitted with the same ratio, access management protocols have to be deployed to avoid
collisions of upstream data coming from multiple customers, due to the shared media operation more expensive
burst mode transceivers are required. Moreover, due to the underlying PON principle, line rate upgrades towards
10 Gb/s are a very ambitious task.
7.3.6.6 Issues and trends: Technical / socio economic and gap analysis
• ROADM and tunable lasers are being developed to improve protection switching and provisioning
capabilities of currently fixed access networks.
• Advances are needed with respect to performance, packaging, higher integration level. In order to
lower the costs and to increase the reliability there is the trend to integrate multiple components
monolithically on a chip or hybridly on an optical bench.
• Inexpensive10 Gb/s short-haul links are becoming increasingly vital for both corporate backbone and
access networks. Chromatic dispersion in the longer wavelength range in conjunction with the chirp
characteristics of DMLs restrict the maximum transmission distance to a few kilometres. 10 Gb/s
upgrading schemes to extend the system reach exploit among others:
• Advanced laser types such as FGL
• WDM based transport, e.g. 4 x 3.125 Gb/s in particular to upgrade CWDM channels
• EML e.g. modulator monolithically integrated with laser
• EDC (also in combination with FEC) for SSMF 45
• Optical filtering of DML signals
• Ethernet-based broadband access network architectures can also use ring topologies 46 .
• Remodulation techniques are being investigated to avoid local generation and stabilisation of light and
to provide for universal ONUs at the customer premises 47
• Systems with spectrum-sliced technologies to enable universal wavelength-independent ONUs that
creates the upstream optical signal by modulating a super-luminescent diode 48
• Bidirectional single-fibre transmission in particular in combination with CWDM using nominal
identical wavelengths for up and downstream signal transport.
• Long-reach PONs aimed at thinning out COs.
7.3.6.7 Gap discussion
In general, costs and maturity of currently available optical components make it economically justifiable to
deploy optical technologies in access networks. Moreover, widespread FTTx deployments in the future will
drastically decline CAPEX. However, to accelerate large scale FTTx implementations further R&D is needed.
Current topics include: P2P Ethernet standard 20 km, FEC in combination with EDC and bidirectional data
transport 49 , Ethernet over CWDM, TFF with extended operating temperature range, less expensive CWDM
transceivers for access network applications, fibre management solutions to solve efficiently high fibre count
problems in the feeder network and in COs, simple but reliable and cost-effective outdoor nodes for FTTC
applications, indoor extension of fibre access networks.
The lack of a political vision in Europe seems to be the most important obstacle to faster FTTx deployments,
much more than costs and technical shortcomings 50 .
45
P. J. Winzer et al.: 10 Gb/s upgrade of bidirectional CWDM systems using electronic equalisation and FEC, Journal of Lightwave
Technology, Vol. 23, No. 1, pp 203-210, 2005
46
J. Grubor et al.: Protected ring network for future optical access domain, NOC 2004, pp 106-113
47
J. Prat et al.: Optical Network Unit Based on a Bidirectional Reflective Semiconductor Optical Amplifier for Fiber-to-the-Home
Networks, IEEE Photonics Technology Letters, VOL. 17, NO.1, 2005, pp. 250 – 252.
48
K. Akimoto et al.: Gigabit WDM-PON system using spectrum-slicing technologies, ECOC 2003, Th2.4.6
49
K.-D. Langer et al.: CWDM access network and prospects for introduction of full-duplex wavelength channels, Proc. NOC 2005,
London, July 2005
50
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Additionally, keys to faster FTTx deployments in Europe comprise a corresponding legislation, the removal of
regulatory uncertainties and the creation of authorities responsible for long-term strategy, coordination and
management issues of broadband networks including interfaces to customer premises networks and metro
networks.
7.3.6.8 Roadmap
In particular near and medium term activities need both regulatory and technical steps.
Near Term
In a first step there is need to remove barriers for large network roll-outs in the access network domain, 51 . Some
critical topics are:
• Creation of an adequate political vision
• Regulation to offer incentives and to protect investments in fibre networks, and in particular to involve
incumbent operators
• Deregulation with respect to competition on FTTx
• R&D to further push the usage of optical technologies
Medium Term
In a second step creation of fibre infrastructures for FTTx is required and start of convergence with fixed part of
mobile networks.
• Open network approach should be preferred in order to coordinate civil works, promotion of fibre
provision by governments, operator owned networks
• To use present public funds and to create new ones if necessary
• Introduction of fibre in the feeder area between COs and remote nodes (cable cabinets) to enable a wide
range of broadband first/ last metres technologies
• Use of present network nodes which offer power supply (e.g. radio base stations)
• Introduction of remote nodes containing active electronics if necessary to a certain extent
• Deployment of micro ducts in the whole access network domain wherever digging up sidewalks
• Installation of FTTB, FTTH/ P on demand
Long Term
The long term development is expected to optimize access network infrastructure and migrating towards an
integrated network serving as both broadband access network and backbone of mobile systems.
• Introduction of FTTB/ H/ P as standard broadband access technology
• Extension of passive optical network technology while reducing/ limiting number of active remote
nodes to limit total power dissipation in the access network domain
• Meshing of remote nodes by fibre links
51 FTTH Council Europe conference "Europe at the Speed of Light", Hand-outs, Amsterdam, February 2005

7.3.7 Disturbance in PLC, Cable and DSL access networks
7.3.7.1 State of the art
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Ingress noise
Ingress is defined as frequency selective impairment in contrast with Impulse noise, and can be categorised as
follows:
• Narrowband Ingress injected in the network itself: the major causes are identified as being AM shortwave,
amateur band, maritime radio transmission; the amplitude of the injected Ingress vary during the
day according to the propagation condition; this slow amplitude variation can be significant
• Location specific interference: electronic equipment in the subscriber premise can inject a high level of
Ingress into the network
Ingress noise characterisation work has taken place in the European ACTS project Interact, and some results are
52 53
available
Impulse noise
Impulse noise is known to be the most degrading factor in Digital Subscriber Line (xDSL) technologies. It is a
non-stationary crosstalk issued from temporary electromagnetic events in the vicinity of telephone lines. Induced
voltage can be as high as 100 mV and typically lasts from 10 to 100 microseconds. In cable networks, they are
of shorter duration, as high pass filtered by the network itself.
Since the 60's, efforts have been made in order to understand and model impulse noise on copper pairs 54 .
One of the well-known models is a representative single pulse, also named 'Cook Pulse' 55 , especially used for
modelling purposes in the HDSL transmission bandwidth. Unfortunately, such a representative pulse is not able
to describe the statistical properties of the noise.
A large amount of work has been done in the late eighties, beginning of the nineties, in the frame of the ADSL
introduction on subscriber loops. To our best knowledge, the most complete measurement campaign and the
resulting analytical model of impulse noise statistics has been published by Deutsche Telekom workers in
1993/94 56 57 58 . They carried out an extensive measuring campaign at central offices in a 4.25 MHz bandwidth. It
led to an impulse noise model incorporating the mean Power Spectral Density (PSD), the phase properties as
well as the analytical statistics of inter-arrival times, lengths and amplitudes. This statistical model is actually
used by several teams as an reliable impulse noise generator.
New work (measurement and simulation methods of impulse noise) as been recently realised, mainly in the
frame of the SDSL & VDSL normalisation process (cf. documents of the TM6 working group of ETSI). The
University of Edinburgh was involved due to their participation in British Telecom lines measurement
campaign.
Finally, the two models (DT & BT) of impulse noise have merged in a joint publication59 .
In HFC networks, there is no model available. Proposition of measurements have been
done60 61 62 in the literature. This is an interesting point to work on.
52 ème
"Impact of Ingress Noise on the Communication on Hybrid Fibre-Coax Networks", E. Claus, K. Haelvoet, L. Martens, Actes de la 54
conférence ARTFG, pp. 16-20
53
‘Characterization of multiple interference impairing CATV networks return path transmission’, V. Moeyaert, L. Robette, J.C. Froidure,
J. Hanoteau, M. Blondel, CD-Rom OSEE (Online Symposium fo Electronics Engineers), Internet, octobre 2000, disponible à l'adresse :
http://www.techonline.com/community/home/13645
54
"A theory of impulse noise in telephone networks", R. M. Fano, IEEE Trans. Comm. COM-25 (6), June 1977, pp. 577-588
55
"Wideband impulsive noise survey of the access network", J. Cook, BT Technical Journal, vol. 11 (3), 1993, pp 155-162
56
"A Wideband Impulsive Noise Survey in the German Telephone Network: Statistical Description and Modeling", W. Henkel and T.
Keßler, Archiv fur Elektronik und Uebertragungstechnik, vol. 48, n° 6, 1994, pp 277-288
57
"A Wideband Impulsive Noise Survey on Subscriber Lines and Inter-Office Trunks –Modeling and Simulation", W. Henkel, T. Kessler,
H. Y. Chung, IEEE Global Communications Conference, 1995, pp. 82-86
58
"Statistical description and modelling of impulsive noise on the German telephone network", W. Henkel, T. Kessler, Electronics Letters,
Vol. 30, n°12, 1994, pp. 935-936
59
"Impulse Generation With Appropriate amplitude, Length, Inter-Arrival, and Spectral Characteristics", I. Mann, S. McLaughlin, W.
Henkel, R. Kirlby, T. Kessler, IEEE Journal on Selected Areas in Communications, vol.20, n°5, June 2002, pp. 901-912
60
"Ingress and impulse noise measurements on hybrid fiber-coax (HFC) networks", J. Vandenbruaene, E. Claus, L. Martens, B. Merchie,
J. Haspeslagh, P. Gabriel, Communications Cables and Related Technologies, 1998, pp. 425-431
61 ème
"Impact of Ingress Noise on the Communication on Hybrid Fibre-Coax Networks", E. claus, K. Halvoet, L. Martens, Actes de la 54
conférence ARTFG, pp. 16-20

7.3.7.2 Issues and trends / Gap analysis
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The requirement to transport much higher bit rates per subscriber upstream and downstream introduce new
challenges for physical layers:
• On point to point networks the problem is generally to optimise the channel capacity in a very hostile
environment, like PLC and XDSL, while respecting the EMC environmental constraints; moreover if
high peak bit rates are intended, a much higher channel capacity has to be planned
• For point to multipoint networks the same constraints exist, but much higher aggregated bit rates have
to be transported to take advantage of traffic statistical multiplexing.
The XDSL, PLC and cable channel models are different in some aspects like the frequency response. However
common work would be beneficial on:
• The analysis of impairments in the low frequency bands, which are common to the 3 medias
• The set-up of common measurement methods for these impairments
• The definition and simulation of physical layers, as the impairments will have a major influence in
determining the appropriate physical layer characteristics
• Dynamic spectrum management; as the channel and impairment situation is rapidly changing, there is a
need to adapt dynamically the physical layer to the channel situation, and therefore to make long and
short term analysis of the channel; therefore common techniques of measurement and analysis can be
found.
62 "Procedure for Measurement and Characterization of Upstream Channel Noise in CATV Networks", K. Haelvoet, D. De Bal, B.
Vanlandschoot, L. Martens, Actes de la 49 ème conférence ARTFG, 1998, pp. 19-23

7.4 CORE AND METRO
7.4.1 Optical Network - The interface between network segments
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Further in this document we present the vision and roadmap for the backbone and metro segments of the
broadband network. Both visions hold the view that an important part of network development is to remove
layers of the protocol stack as this reduces both capital and operating cost by simplifying the equipment.
There appears to be a potential divergence in the nature of the protocols underlying the different parts of the
network, or even perhaps between different peer segments of the network with different owners. In very
simplified terms the backbone network community tends to have originated in the telecoms sector, whereas the
metro community comes from the computer network sector. Both have good reasons for their visions but a
strong divergence is undesirable because the gains made in reducing the protocol stack within each network
segment will be offset by the need to introduce equipment to condition traffic at the interfaces between
segments.
Currently the pervasiveness of the SDH/SONET solution obviates the need for this conditioning with the traffic
being assembled into frames at the access interface of the network. Both groups see SDH/SONET dominating in
the short term; albeit with migration towards enhanced functionality through NG-SDH, however in the longer
term both see SDH/SONET being replaced by other transport and management solutions.
Migration is also an issue in this with different parts of the network changing at different times. Identification of
methods of managing this to avoid unnecessary conditioning equipment is also likely to pay dividends.
Bread is in an ideal position to bestride the two viewpoints and to develop a synergistic vision, which can then
be disseminated to influence development. It is therefore proposed that, during the time left within the Bread
project, we try to develop a holistic view of the vision and roadmap for the overall network which is satisfactory
to both groups.
7.4.2 Optical metro/CWDM
7.4.2.1 Introduction: description
The “Broadband for All” concept emerges as a substantial element of the Ambient Intelligence scenario: In the
future environment people will be surrounded and supported by a network structure, which will support all their
communication needs. Ambient intelligence requires the embedding of technology in natural surrounding such
as buildings, providing constant access to a variety of services such as entertainment, personal communications,
tele-education, etc. The Photonic Network, in conjunction with control software, provides an intelligent
network, which can interconnect the ambient intelligent environment with large data and computing resources.
The Metropolitan Area Network (MAN) lies in between two dominant networking domains, namely the
access network and the backbone. It must respond to the dynamic of the ever-increasing long-haul bandwidth
while addressing the growing connectivity of the access infrastructure. The Metro Access Network is spread
over distances of tens of kilometers while the Metro Core Network can reach up to 200 to 300km. Both include
numerous nodes in order to supply the connectivity demanded by the internal and through traffic of the
structure. Confronted to the expansion of access solutions (wireless, xDSL, FTTx,…) and to the backbone huge
transmission capacity, the MAN lies in the center of the operators and vendors interests. CAPital and
OPerational EXpenditure (CAPEX and OPEX) considerations for the overall network (at installation and over
the years) is strongly related to a proper design (in terms of architecture, protocols, subsystems and components)
of this network key element.
Telecommunication traffic has experienced a mutation from a “voice centric” structure towards a “data
centric” one supporting internet. In the MAN, traffic is growing rapidly due to the broadband penetration and
the deployment of regional content servers (video (VoD), storage networks (SAN)). In the next few years, this
traffic enhancement is bound to follow an ever-increasing expansion rate following the fast evolution of the
access technology.
The evolution of optical transmission technologies in the 1990’s and early 2000’s have delivered a huge
capacity for long-haul data transmission and created a very strong commercial incentive towards traffic
enhancement in order to justify capital expenditure. In addition, the present emphasis on metropolitan network
results from an evolution of traffic going from a majority of long distance interchanges towards a very dense
local (metropolitan) traffic.

OADM
WAN
H Hub
CPN/E CPN/E
Figure 33: Metro core and access networks
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WDM
Metro Core Ring
50 - 200 km circ.
WDM
Metro Access Rings
10 - 50 km circ.
The metropolitan network is presently structured according to a strong legacy and is generally subdivided into
the Metro access network and the Metro core network A metropolitan network must accommodate very varied
applications (voice, video, internet), must collect traffic from diverse access sources and technologies (LANs,
PONs, Wireless, Hybrid fibre-coax) and must provide adequate quality-of-service, reliability or security level.
Network nodes at the edges of the metro network should perform traffic aggregation to improve the efficiency of
the transport network by combining the low bit-rate access signals into a high bit-rate wavelength channel.
Moreover, the network must support bandwidth provisioning with various levels of granularity. This very vast
heterogeneity produces a strong demand on the network performance.
Worldwide optical network hardware market revenue hits $2.18 billion in 3Q04, with slow growth projected to
2007, according to Infonetics Research’s quarterly worldwide market share and forecast report. Furthermore,
worldwide metro WDM revenue hits $294 million in 2Q04, and is projected to grow 32% by 3Q05, and just
under $2billion by 2007.
7.4.2.2 The vision
The metropolitan network represents a keystone in the evolution toward a data-centric network. The wide area
network has been the great benefactor of the 1990’s optical telecommunication development exhibiting point-topoint
impressive performances thanks to WDM technology. On the other hand, local traffic and access solutions
have boomed following the development of internet services, both for home or business applications. (e.g. more
peer-to-peer type of networking, access to content servers (such as video (VoD)). Storage area networks (SAN)
and disaster recovery are viewed as a major demand for future metropolitan network requiring secured transfers
of huge quantities of information. The MAN must provide a very high connectivity, with numerous nodes of
very high capacity. Clearly, optical technology and networking is the only solution for providing such a
service at the metro level. In a near future, metro architecture will have to deal with fibre link carrying 100 to
1000 optical 2.5/10 and possibly 40 Gb/s signal requiring Tb/s Add&Drop capacity.
Because of mission critical applications, only the so-called carrier grade MANs are acceptable. Carrier Grade
mainly means high reliability/availability (>99.999) and QoS differentiation.
Today, Synchronous Digital Hierarchy/Synchronous Optical Network (SDH/SONET) remains the dominant
transmission technology in the metropolitan area network. It has been the foundation for the MANs over the
last decade, serving as the fundamental transport layer both for TDM-based circuit switched network and most
overlay data networks. SONET/SDH has evolved into a very resilient technology. The necessity for data
transmission has resulted in superposing protocols in order to allow for internet packet based architecture to fit
into the SDH format physically transported over a WDM optical layer. (IP over ATM over SDH over WDM).
SDH is fairly expensive to implement. The position of SONET/SDH into the metro domain is thus strongly
supported by the necessity of supporting legacy. SDH also remains very attractive thanks to its ability to
support advanced services such as QoS, priority control… However, the circuit switching oriented protocol is
rather inefficient and expensive when confronted to data transport. The evolution of SDH toward the Next
Generation SDH (NG-SDH) is the major issue.
On the other side, coming from the local area network world, the Ethernet protocol spreads towards the MANs.
The question here is whether the evolution of Ethernet will offer the reliability and quality of service of SDH
and support traffic over long distances. MAC protocols dedicated to packet transport (GMPLS) is under study.

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The resilient packet ring concept (RPR) offers an interesting mean of interfacing Ethernet technology with the
metro domain.
On the physical layer, the introduction of enhanced WDM service in the networking architecture requires
development of new optical functionalities such as Optical Add&Drop Multiplexers (OADM) to allow the
routing of wavelength channels to and from particular access nodes, and to the WAN network. Initially these
OADMs will be fixed in relation to the wavelength channels added and dropped. They will eventually move
towards dynamically reconfigurable OADMs, which allow much greater routing flexibility. For MANs with
many fibres in the ring-topology, (the likely topology in the near term), Optical cross-Connects (OXC) may be
necessary, if full flexibility of add-drop and fibre switching is required. The technologies associated with
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concentrating on packet services. The most prominent E-MAN architecture is the Resilient Packet Ring (RPR).
The RPR is intended to be a carrier grade solution supporting QoS differentiation and fast protection switching.
Finally, Optical packet switching can offer the desired flexible and bandwidth efficient architecture desired
since it provides smaller granularity to the optical layer allowing a high degree of statistical multiplexing.
7.4.2.4 Network architecture - Technical issues and roadmap
Protection: The carrier-grade reliability (the famous > 99.999 % availability or < 6 minutes average down time
per year) can only be achieved by redundancy. The fibre facility between sites is considered the least reliable
component in the system. In ring networks, immunity against link failures is relatively simple. Mesh networks
are more complex to organize for resilience.
Transparency: Fixed or circuit switched wavelength channels are protocol agnostic by nature. This allows
carriers to offer cost effective protocol-transparent wavelength services and to generate in this way new
revenues.
Support of provisioning: 3 rd generation WDM technology with dynamically (re)configurable add/drop or cross
connects – after WDM point-to-point transmission (1 st gen.) and fixed add/drop or cross connects (2 nd gen.) -
plays an important role regarding provisioning. Together with software intelligence, it allows automated
provisioning, a big step in reducing the OPEX.
7.4.2.4.1 Metro Ethernet
The low cost and ubiquity are the main argument for making the Ethernet solution attractive. The present
question is whether Ethernet can be utilized as a direct transport protocol or remains supported on a
SDH/SONET transport layer. Worldwide Metro Ethernet equipment revenue totalled $3 billion in 2003, and is
projected to grow 157% to $7.7 billion in 2007. The new generation of Ethernet 10GbE will lead a further
penetration. A 100Gigabit Metro Ethernet is already envisaged. The recognized weakness of Ethernet is its
inability to provide network management. Ethernet operation, administration and maintenance (OAM) is not up
to the job of enabling or supporting a large-scale carrier network, resulting in a end-to-end OAM facilities
provided by an underlying transport mechanism such as NG-SDH. In addition, Metro Ethernet needs to support
ring and mesh topologies. This demand is addresses via new concepts such as resilient packet ring (RPR), and
MPLS (or G(eneralized)MPLS) for QoS and differentiated service provisioning.
λ DS1/DS3
OC-x
10/100
GbE
ATM/
STM-x
IP/ATM
IP/MPLS
over SDH
IP
(Router)
Ethernet ATM (X) MPLS XXX
(NG) SDH (X Matrix)
XXXX
YYYY
Optical/DW DM/OADM 2 nd/3 rd Generation
Optical M ulti-service Platform (OM P) using (NG)
SDH for sub-wavelength multiplexing
Figure 4
Platform types
7.4.2.4.2 Circuit burst, Packet switching
λ
10/100
GbE
OC-3..48
STM-1..16
ESCOM
(SAN)
Ethernet SDH ESCON FICON
FICON
(SAN)
Optical/DWDM/OADM 2 nd Generation
Cable
Video
(CATV)
Cable
Video
Optical Platform with m ulti-service wavelength
channel interfaces (OP)
• mapping of services directly into wavelengths
• conceptual sim ple solution
• can be inefficient use of bandeidth
Figure 35: Platform type and evolution
The development of network technology and node architecture represents a major aspect for the design of the
MAN. Present solutions rely mainly on opaque electronic switching element supported on the ETDM
SDH/SONET layering. Some circuit architectures are elaborated on the WDM layer by the use of OADM and
OXC working on a wavelength basic granularity (or potentially waveband granularity). The node capacity and
the network flexibility will be largely enhanced by the usage of wavelength agile elements allowing dynamic
wavelength allocation at each node. Optical burst and packet switching would offer a much greater switching
and band usage efficiency. Optical nodes for that type of switching required new characteristics.

7.4.2.4.3 Roadmap summary
The following figure summarizes the roadmap for the network architecture 63
Figure 36: MAN network key issues
7.4.2.5 Enabling technologies – Technical issues and roadmap
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7.4.2.5.1 CWDM/DWDM and OTDM
In metro networks, the increasing demand for higher capacities is met by higher data rates and by increased
spectral density. Coarse Wavelength Division multiplexing (CWDM) [ITU-T G694.2] systems are considered
a cheaper alternative to D(ense)WDM systems and are becoming increasingly important for metro, access, and
cable TV systems where, closer to the end-user, low first-cost economics is the primary issue. The CWDM
channel spacing of 20nm (0.8 nm in DWDM) takes advantage of low cost uncooled distributed feed back lasers
and less stringent Mux/Demux components. The relaxed performance specifications and packaging constraints
enable a 35% to 40% equipment cost savings The whole low attenuation window from 1,2µm to 1,6µm (app.
60nm) can be filled using cheap un-colled lasers/transponders. However, broadband amplification over such a
wide bandwidth is not presently available. Full-spectrum CWDM, unrepeatered transmission using sixteen 2.5-
Gb/s, 20-nm-spaced directly modulated lasers (DMLs) at wavelengths between 1310 nm and 1610 nm has been
demonstrated over 75 km. The losses, the number of channels and channel bit rate limit the attainable system
reach. A significant improvement in transmission distance requires broadband amplification, which is
impossible with EDFAs and impractical with Raman amplification. Semiconductor optical amplifiers are
inexpensive devices for metro applications. Due to the wide channel spacing, a full-spectrum CWDM system
operating at 2.5-Gb/s line rate is limited to 16 channels with 40-Gb/s total transmission capacity. One approach
to increase the capacity is the migration to recently available 10-Gb/s uncooled DMLs.
The main increase in transmission capacity is achieved by the substitution of the 1550-nm CWDM channel with
a DWDM subband. Channel counts up to 15 can be obtained with temperature stabilized DMLs and integrated
lasers electro-absorption-modulators. Dispersion compensation (using dispersion compensating modules or
properly engineered optical fibres) can be introduced for the DWDM channels at the respective multiplexer port
to relax the requirements for new 10Gb/s DMLs in the additional DWDM band. Filter concatenation-induced
distortion may become a severe problem in transmission.
Further increase of the single channel bit rate can be envisaged through Optical Time Division Multiplexing
(OTDM). The demand on the electronic speed is transferred onto the optical technology:: short pulse lasers,
synchronization, OTD-demux. Optical signal processing (OADM, OXC, Label intelligence) is implemented on
a very different basis on OTDM support.
63 after [IST-Optimist, key issue 2004]: www.ist-optimist.org

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7.4.2.5.2 Transmiters (Tx) and receiver (Rx) modules.
Thanks to the standardization of 10 Gb/s data link interfaces, such as 10-Gigabit Ethernet or SONET OC-
192/SDH STM-64 , and several recent Multi-Source Agreements (MSAs) between vendors to design a common
Tx/Rx modules packaging technology, several solutions would exist to drastically reduce the cost of 10 Gb/s
transceivers/transponders dealing with the evolution of Metro Access Network. Among the different MSA
transceiver types, the XFP (small form factor pluggable) transceiver is the most promising. It supports all the
10G format protocols via a serial electrical interface. The optical part of XFP transceivers contains a 10 Gb/s
Transmitter (laser source) and Receiver (photodiode) mounted on a low cost Optical Sub-Assembly (TOSAs and
ROSAs respectively). Many constructors are pushing the performances of XFP transceivers towards longer
reach (40, 80 km) and with wavelength stability compliant with DWDM applications. 1,55 µm TOSA based on
monolithic integration of Electro-Absorption modulator (EAM) and DFB laser are the key component to meet
these specifications. Finally, at longer term, the upgrading up to 40 Gb/s would increase the channel capacity.
Although 40 Gb/s integrated laser–modulator are not ready for XFP packages.
7.4.2.5.3 Tuneable sources
The wavelength tuneable light source is a key component for multiplexing, routing, conversion, dynamic
provisioning and reallocation, protection and management of the WDM network, as well as for solving
inventory problems. It may simply be a hot-swappable laser array, which may have switching times in the
nanosecond range. The electronically tuned multi-electrode laser, e.g. based on sampled gratings, is more cost
effective, but has presently a switching time of the order of 1µs and a tuning range of less than 100 nm.
7.4.2.5.4 Roadmap summary for systems and components
The following figure summarizes the roadmap element for the optical systems and components 64
7.4.2.6 Summary
Figure 37: Key issues for the photonic systems and components for the MAN
The metropolitan area network presently represents a major interest for operators and equipment
manufacturers. It holds a strategic position at the junction between the long haul network and the access nodes.
Triple play, Video-on-Demand, gaming, Storage Area Networks are some of the applications that will drive the
predictively fast demand for a resilient, packet oriented, carrier grade metro network. The IP/ATM/SDH legacy
needs to evolve toward a reduction of the protocol tack and a more efficient statistical multiplexing. Innovation
includes the new-generation SDH protocol and the introduction of Ethernet solution (10GbE) (originally
dedicated to Local networks) into the MAN (often via RPR). Long-term evolution foresees the introduction of
packet switching directly in the optical domains. Presently, the cost reduction required for the MAN is obtained
in the physical layer by the development of Coarse WDM using un-cooled sources and normalized packaged
transceivers/receivers. Capacity and reach enhancements relies on development of low cost high bit rate
transmitters (10 Gb/s DML or 40 Gb/s ILM) compatible with CWDM then DWDM. Wavelength agility
represents an important longer-term requirement for the full usage of the WDM networking services.
64 after [IST-Optimist, key issue 2004] : www.ist-optimist.org

7.4.3 Optical Backbone
7.4.3.1 Introduction
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The backbone, national or wide area network may extend over distances of thousands of kilometers and
provides an interconnection fabric for regional and metropolitan networks.
In recent years considerable capacity has been installed in this network layer, so major investment is not
expected in the near future. Current investment is focused on developing revenue streams or reducing
operational expenditure. There is a trend towards reducing the number of major network nodes and building a
very high capacity backbone, essentially a fabric of very high capacity pipes, with much of the processing and
routing devolved to the regional and metro layers.
The deployment of Wavelength Division Multiplexing (WDM) techniques and equipment in the field has
provided backbone networks with high capacity and long reach capabilities. In this part of the network, in order
to maximise the use of the available fibre bandwidth, the trend has been to develop systems with more WDM
channels together with higher bit rates. Currently deployed systems could transmit 160 channels each at
10Gbit/s. In reality, as yet, few links use more than a handful (~20) of these channels however. Although
practical 40Gbit/s systems have been developed, the economic downturn in telecoms has delayed their
deployment.
The optical links are point to point and are terminated in electronic SDH/SONET switches. The SDH/SONET
layer provides network management and switching of the links. The functions it provides include:
• connection set-up
• connection and link performance monitoring
• management data communications
• protection and restoration
The network providers have a large investment in SDH/SONET equipment. The downturn in the
telecommunications sector from 2000 onwards has restricted investment and limited expectations to more
realistic horizons than those professed in the late 1990s. The implication of this is that near term investments are
likely to be based mainly on SDH/SONET technology variants. Another consequence is that any new
technology deployed in an existing network will necessarily have to work alongside SDH/SONET.
As voice and data networks converge there is a force for upgrading SDH/SONET. Next Generation
SDH/SONET is being employed to provide an evolutionary upgrade to legacy infrastructure by introducing:
• virtual concatenation (VCAT) which allows services to be mapped onto several identically-sized noncontiguous
low order circuits (e.g. VC4) rather than a large circuit (e.g. STM64). The separate frames
may even traverse the network by different routes as they are re-assembled at a network element at the
destination. This gives better utilization of the network as it minimizes isolated unusable capacity.
• Link capacity adjustment scheme (LCAS) also maximizes utilization. This is a signalling protocol that
complements VCAT as it allows hitless in-service addition of circuits to the VCAT group as more
resource is required i.e. it allows the group to grow. LCAS also dynamically removes failed circuits
from the group and adds other circuits to maintain the overall group connection.
• Generic framing procedure which allows efficient mapping of any service/protocol onto the virtual
containers, and avoids standardization delays for new services. It is a completely transparent process,
has wide industry support and is already widely deployed.
• A new control and signalling plane called Automatic Switched Transport Network (ASTN) will allow
real time provisioning and tear down of circuits
• New signalling protocols will allow automatic discovery of networks elements and will allow
defragmentation of the network along with automated provision
Next generation SDH (NG-SDH) improves the situation by increasing the capability of the edges of the network,
while keeping the core of the network essentially unchanged. It allows a higher utilization of the network
resources, but the core network is still managed by a centralized control scheme. This has an impact in the
scalability of the network.
One approach to improve matters borrows from data networking ideas and distributes the management. This is
called Multi-Protocol Label Switching (MPLS). Here the nodes have local knowledge of their neighbourhoods
and switch/route incoming data streams accordingly. Carrier class functions such as restoration are also provided
and managed locally. MPLS can be thought of as providing carrier class circuit equivalents over packet based

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networks and thus unifying data and voice networks. This is gathering traction with some carriers implementing
MPLS networks 65 66 for data transmission.
These techniques will improve matters and overcome near term issues in the migration of services supported by
networks. In the future requirements a more fundamental change in network design will be required to support
economic dynamic networking and fast provisioning.
In the intermediate future, deployment of optical cross-connects would enable routing at the wavelength or
wavelength-band level. The use of photonic switched express paths to reduce switching costs is facilitated by
recent improvements in optical transmission, modulation and forward error correction techniques enabling
longer distances to be achieved without regeneration.
The investment in WDM has led to the development of better, cheaper and more stable photonic technology that
has permeated into other parts of the network (e.g. metro). All the components are in place to enable WDM
optical communication systems to evolve from simple point-to-point links to complex network architectures.
The wavelength-routed network solution allows the signals to remain in the optical domain. Here networking
will be achieved through the use of optical add/drop multiplexers (OADM) and optical cross-connect (OXC)
nodes. Node designs are envisaged which will provide provisioning capabilities as well as protection and
restoration in the optical layer. Generalised multi-protocol label switching (GMPLS), a control plane offering
intelligence in the optical layer, is a good candidate for routing and management of the traffic demands.
However the choice between optical or electrical switching technology deployments is still an open issue.
Transparent optical solutions offer attractive features associated with reducing unnecessary optoelectronic
conversions (cost of many transponders), and allowing transparent (bit-rate and modulation format independent)
networks with reduced capital and operational costs. There is a large investment in existing electrical switch
fabrics, and the SDH/SONET technology that they support. SDH/SONET also provides proven networking
features, such as fast restoration that will need to be replicated in transparent optical solutions. Development of
evolutionary migration paths will be critical for deployment of these technologies in existing networks.
Looking further ahead, the research community has been focusing on optical packet (and burst) switching,
where packets of data are statistically multiplexed, in order to offer better bandwidth utilization. This is
envisaged as the ultimate IP and WDM integration. There are still many technological issues with this approach
to be solved, such as the lack of optical buffering and robust fast switch fabrics. Networking questions here
relate to the support of these switching technologies, whether this is to be done at backbone or regional level and
the type of control plane that is required.
7.4.3.2 State of the art
In order to support the ever-increasing growth of capacity demand, core networks rely on different multiplexing
techniques. Over the years there has been an evolution from analogue to digital transmission, from
Plesiochronous Digital Hierarchy (PDH) to Synchronous Digital Hierarchy (SDH) and recently from SDH to
SDH upon Wavelength Division Multiplexing (WDM). Initially digital transmission was introduced with a
capacity of 2 Mbit/s (the primary multiplexers) and a granularity of 64 kbit/s 67 . A next step was to improve the
transmission efficiency by allowing higher bitrates and introducing cross-connection, so that currently, with
SDH, the granularity is 155 Mbit/s and a line capacity of 10 Gbit/s is possible.
Advances in electronic processing could not follow the traffic growth so the next step was the introduction of
WDM 68 . Here currently deployed systems are capable of capacities of 1600 Gbit/s (160 wavelengths) or even
more, with a granularity of 10 Gbit/s. While the capability to use 160 wavelengths allows growth capacity, few
systems currently deploy the full capability.
Hero experiments with WDM and OTDM 69 if plotted on a graph (see Figure 38) show that technology steps are
typically introduced at a moment when required capacity increases are in the range of a factor 30 to 60. In order
to fully support former technologies the granularity of the new technology typically coincides with the link
capacity of the previous technology generation.
65
BT Global Services: http://www.btglobalservices.com/business/global/en/about_us/our_network/index.html
66
Interoute: http://www.interoute.com/
67
64 kbit/s still forms the basic bitrate in telephony networks.
68
Ken-ichi Sato: Key enabling Tecnologies for Future Networks, Optics and Photonics News, p. 34 May 2004
69
R. DeSalvo et al., “Advanced Components and Sub-Systems Solutions for 40 Gb/s Transmission”, J. Lightwave Technol., vol. 20, pp.
2154-2181, Dec. 2002

OTN
WDM
SDH
PDH
Teleph
0.01
0.1
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Figure 38: Logarithmic graph that shows how link capacity has been growing. Switch granularity follows the
growth by a multiplexing factor of 30 to 60. By projecting this graph is obvious that after the level of 320Gbit/s
link capacity, 10 Tbit/s link capacity will be introduced with a switch granularity of 320 Gbit/s.
In today’s networks services are aggregated, mapped onto frames and transported by the SDH/SONET layer,
which is also responsible for management functions such as link and connection set-up and monitoring,
protection and restoration. The SDH/SONET frames are then transported over the individual optical wavelength
channels. Today’s optical core networks rely on the enormous fibre transmission bandwidth, potentially larger
that 25 THz, available by single mode fibre deployment, with WDM the preferable multiplexing technique.
It is convenient to split the technology used in backbone networks into three areas:
• Transmission
• Networking
• Control
We will now look at the state of the art of these areas in a little more detail.
7.4.3.2.1 Transmission
1
switch switch granularity granularity
10
100
1000
link link capacity capacity
10000
100000
10^6
Mbit/s
Deployed technology
The majority of currently deployed systems use 10 Gbit/s as a line rate. By using C & L bands together, each
containing 80 channels, up to approx 160 channels can be provided giving a total capacity of 1.6 Tbit/s. Systems
are available that provide an un-regenerated reach of over 4000km. All the major suppliers compete for this
market 70 71 72 ,and systems have been deployed to carriers 73 . Marconi has deployed a soliton based system with
80 X 10 Gbit/s wavelengths with an un-regenerated reach of 3000km. Trials have demonstrated the capability of
the system with 160 wavelengths, 40 Gbit/s and 4000km reach (not all necessarily at the same time).
This said the typical utilisation for carriers is short of this. Current (early 2005) links have maybe 20 X 10Gbit/s
channels utilized by large carriers in the core network. Although up to 160 channels may be deployed by using
the upgrade path to the L-band, it is far more likely that the carrier will deploy newer systems with other
improved functionality e.g. in network management, rather than take this step.
Current optical systems are typically point-point links 74 . The WDM multiplex in each band is periodically
amplified by optical amplifiers. The separation of these amplifiers depends on the geographical layout of
facilities but is typically 100km or less. Dispersion compensation is provided on a per band basis, usually by
dispersion compensating fibre within amplifier sites. For most systems NRZ encoding is used, but some systems
70
Nortel Network’s Optera Long Haul 1600: http://www.nortelnetworks.com/products/01/optera/long_haul/1600/collateral/56020.39-
1216-02.pdf
71
Marconi’s Multihaul 3000:
http://www.marconi.com/Home/customer_center/Products/Access/Optical%20Multservice%20Edge/Multihaul
%203000/Multihaul3000_ds.pdf
72
Alcatel’s 1626 Light Manager: http://www.alcatel.com/doctypes/opgdatasheet/pdf/ds1626LM1a.pdf
73
Interoute's intercity high speed network: http://www.interoute.com/networks_i21.html
74
A moderate number of OADMs which drop a small percentage of the traffic while allowing most of the traffic to pass through remaining
optical have been deployed in the core network. They are more common in metro networks where there is less need to regenerate
10^7
10^8
switch
granularity
link
capacity
switch granularity
x
multiplexing factor
=
link capacity

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use other techniques, e.g. Marconi use RZ-solitons to boost un-regenerated systems 75 . The links are terminated
by O-E conversions into SDH equipment.
Current and Available Technology – State of the Art 40 Gbit/s
Transmission at speeds up to 40 Gbit/s has been demonstrated in the field, whilst total fibre capacities of more
than 1 Tbit/s have been deployed in the transport network. Individual channel speeds up to 600 Gbit/s per
channel transmission have been demonstrated in the laboratory. However implementing 40 Gbit/s commercially
is a different matter, influenced by numerous factors mainly by the demand and flexibility that these bit rates
offer. The factors include industry and market conditions, directly related to mass production, as well as many
technical issues. Transmission degradations at 40 Gbit/s, such as chromatic and polarisation mode dispersion,
filtering cross-talk etc are more significant than at lower speeds. Consequently, the techniques used to
compensate for these effects such as efficient amplification techniques, compensation for Polarisation Mode
Dispersion (PMD) and complex Forward Error Correction (FEC) methods need to be deployed. At these bit
rates PMD and dispersion compensating methods must be tunable. Compensation must be done on a per
wavelength channel basis.
These factors will play a pivotal role in the case for the cost efficiency of integrated systems operating at 40
Gbit/s. The step from 2.5Gbit/s to 10Gbit/s increased capacity by a factor of 4 and cost by only a factor of 2.5
when introduced. The transmission degradations at 40Gbit/s coupled with the perceived current overprovision of
capacity in the backbone network, make the step to 40Gbit/s currently less obvious. Perversely, if 40 Gbit/s
begins to be deployed in the metro network, because of demand, this is likely to be a strong driver for provision
of 40 Gbit/s in the backbone network.
Commercial 40-Gbit/s systems are currently available 76 . At the same time, the span of transmission is of crucial
importance for planning appropriate backbone network architectures. A main issue is the unregenerated spans.
Most current transmission systems operating at 2.5 Gbit/s or 10 Gbit/s require regeneration of the signal after
four or five amplification stages. Some systems however, allow 10 Gbit/s transmission over 4,000 km without
any regeneration 75 With the present technology, 40-Gbit/s systems could reach 1,100 km by using for example
the CS-RZ format, with 100-GHz channel spacing and 80 km long fibre spans. In order to avoid regeneration
these systems would need dynamic dispersion post-compensation, active gain equalisers, Raman amplification
and Polarisation Mode Dispersion control. System engineering must also take account of the existing
infrastructure, which may use old non-optimum fibre types, and have variable amplifier spacing.
Even if similar cost reductions could be finally achieved for the transition from 10 to 40 Gbit/s as for 2.5 to 10
Gbit/s, one could not be sure of a fast replacement of 10 Gbit/s by 40 Gbit/s systems. There is a lack of money
on the network providers’ side, and due to the over provisioning situation in most of the core networks there is
no urgent need to install new capacity or replace old infrastructure. The investment in the deployed
infrastructure has to be amortized. The introduction of 40 Gbit/s has to be done as an evolutionary and cost
effective upgrade. The less has to be changed in the fibre infrastructure the better for the deployment of 40
Gbit/s. The best option would be if only at the edges of the networks, at the termination points of the
transmission lines, additional devices have to be implemented. For instance it would facilitate the introduction of
40 Gbit/s systems, if they could work on the deployed fibre infrastructure and if no additional lengths limitations
compared to 10 Gbit/s systems would be introduced.
Retrofitting of 40 Gbit/s channels into an existing 10 Gbit/s WDM transmission system can be an economically
advantageous capacity upgrade scenario, if the conditions (e.g. sufficiently narrow optical spectrum of the 40
Gbit/s signals or coarse enough wavelength grid spacing) are properly accounted for 77 .
75
Marconi’s Multihaul 3000:
http://www.marconi.com/Home/customer_center/Products/Access/Optical%20Multservice%20Edge/Multihaul
%203000/Multihaul3000_ds.pdf
76
Lucent's LambdaXtreme Transport: http://www.lucent.com/products/solution/0,,CTID+2021-STID+10482-SOID+100175-
LOCL+1,00.html
77
L. Ceuppens et al., “Economically Efficient Capacity upgrades with Spectrally Efficient 40 Gb/s Modulation Formats”, Proceedings
ECOC 2003, Symposium “Is it the right time for 40 Gbit/s Systems”

7.4.3.2.2 Networking
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Deployed technology
Although field trials have been made of all-optical networks, the economic downturn and its effect on the
various companies with interests on production and utilisation of these technologies have prevented deployment.
So far operators are just beginning to deploy primitive optical networking techniques. In nearly all backbone
networks, the networking functions are provided by the SDH equipment in the electrical domain
The truly agile optical networks described in the “Current and Available Technology – State of the Art Optical
Cross Connnects” section below, require complete reconfigurability of channel provisioning. This means that
they require full band tuneable lasers, tunable channel filters, reconfigurable OADMs, OXCs, and an optical
control plane. It has been expressed that this type of network is not yet deployed because of the cost and
reliability of tunable lasers and tunable filters.
A compromise between full agility optical network and a point-to-point fixed network is offered by several
companies and has already been deployed. This is an all optical network, but with fixed filter structure in the
add/drop tree. In other words, these networks will have OADM, & OXCs, but using a fixed filter structure
providing add/drop functionality. Therefore, when adding or removing a channel, the transmitter/receiver will
have to be manually placed at the right access wavelength on the filter structure. The network is a static
wavelength routing network, where the path of a channel is pre-defined according to its wavelength, as opposed
to a switched wavelength routing network, where the path of a particular wavelength can be dynamically
assigned. Pseudo agile optical networks are typically deployed in metro networks where regeneration is less
likely to be an issue.
Current and Available Technology – State of the Art Optical Cross Connects
Today’s telecommunications networks deploy wavelength division multiplexing (WDM) to interconnect discrete
points of network topology and offer high capacity and long reach transmission capabilities. The information is
transmitted optically but transferred across the network through links that are terminated by SDH/SONET
equipment forming ring and mesh network topologies 78 79 80 81 82 83 84 . Such a network requires many costly
optoelectronic (OEO) conversions and complicated network management resulting in low scalability and slow
service turn up with high installation, operation and maintenance cost 79 80 81 . Recent technology evolution gives
the possibility of the WDM transport layer migrating from simple transmission links into an elaborate network
providing switching, with higher manageability, lower complexity and cost 83 84 . In such network scenarios,
optical routes form connections between discrete point network locations through optical add/drop and crossconnect
nodes 82 83 84 and provide traffic allocation, routing and management of the optical bandwidth. They also
facilitate network expansion, traffic growth, churn and network resilience. Optical cross-connects are located at
nodes cross-connecting a number of fibre pairs and also support add and drop of local traffic providing the
interface with the service layer. To support flexible path provisioning and network resilience, OXCs will
normally utilise a switch fabric to enable routing of any incoming channels to the appropriate output port and
access to the local client traffic. Several designs have been proposed for achieving robust OXCs based on
different switching technologies 82 85 86 87 88 89 90 .
78 R. Ramaswami and K. N. Sivarajan, Optical Networks, A Practical Perspective. San Fransisco, CA: Morgan Kaufmann, 1998.
79 R. Ramaswami, “Using All-Optical Crossconnects in the Transport Network”, (invited), WZ1-I, OFC2001.
80 A. Tzanakaki, I. Wright and S. S. Sian, “Wavelength Routed Networks: Benefits and Design Limitations”, SCI2002, Orlando, Florida,
July 2002
81 A. Banerjee, J. Drake, P. Lang and B. Turner, “Generalized Multiprotocol Label Switching: An Overview of Routing and Management
Enhancements”, IEEE Communications Magazine, pp 144-150, January 2001
82 J. Lacey, “Optical cross-connect and add/drop multiplexers: technologies and applications”, (Tutorial), WT1, OFC2002.
83 IST OPTIMIST consortium: Technology Trend Documents, January 2004 (www.ist-optimist.org)
84 A. Tzanakaki, I. Zacharopoulos and I. Tomkos: Optical Add/Drop Multiplexers and Optical Cross-Connects for Wavelength Routed
Networks, ICTON 2002
85
A. Tzanakaki, I. Zacharopoulos and I. Tomkos, “Near and longer term architectural designs for OXCs/OADMs/Network topologies”,
Invited paper, “Photonics in Switching conference” Paris, October 2003
86
G. Wilfong, B. Mikkelsen, C. Doerr, and M. Zirngibl, “WDM Cross-Connect Architectures with Reduced Complexity”, J. Lightwave
Technology Vol. 17, pp. 1732 - 1741, October 1999
87
E. Iannone, and R. Sabella, “Optical Path Technologies: A Comparison Among Different Cross-Connect Architectures”, J. Lightwave
Technology Vol. 14, pp. 2184 - 2196, October 1996
88
P. B. Chu, S.-S. Lee, and S. Park, “MEMS: The path to large opticalcross-connects,” IEEE Commun. Mag., pp. 80–87, Mar. 2002.
Photon. Technol. Lett., vol. 10, pp. 896–898, June 1998.
89
D. J. Bishop, C. R. Giles, and G. P. Austin, “The Lucent lambdarouter: MEMS technology of the future here today,” IEEE Commun.
Mag., pp. 75–79, Mar. 2002.
90
P. De Dobbelaere, K. Falta, L. Fan, S. Gloeckner, and S. Patra, “Digital MEMS for optical switching,” IEEE Commun. Mag., pp. 88–95,
Mar. 2002.

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Thus a key network element in the development of flexible high capacity backbone networks is the optical
cross-connect (OXC). The main function of the OXC is to provide flexible connectivity between wavelengths on
different fiber ports in a wavelength-routed network. Current technology characterises an OXC as a function of
the transparency of the switching technology, e.g. opaque OXC and transparent OXC.
The first [opaque] is a digital cross-connect equipped with optical interfaces; they are sometimes referred to as
OEO (Optical-Electrical-Optical) switches and are widely available from many vendors. Opaque OXCs are
either based on electrical switching technology or on optical switch fabrics surrounded by (expensive) OEO
conversions. In OXCs using electrical switching, depending on the technology and architecture, sub-wavelength
switching granularities can be supported providing edge and intermediate grooming capabilities for more
efficient bandwidth utilisation. Opaque OXCs also offer regeneration, wavelength conversion and bit-level
monitoring.
In transparent OXCs the incoming signals are routed transparently through an optical switch fabric without the
requirement of optoelectronic conversions. The switching granularity may vary and support switching at the
fibre, the wavelength band or the wavelength channel level. Although some years ago vendors were focusing on
transparent OXCs (Diamond Wave, Lucent LambdaRouter, Calient) to date more vendors offer opaque solutions
(Tellium Aurora, Alcatel 1674 Lambda Gate) 91 92 93 94 .
Rapid advances in WDM technology have brought about a tremendous growth in the required size of the OXC
together with cost and the complexity and control 95 96 . As the DWDM technology has matured, it has brought
about expansion of the number of ports of cross connects (optical and electronic). The number of network
wavelengths has increased in order to meet capacity demands. In the future, WDM networks of up to 1000
wavelengths may be deployed to fully exploit the available fibre spectrum 97 . In such a scenario an optical crossconnect
for bands of wavelengths, i.e. a waveband cross-connect (WBXC) has been proposed 98 99 100 . In 101 102 103 a
multi-granularity OXC is designed on the basis that only a fraction of the input traffic needs to be switched in
any particular node
Lack of standardisation is still an issue for OXC deployment, although most of the vendors announce G-MPLS
compliance, many require centralised management systems to set up and tear down connections.
7.4.3.2.3 Control
Deployed Technology – SDH/SONET and Next Generation SDH/SONET
Although a few networks are being deployed which use MPLS for data transport 104 105 the vast majority of
deployed networks currently use SDH/SONET to transport both data and voice through the network. Optical
links are typically point-point and are terminated with SDH/SONET switching equipment. SDH/SONET
manages the physical equipment and links within the network. Incoming data is assembled into frames, which
also carry associated management data for transmission across the network. SDH/SONET sets-up the connection
for the frames, maintains knowledge of the network status and provides protection and restoration during failure.
Currently Next Generation SDH is gathering traction. This is a variation of SDH/SONET where the edge nodes
are upgraded initially. Migration of the core elements of the network to NG SDH/SONET can occur later. It has
91 Ciena’s CoreDirector http://www.ciena.com/products/coredirector/coredirector.htm
92 Cisco ONS 15454: http://www.cisco.com/en/US/products/hw/optical/index.html
93 Alcatels Lambda Gate: http://www.alcatel.fr/products/productsummary.jhtml?relativePath=/x/opgproduct/1674.jhtml
94 Diamond Wave: http://www.calient.net/products or http://www.calient.net/solutions
95 X. Cao, V. Anand C. Qiao, Waveband Switching in Optical Networks, IEEE Comm. Magaz. April 2003, p 105-112
96 L. Noirie, M. Vigoureux, and E. Dotaro, “Impact of intermediate grouping on the dimensioning of multi-granularity optical networks,” in
Proc. OFC, 2001, p. TuG3-3
97
IST OPTIMIST consortium: Technology Trend Documents, January 2004 (www.ist-optimist.org)
98
K. Harada, K. Shimizu, T. Kudou, and T. Ozeki, “Hierarchical optical path cross-connect systems for large scale WDM networks,” in
Proc.—OFC, 1999, p. WM55-3.
99
O. Gerstel, R. Ramaswami, and W. Wang, “Making use of a two stage multiplexing scheme in a WDM network,” in Proc.—OFC, 2000,
p. ThD1-3.
100 M. Lee, J. Yu, Y. Kim, C. Kang, and J. Park, “Design of hierarchical crossconnect WDM networks employing a two-stage multiplexing
scheme of waveband and wavelength,” IEEE J. Select. Areas Commun., vol. 20, pp. 166–171, Jan. 2002.
101 X. Cao, Y. Xiong, V. Anand, and C. Qiao, “Wavelength band switching in multi-granular all-optical networks,” in SPIE Proc.
OptiComm’02, vol. 4874, Boston, MA, 2002, pp. 198–210.
102 R. Izmailov, S. Ganguly, Y. Suemura, I. Nishioka, Y. Maeno, and S. Araki, “Waveband routing in optical networks,” presented at the
IEEE Int. Conf. on Communications (ICC’02), New York, 2002.
103 X. Cao, V. Anand C. Qiao, A Waveband Switching Architecture and Algorithm for Dynamic Traffic IEEE COMMUNICATIONS
LETTERS, VOL. 7, NO. 8, AUGUST 2003p. 397
104 BT Global Services: http://www.btglobalservices.com/business/global/en/about_us/our_network/index.html
105 Interoute: http://www.interoute.com/

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been designed to solve some issues which occur in standard SDH/SONET associated with the slow circuit
provision, the difficulty in providing a large contiguous capacity required by some connections, and the
inefficient fragmentation of the network as some capacity can get stranded.
The major evolutions in NG SDH/SONET are the introduction of:
• virtual concatenation (VCAT). This allows services to be mapped onto several identically-sized noncontiguous
low order circuits (e.g. VC4) rather than a large circuit (e.g. STM64). The separate frames
may even traverse the network by different routes as they are re-assembled at a network element at the
destination. This gives better utilization of the network as it minimizes isolated unusable capacity.
• Link capacity adjustment scheme (LCAS). This is a signalling protocol that complements VCAT as it
allows hitless in-service addition of circuits to the VCAT group as more resource is required i.e. it
allows the group to grow. LCAS also dynamically removes failed circuits from the group and adds
other circuits to maintain the overall group connection. LCAS is particularly attractive to carriers for
protection and restoration. Loss of one VCAT member from the group can be accounted for and
recovered from using the LCAS management. If the channel is transmitting at less than its peak rate,
the surviving members may be able to maintain the connection. If the capacity in the surviving group is
not sufficient more members may be added.
• Generic framing procedure which allows efficient mapping of any service/protocol onto the virtual
containers, and avoids standardization delays for new services.
• A new control and signalling plane called Automatic Switched Transport Network (ASTN) allows real
time provisioning and tear down of circuits
• New signalling protocols which allow automatic discovery of networks elements and will allow
defragmentation of the network along with automated provision
Current and Available Technology – State of the Art G-MPLS and IP
The current push in the control plane is to automate dynamic provisioning in the network 106 . From both operator
and customer viewpoints there are clear benefits as this allows fast provisioning of circuits which bring on
stream new services and revenue streams. Further traffic engineering can allow more efficient use of the
networks and protection to be efficiently allocated. Automating the control function also removes the potential
for human error. Other desired features that included are automatic network discovery, and standardized
interfaces between networks for inter-operability.
There are two solutions being developed via standards bodies. These solutions use different approaches to form
the control plane in line with their origins. The two are not mutually exclusive, although much work will need to
be done on the details to allow them to work together 107 .
The Automatically Switched Optical Network (ASON) originates in the ITU. This uses a top down approach to
define the architecture of the control plane. The top level requirements are defined and these then cascade down
to the requirements for the individual components. The definitions cover the control plane architecture,
signalling, routing and network discovery. Network discovery as well as indicating the finding of physical links
also implies the detection of resource and service discovery in the higher layers of the network. The standard
does not define protocols (although the ITU is working on compliant protocols). Protocols can be compared to
the requirements to see if they are “ASON compliant”.
The IETF has developed Generalised Multi-Protocol Label Switching (G-MPLS). This has it origin on MPLS,
which is a forwarding scheme whereby a packet has a label associated with it. When it enters a switch its output
port and output label is found from a look-up table according to its input port and input label. To originate a
connection the relevant switches have to have suitable entries placed in their lookup tables, and when the
connection is torn down these entries are removed. The resulting path is called a Label Switched Path (LSP).
This scheme has a benefit when compared to schemes based on the destination IP address, as the lookup tables
are smaller and therefore latency in the switch is reduced. G-MPLS expands these techniques in recognition that
as well as data labels such properties as wavelength of light and slot position in a TDM signal can define the
route to be taken and these are included in the technique. The set of protocol in G-MPLS includes ones for
signalling routing and link management and discovery.
106
A.Jajszczyk, “Automatically switched optical networks: Benefits and requirements” IEEE Optical communications, pp S10-S15, Feb
2005
107
N. Larkin, “ASON and GMPLS – The Battle of the Optical Control Plane”, White Paper,
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Both techniques as defined need not be limited to optical communication. However since optical transport is an
inherently analogue process, care will need to be taken that an optical signal in a network does not degrade to be
unrecoverable before it is regenerated. This has begun to be addressed by some researchers 108 .
7.4.3.3 Issues and trends
Perhaps the most important issue, currently, is the state of the economic environment, for the network providers.
The situation after the bubble of the early years of the 21 st century means that for the foreseeable future
providers will only invest in and deploy technology that will increase their bottom line; this will be either by
introducing new value added services, or capacity to increase revenue, or by reducing operational cost perhaps
by removing layers of the protocol stack.
That said the research community is still strong and is developing technologies that will improve both these
areas. Again it is helpful to break the trends down into the 3 sections.
7.4.3.3.1 Transmission
Future Technology - Research Trends Capacity & Transparent Reach
Research in this area has contracted since the bubble, however it is still vibrant with sessions in OFC 2005
including titles of “40Gb/s and beyond”, “Modulation techniques” and “Ultra Long Haul” along with other
contributory areas. Thus the transmission technologists are still researching into how to send more and more
bandwidth along greater distances before regeneration.
OFC 2005 highlights include:
• Spectral efficiency improvement by demodulation of 40 Gbit/s polarization multiplexed signals with 16
GHz spacing 109
• Spectral efficency improvement by using a super-continuum source to generate 1022 X 2.5Gbit/s with
6.25 GHz spacing over 116km 110
• Transmission of 18 X 40Gbit/s over 6250km of conventional NZ-DSF 111
• A field demonstration of a 160Gbit/s OTDM signal over 200 km 112
• A field demonstration of 8 X 160Gbit/s transmission over 430km and investigation into PMD
compensation 113
• A 320 Gbit/s OTDM transmission over 80km of fibre 114
Interestingly there is a comment from a 2004 OFC workshop reported in JLT 115 , that at bit rates above 2.5Gbit/s
the interaction between dispersion and nonlinearities becomes crucial and the way the dispersion is managed
along a link becomes as important as the dispersion itself. Thus it is likely that a move to higher and higher bit
rates will conflict with the desire for all-optical networking described above. Certainly the move to higher bit
rates will limit the transparent diameter of the signal.
Other themes appear to be how to take cost out of the network with several papers replacing fibre based
dispersion compensation systems along the transmission fibre, with electronic based methods 116 117 , optical phase
conjugation 118 or chirped lasers 119 .
108 B. Peeters et al, “Optimal Routing in hybrid networks by decoupling the route calaculation from the assessment of optical route
viability”, NOC 2004, Eindhoven, The Netherlands, June 29– July 1, 2004
109 S. Tsukamoto et al., “Coherent Demodulation of 40-Gbit/s Polarization-Multiplexed QPSK Signals with 16-GHz Spacing after 200-km
Transmission”, OFC 2005, Paper PDP29, 2005
110 T. Ohara et al.. “Over 1000 channel, 6.25 GHz-spaced ultra-DWDM transmission with supercontinuum multi-carrier source”, OFC 2005,
Paper OWA6, 2005
111 J.-X Cai et al., “Transmission of 40Gbit/s WDM Signals over 6,250 km of Conventional NZ-DSF with >4 dB FEC Margin”, OFC 2005,
Paper PDP26, 2005
112
T. Miyazaki et al., “Field Demonstration of 160-Gb/s OTDM Signal Using Eight 20-Gb/s 2-bit/symbol Channels over 200 km”, OFC
2005, Paper OFF1, 2005
113
R. Leppla et al., “ PMD Tolerance of 8x170 Gbit/s Field Transmission Experiment over 430 km SSMF with and without PMDC”, OFC
2005, Paper OFF2, 2005
114
A.I. Siahlo et al., “320 Gb/s Single-polarization OTDM Transmission over 80 km Standard Transmission Fiber”, OFC 2005, Paper
OFF3, 2005
115 J. Livas, “Optical Transmission Evolution: From Digital to Analog to ? Network Tradeoffs Between Optical Transparency and Reduced
Regeneration Cost”, ”, J. Lightwave Technology Vol. 23, pp. 219 - 224, January 2005
116 A.H. Gnauck et al., “Linear Microwave-Domain Dispersion Compensation of 10-Gb/s Signals using Heterodyne Detection”, OFC 2005,
Paper PDP31, 2005
117 D. McGhan et al., “5120 km RZ-DPSK transmission over G652 fiber at 10 Gb/s with no optical dispersion compensation”, OFC 2005,
Paper PDP27, 2005

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Private conversations with Prof. Takis Hadjifotiou have identified the following additional research trends:
• Electronic muxing/demuxing using III-V semiconductors to achieve approximately 80Gbit/s
• The need for optical muxing/demuxing to attain 160 Gbit/s
• use of fibre optics for muxing generates big problems on polarisation control and coherent mixing;
• Pulse generation
• also problematic with mode locking being the probable technique for pulse generation
• Optical demultiplexing at the receiver needs optical IC with optical gates (such as EAM) and an
excellent clock extraction subsystem
• Bit rate per tributary to 160 Gbit/s stream or higher can be 10, 40 or even 80 Gbit/s
• 10 Gbit/s is preferable because of the low cost compared to 40 Gbit/s and straight through connection
options
• 160 Gbit/s is difficult to network because of the small tolerances required and the granularity. There is
a virtual impossibility of dropping and injecting tributaries. This is in broad agreement with paragraph
2 above
• Electronic signal processing is now possible at ~ 10 Gbit/s and this will represent a paradigm shift in
the design of optical systems.
7.4.3.3.2 Networking
Future Technology – Research Trends Optical Packet and Burst Switching
WDM is deployed to support the ever-increasing capacity demand. Even if circuit switched optical networks are
introduced, access to the optical bandwidth will still be provided with waveband/wavelength granularity. In
particular, future optical networks should be able to serve a client layer that includes packet based networks with
highly dynamic connection patterns such as the internet 120 121 . Data-related traffic is already taking over from
voice-related traffic in the network, and due to demand burstiness a transport network based on circuit switching
may not be able to offer the required flexibility 122 123 .
Also the range of future services will be very diverse in terms of required channel capacity channel occupancy,
duration set-up time and frequency. 124 125 126 127 128 129 130 131 132 133 134 .
Optical packet (and burst) switching like its electronic counter part has been suggested as a switching paradigm
that will efficiently utilise the available fibre bandwidth, by statistically multiplexing information from different
118 S.L. Jansen et al., “10,200km 22x2x10Gbit/s RZ-DQPSK Dense WDM Transmission without Inline Dispersion Compensation through
Optical Phase Conjugation”, OFC 2005, Paper PDP28, 2005
119 S. Chandrasekhar et al., “Flexible transport at 10-Gb/s from 0 to 675km (11,500ps/nm) using a chirp-managed laser, no DCF, and a
dynamically adjustable dispersion-compensating receiver”, OFC 2005, Paper PDP30, 2005
120 S. Dixit ed.: IP over WDM, Building the Next Generation Optical Internet, J. Willey and Sons, 2003
121 Moises R. N. Ribeiro: Traffic Prioritisation in Photonic Packet Switching, PhD Thesis, University of Essex, June 2002
122 IST OPTIMIST consortium: EU Photonic Roadmap, Key Issues for Optical Networking, January 2004 (www.ist-optimist.org)
123 R. Inkret, A. Kuchar, B. Mikac: Advanced Infrastructure for Photonic Networks: Extended Final Report of Cost Action 266, 2003
124 Blumenthal D. J., P. R. Pructnal, and J. R. Sauer, “Photonic packet switches: architecture and experimental implementations”,
Proceedings of IEEE, Vol 82, No.11, Nov. 1994
125 D J Blumenthal et al, “All-Optical Label Swapping Networks and Technologies”, JLT Vol 18, No 12, Dec 2000
126 Tucker, RS et al, “Photonic Packet Switching: An Overview”, IECE Trans Commun, Vol E82-B, Feb 1999
127 S Yao et alia, “Advances in Photonic Packet Switching”, IEEE Comms Magazine, Feb 2000
128 MJ.OMahony, D.Simeonidou, D Hunter, A Tzanakaki, "The Application of Optical Packet Switching in Future Communication
Networks", IEEE Comms Magazine, pp128-135, March 2001
129 T. S. El-Bawab, S. Jong-Dug: Optical packet switching in core networks: between vision and reality, Communications Magazine, IEEE,
Volume: 40, Issue: 9, Sep 2002, Pages: 60 – 65
130 X. Lisong H. G. Perros, G. Rouskas,: Techniques for optical packet switching and optical burst switching Communications Magazine,
IEEE , Volume: 39 , Issue: 1 , Jan. 2001, Pages:136 – 142
131 D. Hunter, I. Andonovic: Approaches to optical Internet packet switching Communications Magazine, IEEE, Volume: 38, Issue: 9, Sept.
2000 Pages: 116 – 122
132 S. Yao, B. Mukherjee, S. Dixit: Advances in photonic packet switching: an overview, Communications Magazine, IEEE , Volume: 38 ,
Issue: 2 , Feb. 2000 Pages:84 – 94
133
D. Blumenthal, P. Prucnal, J. Sauer, “Photonic packet switches-architectures and experiment implementations”, IEEE Proceedings, 82,
1650-1667, November 1994
134
M. Renaud et. Al, “Network and system concepts for optical packet switching” Communications Magazine, IEEE, Volume: 35, Issue: 4,
April 1997, Pages: 96 – 102

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sources on the same channel 135 . As packet technology offers high granularity it facilitates the convergence of
electronic and optical technologies in an IP-centric networks. Improved networked economics can be achieved
via efficient bandwidth utilization but also through simplification of management and control 136 .
These arguments for the use of photonic packet switching are from the network point of view 137 138 . There are
also important roles to be played by optics in electronic nodes that may possibly point in the direction of
photonic switching nodes. Until recently port speed of electronic nodes had to follow the increase in
transmission bit rate. After the advent of WDM, node capacity could be increased not only by upgrading bit-rate
per port but the number of wavelengths. Unfortunately this solution does not solve every problem for terabit
router design as node dimension will possibly reach a three figure number which will in turn bring in the
problems of multi stage interconnection (power consumption, footprint, electromagnetic interference 137 ).
Consequently optical parallel interconnection is already in the majority terabit routers as a means to interconnect
the multiple stages and to reduce the number of ports 137 . Once interconnections are made optically, it is
reasonable to imagine an optical transparent central stage without OEO conversions and ultimately transparent
photonic switching from inlets to outlets. Some router vendors have already introduced optical switching for
capacity expansion 139 . It is evident that this evolution scenario depends, at least, on the availability of robust
fast, i.e. ns, and preferably completely transparent optical switches and feasibility of contention resolution
techniques 140 .
7.4.3.3.3 Control
The size of future core network dictates that upgrades are done gradually. Hence, future networks will be
heterogeneous, which is the main challenge for development of core-network control platforms. Thus although
the technical solutions for control are progressing well, the major challenges are related to the interfaces
between different domains. The challenges can be summarized as:
• Standards for interoperability
• Mapping application need (QoS) to network requirements
• Resiliency mechanisms.
• Control plane processing requirements
The two proposals for optical control platforms, ASON and GMPLS, are likely to coexist in the network and
hence a scheme for interworking is required in order to dynamically deploy end-to-end connections. Figure 39
illustrates one obvious scenario in which the different operators / administrates use different network platforms.
Workstation
Operator 1
GMPLS
Operator 2
ASON
Operator 3
GMPLS
Figure 39 Interworking requirements between different operators’ domains
Workstation
As well as the interworking of the different platforms, related scenarios include:
• Interconnection of different vendor’s implementation of the same platform
• Interconnection of administrative domains using the same control platform
• Interconnections of domains using identical platform but based on different transmission technologies
(e.g., different versions of NG SDH/SONET).
This requires specification and standardization of suitable inter-platform-interfaces. The interconnection might
require special gateways acting as control plane proxies.
135 IST OPTIMIST consortium: EU Photonic Roadmap, Key Issues for Optical Networking, January 2004 (www.ist-optimist.org)
136 M. O’Mahony: Optical Packet Switching, Short Course, ECOC 2004
137 Moises R. N. Ribeiro: Traffic Prioritisation in Photonic Packet Switching, PhD Thesis, University of Essex, June 2002
138 Q. Yang, K. Bergman: ‘Performances of the Data Vortex switch architecture under nonuniform and bursty traffic Lightwave
Technology, Journal of , Volume: 20 , Issue: 8 , Aug. 2002 Pages:1242 – 1247
139 Chiaro [Online]. Available: www.chiaro.com
140 Steinar Bjornstad: Packet Switching in optical Networks, Doctoral Thesis at NTNU, 2004:101

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QoS requirements will become more important and is an issue. This includes mapping the packet switched
IP/MPLS traffic flows onto circuit switched ASON / GMPLS connections and ensuring that the application
requirements are met for the end-end connection.
Protection is also an issue. Dynamic protection schemes are widely used in ring network topologies but are
mainly based on manually provisioned back-up capacity. Automating the setup of backup paths and enabling it
to work on meshed network topologies will enable a much more efficient use of network /transmission &
switching capacity and eliminate human errors in back-up path provisioning. However this will require
development and verification of new control plane algorithms. Perhaps verification is the hardest issue here to
ensure that critical connections are restored under all possible conditions.
Finally dynamic provisioning of connections and dynamic protection mechanisms increases substantially the
processing requirements to the control plane. Thus, processing power is a potential bottleneck in future,
heterogeneous optical, core networks. Perhaps distributed techniques which parcel out the problem could be
used. Certainly the networks are likely to be administered as separate independent domains.
7.4.3.4 Gap analysis
The evolution of optical networks, as described below involves the migration from voice centric designs to data
centric designs. Initial changes will be based on enhancing the capability of SDH with the step to next
generation SDH to allow more efficient use of the network and to step from a static to semi-dynamic situation.
The control plane will also evolve to Automatically Switched Optical Networks and/or G-MPLS. Much work
has been done to define these control methods. These techniques are not exclusive, but some detail will need to
be sorted to allow them to work together and for different vendors’ platforms to interwork. In addition these
networks will need to address end-end quality of service requirements, efficient restoration without reserved
hardware and dynamic allocation strategies.
All the technologies have been developed to allow an optical cross connect overlay to pass through traffic
without dropping down to the electrical layer and this is the next obvious step. Although in principle this could
be achieved today it is a revolutionary step rather than evolutionary. It is to be expected that there will be some
development necessary to find the optimum technique and much verification of the technology will be required
by the carriers before installation.
The final step in the replacement of the legacy SDH equipment in the add/drop by MPLS routers.
7.4.3.5 Roadmap
Near Term
The current position is that networks are still mainly optimised for voice, although since 2002 data traffic has
exceeded voice traffic. Data traffic has a very different nature to voice traffic with short set up times and
connection durations and has different statistics with a bursty nature, so a traditional circuit switched network is
not apt.
Current networks use SDH which is a framing technique with good overheads which allow excellent monitoring
of traffic. SDH uses 2Mbit/s frames of 64 kbit/s voice channels which are multiplexed up to 155 Mbit/s and then
up to 10 Gbit/s. In the core network, pipes are set up between nodes (Metro rings for example) to carry traffic at
bit rates up to 10Gbit/s. The pipes are inter-connected at major nodes (cities). Most traffic passes through (in the
UK 70%) and a little is dropped and added. Traffic within these pipes is interconnected by electronic digital
cross-connects at a granularity level of 155 Mbit/s.
So the current position has the network comprised of optical WDM transmission between nodes with crossconnection
achieved electrically. Each wavelength carries 10 Gbit/s. A centralised management system sets up
route using the signalling system. New fibres can be added to augment routes, but this is done manually in
exchanges and is slow, so the system is essentially static.
Channel transmission rates may evolve from 10 Gbit/s to 40 Gbit/s but this is only likely if the economics of
such a move make it advantageous to the carrier, or if the demand in the metro circuits causes the installation of
40 Gbit/s to occur there. There will be a trade off between the bit rate and the un-repeatered reach and this will
have implications migration to optical networking described below. Thus carriers considering investment in 40
Gbit/s will need to take a holistic long term view of their network evolution before making a choice.
For data the IP packets are loaded either directly into the SDH frames or via ATM cells. Large packets are
fragmented at the source and reassembled at the sink. The SDH format was designed for voice networks and is
not ideal for large data transfers. The network can get fragmented with isolated frames existing around the

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network which could support data, but are not contiguous. A few years ago it was envisaged that SDH would
rapidly be replaced, but the collapse of the bubble along with the massive investment of SDH has caused a great
rethink.
Work is underway on Next Generation SDH (NG-SDH) in which frames have virtual concatenation. At the edge
of the network frames are identified as (virtually) contiguous; they may traverse different paths through the
network, but are re-assembled at the end node. This allows large data volumes to be transferred efficiently by
allowing use of the previously isolated frames. Auto-discovery of the network and connectivity is another
benefit introduced and the introduction of a control and signalling layer, the Automatic Switched Transport
Network, will allow fast set up and tear down of services and dynamic allocation of resources together with fast
provisioning of end-end resources.
Distributed control planes such as GMPLS will be introduced to provide not only label switching, but control
over wavelength channel, fibre, time-slot etc. This route represents more of a packet based rather than circuit
based network implementation.
Medium Term
As we move into the medium term the mix of traffic will move towards more data and less voice. We want to
evolve from the near term network, so the node comprises SDH and WDM combined with a router. SDH will be
upgraded to have a cross-connection at 2.5Gbit/s as it is more efficient that 155 Mbit/s.
The next step involves the possible phase out of SDH and the introduction of optical cross connects to get us
towards the long term vision.
Long Term
Today’s end point of our high level vision is that within the core network, the nodes will comprise large MPLS
routers together with an optical cross-connect switch inter-connected by DWDM fibres. This end point
represents the intersection of two trends:
• Everything is becoming data, and the value of SDH has diminished ( some framing will still be neededthis
is where GFP (generic framing procedure comes in) in a bid to reduce the costly number of
network
• At each node most of the traffic is transit (70% in UK)], thus it makes sense to bypass transit traffic
using optical cross-connect –rather than everything going through router.
The OXC will deal with the transit traffic and drop the local traffic into the MPLS router where it will be dealt
with and forwarded. However the bursty nature of data traffic means that overlaying the circuit network with be
an optical burst switched network in which the bandwidth of a wavelength is shared between users to allow an
increase in efficiency through statistical multiplexing. IP packets at the edge are assembled into a burst. The
route is set up, the burst is sent, and the route is taken down.

7.4.4 Grid networks
7.4.4.1 Introduction
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A recent technique, which has the potential to drive large amounts of data transfer over broadband networks, is
grid computing. This is a technique where a computing problem is divided into many small pieces each of which
can then be calculated using spare processor power on many disparate platforms spread globally. The concept
here is that the computing power is a resource that can be turned on when needed in an analogous way to the
supply of electrical power to a consumer.
Typically up to now the applications have been non-commercial such as the SETI@home project 141 , where the
processing power has been donated for free by willing individuals. However as grid development moves
forward it is likely that the applications will become more commercial such as investigations of new molecules
for pharmaceutical purposes, and processing power will be brokered in a market.
The main requirement for applications is that they must be able to be split into parallel elements which can be
individually calculated before being aggregated to give the overall solution. One bonus of the “on tap” nature of
the processing power is that processes that previously took long periods to compute, can now be calculated in
virtual real time, without access to prohibitively expensive super computers.
A good example of this is analysis of astronomical data. Astronomers have access to telescopes for limited
periods of time. Historically, they would make their measurements and then analyse them over the months
following. This was inefficient as they had to measure blind. Grid networks give the potential for the analysis to
be completed while measurements are still occurring and for the telescopes to thus be able to be directed to
interesting features during the user’s time allocation.
Since the 1960’s we have progressed when only a few organisations could afford computers, and these had
limited power, to the point where most Western individuals have more personal computing power at their
disposal than the Apollo programme had. . The processing power of computers still doubles every 18 months
following the exponential curve described Moore’s Law, a corollary of this is that the cost of processing
approximately halves every 18 months.
One driver for progress is never being satisfied. The evolution we have made to solve previously intractable
problems whets our appetite to solve yet more complex challenges. Indeed the challenges in some way are
provided by the increased data provided by advanced technology that needs to be analysed.
Foster states that processing power (cost) doubles (halves) every 18 months 142 . In contrast storage power (cost)
doubles (halves) every 12 months. Certain areas generate lots of data. Particle accelerators for the investigation
of nuclear physics and telescopes for the investigation of the universe are obvious examples. Petabyte data stores
are already planned. This data has to be analysed and the relative rates of growth of the two sectors means that
this is becoming infeasible at a single site. Finally he states that the power (cost) of the communications network
is doubling (halving) every 9 months. If this continues, data communication will become essentially free. At this
point it becomes economic to analyse such data remotely (or to do equally computationally intensive activities).
Thus the prime drivers for grid networks are the complexity of the computation required and the minimal cost of
communications. Finally the model requires the provision of space processing capability not being used by
providers to be available to users. Until this point this has been charitably provided, this may change as
commercial users begin to use the technology.
An interesting consequence of the donation or sale of space processing cycles is that the processing resources
used are working more efficiently. This in turn hints that grid computing is “green” in that less physical
resources must be used world wide for the same result.
This argument leads to a drive for distributed computing of which grid computing is an important example.
Baker 143 lists the elements that comprise a grid:
• Grid fabric – this comprises all the physical resources available over the internet worldwide, and could
comprise individual PCs, unix workstations, sensors such as telescopes providing data, storage devices
and on-line databases. Although Baker does not specifically state it the physical communications
equipment used to link the grid would also be included in this element. The widely varying nature of
141
http://setiathome.ssl.berkeley.edu/
142
I. Foster: “The Grid: A New Infrastructure for 21st Century Science”, Physics Today, February, 2002
143
M. Baker et al “Grids and Grid technologies for wide-area distributed computing”, Software – Practice and Experience, 2002, John
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the components of this gives a strong drive that the grid middleware and applications should not be
platform specific.
• Core grid middleware – this element is concerned with the brokering of resources, distribution of
requirements and quality assurance. Factors that must be dealt with here include resource discovery and
management, access negotiation and trading, security, allocation, & quality of service.
• User level grid middleware – These are the software tools that the developer can use to adapt their
problem for a grid based solution. The components include languages, libraries and broker clients that
allow the user to define their requirements from the transaction.
• Grid applications and portals – the application is simply the problem that the user wants to solve such
as a simulation or data analysis. Portals are web based services that users can submit jobs to and collect
jobs from. In other words the portal acts as an interface to the grid that the user would otherwise have
to provide.
It is instructive to use these four parts to look at the state of the art in grid computing:
7.4.4.2 Grid fabric
The grid fabric is what is provided (hitherto by charitable individuals for free) and available for the grid to use.
Since this will be spare resources specified by some unknown users and the communications network of the
internet, it is beyond the scope of the grid community to develop the resources further. The grid community will
simple develop the agents which sit of the resources to talk to the broker and provide the software necessary for
the application to operate. Note that it is paramount that these do not compromise the users’ security in anyway.
The community will need to ensure that the middleware and agents can work with what is available 144 , and
provides the quality of service required by both the customer 145 and the resource provider 146 .
The necessary work for communication has already been done. Grid designers have no desire to re-invent the
wheel and thus will transmit the data using existing widely dispersed standard protocols such as TCP/IP.
Standard techniques can be used for encoding the communications to keep them secure from external snooping
It is fair to expect that the capabilities of the hardware will shadow pace with the development of computing and
communication technology.
7.4.4.3 Core grid middleware
The first applications claimed to be grid applications, such as the SETI@home project 147 could equally be
claimed by the peer-peer network community. Here providers donated resources by going to the SETI website,
downloading SETI specific software and registering. Advertising was by word of mouth and the internet
grapevine.
The vision described by the current generation of grid developers is to use middleware to maintain grid resource
tables and broker and allocate access. Assuring or negotiating the require quality of service will be part of the
responsibility.
144 The resources available may vary strongly with different platforms, operating systems, processing power etc. It is important that the
middleware can work with all this and is not prescriptive.
145 The grid requires contributors to provide resources, so it is paramount that their experience is positive. Factors to consider here are
• that their participation should not impact their own use of their resources or communication i.e. they have first call on the
resources. The ideal situation is that the participation does not impinge on the owner’s experience
• their security is not compromised in any way. Use of the grid is likely to involve the pushing of software out to the resources.
Middleware will need to guarantee protection by application validation
• they should be free to join or leave at any time. Note that this implies a need for the application to be stable under unpredictable
and sudden changes in the grid environment
• they should only have to install simple software on their platforms to participate. They certainly should not have to change
operating system or install new languages
146 Grid users should also have a positive experience. Some factors are:
• Ease of use – for penetration the software should provide facilities for non-specialists to input their application and the
middleware to translate it into grid compliant forms
• Security – as well as with communications security, the data and application itself may need to be kept confidential from hosts
147 http://setiathome.ssl.berkeley.edu/

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This step may even involve some commercial transaction as an incentive for resource providers 148149 . Thus the
core grid middleware along with will provide credit/billing functions in conjunction with the user level grid
middleware. In addition the two elements will have to validate the users’ identities and ensure security both of
the communication and application data and prevent malicious access to the resources.
In this vision the grid is a resource that can be tapped at will by users. Individual processing resources are linked
flexibly to the applications through the middleware rather than directly and rigidly.
7.4.4.4 User level grid middleware
As described above this element must work in conjunction with the core grid middleware to provide
identification, security, billing functions and quality of service.
The other main function of this level of software is to organise the application into a form that the grid can deal
with. The nature of the grid gives some constraints on the format of applications that can be used. The grid will
use multiple platforms with different speeds and these may be dynamically added and dropped without warning,
either because of owner requirements or because of network issues such as failure and latency. Thus the
application must be broken down into small sections which are loosely coupling. Parameter sweep modelling is
a good candidate for this kind of application, as it creates several independent jobs. Examples include analysis of
different molecules for drug applications, analysis of small sections of astronomical data e.g. for spectral
content, analysis of large databases to extract population data e.g. for a large supermarket to understand its sales.
Groups are developing visual based software for users to develop their applications.
7.4.4.5 Grid applications and portals
The application is beyond the scope of grid development as it belongs to the user and may take any form.
However it is worth noting that the grid imposes constraints as described above.
The user’s interaction with the portal will allow him to post the job and receive the results. In addition it is
proposed that the user will be able to specify the quality of service he requires e.g. analyse 100 molecules in 10
minutes, and how much he is prepared to pay as part of the negotiation with the lower levels of software.
Buyya 149 describes the 11 steps in for an application to run:
• The users compose their application as a distributed application using visual tools
• The users’ analysis and QoS requirements are submitted to the resource broker
• The broker performs resource discovery based on user-defined characteristics including price
• The broker identifies the list of data resources and uses optimal ones
• The broker identifies the list of computational resources and selects optimal ones
• The broker does a check on the user for the necessary credit and/or authorisation to use the resources
• The broker schedules and deploys the job to the resources to meet the QoS requirements
• The resource agents execute the jobs and return results
• The broker collects the results and passes them back to the user
• The broker passes the usage information to the accounting system for charging
• The accounting system reports share allocation or credit usage to the user.
7.4.4.6 State of the Art
There are several groups working on grid development. Some of the more notable ones are:
• Grid Computing and Distributed Systems (GRIDS) Laboratory at the University of Melbourne
developing the Gridbus project. A detailed list of achievements is described in 150 , in summary all the
elements required as described above are at some release status, and they have also developed a tool for
modelling global grid operation
148 We would like to propose here the use of a new parameter class of customer, so that resource providers can price their facility according
to the user and application. This would give the possibility that charities and academic organisations may have access to grid resources
for free or a low cost, while commercial organisation may need to reward the resource providers for helping their business. The
parameter could be further differentiated according to application to allow resource providers some ethical input into what their facilities
are used for. This parameter is analogous to the class of service parameter that the customer enjoys.
149 http://www.gridbus.org/papers/gridbus2004.pdf
150 http://www.gridbus.org/papers/gridbus2004.pdf

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• Globus Alliance, a community of organisations and individuals who have released a toolkit for building
grid systems and applications 151 . The collaborators are primarily at European and American
organisations. The team state, “The Globus toolkit includes software for security, information
infrastructure, resource management, data management, communication, fault detection, and
portability. The packaged suite of components can be used either independently or together to develop
applications.” The claim that there are over 22,000 downloads per month from their web-site
• Coregrid, is a network of excellence funded by the EC under the 6 th Framework program 152 It started in
Sept 2004 and is due to last 4 years. The program of activities is based around 6 complementary
research areas:
- knowledge & data management;
- programming models;
- system architecture;
- Grid information and monitoring services;
- resource management and scheduling;
- problem solving environments, tools and GRID systems.
Similarly there are several groups trying to organise large grid networks. These include:
• The Global Data-Intensive Grid Collaboration 153 organised by the GRIDs laboratory. This is intended
to demonstrate achievement of the two originating HPC challenges “Most Data-Intensive and
Geographically Distributed Applications”.
• Teragrid154 launched by the National Science Foundation in the US with multiple supercomputing sites
connected 155 . The components are linked by a 40Gbit/s network and can provide 20 Teraflops of
processing power and over 1 Petabyte of storage. Stated applications for the Teragrid include:
- the study of drug interactions with cancer cells, to thereby develop better cancer drugs
- the study the human genome and how the brain works,
- the analysis of weather data so quickly that they will be able to create real-time weather forecasts that
can predict down to the kilometer where a tornado or other severe storm is likely to hit.
- the design of better aircraft by allowing realistic simulations of new designs
- the understanding the properties of our universe and how it formed.
• The Large Hadron Collider Computing grid (LCG) 156 . This is being built to deal with the anticipated
computing needs of the Large Hadron Collider under construction at CERN. It includes more than 100
sites in 31 countries which contribute >10,000 CPUs and nearly 10,000,000 Gbytes of storage. The
group claim this is the largest international scientific grid and they are achieving record breaking results
for high speed data transfer. However the current processing capacity of this Grid is estimated to be just
5% of the long-term needs of the Large Hadron Collider. Therefore, the LCG will continue to grow
rapidly.
Of these grids the first is the closest approximation of a flexible grid as described in the introduction. The other
two examples are primarily under administrative control of one body for defined applications.
7.4.4.7 Issues and Trends
Currently there appear to be two trends of development within the community:
• The first is concerned with solving big scientific problems such as the date provided by the LHC.
Teams working on this generally are building large grid networks (either with clusters of resources
provided by well defined collaborators, or with those provided from a more loose collection of
donators). The grids are based around single (or a small group of) applications and may not necessarily
be easily transferable to other projects with the software possibly being bespoke. The aim here is to
provide a big resource to a limited number of users
• The second is more egalitarian with the thrust being to generate a devolved resource available to
everyone. They propose a market system for allocation of resources and posit intelligent middleware
151 http://www.globus.org/
152 http://www.coregrid.net/mambo/component/option,com_frontpage/Itemid,1/
153 http://gridbus.cs.mu.oz.au/sc2003/
154 Strictly speaking the defined nature of the resources and their ownership by a collaborating group means that Teragrid should be
considered a cluster network, rather than a grid network using definitions available in the literature.
155 http://www.teragrid.org/about/index.html
156 http://lcg.web.cern.ch/LCG/

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allowing the penetration of the grid to be massive and available to those who are not computer science
experts
Both approaches are valid and the development of the grid will probably proceed along both paths in parallel.
7.4.4.8 Gap Analysis
The tools necessary for the “large science” applications are already present. The main thrust here then will be to
grow the size of the grids and their processing and storage powers. As the amount of data thrown out by
experiments continues to exponentially grow, the thirst for resources will still continue to grow. The expectation
here is that major investments will be required for storage and processing power, if the grids are cluster
networks under the control of one administration, or the users will have to encourage more and more to donate
resources if the networks are true grids. In either case the data transfer over networks will increase and high
speed connections will be needed, particularly at the users’ ends as they will form the hubs of the networks.
The software tools for the pervasive democratic grid will need to continue development. While the requirements
of the software suite are well understood, much work needs to be done to generate the code, verify it and
guarantee it suitable for deployment. Further for large penetration both the users and the providers
understandably will require convincing of its security and lack of impact on their requirements. Some work will
need to be done to encourage providers to sign up and perhaps the market ideas are the best way of doing this
with the providers being rewarded for their participation. Perhaps the most challenging aspect of the software is
the part which will allow non-specialist users to generate their applications for use on the grid.
7.4.4.9 Roadmap
Near Term
Grid resources will continue to be available to large scale scientific applications, but the size of the networks
(number of nodes, storage and computing power) will continue to grow. Broadband penetration will also aid
this. The user group will enlarge from predominately pure scientists with academic research organisations to
applied scientists some from commercial organisations. The applications will still need specialists to couch them
in distributable terms. Grid “clusters” will still be administrated by single organisations or collaborations.
Medium Term
Development of the middleware will begin to alter the nature of the grid. Resources will be available through
brokers to a wider group of participants. Thus the grid management will become decentralised. Some expertise
will still be needed to generate the applications, but this will process will be simplified so it is within the grasp
of smaller organisations. The grid will become more commercial in its nature with some form of reward/cost for
its supply/usage.
Long Term
The grid will become a ubiquitous resource and become as much a part of everyday life as electricity supply and
usage is now. Penetration will make the resources available to all users regardless of size and technical
adeptness. Individuals will be able to use the grid to provide them with their needs and will supply the grid
themselves with their spare processing power. A market will reward them for their supply and charge them for
their demand. The application software will allow users without detailed knowledge to use the resources in the
same way that a user today can use a spreadsheet without detailed knowledge of the code that powers it. Perhaps
applications will be available to the users from the grid only rather than from their machine in a similar way to
current web .asp resources.

7.5 END-TO-END
7.5.1 Security
7.5.1.1 Introduction
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Broadband networks will offer people the possibility to be connected to the Internet at all times, new wireless
applications will enable the users to access the Internet from just about anywhere and the possibilities to connect
everything from printers to refrigerators to the Internet, will continue to develop and expand the way people use
the Internet. However, users often feel insecure when using the Internet due to fear of viruses, hacking attacks
etc.. In the near future requirements on security will rapidly change as networking and computing develop
further and computing become more ubiquitous.
Managing security has turned out to be a difficult and complex task, as the user has to deal with the availability,
integrity, authenticity, and confidentiality of data and services. Due to the complexity of technology, many
components and actors must play together, and human behaviour has become a crucial factor.
Improving information security is critical to the operations, reputation, and economic stability of any
organisation. As an organisation’s dependency on computers and network communications increases, so does its
vulnerability to information security compromises. Almost every week the media reports on new computer
crimes, system break-ins, malicious code attacks, and the ever-growing threat of cyber terrorism. Current
research on network security shows three realities that organisations must consider:
• Threats to computer systems and networks are increasing
• Damage caused by malicious attacks is rising
• Systems without appropriate security are easy hits for hackers
In addition to the legal ramifications of a security breach, it has substantiated that malicious attacks result in
actual financial costs, decreases in revenue, and an incredible impact on productivity. The security architecture
that can help organisations to reduce incidents of security breach and to meet the requirements of new laws and
regulations around the world is being addressed in many industrial and public organisations.
7.5.1.2 State of the art/existing technologies
7.5.1.2.1 Threats to Network and Information Security
Risk Assessment
When deciding which technologies should be used to protect an information network and how they should be
used, it is important to consider in detail what the realistic threats to the network are. Simply applying security
technologies without considering in detail why there are being applied can lead to inappropriate security being
applied. In the worst-case, inadequate security may be provided, leaving the network potentially open to attack.
However, applying security measures that are not needed may be almost as damaging due to the increased costs
involved and potential reduction in the efficiency and functionality of the network.
When considering threats to the network in detail, it is also important to remember that 100% security is rarely,
if ever, possible. Just because a threat is possible does not mean that it should be countered. Similarly, some
threats may be considered important, but, in general, it will not be possible to eliminate them entirely. What is
required is to mitigate the risks to an acceptable level. This is the process of risk assessment.
When performing a risk assessment, one typically needs to think about the assets that require protection, the
potential threats to these assets, and potential countermeasures.
Assets
The first step in a risk assessment should always be to identify what assets are of value, and therefore could
potentially be at risk. This involves answering questions such as what are the assets?, what is the value of
particular assets?, how will they be used?, what is their life cycle? and so on.
Threats
Once the assets that may require protection are understood, then potential threats to them need to be considered.
Threats can be divided into those that may affect the confidentiality, integrity or availability of assets.

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For each potential threat, an assessment has to take place of how significant it is. This will typically involve an
estimation of the likelihood and impact, if successful, of the threat. Some threats may be extremely significant if
successful. However, if they are extremely unlikely to happen, then they may be considered an acceptable risk.
On the other hand, some threats may be of only minor significance if successful, however, if they are very likely
to happen then the cumulative effect may be significant. Therefore, an assessment of the likelihood of a threat is
important. This will involve assessing factors such as ease of implementation of threats and motivation of
attackers. When assessing the impact of threats if successful, an evaluation of the assets affected will be
necessary.
The output of this assessment of risks will be a set of significant threats to the network, where each one has a
level of risk associated to it.
Countermeasures
Once the significant threats are known, countermeasures to mitigate the risks can be selected. Countermeasures
can either be technological, e.g. apply IPsec, or procedural, e.g. security awareness training. They are aimed at
addressing the vulnerabilities that the threats make use of. Threats with higher risk levels will, in general, require
stronger countermeasures to be put in place than those with lower risk levels. Once again, it is worth pointing
out that countermeasures are not generally chosen to try and eliminate threats, but to reduce their risk to
acceptable levels.
7.5.1.2.2 Security Threats
Threats on networks can be fortuitous due to users’ errors or material problems, but they also can be intentional.
Security threats to networks and information systems are categorized as:
Confidentiality violation
The confidentiality violation is when those who have not been authorized to access particular electronic data are
able to. They intercept and use private information.
Data’ integrity violation
The data integrity violation is when those who are not allowed to do so can modify the electronic data. This
threat affects the quality, correctness, authenticity, timeless and accuracy of the data.
System’ integrity violation
This threat has an effect on the successful and correct operation of the resources. Secret violation and intrusion
or hacking using Trojan Horses or back doors impinge on the system’ integrity.
Reduced availability
The reduced availability is when the electronic data cannot be accessed when needed by those authorised to do
so. Licensed used must be able to use these resources without being hindered by unintentional or malicious acts.
There are several kinds of reduced availability reasons, such as the denial of services caused by worms,
spoofing, or the pollution due to spam.
7.5.1.2.3 Threat Matrix
Threath \ Affected security objectives Confidentiality Data’ integrity System’ integrity Availability
Eavesdropping Yes
Denial of Service Yes
Man in the Middle Yes Yes Yes
Masquerading Yes
Replay Yes Yes
Spoofing Yes
Rootkits Yes
Spam, retro-spam Yes
Back door Yes Yes
Hoax Yes
Macro-virus Yes
Spyware Yes
Trojan Horse Yes
Virus (simple) Yes
Worms Yes
Table 11: Threat Matrix

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7.5.1.2.4 Defining Security Policies
Once the risk assessment process has been completed and countermeasures selected, the results should be
captured in a security policy document. This document will be provided to implementers, administrators and
users of the network, and describes what technological countermeasures are used and how they should be
configured, actions that must be undertaken for particular scenarios.
Privacy
Besides the confidentiality of exchanged or stored information, privacy aspects become important if the
information contains any kind of personal information. In general, privacy is only given if the personal
information, which is transmitted over the network or stored in any database,
• is held in trust,
• is visible only to any parties with the previous consent of the person to whom the personal information
belongs to, and
• is not transferred to any third party without the previous consent of the person to whom the personal
information belongs to.
7.5.1.2.5 Trust Services
Public Key Infrastructure
The target of a PKI is to provide Public Key Certificate (PKC) management to the group of security protocols
designed to protect the Internet. These protocols, as IPSec (Internet Protocol Security), SSL (Secure Sockets
Layer), TLS (Transport Layer Security) or S/MIME (Secure Multipurpose Internal Mail Extensions) use public
key cryptography to provide services such as confidentiality, data integrity, data origin authentication and nonrepudiation.
Users of public key based systems must trust in a PKC. It is a data structure which binds a public key to the user
subject. This binding is achieved by having a trusted CA that verifies the subject identity and digitally signs each
digital certificate.
A PKI is based on public key cryptography system, that may include software, people, policies, hardware, etc,
allowing to create, manage, store, distribute and revoke public key certificates. The Private Key Infrastructure
(PKI) is a robust technology that provides a complete security solution to open networks where many
communication partners are involved. It delivers strong authentication, data confidentiality and data integrity. It
enables non-repudiation and facilitates centralized privilege management.
The PKI deployment depends on the level of security that needs to be obtained for applications and the
demographics of the community of application users. It is important for the users to understand the reasons
behind selection PKI technology, the procedure in obtaining certificates and the advantages in using PKI. A set
of sound policies and procedures must be created and maintained in order to deploy a successful PKI. It is also
critical to review current policies and decide if additional policies and practices have to be established and
implemented.
7.5.1.2.6 Secure Mobility Services
Relevance of mobility protocols
The support of mobility of different parts of the network becomes an increasingly important requirement in
many scenarios. The solutions, which are currently investigated and developed in the Internet Engineering Task
Force (IETF) for this purpose, can be structured in the following categories:
• Host Mobility, that is a mobile host dynamically changes its point of attachment to a fixed backbone,
• Network Mobility, that is a network in motion dynamically changes its point of attachment to a fixed
backbone, and
• Mobile Ad hoc Networks, that is the backbone topology itself consists of mobile router and
consequently is dynamically changing.
Threats to mobility protocols
As the intention of mobility protocols is clearly to support a roaming system in maintaining efficient means for
communication, most attacks are destined to prevent this support and thereby successfully disrupt the
communication of the roaming system. This means even if the specific attacks make use of techniques like
spoofing or masquerading, the final consequence of most attacks is a Denial of Service.

7.5.1.3 Issues and trends
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ICT (information and communication technologies) are getting pervasive in creating Information Society
across heterogeneous, complex, open, interdependent and intelligent information infrastructures.
An open Information Society creates new opportunities for value creation and knowledge sharing, thereby
leading to possible conflicts with the traditional principles of privacy. It also opens up new vulnerabilities for its
users in terms of malfunction, contentious activities and privacy invasion. Heterogeneous technologies (fixed,
mobile, DVB, wireless, satellite etc..) and m-commerce in particular will have far reaching implications for trust
and dependable security. Security without dependable infrastructure and services will have no value. Hence
security and dependability have to be considered together.
These technologies involve the mobility of users of information and communications services (e.g. laptops,
mobile phones, PDA’s), the mobility of applications for personalised and location based services (e.g.
downloadable code and content) and the mobility of the components in the communications networks.
Emerging research issues
The security of the personal info-sphere, which covers the notion of securing personal info-assets and
credentials and relates to the deployment of personal area networks composed of personal devices. These
devices can all be interconnected on a peer to peer basis.
The security of the virtual community, which covers aspects related to establishing and managing trust relations
in communities, concerning social as well as business relations. Within this context there is a need for flexible
and configurable security policies that also cover different levels of authentication and authorisation of the
actors in transactions whilst safeguarding anonymity requirements for certain categories of actors. Trusted
infrastructures are needed to implement these policies. This challenge is getting even harder because of the
growing intelligence, functionality and responsiveness being placed in the infrastructure, which itself is
increasingly becoming dynamic.
The Security of the Infrastructure, which covers the notion of securing the essential IT infrastructure that
underpins the economy and society of the European Union. Technological developments and the needs of law
enforcement provide increased opportunities for surveillance in Internet. Better managing and strengthening our
infrastructure would make it more efficient and resilient without the need for unnecessary surveillance. A
societal debate that strikes an acceptable balance between surveillance and the rights of the individual should
underpin that issue.
To support user confidence and security, trustworthy (“trusted”) components should become more easily
available to users. Users should be given the possibility to choose (as appropriate) components which they trust
and which they would use to store personal information and credentials so as to build trust relations with other
entities and objects. However, the overall security model is changing rapidly and profoundly, and this means
that the notion of “trusted component” is changing as well: from monolithic systems the drive is towards
distributed systems and networked components.
Another aspect of confidence and trust is linked to the capability to evaluate and assess the security
levels/features of components, systems, services, etc. Since the security of a system depends on the interworking
and interoperability of different systems and processes, schemes for evaluation and assessment should support
the same dynamics (in time and space) and lifecycle as the technologies they are assessing.
7.5.1.4 Socio-economic impact
In the Internet of today the pendulum swings mostly towards the ‘technical haves’ and the people in possession
of certain information. Whereas the ‘technical have-nots’ come under immense pressure from the legislation
from above and have no means to evade this stranglehold. Users often feel insecure when using the Internet due
to fear of viruses, hacking attacks, eavesdropping, identity theft and other nefarious activities. In the near future
requirements on security infrastructures will rapidly change as networking and computing develop further and
computing becomes more ubiquitous. This means that broadband connections will offer people the possibility to
be connected to the Internet at all times, new wireless applications will enable the users to access the Internet
from just about anywhere and the possibilities to connect everything from printers to refrigerators to the Internet,
will continue to develop and expand the way in which people use the Internet.
Governmental e-applications have to be affordable to any citizen and more than others must be respectful of
privacy. Nevertheless, many of these applications serve millions of users, and handle tremendous amount of
data. These applications are, by definition, highly reliable when used by the public and must be extremely
resilient when supporting the critical missions of the government or vital utilities.

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Improving information security is critical to the operations, reputation, and economic stability of any
organisation. As an organisation’s dependency on computers and network communications increases, so does its
vulnerability to information security compromises. There are continuous media reports on new computer crimes,
system break-ins, malicious code attacks, and the ever-growing threat of cyber terrorism. Current network
security shows three realities that organisations must consider:
• Threats to computer systems and networks are increasing
• Damage caused by malicious attacks is rising
• Systems without appropriate security are easy targets for people intent on doing damage
Malicious attacks result in actual financial costs, decreases in revenue, and an incredible impact on productivity.
The security architecture that can help organisations to reduce incidents of security breach and to meet the
requirements of new laws and regulations around the world is being addressed in many industrial and public
organisations. Security is becoming far more complex everyday and requires new thinking on security models,
policies and guidelines to information systems designers considering the security requirements of their networks
and applications.
Data stored on computers that has even a remote possibility of containing information such as social security
numbers, credit card and financial account numbers, account balances, and investment portfolio information
must be protected.
7.5.1.5 Roadmap
The roadmap development for security and trust is a difficult one, since the security requirement is so pervasive,
there is a continuous paradigm shifts in defining the security and trust requirements. The FP6 framework has
several projects addressing these issues, and the reader should go into these project results to understand the
roadmap issues of security.
7.5.1.5.1 New types of networks
The technical and business trend in communication networks is to converge, integrate more “intelligence”,
“autonomy” and “functionality” into networks that become more and more responsive/active. These new
networks can differ in physical extension and scale (local, personal, domestic, etc.), timeliness, configurability
etc. In particular, connectivity and communications are more and more being realised by integrating an
increasing number of diverse and heterogeneous networks, services and/or components of networks which give
birth to new categories of networks, namely:
• • Spontaneous/ Self-Organising Networks, which are at the service level (or service related) – such as
enabling people in a room to establish communication. These embrace the “plug and play” concept and
generalize the “JINI” model.
• • Ad Hoc Networks normally formed by an ensemble of network nodes without fixed and predefined
infrastructures (topology). These are routing related and, normally, embrace the notion of
communicating objects, piconets, Bluetooth, etc.
• • Ambient Networks - that are context aware in the sense of “personalisation”, localization (in space
and time) and contextualisation. Bluetooth and other domestic (“domotic”, i.e. for use in an automated
home environment) protocols would bring computers everywhere as communicating objects. This will
drive demand for security models deployable through space and time. In this respect, new patterns/
behaviours of communications would emerge, including multi-party communications and virtual
associations of any kinds (devices, components, entities, domains, hybrid, etc.) This in turn will require
novel paradigms to manage and share secrets, such as new cryptography protocols to enable more
parties to contribute to the same discussion (multilateral discussion) Lastly, it is envisaged that all these
developments would tend to resolve the current complexity by clearly distinguishing between the
application layer and the transport layer.
7.5.1.5.2 New challenges: Network security architecture definition
• Innovative network security models, including
- new cryptographic paradigms and novel multi-party cryptographic protocols that can be easily
adapted to different security policies and that can enhance the configuration of policies.
- new approaches to defining security policies not necessarily based on access control, which may not
be a viable solution in a mobile environment.

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• New protocols (in particular for multicasting) for identification and authentication of nodes, services,
routes, active code, etc. as well as for distribution of credentials
• Coping with new attack models such as distributed denial of service attacks
• Multi-party security association management
• Issues related to management of sources of trust and accountability in dynamic environments.
• Survivability of infrastructures, including assurance of unbounded and novel network types (e.g.
“mobile” networks)
• Common security framework for both wireless and wireline architectures
- Providing uniform access to security functions from a user’s perspective.
- Rethinking the access control function to subdomains, when dealing with increasing number of
domains and increased heterogeneity and to the user (personal) sphere.
• The importance of security standards was underlined in order to avoid proliferation of interworking
procedures.
7.5.1.5.3 Interoperability Issues
The emergence of new networks and services would bring about the problem of how to secure the
interoperability of all these networks and security domains of individual networks. The situation would also be
made more complex by the fact that networks would themselves be the “access device/gateway” to wider
“scope” networks, such as:
• different types of Wide Area Networks/Corporate Networks (Mobile telecomm nets, mobile Internet,
fixed networks)
• different types of access networks (xDSLs, DVB-T/H, WLANs and mobile)
The secure interoperability issues would not only stem from the “structural” diversity of the networks but, even
more importantly, from the evolutionary aspects related to the capability of dynamically re-configuring networks
and service components. On top of the huge difficulties in realising secure physical and logical interoperability
between networks, the challenge will be made even harder by increasing number of network service providers
involved in the provision of network services (active nets, segmented value chain, etc.).

7.5.2 Overall management and control
7.5.2.1 Introduction
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Network functionality is usually split into three parts called planes; each of them responsible for certain
functions:
• Management plane
Longer-term functionality, such as static bandwidth provisioning, device configuration and monitoring,
fault management and restoration.
• Control plane
Short term functionality: Connection set-up and tear-down, protection, signalling, etc.
• User plane
Could also be called data transport plane. Raw data transport, buffering, shaping…
The overall function is to provide a certain degree of Quality of service (QoS) to the user.
Management Plane
Control Plane
Discovery
Signalling
Routing
Resource
management
Transport Plane
Figure 40
The management plane performs overall network functions such as bandwidth reservation/provisioning,
monitoring and restoration. A separate network usually performs network management. I.e., the network
carrying management information is different from the one carrying user data. In that way network monitoring
can be maintained even in the case of failures.
Network management information is carried by specialised protocols such as SNMP. Each network element or
sub-element contains an element manager, which gathers information and communicates with a centralised
network management systems located at the control centre of the network provider.
Usually, network management is sub-divided into a number of sub-functions, namely:

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• Configuration management
• Performance management
• Fault management
• Security management
• Accounting management
The control plane takes care of signalling information in the network. The control plane provides such
functionalities as routing and resource reservation. With the introduction of a control plane conventional optical
networks can become much more dynamic and responsive, and thus dynamically changing customer bandwidth
demands can be met and a better utilisation of the network resources can be achieved. It also supports quick
protection and restoration.
The user plane is responsible for transport of user data. A vast amount of protocols have been defined in order to
insure proper communication, - define data formats, handle flow and congestion control, define numbering plans
(addressing schemes) etc.
7.5.2.2 End to end control / QOS support
Within the IP community two different approaches for providing QoS in IP based networks have emerged:
Intserv or integrated services and Diffserv or differentiated services (Table 12).
Intserv
Diffserv
Characteristics
Per flow traffic management. Relies on explicit resource reservation in the network nodes. RSVP is used as
signalling protocol to set up paths and maintain a soft state for each connection, meaning that reservations must be
refreshed in order to keep the connection established. All network nodes must support Intserv in order to be able to
give any guarantees.
Per packet traffic management. A number of traffic classes are created by prioritisation in all network nodes and
classification at network / domain boundaries at the so-called diffserv code-points. The most fundamental diffserv
QoS concept is the PHB. Each additional diffserv capable device added to the network enhances the separation of the
traffic classes.
Table 12
The main difference between intserv and diffserv is the way resources are treated within the network. The per
packet traffic management paradigm used by Diffserv relies on each network element’s correct treatment of the
packet. The difficult thing here is the mapping from packet processing in each node (so called per hop behaviour
or PHB) to end-to-end connection characteristics.
Intserv connections are conceptually easier to handle because explicit resource reservation is employed.
However, Intserv has a scaling problem. The soft state reservation created by RSVP is accomplished by two
types of messages: RESV and PATH. PATH messages flow from the connections initiator and are routed
through the network to the receiving client. The receiving client then computes a bandwidth requirement
specification and issues a RESV message. This RESV massage backtracks the route followed by the PATH
message forcing resources to be allocated in the traversed routers. This cumbersome reservation mechanism
supports multicasting. The PATH massage is just duplicated in branching points and, in the reverse direction,
RESV messages are merges in the branching points.
Nowadays MPLS (Multi Protocol Label Switching) is considered a better alternative than Intserv, so today the
real battle is between MPLS and Diffserv.
MPLS (Multi protocol label switching) is a networking concept that is based mainly on a shift of all complex
functionality to the edge of the network, leaving only simple tasks for the core network and hence enabling fast
and efficient operation. The control plane (that takes care of e.g., routing) and switching (packet forwarding) are
completely decoupled, which yields the advantageous property that they can be chosen independently. MPLS is
designed as a pure 'everything over everything' concept, hence its name. In reality, however, its predominant use
and the majority of standardization work is focused on carrying IP traffic with MPLS, which is due to the
ubiquitous Internet.
Packets in MPLS are forwarded along Label Switched Paths (LSPs) that are determined by routing protocols
based on predefined traffic classes called Forward Equivalent Classes (FECs). An FEC can be equivalent to a
single entry in a conventional IP routing table or it can be an aggregation hereof. An FEC can also be specified

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based on a number of additional constraints such as originating address, receiving port number and QoS
parameters. These LSPs are defined in the switches by using labels, which are distributed by a Label
Distribution Protocol (LDP) responsible for mapping between routing and switching. Today, the protocol used
for label distribution is predominantly RSVP, which also exists in a Traffic engineering capable version, which
is called RSVP-TE.
One of the major benefits of the MPLS concept is its ability to perform traffic engineering, i.e., to be able to
control how traffic flows through the network, which is one of the prerequisites for providing QoS guarantees
on connections. Generally, traffic engineering implies to route along non-shortest paths and utilises Constraint
Based Routing (CBR) where the routes are calculated subject to performance- and administrative constraints,
which are assigned by the network management system based on traffic measurements. The well-known routing
protocol OSPF, which is based on shortest path first (SPF) computations can rather easily be extended to include
constraints, in which case it is called CSPF (Constrained Shortest Path First). The CSPF algorithm is “greedy” in
the sense that a link is added to a path only if it satisfies the constraints, but the route calculations are not
globally optimised.
The solution could be to introduce long-term traffic engineering based on e.g., Linear Programming (LP)
techniques that will produce more optimised route assignments compared to constraint based routing. LP is very
time consuming, however, so a combination of LP and CSPF is preferable, i.e., while CSPF calculates the routes
in the network, an LP solver runs in the background and optimises the CSPF computed routes. Another
approach to reducing the LP computation time is by employing heuristics that, albeit giving only sub-optimal
solutions, are usually close to the optimal ones with significantly reduced computation times.
7.5.2.3 Protection and restoration
The survivability of networks is achieved by providing backup paths. Two mechanisms are used to supply these
backup paths: In protection, the paths are pre-computed and established prior to a failure, in contrast to dynamic
restoration, where the backup paths are computed and established by using remaining resources in the network
only after a failure has occurred.
The evaluation criteria for protection and restoration methods are:
• Reliability
• Robustness
• Resource usage
• Recovery time
Traditionally, networks have been controlled in a centralized structure, but a more dynamic traffic pattern is
creating the need for distributed and highly flexible control mechanisms, where the network can be selforganizing
by setting up and tearing down connections as they are required. In order to restore a network failure
in a distributed control plane, the failure first needs to be discovered and a backup path with sufficient resources
has to be allocated before the traffic can be switched to the identified backup path.
In the field of survivable networks, researchers and industry are currently focusing on the following areas:
• Fault detection schemes
• Algorithms for survivable routing and resource allocation
• Analysis and optimal design of network topologies
• Integration of quality demands in survivable networks
• Analysis of reliability and availability
• IP-centric control and GMPLS mechanisms
7.5.2.4 Trends and issues
Today the communication infrastructure is divided into a number of different networks usually focused around
specific access technologies with dedicated administration of applications and users. Despite that interworking
to some extent is enabled between users connected via different access technologies the consequence has been a
continuously growing complexity of the control architecture -with impact on cost and reliability. Users that want
to exploit different kind of access networks (fixed and wireless) need a set of subscriptions with different set of
options and permissions. New services or new applications of existing services need to be developed and
administrated independently within the different network. In order to simplify the future networks a migration

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strategy must be defined that integrates not only the data plane but even more important the administrative
system (control and management). It is hard to come up with one definitive answer for what future will bring. A
single technology architecture and network has the advantage of easier maintenance. However, a single
technology probably cannot provide the optimal solution in all circumstances. In any case, it is a given fact that
most of today's telecommunications networks are multi technology networks. There are three main reasons for
that:
• These networks are themselves interconnected networks of different operators’ networks. Each
operator has full control over its own domain (and adopt a single technology, if it can), but has no
control over what technology its neighbour is using.
• Many of these networks are very large. Each technology has its advantages. Therefore different
technologies can be optimal in different circumstances/environments, and thus an operator can decide
to use the optimal technology solutions in the different areas.
• The upgrade of large networks is done gradually, during which phase multiple technologies are present
in the network.
A consequence of migrating from one, existing network architecture to another one is that new equipment must
be introduced. The sheer size of networks often dictated a step-by step migration strategy, which implies that at
all times the network will consist of a mixture of equipment, ranging from e.g., electrical routers to all-optical
packet and wavelength switches. It is important to find a suitable architecture in which new technology (e.g.,
optical switches) can be introduced gradually and hence enable a seamless migration. It should also be
emphasized that this mixed network (Figure 41), which for instance could be organized in a hierarchical fashion,
is in fact advantageous for many networks because it makes the operator leverage a number of different legacy
technologies while seamlessly migrating to the newest technologies.
Figure 41: A mixed-technology network. New technologies are popping up as “islands” within the network.
There are a number of issues related to control in networks, namely:
• Where to place the functionality (policing/shaping/admission control units etc.), and how. One
approach could be to move some control to the access network to relieve some signalling burden from
the core network. This is an issue also when considering network protection / restoration.
• How to provide end-to-end control and hereby QoS support
• How to evolve the current networks reusing as much as possible from the legacy networks.
• How to enable dynamic (on demand) introduction of new services
• Dynamic restoration.

7.5.2.5 Data transport
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7.5.2.5.1 Emerging transport protocols
UDP and RTP have become the protocols of choice for the transport of multimedia continuous streams on the
Internet. They are widely used in existing products for multimedia transport (see Apple’s quicktime streaming
server, Microsoft windows media server, Real networks helix universal server, etc.) Multimedia streaming over
RTP/UDP has been also widely investigated in past IST FP5 projects and is being retained by initiatives such as
ISMA (Internet Streaming Media Alliance).
The real-time transport protocol (RTP) provides end-to-end delivery services for data with real-time
characteristics, such as interactive audio and video. Those services include payload type identification, sequence
numbering, time-stamping and delivery monitoring.
However, RTP itself does not provide any mechanism to ensure timely delivery or provide other quality-ofservice
guarantees, but relies on lower-layer services to do so. It does not guarantee delivery or prevent out-oforder
delivery, nor does it assume that the underlying network is reliable and delivers packets in sequence..
While RTP is primarily designed to satisfy the needs of multi- participant multimedia conferences, it is not
limited to that particular application. Storage of continuous data, interactive distributed simulation, active badge,
and control and measurement applications may also find RTP applicable. RTP consists of two closely-linked
parts:
• the real-time transport protocol (RTP), to carry data with delay-constraints;.
• the RTP control protocol (RTCP), to monitor the quality of service and to convey information about the
participants in an on-going session.
7.5.2.5.2 DCCP
This DCCP (Datagram Congestion Control Protocol) protocol is intended to be used by applications such as
streaming multimedia. It can be regarded as a mix of UDP and TCP and offers a choice of congestion control
mechanisms without making use of some of the TCP features, which are not compatible with delay constraints.
DCCP is intended for applications, which have preference for delivery of timely data over in-order delivery or
reliability. Many of the applications targeted by DCCP (e.g., streaming multimedia) currently use RTP over
UDP. DCCP is intended to be a standard way to implement congestion control and congestion control
negotiation.
DCCP provides many features to users, and has been criticized for the resulting complexity. A simplified
version of DCCP, called DCCP-Lite is also under specification.
7.5.2.5.3 UDP-lite
The above problems need to be addressed in both wired and wireless media delivery infrastructure. However, in
infrastructures with mobile and wireless access, QoS support requires in addition the delivery technologies to
allow for high spectrum efficiency as well as robustness against errors.
This has led to the creation of the ROHC working group within the IETF and to initiatives such as UDP-Lite
which should allow a more efficient bandwidth usage. The implementation of end-to-end congestion control in
network infrastructures with wireless access requires a capability of differentiating losses due to network
congestion from losses resulting from UDP or UDP-lite paket discard after error detection. This is known as a
loss differentiation problem.
UDP-lite is a lightweight version of UDP, which provides increased flexibility in the form of a partial and
adaptable checksum. Accordingly, the data in a packet can be divided into two parts, a sensitive and an
insensitive part. Bit errors in the sensitive part of a packet will cause packets to be discarded at the receiving
side, while errors in the insensitive part will be ignored. While providing this extra flexibility, the UDP-lite
protocol is compatible with the classic UDP protocol.
7.5.2.6 Application layer mechanisms
Another trend consists in trying to adapt the applications to the network characteristics. A number of
experiments have already shed light on the benefits of adaptation mechanisms. By handling delay jitter (delay
adaptation), packet loss (forward error correction, error concealment), and variable source rate availability, they
allow to improve the quality of multimedia communications over best-effort networks. Congestion control, rate
control, forward error correction, scheduling in the application layer are considered as alternative or

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complementary solutions to the problem of optimum stream adaptation to network varying bandwidth, loss rate
or delay characteristics.
Congestion control can take different forms: one finds solutions relying on bandwidth prediction mechanisms,
such as the TFRC algorithm now introduced in DCCP. The bandwidth prediction is coupled with rate control
performed either by a real-time encoder or by the streaming server.
In streaming servers, so far, simple strategies such as multi-rate switching are generally considered (see e.g., the
windows media server). The multimedia content is pre-encoded at a selection of bit rates. The different streams
are stored on the streaming server. In streaming solutions supporting multi-rate switching, the streaming server
automatically detects the user’s Internet connection speed, e.g., using bandwidth prediction techniques described
in the above section, and suitably adapts on the fly the bit rate, hence the quality of the media stream, by
selecting the appropriate encoded stream. Multi-rate switching is implemented e.g., in the Microsoft windows
media server and in the SureStream technology of the RealNetwork Helix media server. One should also note
that alternative solutions to multi-rate switching considered in standardisation groups (e.g. MPEG) rely on
scalable representations of the multimedia signals.
The deployment of relay or caching media servers at the network edges is also among the features considered
for avoiding overload of the core network. Streaming servers are thus positioned at the edge of the distribution
network near the end-users. These proxy or caching servers can then fetch the requested media and serve it as if
the content was locally available. This contributes to removing the load from the central server. The architecture
of relay servers then implements what it is commonly referred to as Application Layer Multicast, leading to
overlay content delivery architectures.
7.5.2.7 Client side buffer management
Mechanisms such as buffer management on the receiver, by allowing for local caching and playback, are also
envisaged to reduce the impact of network congestion on the quality of the rendered signals. Client side
buffering coupled with intelligent pre-fetching and playback provides means to “absorb” network bandwidth
varying conditions. Media data is buffered at the client to protect against playout interruptions due to packet
losses and random delays. However, while the likelihood of an interruption decreases as more data are buffered,
the latency increases. In today’s streaming technologies, buffering delays often range from 5 to 15 seconds for a
good balance between delay and playout reliability.
Solutions for rate-distortion optimized streaming of media packets have been studied. The streaming system
decides which packet to transmit based on the packet deadline, the channel statistics, the feedback information,
the packets inter-dependencies and the reduced distortion resulting from a correct reception and decoding of the
packet.
7.5.2.8 Migration steps
Up to date, telecommunication networks have been built for specific purposes. For instance, the PSTN/IN
network has been built to provide the fixed telephony service, and the mobile networks have been built to
support mobile telephony and data services. The aforementioned services run on separate infrastructures. The
Internet has been placed on top and (by definition) may use any access and core network technology, but still
needs it’s own infrastructure to handle subscribers.
The current approach allows only a few players to dominate the market while new services are difficult and
effort/cost/time-consuming to introduce due to slow standardisation progress and difficulties to integrate with
existing core infrastructures and service implementations. Another major consequence of building ‘servicespecific’
networks is the replication of redundant functions. For instance, one of the functionalities of the Home
Location Register (HLR) in mobile networks is subscriber authentication and authorization. If the same
subscriber also utilizes an Internet service, this function cannot be reused. Currently, authentication and
authorization is set up individually for each service.
Additionally, up-to-date networks use the traditional architectural segmentation of network types in core, access
and user-equipment domains, whereby the core network is responsible for “managing” user requirements in
terms of switching/routing, bandwidth/QoS reservations, authentication and tariffing, and the access network
infrastructure (Local Exchange, Base Station Controller, Network Access Servers, etc) is typically limited to
allowing connectivity of the user equipment to the core. Furthermore, existing access infrastructures follow a
“monolithic” approach whereby systems are vertically integrated and exhibit low flexibility and customisability.
In this context, network services and even applications offered by “third-party” providers are dependent on, and
mainly implemented at the core of the operators’ telecommunications networks they deploy. This approach

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frequently results in core-network overload and congestion in terms of access and network-services
provisioning.
Therefore, the lack of a novel and consistent approach that would move and/or concentrate interconnectivity
(switching/routing), intelligence, dynamic service deployment, and service-management processes towards the
edges, is evident. This would enable core networks to be treated as backbone resources being deployed by and
interacting with network services and applications.
Spezialised
Network Elements
Spezialised
Protocols
Subscriber Data
enclosed in
Network Elements
• a closed environment
• a network for each service
• too complex
• too expensive
No future!
Figure 42: Telecommunications Networks Today
Five steps could be envisaged in this evolution strategy;
• Step 1: Get the Data out of the Network Elements
• Step 2: Use a Service-Centric Architecture for new Applications
• Step 3: Integrate Legacy Infrastructure
• Step 4: Move Switching, and Services Management towards the Networks Edges
• Step 5: Dynamic Service Deployment.
Generic Storage Area Networks (SANs) have been proposed as a solution for the central storage and backup of
persistent data kept in various networks elements (HLR, SCP, etc). One approach could be to extend the
deployment of SANs also for enabling the rapid introduction and flexible provisioning of applications. In this
manner information will be directly available at the access points, while security-related and networks
interoperability issues (communications protocols) could be solved through the deployment of widespread and
established Internet and Information Technologies. An adequate open data model will have to be defined and
developed for this purpose. In this context, the target will be the provision of a common data model addressing
the requirements of divergent information and database technologies (RDBMS, ODL, OQL, etc).
The integration of legacy infrastructures should aim at preserving existing operators’ investments and in the
same time enable the rapid realisation of new revenue generating services. This will be accomplished by
defining and implementing the procedures and communications interfaces enabling the management of legacy
networks resources and retrieval/updates of applications information currently ‘hidden’ in a wide variety of
network elements.
7.5.2.9 European projects
The FLEXINET concepts and architecture are applicable to various access network technologies
(GSM/GPRS/UMTS, WLANs, V5, etc.), but will be focused on the mobile and wireless operator needs (UMTS
& WLAN) for packet switched applications.
Other FP5 and FP6 projects of interest are , MUPBED, GEMINI, FLEXINET, NGNI, DAVID, LION,
WINMAN

UMTS Nodes B & BTS
FlexiNET Generic Data Interface bus
Storage Area Networks
Core UMTS/GSM Networks
Core UMTS/GSM
Core UMTS/GSM
FlexiNET
FlexiNET
Programmable
Programmable
FlexiNET Data
Services
Services Gateway Access
Access Nodes
Nodes
Nodes (DGWN) (AAN)
(AAN)
7.5.2.10 More information in:
RNC/BSC
RNC/BSC
RNC/ BSC
FlexiNET
FlexiNET
Programmable
Programmable
FlexiNET UMTS
Services
Services Access Access
Access Nodes
Nodes
Nodes (FUAN) (AAN)
(AAN)
Backbone IP
Networks
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RNC/BSC
RNC/BSC IP Router
Gateways
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FlexiNET
FlexiNET
Programmable
FlexiNET Programmable Services
Services
Services Access Access
Access Nodes
Nodes
Nodes (FSAN) (AAN)
(AAN)
FlexiNET Generic Applications Interface bus
WLAN Access Points
Legacy Telecommunications
Applications and Enterprise
Interworking
FlexiNET Interworking Bus with Legacy Switch platforms
Figure 43: FlexiNET generic Network Architecture topology
Access routers, bridges, etc
Third-party
applications
Servers
FlexiNET
• Zhang, J. and Mukherjee, B. “A Review of Fault Management in WDM Mesh Networks: Basic
Concepts and Research Challenges”. IEEE Network, March/April 2004. pp. 41-48
• Grover, W.D.”Mesh-Based Survivable Networks: Options and Strategies for Optical, MPLS, SONET,
and ATM Networking”. Prentice Hall, August 2003, ISBN 0-13-494576-X
• Vasseur, J.P., Pickavet, M., Demeester, P. “Network Recovery: Protection and Restoration of Optical,
SONET-SDH, IP, and MPLS”. Morgan Kaufmann Series in Networking 2004, 0-12715051-X

7.5.3 IPv6
7.5.3.1 Introduction
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At present, a mature IPv6 stack is available for most popular operating systems and all major network system
vendors support IPv6 in their new equipment. Last year, China deployed the largest production IPv6 network,
CERNET2, currently connecting 200 colleges in the country. Given the shortage of IPv4 addresses and the
recent growth of the economy in Asia, it is no surprise they are early adopters for the new network protocol. In
Europe and the United States, IPv6 networks are mainly explored in research projects and production
deployment initiatives providing end-to-end IPv6 connectivity are scarce. Driven by the research projects, tunnel
broker services providing tunnelled IPv6 access to early adopters all over the world came into existence,
however. Despite the absence of production IPv6 deployment evidences in Europe, recent large address
allocations by RIPE NCC to European operators and providers indicate their increased interest in IPv6. Figure
44 below 157 , indicate that the majority of IPv6 prefix requests are served by RIPE NCC (Réseaux IP Européens
Network Coordination Centre) and APNIC (Asia Pacific Network Information Centre), mainly covering Europe
and Asia.
Figure 44: Distribution of IPv6 allocations by number (left) and by size (right)
The cautiousness of the European and American operators with respect to the large-scale introduction of IPv6
can be motivated by both economical and technical reasons. First, introducing IPv6 in each network device is a
costly operation and the absence of a killer application makes this a risk investment. Secondly, network services
and applications need to support IPv6. Today, many applications use IP(v4) addresses instead of hostnames,
thereby necessitating both server and client side software upgrades. The limited number of websites accessible
by IPv6 today reflects this issue.
157 RIPE homepage: http://www.ripe.net/rs/ipv6/stats/

7.5.3.2 State of the art
7.5.3.2.1 CERNET2
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Backbone and Usenet
CERNET2 adopts a two-layer hierarchy consisting of backbone and usenet, with the former with the pure IPv6
protocol.
The CERNET2 backbone is based on the high-speed transmission network of CERNET, which links the
CERNET2 core nodes in Beijng, Shanghai, Guangzhou and other seventeen cities at a speed of 2.5-10 Gbps.
The network center of CERNET2 is located in Tsinghua University, Beijing.
The CERNET2 usenet is a trial network for the research of colleges, universities and research institutions.
Adopting the IPv6 protocol, it accesses the CERNET2 core nodes through high-speed MAN (Metropolitan Area
Network), optical fiber connection or high-speed distance line. Peking University, Tsinghua University and
other 200 famous colleges and universities will become the first batch of CERNET2 users.
CERNET2 Core Node
GigaPoP, core node of CERNET will be set up in Beijing, Shanghai, Guangzhou and other seventeen cities,
each capable of providing 1~10Gbps IPv6 high-speed access services for more than ten users. In contrast, the
Beijing core node can provide such services for more than 30 users.
CNGI-6IX, National/International Internet Center
CNGI-6IX, the national/international NGI exchange center has been established in Tsinghua University, Beijing.
It will provide 1~10Gbps interconnection for NGI in the country, and 45-155 Mbps interconnection for NGI in
North America, Europe, Asia-Pacific Region, as well as other countries and regions 158.
7.5.3.2.2 European IPv6 deployment initiatives
The European Commission supports IPv6 investigation by funding several IST projects tackling IPv6 issues. An
overview of all IST IPv6 projects can be found on the IPv6 Cluster homepage [2]. The European projects
mentioned below focus explicitly on IPv6 deployment and assessment by constructing large scale IPv6
networks.
6NET 159
Objectives:
• Install and operate an international pilot IPv6 network with both static and mobile components in order
to gain a better understanding of IPv6 deployment issues. This network will primarily use native IPv6
links (initially running at 155 Mbps and increasing to 2.5 Gbps in the second year), although
encapsulation over IPv4 infrastructure may be necessary in some cases.
• Test the migration strategies for integrating IPv6 networks with existing IPv4 infrastructure.
• Introduce and test new IPv6 services and applications, as well as legacy services and applications on
IPv6 infrastructure.
• Evaluate address allocation, routing and DNS operation for IPv6 networks.
• Collaborate with other IPv6 activities and standardisation bodies.
• Promote IPv6 technology.
Euro6IX 160
The first objective of the Euro6IX project is to research an appropriate architecture to design and deploy the first
Pan-European non-commercial IPv6 Internet Exchange (IX) Network. It will connect several regional neutral
IPv6 Internet Exchange points across Europe, and achieve the same level of robustness and service quality as
currently offered by IPv4 Internet Exchange Networks.
The second objective is to use the deployed IPv6 IX infrastructure to research, test and validate IPv6-based
applications and services.
As a third objective, the network built within the Euro6IX project will be open to specific user groups (existing
and to be created), who will be connecting to the Euro6IX network by means of a variety of access technologies
158 http://www.edu.cn
159 http://www.6net.org
160 http://www.euro6ix.org

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– mobile, xDSL, cable – and internetworking with legacy IPv4 networks and services, to test the performance of
future IPv6 networks, and non-commercial native IPv6 advanced services and applications. The network’s
Acceptable Use Policy (AUP) excludes the possibility of carrying commercial traffic.
The fourth objective of the project is dissemination, liaison and coordination with clusters, fora, standards
organizations (e.g. the IETF and RIPE) and third parties, with particular consideration for interworking and
coordination with peer projects.
GÉANT2 (dual stack IPv6 network) 161
Objectives:
• To plan, build and operate a multi-gigabit pan-European backbone research network interconnecting
Europe's national research and education networks (NRENs), over which a suite of advanced services
will be offered to meet the increasingly demanding requirements of Europe’s research and education
community
• To conduct joint research into the development of networking technologies and services, with the
primary aim of developing ideas from concept to production service to directly serve the users of
GÉANT2 and its connected NRENs
• To support effectively and directly projects and users who have advanced networking requirements
• To pursue initiatives targeted at closing the 'digital divide', through both in-depth analysis of the picture
of research networking in developing areas and the provision of direct support
• To examine the future of research networking, exploring the case for the sustaining of research and
education networking beyond the conclusion of the project.
7.5.3.3 Issues and trends:
As mentioned in the introduction, application support for IPv6 can be considered as the main technical issue
preventing IPv6 adoption by end-users. Fortunately, the IPv6 Ready Logo Program addresses this problem.
IPv6 Ready! Logo for Applications 162
The IPv6 forum plays a major role to bring together industrial actors, to develop and deploy the new generation
of IP protocols. Contrary to IPv4, which started with a small closed group of implementers, the universality of
IPv6 leads to a huge number of implementations. Interoperability has always been considered as a critical
feature in the Internet community.
Due to the large number of IPv6 implementations, it is important to provide the market a strong signal proving
the level of interoperability across various products.
To avoid confusion in the mind of customers, a globally unique logo program should be defined. The IPv6 logo
will give confidence to users that IPv6 is currently operational. It will also be a clear indication that the
technology will still be used in the future. To summarize, this logo program will contribute to the feeling that
IPv6 is available and ready to be used.
The IPv6 Logo Program consists of three phases
• Phase 1: In a first stage, the Logo will indicate that the product includes IPv6 mandatory core protocols
and can interoperate with other IPv6 implementations.
• Phase 2: The "IPv6 ready" step implies a proper care, technical consensus and clear technical
references. The IPv6 ready logo will indicate that a product has successfully satisfied strong
requirements stated by the IPv6 Logo Committee (v6LC).
• To avoid confusion, the logo "IPv6 Ready" will be generic. The v6LC will define the test profiles with
associated requirements for specific functionalities.
• Phase 3: Same as Phase 2 with IPsec mandated.
7.5.3.4 Gap analysis:
Currently, operators judge the financial risk associated with massive end-to-end IPv6 support cannot be
justified. Identification of killer applications could boost IPv6 deployment.
7.5.3.5 More information:
IPv6 Cluster homepage: http://www.ist-ipv6.org/index.php
161 http://www.geant2.net
162 http://www.ipv6ready.org

8. Market developments & policy aspects
8.1 Introduction
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This chapter includes a complete set of EU country studies, as well as case studies of a few number of non-EU
key broadband countries. The case studies mainly concentrate on success stories describing some of the front
runners in broadband development. The idea is to analyse examples of successes and failures in a number of
selected countries, which can be used as guidance in formulation of future policy initiatives in a European
setting. The synthesis of all the individual country analyses is then the subject of the following chapter.
The EU country studies come in two varieties: an in-depth approach for several countries of particular interest
for broadband, and more condensed country studies for the other EU countries plus one for the EU as a whole.
The EU countries selected for the in-depth approach are Finland, Denmark Germany, Sweden, and the UK.
Finland and Denmark are chosen as both countries have a high ranking with regard to penetration of broadband
services. Finland provides a special case as they are hosting a very strong telecom industry. Denmark has a
moderate telecom industry but has a tradition as an advanced telecom market with regard to usage and
regulation. For example, it has recently been ranked 1 in IDC’s information society index 163 . Germany has been
selected because it is the most important market in Europe. Sweden is not only advanced in telecommunications
in general, but is also leader in fibre-to-the-home technology. Finally, the UK is the country with the lowest
market share for the incumbent telecoms operator.
For the non-EU case studies we have selected the US, Japan, South Korea, Canada and Iceland. Clearly, the US
is a key market for broadband development, in particular regarding the multiplicity of technologies and
initiatives. Japan has been very successful at disseminating broadband access recently, while South Korea is the
leading broadband country in the world. Japan and South Korea have also followed distinct telecom strategies
which are very different from those applied within Europe. Canada has high broadband penetration despite low
population density, an important challenge for large parts of Europe. Finally, Iceland has been included because
it is successful in broadband roll-out although there is basically no infrastructure competition. All of the non-EU
country studies are of the extended kind.
Altogether, therefore, there are ten in-depth and twenty-one condensed country studies. Given the large number
of countries, not all aspects of markets and regulation will be studied in every country. Every country study
consists of a short country introduction, an update of the broadband market, an overview of the policies pursued
by public authorities in the respective country, and a short conclusion. The in-depth studies have more detailed
information on the market developments and on the policies, and typically have also detailed information on a
number of exemplary local or regional initiatives.
Before coming to the country studies, section 8.1.2 briefly surveys broadband market developments worldwide.
Section 8.1.3 gives a short introduction into the fundamentals of regulation.
8.1.1 Broadband indicators
In a comparison of indicators for supply of broadband in various countries, it is necessary to be aware of
differences in the definition of what broadband really is. The OECD defines broadband as a 256 kbps
downstream and at least 64 kbps upstream connection (OECD 2004), the FCC requires high-speed lines faster
than 200 kbps at least in one direction (FCC 2002). Some EU publications use 144 kbps in one direction as the
limit (EU Communication Committee 2003). These differences are necessary to consider when statistics from
various sources are compared.
As technologies are rapidly changing, it is difficult to focus on exact kbps numbers in defining penetration of
broadband. Maybe a broadband connection should for the time being be defined as an always-on connection
capable of streaming music in good quality without interruptions. It may however be necessary to change this
definition, if the majority of future broadband services will demand a capacity higher than can be delivered
through such a line.
Broadband availability refers to the number of end users which are within the reach of broadband capable access
points to the core broadband network. In the case of DSL "availability" number refers to the number of upgraded
local exchanges. One can refer to this figure as "theoretical broadband availability" or "supply side availability".
163 http://www.idc.com/getdoc.jsp?containerId=pr2004_10_28_164010

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This figure is easy to gather (the number of upgraded switches), but it gives an incomplete picture as this figure
does not tell anything about the capacity within the network. Lack of capacity may imply that only a limited
number of users are able to connect – or that user in reality only will have a bandwidth, which cannot be termed
as broadband, available. This "practical availability" is also very important especially in relation to end user’s
and their broadband experiences.
In addition upgrade of the local exchanges may not be sufficient for reaching all customers. xDSL is distant
dependent: the further away users live from the local exchange, the slower is the connection. Therefore
broadband may not be available for the more distant customers unless additional investments in the access
network are made.
8.1.2 Broadband market developments
After a couple of years in which the electronic communication markets had been in a somewhat fragile state,
mainly due to the global economic downturn, high debt rates for some market players due to the cost of 3G
licenses, ill-timed investments in backbone networks and the high prices paid for foreign acquisitions of
operators, the sector has been picking up momentum over the last year or so. It has managed to do so despite the
persistence of weak economic growth in many EU countries. One of the motors of this sectoral recovery has
been the take-off of broadband deployment.
Figure 45 shows the development of Internet and broadband penetration 1998-2004. In 2004 there were in total
around 160 million broadband subscribers in the world.
Figure 45, Broadband and Internet users worldwide [millions] 164
Wireless and satellite broadband solutions are still relatively new to the market and most broadband users
currently rely on fixed-line connections to access the Internet (mainly through DSL or cable modems). Therefore
broadband solutions have mainly been rolled out in areas where sufficient returns on investments could be
expected, e.g. metropolitan areas or fairly high density areas in developed countries. Also the level of gross
national income (GNI) per capita has a high influence on the expected broadband penetration level, as inmost
countries broadband connections are relatively expensive. Figure 46 (“Figure 10”) below shows broadband
penetration and choice of technology in the top-ten countries.
164 http://www.itu.int/ITU-D/ict/statistics/at_glance/Europe_RPM_2005.pdf

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Figure 46: Broadband penetration, subscribers per 100 inhabitants, by technology 165
The high penetration markets in Korea, Canada, Iceland, Japan and the US as well as Denmark, Sweden,
Finland and the UK will be further described in the in-depth country studies.
The fast growth of subscriber numbers has been accompanied, and at least partly caused, by rapidly falling
prices. The decrease in prices is usually, but not always, associated with intensified competition, either on the
same infrastructure, or between different infrastructures.
165 http://www.itu.int/ITU-D/ict/statistics/at_glance/Europe_RPM_2005.pdf

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Figure 47: broadband prices in the top 15 broadband economies 166
Figure 48: Market share of incumbents in old EU Member States 167
166
http://www.itu.int/ITU-D/ict/statistics/at_glance/Europe_RPM_2005.pdf
167
Commission Staff Working Paper, Annex to European Electronic Communications Regulation and Markets 2004 (10th report),
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Although most telecom markets have become liberalised (see below), the incumbent operators still dominate the
market for broadband services. Figure 4 illustrates that even in countries where telecommunication markets have
been liberalised for some years, the incumbent operators still hold a major market share regarding broadband
connections. Since xDSL is currently growing faster than alternative access technologies, in particular faster
than cable, the strong position of incumbent telecom operators on the xDSL segment would suggest that their
overall market share is likely to further increase in the near future.
8.1.3 General regulatory aspects
Telecommunications markets are nowadays liberalised throughout much of the industrialised world, but
significant differences remain. Liberalisation has always been accompanied by regulation, which can take very
different forms. Even where common principles have been fixed, as within the EU, where an EU-wide
regulatory framework is in place, implementation may still differ – for example, in Denmark, but not in most
other EU countries, unbundling is also demanded for optical networks. Differences in the regulatory framework
conditions of liberalised market are even bigger where there is no set of common principles, such as among the
US, Japan, Korea and the EU.
The basic right to deploy a self-owned infrastructure outside the purview of the incumbent operator is a corner
stone of the liberalisation of infrastructure provision. However, the most common mode of operation of
alternative infrastructure providers, does not, to any large extent, consist in deployment of complete networks,
but rather in the establishment of partial networks (backbone or metro) which are interconnected with other
operators’ networks. Regulation is needed to ensure fair competition in this situation where market power is
extremely unequal – usually the incumbent operator are owners or at least control the “last mile”, i.e. the access
to customers premises, throughout their country, which gives them huge leverage over other operators, in
addition to an initial market share of 100% at the time of liberalisation. Sometimes this leverage is diminished
by the presence of alternative infrastructures, such as cable TV networks, but then again sometimes the same
operator controls both. In this context, a key regulatory instrument is “local loop unbundling”, i.e. giving
competitors the right to use the incumbents’ customer access. However, this often requires very detailed
technical rules. Other key regulations concern interconnection, frequency attribution, rights of way, and names
and numbers; and finally, universal service regulation and consumer protection.
Within the EU, public network operators have both the right and the obligation to negotiate the interconnection
of their networks with each other, while private network operators do not. All communications providers will,
however, be entitled to make reasonable requests for access to network facilities (such as unbundled local loops,
partial private circuits or wholesale ADSL) from operators designated as having Significant Market Power
(SMP). ‘Reasonable’ requests must, for example, be technically feasible. The SMP operators will be under an
obligation to provide this access on fair, non-discriminatory and reasonable terms. Again, even though
interconnection regulation is based on the same general principles within the EU, there are still substantial
differences between member countries with regard to the terms and rates for interconnection 168 .
168 See 9 th implementation report from the Commission and an updated version of the regulatory aspects from the SERENATE project
deliverable D7: http://www.serenate.org/publications/d7-serenate.pdf and
http://europa.eu.int/information_society/topics/ecomm/doc/all_about/implementation_enforcement/annualreports/9threport/com2003071
5en.pdf

8.2 European Union
8.2.1 Introduction
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The EU 25 includes both the long-established market economies of Western Europe, and the newly-reformed
market economies of Eastern Europe, which acceded in May 2004. However, significant income and
development differences remain, which is reflected in the broadband market.
8.2.2 The broadband market
Broadband penetration is increasing rapidly across the EU, but at varying speeds and from varying starting
points. As a rule of thumb, digitally advanced Nordic countries and the highly cabled Benelux do particularly
well, while the new member states and Greece lag behind. The EU-wide penetration rate nearly doubled in
2004.
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
0%
1% 2%
2% 3% 3% 3% 3% 4% 4%
EU Broadband penetration rate
6%
8% 8% 8% 8% 8% 9%
11%
10%
10%
10% 10% 10%
January 05
15%
15%
16%
19%
18%
EL SK CZ LV CY EU10 PL IE HU LT SI IT ES LU PT DE EU25 MT EU15 AT EE UK FR FI SE BE DK NL
Figure 49: Broadband penetration on 1 January 2005 (Source: EU Commission)
In terms of technology, xDSL is the dominant technology, often because it is the only one available. Cable is a
serious competitor where cable TV networks did exist, but its geographical coverage is limited. Fibre-to-the-
Home deployment is significant only in Sweden and Italy, and to a lesser extent in the Netherlands and
Denmark. Satellite is considered in several large countries as an alternative for rural areas, but uptake remains
fairly low. 3G networks have considerable numbers of subscribers in Italy and the UK, and – relative to their
small population – in Sweden, Denmark and Austria, too. Powerline communications have no significant market
share anywhere. WiFi/WiMax implementation remains localised and do not yet provide wide geographical
coverage.
Technology Share
DSL 80 %
Cable 18 %
Other 2 %
Table 13: Share of broadband technologies in EU – December 2004 (Source of data: ECTA)

8.2.3 Broadband policy
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The current regulatory framework 169 , which dates from 2002 and, is generally pro-competitive, liberalizing
service provision, facilitating market entry makes and setting up a system of independent National Regulatory
Authorities (NRA). In particular, it has made local loop unbundling in the telephone network mandatory, which
is a key ingredient to introduce competition in the DSL market. However, it does not require separation of the
various networks; therefore, cable and telephone networks in several member states are owned by the same
company, reducing facilities-based competition.
The Commission issues annual implementation reports to verify transposition and implementation in the member
states. While the framework should have been transposed in the old member states by 2003 and in the new
member states upon accession, by October 2004 five Member States (Belgium, Czech Republic, Estonia,
Greece, Luxembourg) still needed to adopt primary legislation to transpose the framework, and eight Member
States (Spain, France, Cyprus, Latvia, Lithuania, Poland, Slovenia, Slovakia) still needed to adopt secondary
legislation 170 . The Communications Committee (COCOM), a working group of regulators, attempts to ensure
that the practical application of the rules also conforms to the pro-competitive principles of the directives.
Looking beyond purely telecommunications regulation, the European Union has started to develop a broadbased
information society policy with the eEurope initative 171 at the end of 1999, resulting in the eEurope 2002
action plan, which focused on infrastructures, skills and content. It was subsequently extended to eEurope
2005 172 , and it now being revised again in the i2010 initiative 173 , which puts the emphasis on information space,
innovation and investment in research, and inclusion. Most of the specific broadband policy, which emerged as a
European issue only at the end of 2002 174 , is conducted within that policy framework.
In January 2003, the Commission hosted the European Broadband Day 175 , followed by Broadband Content and
Broadband Regional workshops later that year. After identifying broadband as a key challenge for electronic
communications policy 176 , it issued a Communication on national broadband strategies, as well as an annexed
staff working document detailing strategies pursued by all old member states, in May 2004 177 .
A particular concern for EU policy is the roll-out of broadband across in rural areas as part of the e-inclusion
strategy. An eEurope advisory work group issued recommendations including demand aggregation of services,
deployment of public access points, broadband as a priority for the structural funds, encouraging eServices and
eContent, private/public partnerships and called for a pan-European initiative for very sparsely populated
areas 178 .
In addition, the EU is funding a number of research projects under the 6 th framework programme, in order to
develop technologies able to provide broadband access more efficiently and more conveniently, thus furthering
uptake. In the same programme, concertation actions such as the present BREAD are funded in order to create
coherence between technological progress and socio-economic conditions.
8.2.4 Conclusion
Broadband penetration is growing very fast in the EU, but levels of deployment are very uneven, both between
countries and within countries between urban and rural areas. The EU policy on broadband is currently focussed
on three major axes: ensuring a competitive framework, addressing broadband gaps in rural areas, and
technological development. Moreover, there is a number of Internet policies, such as public access points, ehealth,
e-education and e-government, which continue to have an impact on broadband development.
169 Framework 2002/21/EC, Access 2002/19/EC, Universal Service 2002/22/EC, Authorisation 2002/20/EC, Competition 2002/77/EC and
ePrivacy Directives 2002/58/EC
170 European Electronic Communications Regulation and Markets 2004, COM(2004) 759 final
171 COM (1999) 687 final
172 COM(2002) 263 final
173 COM(2005) 229 of 1 June 2006
174 SPEECH/02/606 by Commissioner Liikanen, "The eEurope Broadband Strategy" at The European Telecommmunications Network
Operators' Association (ETNO) Conference 'Making Broadband Happen in Europe' Brussels, 3 December 2002
175 http://europa.eu.int/information_society/eeurope/2005/all_about/broadband/index_en.htm
176 COM(2004) 61 final Communication from the Commission “Connecting Europe at high speed: recent developments in the sector of
electronic communications”
177 COM(2004) 369 final Communication from the Commission “Connecting Europe at High Speed: National Broadband Strategies”
178 eEurope Advisory Group Work Group No.1: Digital Divide and Broadband Territorial Coverage Written Recommendations, 29 June
2004

8.3 Austria
8.3.1 Introduction
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Austria is a federal republic comprised of nine provinces and encompasses a geographic area of 83,853 square
kilometers. The population numbers more than eight million people (8,032,557 in 2002), about 1.6 million
(1,550,123 in 2002) of whom live in the capital, Vienna. 179 Main sources for information on ICT in Austria are
Statistik Austria 180, 181 , in particular the surveys on ICT usage in households 2004 182 , on ICT usage in households
2003 183 , on e-Commerce 2003/2004 184 and on e-Commerce 2002/2003 185 ; the Austrian Regulatory Authority for
Broadcasting and Telecommunications (RTR-GmbH) 186 ; Prognos AG 187 ; and Preslmayr & Partners 188, 189 .
8.3.2 The broadband market
Figure 50 roughly describes the penetration of ICT services within companies and households, available in 2003
and 2004. Nearly 100% of 29.000 Austrian companies with more than nine employees are equipped with PCs
and Internet access lines. While in 2003 the majority of the Internet access lines were narrowband (Dial up,
ISDN), in 2004 broadband access lines (ADSL, UMTS, cable modems) have overtaken narrowband access
lines. Additionally, 18% of the companies are able to access the Internet by mobile phones.
Figure 50: Penetration of ICT services within companies and households in 2003 and 2004
(without WLAN and GPRS)
179
Preslmayr & Partners and Auditor Treuhand GmbH (2003). Investing in Austria, 5th, completely revised edition, Vienna,
http://www.deloitte.com/dtt/cda/doc/content/2003%20Investing%20in%20Austria%205.pdf
180
http://www.austria.gv.at
181
ftp://www.statistik.at
182
STATISTIK AUSTRIA (2004). Hauptergebnisse der Europäischen Erhebung über den Einsatz von Informations- und
Kommunikationstechnologie (IKT) in Haushalten 2004 in Österreich. http://www.statistik.at/fachbereich_forschung/ikt.pdf
183
STATISTIK AUSTRIA (2003). IKT-Einsatz in Haushalten 2003, Ergebnisse der Europäischen Erhebung über den Einsatz von
Informations- und Kommunikationstechnologie (IKT) in Haushalten 2003 in Österreich,
ftp://www.statistik.at/pub/neuerscheinungen/ikt_web.pdf
184
STATISTIK AUSTRIA (2004). Hauptergebnisse der Europäischen Erhebung über E-Commerce 2003/2004 in Österreich.
http://www.statistik.at/fachbereich_forschung/ecommerce.pdf
185
STATISTIK AUSTRIA (2003). E-Commerce 2002/03, Ergebnisse der Europäischen Erhebung über E-Commerce 2002/03.
ftp://www.statistik.at/pub/neuerscheinungen/ecommerce_web.pdf
186
http://www.rtr.at
187
Prognos AG, http://www.prognos.de
188
http://www.preslmayr.com
189
http://www.net4you.co.at/user/preslmayr/invest/invest.htm

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Concerning households a different picture is obtained: 40% of all 6.4 million households are connected to the
Internet with a majority of narrow band access lines (25% in 2003, 23% in 2004) and a smaller percentage
pertaining to broadband access (8% in 2003, 14 % in 2004). The number of available PCs amounts to about
53%.
8.3.2.1 Demand 190 191
Companies192 : Present applications by companies are mostly narrowband and can thus be used by dial-up
connections. At present, only a few applications exist that include real broadband contents, i.e. contents that are
to be transmitted in real time to allow their successful use. In the following applications by companies are listed
under four headings:
• Utilisation of commercial Internet services
- banking and financial services (70%)
- market observation services (55%)
- purchase of digital products (36%) or other non digital products (19%)
- services for professional training (22%)
- tourism booking services (37%)
• Utilisation of e-government services
- download of forms (73%)
- information retrieval (64%)
- transmission of filled in forms to public institutions (43%)
- complete handling of all regulatory tasks (21%)
• Provision of Internet services
- marketing of own products (50%)
- online access to product catalogs and pricing lists (27%)
- provision of customer specific service access (12%)
- sales services (9%) and after-sales services (7%)
- download service for digital products (6%)
• Teleworking
- This application is used by about 70% of all companies with at least one employee using that service.
In terms of safety, companies take the following measures:
- implementation of antivirus software (89%)
- regular update of antivirus software (64%)
- installation of firewalls (56%)
- off-site data back-up (39%)
- use of safe servers (35%)
- use of encryption (13%)
- use of digital signature (3%)
Households193 : In the first quarter of 2003 the Internet was used by 2.6 million (41%) of all persons in the age of
16 to 74 years. This is an increase of 4% in comparison to the second quarter of 2002. While the percentage of
Internet use of persons aged 16 to 24 is about 67%, only 4% of all persons aged 65 to 74 use the Internet.
Additionally the results show that the Internet is more often used by men (47%) compared with women (36%)
and also more often by persons with an academic degree (80%) in comparison to persons with certificate from
secondary school (23%). The Internet was used daily all together by 1.2 million persons (47%), at least once a
week by 1.1 million (42%) and at least once a month by 0.3 million (10%).
27% of all persons used the Internet in the first quarter of 2003 one to two hours per week. Another 27% used
the Internet three to five hours per week. And the percentage of people who used the Internet less than one hour
190 STATISTIK AUSTRIA (2003). IKT-Einsatz in Haushalten 2003, Ergebnisse der Europäischen Erhebung über den Einsatz von
Informations- und Kommunikationstechnologie (IKT) in Haushalten 2003 in Österreich,
ftp://www.statistik.at/pub/neuerscheinungen/ikt_web.pdf
191 STATISTIK AUSTRIA (2003). E-Commerce 2002/03, Ergebnisse der Europäischen Erhebung über E-Commerce 2002/03.
ftp://www.statistik.at/pub/neuerscheinungen/ecommerce_web.pdf
192 STATISTIK AUSTRIA (2003). E-Commerce 2002/03, Ergebnisse der Europäischen Erhebung über E-Commerce 2002/03.
ftp://www.statistik.at/pub/neuerscheinungen/ecommerce_web.pdf, p. 26, 29, 30
193 STATISTIK AUSTRIA (2003). IKT-Einsatz in Haushalten 2003, Ergebnisse der Europäischen Erhebung über den Einsatz von
Informations- und Kommunikationstechnologie (IKT) in Haushalten 2003 in Österreich,
ftp://www.statistik.at/pub/neuerscheinungen/ikt_web.pdf, p.28-32

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per week was about 18%. The Internet was used by 1.9 million persons (74%) at home, by 1.2 million (47%) at
their work place, by 0.31 million at their training places and by 0.39 million at other places, e.g. Internet coffee
bars, post offices, public agencies.
Reasons for Internet resistance in households194 : While nearly every Austrian company is connected to the
Internet and also a relevant portion of households have Internet access a still rather high percentage of private
users (individual persons) rejects (fig. 1) an Internet connection at home, from various reasons. Thus more than
55% of the people without Internet access state a lack of usefulness of the Internet use, 27% claim that they do
not have the appropriate competence to handle Internet services successfully. For others purchase costs (27%) or
continuous costs (21%) are too high. Finally, about 15% can use the Internet at other places.
Applications195 : Most applications of the present Internet use are narrowband and can thus be used by dial-up
connections.. At present, only a few applications exist that include real broadband contents, i.e. contents that are
to be transmitted in real time to allow their successful use. Such contents are196 :
• online gambling,
• half screen video,
• full screen video,
• TV over IP with DVD quality
In the following the main (mostly narrowband) applications are listed, according to their frequency of use during
the first quarter of 2003:
• communication by e-mail: 88%
• search and utilise information about goods and services: 65%
• reading/ downloading newspapers, magazines and sth. near it: 39%
• search and utilise travel and accommodation information: 36%
• search and utilise information from websites of public: 35%
• Internet banking: 30%
• other forms of communication (e.g. chatting): 29%
• playing/downloading of games and music: 28%
• use of training and educational services: 28%
• downloading of forms of public institutions: 25%
• online shopping: 25%
Safety measures197 : To protect their Internet use about 30% of the private users implemented and updated an anti
virus program. And 23% of the Internet users applied identification codes to protect their Internet use.
8.3.2.2 Supply 198
The following nine transmission and access technologies are relevant in Austria:
• DSL In May 2003 already 80% of the Austrian population could be supplied by ADSL.
• Cable TV (coaxial or hybrid fiber-coaxial). This technology is more widespread in Austria than other
technologies.
• Fibre Optic Technology: Fibre to the home is not realized by now.
• Power Line Cable: A use of that technology is expected, if at all, in the medium-term only for in-house
systems.
• Wireless Local Loop (WLL): Though frequency bands are available in Austria, by now a promising
business plan does not exist. Therefore in 2003 WLL is not used despite its evident advantages to cover
Austrian rural areas. One essential reason for this could be high costs resulting from the small number
of equipment units.
194 STATISTIK AUSTRIA (2003). p.23, 24
195 STATISTIK AUSTRIA (2003). p.32 et seqq.
196 Cuny-Pierron, A. (2004). Pro Breitband (in: ispa newsletter, Weites Land, breites Band, Nr. 1 • 2004),
http://www.ispa.at/downloads/f6253add2fc9_ispa104_dr_final-version.pdf, p.5
197 STATISTIK AUSTRIA (2003). IKT-Einsatz in Haushalten 2003, Ergebnisse der Europäischen Erhebung über den Einsatz von
Informations- und Kommunikationstechnologie (IKT) in Haushalten 2003 in Österreich,
ftp://www.statistik.at/pub/neuerscheinungen/ikt_web.pdf, p. 32
198 RTR-GmbH (2003). Breitbandinitiative 2003: Österreich auf dem Weg zum Spitzenplatz in der Informationsgesellschaft (Breitband
Status Report), http://www.rtr.at/web.nsf/lookuid/0808B704869D1DDFC1256E55006612EC/$file/Breitbandstatusbericht.pdf,. p.16 et
seqq.

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• Wireless Local Area Network (WLAN): This is one of the main wireless technologies in Austria.
Increasingly hot spots are installed particularly because of high private demand. The latter may be
explained by a rather low price for use of access to high data rates. Compared to other countries
penetration rate of hot spots is quite high. Thus with 127 hot spots Vienna is on first place followed by
New York with 115 and San Francisco with 102 hot spots.
• GPRS: Besides WLAN it represents the preferred wireless Internet access.
• UMTS
• Satellite: This technology is regarded as promising for rural. However because of the high investment
costs the demand for such a system is weak by now and does not indicate a rapid development.
The various technologies available are offered by many providers. Thus the access to the broadband cable
technology is provided by all together 90 companies, many of which use the network infrastructure of Austria
Telekom. Here the most important ones are for199, 200 :
• ADSL: Aon Speed (Telekom Austria), UTA ADSL Wild Cherry, T-Online dsl, Inode, YCN or EUnet
• ADSL unbundled: Inode xdsl@home, Hostprofis, UTA Complete, silverserver SILVER:ADSL, eTel
direct or gdsl.at
• ATM: ATnet
• Cable: Chello, Kabelsignal, Liwest (OÖ), Salzburg AG or BKF
• DSL: Cnet
• FTTH: blizznet.at or ATnet
• WLAN: Funknetz.at, ewave.at, cyberservice.org, Alpha NetWork, wavenet.at, rf-funkInternet, funklanost.at,
netpark.at or kt-net.at
• SDSL: hotze.com, Na-NET, Net4You, Alpha NetWork, globalcore, kapper.net, ACW, Silver Server,
Hartberg Online or CSO.net
• PLC: LinzAG
• xDSL: Inode, mm c , Linz Net, UTA, cworks or yc net:works
Similarly access to DSL systems is offered by a variety of providers. On that basis competition is possible that
causes different price systems as described within Table 14201 .
Table 14: Minimal and maximal prices for access and monthly costs for the use of broadband access in Austria
199 Madmaxx.online (2005). Internet-Provider, http://www.8ung.at/madmaxx/provider.html
200 Preisvergleich Internet Services AG (2005). ISP-Preisvergleich für Festverbindungen, http://www.geizhals.at/isp/
201 Preisvergleich Internet Services AG (2005). ISP-Preisvergleich für Festverbindungen, http://www.geizhals.at/isp/

8.3.3 Broadband policy 202
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It is assumed that sufficient broadband communication networks would grow also without public intervention.
However, growth would be slow and focussed on urban areas thus causing disadvantages for Austrian
competitiveness compared to other European countries. Additionally the attractiveness of rural areas would be
weakened. On that basis various intervention measures both on European level and on national level are
discussed. On federal level direct interventions are initiated from various governmental departments: (1)
Education, Science and Culture 203 (2) Traffic, Innovation and Technology 204 (3) Economy and Labour 205 . The
focus of these initiatives is to support research and developmental projects, development of new products and
techniques and programs to improve user competence. Indirect measures mainly focus on various tax relief for
companies. Additionally public measures are initiated to extend and reconstruct the communications
infrastructure in Austrian provinces as Niederösterreich. Of course, all measures must comply with legal
competition requirements.
8.3.4 Conclusion
With regard to broadband penetration Austria fell back in comparison to other European States after a strong
start in 1997 (Cable modem) and 1999 (ADSL) 206 . To improve the situation various measures are to be taken
according to the Austrian Regulatory Authority for Broadcasting and Telecommunications28 . Particularly the
following measures are recommended:
• Education and sensitization of general public with regard to benefits of Internet use
• Creation of user friendly technology by performing usability studies
• Measures to increase user competence in handling information and communication technology
• Creation of content that is adapted to user needs and assures benefits by immediate availability
• Achieving regulation measures compatible with rules for fair competition
• Measures to extend and improve communication infrastructures in handicapped (rural) areas
• Increase of the number of access public access points (e.g. public library, kiosk systems...)
202
RTR-GmbH (2003). Breitbandinitiative 2003: Österreich auf dem Weg zum Spitzenplatz in der Informationsgesellschaft (Breitband
Status Report). http://www.rtr.at/web.nsf/lookuid/0808B704869D1DDFC1256E55006612EC/$file/Breitbandstatusbericht.pdf, p. 45 et
seqq.
203
http://www.bmbwk.gv.at
204
http://www.bmvit.gv.at
205
http://www.bmwa.gv.at
206
RTR-GmbH (2003). Breitbandinitiative 2003: Österreich auf dem Weg zum Spitzenplatz in der Informationsgesellschaft (Breitband
Status Report). http://www.rtr.at/web.nsf/lookuid/0808B704869D1DDFC1256E55006612EC/$file/Breitbandstatusbericht.pdf, p. 9

8.4 Belgium
8.4.1 Introduction
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Belgium is one of the European leaders in the broadband network and services. Broadband coverage is higher
than 98%. Penetration rate is among the best in Europe. There are several reasons to this leading position.
• The small size of the country, the high population density and the mainly urban topology (about 60%).
• Strong operators in cable (Telenet and UPC) and DSL (Belgacom), started off by cable TV operators’
investment to upgrade their networks and provide cable modem services.
• Governmental wishes to enhance the communication between the different communities (Flemish,
French and German) and regions (Flandres, Wallonia, Brussels)
It is particularly interesting to note that Belgium has a very high broadband penetration despite a very low PC
ownership.
%
Nombre de PC (1990-2002)
Nombre de PC (en millions)
1990 1995 1998 1999 2000 2001 2001
Évolution
2002/2001
UE15 25,2 56,2 82,7 91,2 105,3 116,9 132,8 +13,6%
PC par
100
habitants
Belgium 0,9 1,8 2,3 2,3 2,4 2,5 +4,2% 24
Denmark 0,6 1,4 2,0 2,2 2,7 2,9 3,1 +6,9% 58
Germany 6,5 15,6 22,9 24,4 27,6 31,3 35,6 +22,8% 43
Greece 0,2 0,4 0,6 0,6 0,8 0,9 0,9 8
Spain 1,1 3,5 4,3 4,8 5,8 6,8 7,9 +16,2% 20
France 4,0 7,8 13,6 15,7 17,9 19,5 20,7 +6,2% 35
Ireland 0,3 0,7 1,0 1,2 1,4 1,5 1,7 +10,3% 42
Italy 2,1 4,8 8,0 9,0 10,3 11,3 13,0 +15,0% 23
Luxemburg 0,1 0,1 0,2 0,2 0,2 0,2 0,3 59
Netherlands 1,4 3,1 5,1 5,7 6,3 6,9 7,6 +9,5% 47
Austria 0,5 1,3 1,9 2,1 2,3 2,7 3,0 +11,1% 37
Portugal 0,3 0,6 0,8 0,9 1,1 1,2 1,4 +16,2% 13
Finland 0,5 1,2 1,8 1,9 2,1 2,2 2,3 +4,5% 44
Sweden 0,6 2,2 3,5 4,0 4,5 5,0 5,6 +11,1% 62
United-Kingdom 6,2 11,8 15,9 18,0 20,2 22,0 24,0 +9,0% 41
Iceland 0 0,1 0,1 0,1 0,1 0,1 0,1 45
Norway 0,9 1,2 1,8 2,0 2,2 2,3 2,4 +4,3% 53
United States 54,2 86,3 124,0 141,0 161,0 178,0 190,0 +6,7% 66
Japan 7,4 15,1 30,0 36,3 40,0 45,6 48,7 +6,8% 38
Table 15: PC penetration in European countries
(2003: http://www.itu.int/ITU-D/ict/statistics/at_glance/Internet03.pdf)
2002

8.4.2 The broadband market
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Broadband access is mainly provided through the wired networks. The reasons for this are firstly the urban
configuration of the country and secondly the strong competition between cable and the DSL operators. It is
important to realise that 60% of the population have a choice between DSL and cable technologies in their area.
The resulting market split is 62% for ADSL and 38% for cable networks, which offer more than 3 Mb/s to the
users.
The most important access mode is offered by the DSL networks (86% provided by Belgacom) covering nearly
all of the country. An important number of independent Internet Service Providers (ISP) is trying to gain market
shares through the resale of Belgacom DSL products. Belgacom is one of the operators having the highest
penetration rate in the world (29% at the end of 2003) with an impressive rise of its number of subscribers
(Table 16).
Date Number of ADSL connections
End of 2001 230 000
End of 2002 517 000
End of 2003 785 000
End of 2004 > 1 000 000
Table 16: Number of ADSL connections
At the beginning of 2005, the offered services were:
• “ADSL light” at 29.95 € per month (first month for free): 128 kb/s upstream, 512 kb/s downstream.
• “ADSL go” at 39.95 € per month (first month for free): 192 kb/s upstream, 4 Mb/s downstream.
• “ADSL plus” at 54.95 € per month (first month for free): 256 kb/s upstream, 4Mb/s downstream
An important innovation was the launch in November 2004 of the first VDSL service, available for a monthly
subscription price of 59.95 €, and providing to the subscribers up to 9 Mb/s downstream and up to 600 kb/s
upstream. Another important innovation is a product on the “ADSL Light” model, but as a time-based service
allowing to reduce the cost of broadband access.
Although cable networks cover only 64% of the Belgian territory, that rate increases up to 95% in Flandres and
Brussels where the cable networks sever almost 100% of the population. The two main operators are UPC
Belgium and Telenet. Since the competition between the two cable operators is intensive, the services and
pricing listed below are purely informative.
UPC Belgium increased the speed of its services at the beginning of 2005. The products are now as listed in
Table 17. UPC Internet subscribers grow from 28 100 at the end of June 2004 to 29 200 at the end of September
2004.
Chello offers
Downstream
bitrate (kb/s)
Upstream
bitrate (kb/s)
Subscription
(euros per month)
Starter 256 64 14.95
Easy 512 128 24.95
Classic 6000 512 29.95
Plus 10000 768 39.95
Extreme 20000 1000 49.95
Pro 16000 1000 69.95
Table 17: UPC Belgium products

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Telenet is the main broadband Internet, TV and telephony provider in the Flemish area, with 55% of the market
shares at the end of December 2002. Telenet subscribers increased from 500 000 in October 2004 to 528 000 at
the end of December 2004.
Telenet offers
Downstream
bitrate (kb/s)
Upstream
bitrate (kb/s)
Subscription
(euros per month)
ConfortNet 512 128 29.95
ExpressNet 5000 192 41.95
ExpressNet Plus 6600 512 51.95
ExpressNet Turbo 10000 512 59.95
Table 18: Telenet products
Regarding wireless services, Telenet offers a WiFi service allowing a free surf inside and outside the
subscriber’s home but also through 100 hotspots in the major Belgian cities, mainly in Flanders. On the other
hand, Belgacom is operating 313 WiFi hotspots located all over Belgium.
Satellite or Power Line Transmission remain of minor importance. Satellite is mainly used to download data
when the upstream is done through dial-up or broadband networks. The satellite operators are NetSystem Sat,
NetbySky or SkyDSL operated by Strato AG (Germany)
For the mobile services, the problems are related to the delays in the launches of 3G services and the restricted
coverage areas (only 6 Belgian cities including Brussels). Despite prices similar to 2G services, remote Internet
accesses remain limited, but the potential of this kind of services seems to be high due to the good rate of mobile
phone in Belgium (84%).
8.4.3 Broadband policy
The objective is to target the 2.5 million households and the 500 000 small and medium enterprises (SME) to be
connected at the end of 2006 by increasing the number of services and reducing the prices. This objective is
helped by the governmental wishes to help people to be connected, calling upon operators to put on the market
“light” offers with lower prices and reduced speed as described above with the new services appeared at the
beginning of 2005.
Two main institutions provide an impulsion to the broadband activities in Belgium:
• ISPA (Internet Service Providers Association) BELGIUM is non-profit organisation created to promote
the interests of Belgian companies providing internet services. Its members account for 97% of the
internet connections in Belgium. ISPA publishes a quarterly market survey on the development of the
Belgian internet market, and is also active at a regulatory, legislative and technical level on behalf of its
members and of the industry in general.
• BIBA (Belgium Internet Broadband Application) is an initiative started at the end of 2002 by the
Belgian Minister of Telecommunications to foster broadband applications development. The BIBA
platform started in August 2002, allowing several industrial players to launch new services based on
existing technologies with a real market potential and SME oriented. The pilot applications are in the
health, security, e-learning or teleworking domains.
The Belgian government is also thinking about a new use of public funds stopping investment in infrastructures
which are already complete and stimulating the use of new applications by
• developing the digitalisation of the federal scientific and cultural heritage.
• encouraging the research and development of broadband applications and tools increasing the
consumer’s confidence (electronic signature and e-payment)
• developing a federal portal offering the first interactive applications such as “tax-on-web” or electronic
ID with direct applications in healthcare.
• connecting public administrations, schools and hospitals. (I-Line project)
• connecting the SME through the Agoria road show illustrating the advantages of broadband technology
on the basis of the Finnish example.

8.5 Cyprus
8.5.1 Introduction
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Cyprus joined the European Union on 1 May 2004, has a population of 797.800 (2002) on a territory of 9251
Km 2.
8.5.2 The broadband market
Until recently the only provider of broadband services in Cyprus was the incumbent operator. After the
liberalisation of electronic communications and services in year 2003 several other provides have started to
compete the incumbent at the service level utilising the Digital Subscriber Line Access Multiplexers (DSLAMs)
of the incumbent.
In year 2004 the incumbent operator has published its RUO that gave the right to alternative operators to provide
their services through fully unbundled lines and shared access lines. In addition, EAC (Electricity Authority of
Cyprus) has made available its fibre optic network for public use. The company has reached an agreement with
two alternative operators for the use of its infrastructure (Cablenet – Primetel).
The fixed-line density stands at 57.73%, while mobile telephony reaches 82.4% of the population. 3G services
will be provided within year 2005. There are 66.463 Internet subscriptions, and 17.994 broadband connections.
The market shares of providers of broadband services are as follows (Percentage of penetration in the market
based upon subscriber number (2003)):
• 74 % Cyta
• 13 % Spidernet
• 9 % Logosnet
• 2 % Avacom Net Services
• 2 % Thunderworx.
8.5.3 Broadband policy
Policies and strategic planning for the broadband market are handled by the Planning Bureau – Ministry of
Finance. It is expected that within year 2005 licenses for the provision of internet broadband connections by
means of wireless local loop will be issued. It is also expected that internet broadband connections will be
provided by means of 3G and power line communications (PLC).
In addition, by the year 2006 OCECPR together with DEC MCW (Department of Electronic Communications –
Ministry of Communications and Works) will licence DVB – T (Digital Video Broadcasting – Terrestrial).

8.6 Czech Republic
8.6.1 Introduction
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The Czech Republic, which has joined the European Union on 1 May 2004, has 10 211 500 inhabitants on a
territory of 78 866 square km, which means that its population density is 129.4 inhabitants per square km. The
density is thus broadly in the middle of the EU range, although somewhat higher than the average. Purchasingpower
adjusted GDP stood at 70% of the EU 25 average in 2004.
8.6.2 The broadband market
The Czech Republic has a very high usage of mobile telephony with a penetration rate of approximately 105%,
far above EU average, but a very low number of fixed lines, equivalent to only 35.5% 207 of the population, far
below average, and decreasing at a rate comparable to most other member states. While the high figure for
mobiles is unusually high for a new member state, the low figure for fixed lines is a feature it shares with
virtually all the other new member states bar Cyprus and Malta. The fixed line network is still 99% dominated
by the incumbent telecom operator Český Telecom 208 , but the mobile telephony market is very competitive.
Český Telecom’s Eurotel subsidiary has a 42% market share, while its T-Mobile has 40.8% and Oskar 17.2% 209 .
The Czech broadband market is expanding after a late start – ADSL has been available from the incumbent only
since March 2003. Český Telecom now offers ADSL services on approximately 3 million fixed lines,
corresponding to 88% of its customers, but has so far only signed up 100 000 broadband customers 210 . Local
loop unbundling equally started late, only in December 2003. Alternative operator Aliatel also offers ADSL in
all urban areas, but subscription figures are not available. Cable companies had 60 000 broadband customers at
the end of 2004 211 . With 1.2 mio existing cable TV connections, of which roughly 800,000 are currently used
(UPC 370 000, Karneval 280 000, and the rest by 95 mostly regional operators), they still have large room to
grow in broadband, too 212 .
Concerning mobile broadband, Eurotel has launched a 3G network in August 2004 and had 35 000 subscriptions
by the end of 2004, while both T-online and Oskar offer GPRS/EDGE services for which subscriber numbers
are not available. Another 40 000 users are using other technologies 213 , mostly Fixed Wireless Access.
Broadband satellite is equally available 214 . Adjusting for growth of the cable operators in the second half, it
should be estimated that there were overall around 230 000 broadband (fixed and mobile) subscriptions in the
Czech Republic at 1 January 2005, which translates into a penetration rate of about 2.3%.
8.6.3 Broadband policy
The national broadband access policy: broadband strategy of the Czech republic 215 , which is part of the current
information society strategy “e-Czech 2006” 216 , sets the objective of 50% of the population using broadband by
2010. Apart from establishing the conditions for fair competition on the telecommunications market and the
development of e-commerce, it focuses on three roles for the government: the state as a service provider as a
customer, and as a provider of direct support.
As a service provider, the state will focus on the provision of e-government, defined as allowing citizens to
communicate in a simple and fast manner with the state while generate savings for the state budget, while also
supporting e-health and e-learning. As a customer, the state should intentionally stimulate market development
and support competition on this same market, particularly by building up demand. In particular, it intends to
provide all state institutions with broadband Internet access by 2006.As a provider of direct support, the state
207
Eurostat, Statistics in Focus 8/2005: Telecommunications in Europe, 7.2.2005, http://epp.eurostat.cec.eu.int/cache/ITY_OFFPUB/KS-
NP-05-008/EN/KS-NP-05-008-EN.PDF (figure refes to 2003, but any change is unlikely to be signficant)
208
Annex II to European electronic communications regulation and markets 2004 (10th report), {COM(2004)759 final}, 2.12.2004
209
European Mobile Communications Report, Issue 189 – February 2005
210
Press release Český Telecom: NUMBER OF EXPRESS SUBSCRIBERS EXCEEDS 130 000 (04.01.2005)
211
Annex II to European electronic communications regulation and markets 2004 (10th report), {COM(2004)759 final}, 2.12.2004
212
The national broadband access policy: broadband strategy of the Czech republic, Ministry of Informatics of the Czech Republic, 2005
213
Source: ECTA
214
http://www.oecd.org/dataoecd/38/40/31718094.pdf
215
The national broadband access policy: broadband strategy of the Czech republic, Ministry of Informatics of the Czech Republic, 2005
216
http://www.micr.cz/dokumenty/default_en.htm

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intends to support networks and local distribution networks in less densely populated and less developed regions
in the CR.
For this purpose, a "Broadband Development Subsidy Title" is foreseen, into which 1% of the proceeds from the
privatisation of Český Telecom will be deposited. The Subsidy Title will be used from the 2006 budget onwards
to co-finance infrastructure projects for metropolitan and local networks, but also to co-finance projects for
broadband content and services. Contributions may be drawn for costs of both the construction and the first year
of operations. Priority will be given to support for projects which will stimulate demand for broadband access
from different users (e.g. healthcare, education, municipal bodies, commercial entities, etc.) in specific areas,
and projects which will provide a higher economic effect of investment.
8.6.4 Conclusion
Broadband in the Czech Republic had a very late start: by July 2004, the Czech Republic was 22 nd in the EU,
including significantly behind most other new member states. Starting in 2004, penetration has started growing
considerably, probably at least doubling in the second half of the year. From the timing, it appears that two
factors have caused that take-off: firstly, that the incumbent is now offering and actively promoting ADSL, and
secondly, that local loop unbundling is now available. It would appear in particular that retail prices, which were
above EU average, have decreased somewhat, although prices for unbundled local loop and shared access are
still the highest in Europe. 217 However, given the very low penetration to start with, it is unclear whether these
developments alone will be sufficient to allow the Czech Republic to catch up with the others – even if it
doubles again in 2005, penetration will still be at the bottom of the EU.
217 Annex II to European electronic communications regulation and markets 2004 (10th report), {COM(2004)759 final}, 2.12.2004

8.7 Denmark
8.7.1 Introduction
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Chapter 2 discusses different factors affecting the general broadband development in Denmark. In chapter 3
selected case studies of alternative broadband development in Denmark are presented. The reason for focusing
on alternative networks is that we are witnessing potentials for a paradigm shift, where new actors (in some
cases the end user) have end to end control of the networks. In some common uses, however, the telecom
operators are kept as backbone providers.
These alternative networks have capabilities of offering Internet, voice and video services (triple play), which
gives them possibility for competing with voice service providers and TV access providers. There are however
unsolved problems relating to efficient organisation and regulation of these platforms. Technology-wise there
are problems related to coverage, capacity, QoS, Security…, and when it comes to regulatory issues there are
problems like universal service with regards to voice services, and with regards to TV services, there are a
number of challenges like copyright, ‘must carry’, etc. known from the multi channel TV regulation. Also the
market organisation and business models will have vital influence on the future of these platforms.
In this report through detailed case studies a number of these parameters are addressed. The analysis tries to
identify the drivers and barriers of the development of alternative networks based on following parameters:
• The deployed technology and the technological capabilities
• The offered services
• The structure and architecture of networks
• The organisation and ownership structure
• The deployed business model and funding, including the role of government
8.7.2 The broadband market
8.7.2.1 Supply
In Denmark there are more than five million inhabitants and more than 2.4 million households. Broadband
services are available for 98% of the population (98% of Households can access a broadband connection of
minimum 512 Kbps and 95% can access a minimum 2 Mbps). Unlike the EU regulation framework, the Danish
service obligation includes ISDN and 2MB lines. It has been discussed to include broadband services in the
universal service obligation imposed on the incumbent operator, but when it turned out that broadband already
was available to the vast majority of the population it was considered to be an unnecessary regulatory
intervention.
Broadband via DSL is offered by a number of operators. However, the incumbent operator TDC has a market
share of 79%. On top of this the other operators depend to a large extent on the TDC access network to reach
their customers either by raw copper or bit stream access agreements. When DSL services were introduced in
Denmark, the three operators TDC, Cybercity and Tiscali had equal market shares. But since 2000, TDC has
gained the majority of the new (mainly residential) customers. The competitors have accused TDC for unfair
competition, as TDC has demanded large fees on top of the interconnection charge to get access to their
network. But this has not yet led to any intervention from the IT- and Telecom Agency or the Competition
Board.
Also competition in cable networks is limited, with two major operators e.g. TDC and Telia. It is clearly TELIA
that have taken the lead in introduction of cable services in Denmark. TDC was very reluctant to go into this
market as they preferred to offer ISDN and DSL services to their customers.
Prices for broadband have remained rather high in Denmark compared with the bandwidth offered. This has
stimulated the creation of a number of alternative providers such as neighbourhood organisations that have set
up their own networks either based on existing cable infrastructures or WLAN. Also, power companies are
active in this area. They are rolling out optical fibres to a large number of households, and will thereby be able
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12/02 06/03 12/03 06/04
DSL coverage (% of population) 95% 95% 95%
DSL subscribers 307.000 390.693 473.481 562.112
DSL penetration (% of population) 5,7% 7,2% 8,8% 10,4%
Cable modem coverage (% population)
Cable modem subscribers 133.548 177.304 243.602 297.155
Cable modem penetration (% population) 2,5% 3,3% 4,5% 5,5%
FTTH subscribers na 35.000 42.400 86.142
PLC subscribers 0 0 0 0
WLL subscribers 1.485 1.760 2.332 3.019
Satellite subscribers 0 0 0
Total 442.033 604.757 761.815 948.428
Total penetration (% population) 8,2% 11,2% 14,1% 17,6%
Table 19: Overview of broadband services in Denmark
Although the Danish telecom market is considered to be one of the most liberal and competitive markets,
competition on the market for broadband services still needs to be developed. This is properly one of the reasons
for a rather slow take-up for high bandwidth DSL services. TDC has through efficient marketing been able to
provide a high penetration of DSL services, but lacks the incentive to increase the bandwidth offered. As long as
the competitive pressure is limited, offering of higher bandwidth will add to the costs, but will not create more
customers.
8.7.2.2 Demand
The Danish market has, like the markets in the other Nordic countries, a high penetration of most kinds of
telecom services. This has been explained by the fact that the major share of the population is able to afford
these services. In addition, Danish consumers and enterprises are among the fastest to take up new technology.
Denmark has one of the highest penetration rates of fixed phone lines although the penetration rate has been
falling from 72 in 2001 to about 67 lines per 100 inhabitants in 2003 218 . This is partly due to a substitution by
mobile phones as the penetration rate of mobile phones has increased from 74 to 89 within the same period. The
Nordic countries were among the first to introduce mobile telephones and used to have the highest penetration.
However, their lead has decreased in the past couple of years, and a number of countries both inside and outside
Europe have reached the same high level of penetration.
Also, with regard to broadband and Internet services, Denmark has been among the leading countries in Europe
and it still maintains one the highest penetration rates in Internet access as well as penetration of ADSL and
cable modem. The aggregate penetration of broadband services were in 2003 14.1 connections per 100
inhabitants. Two thirds of the connections were based on ADSL technology, about 25% on cable modem and
about 5% on fiber to the home (www.itst.dk). It should however be noted that more than half of the connections
supply a bandwidth below 144 kbps downstream, which is below some definitions of broadband, and certainly
far below what is offered in e.g. South Korea.
Several comparisons position Denmark as an advanced market for ICT products in particular in the mobile
areas. According to a benchmarking analysis measuring 26 parameters within infrastructure, applications and
market structure, Denmark is the most advanced ICT market next to Hong Kong and ahead of other
218 ITST: Telecom Statistics various years http://www.itst.dk

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Scandinavian and European countries (ITU 2002). In a similar benchmark on ‘e-readiness’ made by INSEAD,
Denmark ranks as number eight after both Sweden and the UK (Dutta and Jain 2002).
Seen from the demand side, the Danish point of departure for being among the leading countries in terms of
broadband penetration is rather good. The Danish market is usually very quick to take up new technologies and
a high and evenly distributed income implies that a high penetration can be obtained for most consumer services.
In addition to this, Denmark already has a high penetration of PCs and Internet connections. The Danish
Government has been very active to develop e-Government services, which also has contributed to the demand.
8.7.3 Broadband policy
Denmark has since the mid 90s followed a deliberate policy of stimulating competition on the telecom market,
and the Danish market is considered to be one of the most competitive within the EU with fierce competition in
particular on the market for mobile services. Denmark was also among the first countries to demand unbundling
of the local loop. In contrast to most other EU countries unbundling is also demanded for optical networks.
Denmark has introduced a special taxation scheme, which enables employers to offer PCs as well as broadband
connections to their employees as a tax free benefit. Considering the high levels of income taxes in Denmark,
this implies that tax reductions in reality pay more than 50% of the costs. This scheme has become very popular
and many companies provide this opportunity to all of their employees as part of their salary.
8.7.3.1 Case studies
In the following four detailed case studies on alternative networks in the Danish market are given. Later some
brief case descriptions of innovative initiatives are outlined. The four cases are chosen such that it becomes
possible to analyze the parameters we have outlined in this report. The first case is a City network, case number
two is a community network, case number three is a power company provided network and the last case is an
operator driven network with a large municipality as a big customer.
Today the number of broadband subscribers in Denmark exceeds one million and the share of alternative
networks is increasing rapidly. The following cases give an indication of the variety of network initiatives in
spreading out the broadband infrastructures and services in Denmark.
8.7.3.1.1 Case study 1: (City network) Frederiksberg net
Freaderiksberg Net (FrbNet) is a ‘non profit’ community network serving residents in a part of Copenhagen,
called the Frederiksberg commune. The company was founded by two entrepreneurs in 2000 following a civil
meeting and established with private and bank loans. The company is operated as a partnership organization
where all members of the network own an equal share in the company. Independently of the commune, but as
customer of some of the services offered by the commune (such as billing and passive infrastructure), it has a
customer base of 20 000.
The company has only five employees and uses simple business models (such as flat rate charges rather than
usage measured) and outsources as many tasks as possible (billing, PSTN interconnectivity and termination,
fibre installation and deployment etc.). The company thus has a relatively simple in-house operation and
overhead but a more complex relation to subcontractors.
FrbNet uses a FTTB solution to connect buildings to their own Ethernet backbone network. The backbone
network is build up gradually based on requests from building complexes. For deploying the fibre, the company
buys access to an already established underground tube infrastructure in Frederiksberg owned and operated by
the local fire department219 . FrbNet thus owns and operates the fibre cables but pays a distance related fee for
deployment and a distance related yearly fee.
Upon connectivity, FrbNet installs their own router, switch and ATA (analogue telephone adaptor), but building
complexes (condominium) need to rewire all apartments with two sets of eight strand UTP cables themselves.
No equipment is needed inside apartments as one cable provides LAN connectivity and 2-4 strands of the other
are used for POT services. At his time the company does not offer video or television services.
The pricing structure is based on flat-rate subscriptions to users depending on bandwidth. The current fees are
monthly fees of € 13 for 1 Mbps, € 20 for 2 Mbps, and € 36 for 10 Mbps. The VoIP is offered for a flat rate of €
219 These special circumstances arise from an over 20 year old initiative by the Frederiksberg fire department to directly connect all
apartments in the area with an automatic fire alarm to the fire department headquarters. Today, the fire department openly sells access to
this infrastructure.

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20, including unlimited fixed line minutes. When bundled with internet subscription, VoIP and 2 Mbps are
offered with a € 3 discount, and VoIP and 10 Mbps with € 10 discount.
FrbNet uses an immature ‘gated garden’ business model where the company in the lack of external service
providers has implemented both Internet provision and a telephone service in-house. Technical solutions are
based around standardized pure Ethernet equipment which they consider as one of their success criteria. The
VoIP service is based on the Asterisk, open source Linux PBX. PSTN interconnectivity is provided through a
telephone wholesale contract where FrbNet also gets number series to offer their customers.
With an increasing customer base, the company hopes to attract external multimedia service providers both to
replace the existing telephone service as well as to introduce new VoD and IPTV services. However, before
video services can be offered organizational decisions about business models and billing solutions need to be
taken. The company regards introduction of video services as the most difficult future task due to the following
challenges and barriers:
• Cabling: Access price to incumbent owned coaxial cables from basement to apartments is used as a
barrier by the incumbent.
• Content: The cost of content is too high for a small customer base like FrbNet.
• Standardization: There is a lack of standardisation both in encoding (MPEG, WMF, HighDef) as well
as in set-top boxes.
• Planning and organization: The addition of VoD and IPTV changes the structure of the existing
systems, i.e. transmission pricing and billing.
• Vendor relation: Content owners want to establish direct relationship with viewers instead of through
FrbNet.
• Distribution: Distribution is more of a technical challenge (rather than barrier) but can be solved (the
network supports it)
• Demand: FrbNet feels that customers are not looking for (there is not demand) for alternative television
services. The demand is for cheap Internet and telephone.
On the future horizon, FrbNet see improved service quality rather than price reductions. This could e.g. be in the
form of fibre cables from basement to apartments and introduction of VoD and IPTV services.
Conclusion
FrbNet is a ‘non-profit’ city network that due to inexpensive standardized equipment and access to existing
public infrastructure and services (lowered entry barrier) can offer cheap IP services. The company has limited
financial resources and investment and operational cost is kept at a minimum through steady growth, small
overhead and outsourcing. The company uses an immature ‘gated garden’ model to offer Internet and telephone
services over a converged Ethernet FTTB infrastructure. Driven by aggregated demand from building
complexes (condominium) the company faces continuous financial and organizational challenges.
8.7.3.1.2 Case study 2: (Community Network) DjurslandS.Net
DjurslandS.net is a non-profit community network in the rural area of Djursland. The company stems from a
grass-root movement ‘Boevl’ that through support from the local commune has been arranging voluntary
computer teaching in the community since 1992. Today the company has evolved into an umbrella organisation
for eight local community wireless networks. The goal of the company is to avoid an ongoing social regression
in the region by providing affordable high-speed internet access to all residents of the region.
During the planning phase of 2000-2002, the company first tried to gather a critical mass of potential customers
in the region to strengthen bargaining power against commercial operators. However, since 25% of the 32.000
households (population of 82.000) in the region are outside the reach of traditional DSL and cable, none of the
commercial operators could meet the goals of the company. The company therefore started testing and
evaluating wireless and satellite access and concluded that wireless access was superior due to the high
transmission delay in satellite technology.
In 2002 the company got an EU grant to partly finance the build-up and operation of their own wireless access
network based on the 802.11b standard. Being a non-profit community organisation the company had troubles
raising the remaining investment capital and therefore the decision was taken to divide the company into the
eight local community networks that it now is composed of, each responsible for funding their own access
points. For backbone connectivity, the company relies on a mix of an existing public regional fibre network
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The operation is based on standardised equipment and open source software where available and the ‘do-ityourself’
paradigm (e.g. to minimise cost the company assembles it own access points and antennas). For
operation, the company gets indirect support from the regional government through sharing of its 10 employees
and housing (e.g. the offices are in the basement of the local gymnasium), and relies on local voluntary work.
To subscribe, users within 1,5 Km of an access point can buy a standard package including an outdoor
mountable amplifying receiver for € 265 or users within 5 Km can buy an extended package witch also includes
an extra outdoor antenna. The company offers a flat rate monthly subscription fee of € 13,50 for a 1-6 Mbps
shared duplex bandwidth (multiplexing of up to 20-30 users). In yearend 2004, DjurslandS.Net had 2.200
customers making them the largest non-commercial wireless network in Europe.
The company adopts a simple mix of ‘public garden’ and ‘walled garden’ business model based on providing
Internet access and encourage users to use the connection as much as widely as possible. To provide the required
data services, the company however bundles e-mail, homepage etc. into the subscription fee.
As a future development, the company is investigating adoption of new wireless standards such as 802.11a and
g and evaluating and testing VoIP. However, there are no concrete plans for upgrading the infrastructure or
adding new services such as voice or video. This can both be contributed to the technical limitations of wireless
networks but also to the competitive situation with other traditional technologies such as PSTN and terrestrial
television.
When asked about the community support and devotion and the commercial viability of the project and the
founder of the company points out that the characteristics of rural areas in the form of solidarity, responsibility
and common ‘do-it-yourself’ mentality. Operators don’t see a commercial basis in meeting the demand of the
rural areas and therefore, as a last resort, necessity and vision drives the users to start a common initiative. The
solution then becomes different from the commercial strategy, not only in terms of profitability but also on the
social level as the community network is not based on hiring professionals for all task but based on using the
available resources and build up competences in the community.
Conclusion
DjurslandS.Net is a ‘non-profit’ rural community network that due to unmet demand for broadband connectivity
in regions outside the reach of traditional technologies and financial support from EU has implemented a
wireless infrastructure. The company has limited financial resources and minimizes investment and operational
cost e.g. through access to a public backbone network, voluntary work, and indirect support from the commune.
The company adopts a simple mix of ‘public garden’ and ‘walled garden’ business model to provide
inexpensive internet access. Driven by local support and solidarity the company faces continuous financial and
organizational challenges.
8.7.3.1.3 Case Study 3: (Energy Utility) NESA
NESA A/S is energy utility company operating in the vicinity of Copenhagen. The company has its core
activities of electricity distribution and trade and is the biggest electricity provider in Denmark with 535.000
customers. For the past 15 years the company has been deploying fiber cables to support its core activities, e.g.
through an IP based control system for their electricity installations, and now owns more than 25.000 Km of
fibers and more than 700 Km of fiber traces.
In 2002 the company diversified into the broadband market and started implementing and testing a FTTH
network. In yearend 2004 the company had 800 active homes participating in a commercial pilot project. The
deployment strategy of the company is to lay down empty micro duct tubes with power cables, for subsequent
blowing of fiber. The company has already connected 20.000 homes with tubes and intends to lay tubes to
200.000 homes in the next 5-7 years. The company has not yet taken decision about fiber roll-out in the tubes
and according to them there is a need for political support in role-out of fiber infrastructure, as they phrase it:
“all important infrastructure projects require political support”.
According to NESA there are several important synergies between electricity supply and fiber optic
infrastructure supply: a) common network planning, b) Common digging projects, c) Common network control
and monitoring, and d) common service organization. The cost of the fiber cable itself is minor in relation to the
groundwork and as NESA phrases it: “It should be illegal not to establish fiber connections to the household
when a digging project is ongoing”.
To build up the FTTH network, NESA contracted IBM Denmark as system integrator for the project using a
technical solution from Cisco and PacketFront. The network is based on a MPLS backbone network from Cisco,
connecting islands of up to 24 homes with an active switch in a curb using a star topology. Inside the homes,
NESA installs customer premises equipment (CPE) that terminates the fiber. From the CPE, users are self
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NESA’s business model: NESA provides an operator independent network, where different service providers
can access the households through NESA network and NESA owns, controls and maintains the broadband
network and physical infrastructure. Today there are five service providers competing in four service types (see
Figure 51).
Figure 51: Service Providers in NESA’s FTTH network
In the current pilot project, customers pay a fixed monthly fee of € 50 for access to the infrastructure and then
buy services directly from service providers through a web portal.
In this approach there is no profit sharing or transportation fee for service providers and NESA covers all
expenses (and profit) from the customer connectivity fee (public garden model). However, the specifics of the
future business model are under development and as a part of that, NESA is considering introducing
transportation fees for service providers. With this transportation fee, NESA hopes to reduce the customer fee,
which otherwise can be a barrier to attracting new customers, and to better represent the real transportation cost
of different services’ requirements.
NESA believes very strongly in the ‘open access’ business structure and see that as their main success criteria in
competition with traditional operators and over for other FTTH projects. They adopt a rather disintegrated
service and infrastructure approach, by not providing any additional services or functions that have to do with
the services themselves, e.g. not providing set-top boxes, billing nor product support. They believe that
distancing themselves from service providers is the only way to ensure fair competition.
When introducing future services, NESA does not encounter technical limitations but regard standardization as
barrier to the development, especially in set-top boxes. The company has successfully implemented TV and
VoD services but misses a service that is unique to the FTTH platform.
Conclusion
NESA A/S is an Energy Utility Company that due to synergies with its core activities and strong financial
situation is planning to establish a FTTH infrastructure. The company uses an ‘open-access’ model where NESA
operates and maintains the broadband network and physical infrastructure and independent service providers
compete for customers through a portal. Driven by operational synergies and new market potentials the main
barrier to full-scale deployment is ensuring financial sustainability.
8.7.3.2 Case study 4: (Operator Driven) AarhusNet
NetDesign A/S is, as the name implies, primarily involved in design and consultancy of internal and external
data networks for Danish enterprises. In 2003 the company diversified after winning an outsourcing agreement
with Aarhus Municipality for establishment and operation of a new backbone network for all public institutions
in the Aarhus region, the second largest city of Denmark. NetDesign was granted an exclusive eight year
contract that guarantied the critical mass required to build up a multifunctional regional backbone infrastructure
that the company has designed to further meet the needs of businesses and eventually residential users.
The network is MPLS based and structured as a number of redundant rings that provide a total of 58 active
Points of Presence (PoP) with 1 Gbps connectivity. In addition 22 Local Exchanges are connected from where
the company provides 1380 locations with 2,3 Mbps G.SHDSL connectivity. The goal of the design was to limit
the distance from PoPs to institutes and enterprises in the area, minimizing deployment cost for new customers
and increasing competitiveness.
NetDesign operates the network on the ‘open access’ principles where independent service providers are granted
access to customers on competitive basis. The network met public critique from competing traditional operators,
such as the incumbent TDC that meant that providing services over the AarhusNet rather than their own,
incurred extra cost and skewed competition. In yearend 2004, the Danish incumbent acquired 98% of the

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company which now is operated as a subsidiary of the Danish incumbent TDC, using the same operational
principles.
To reach the residential market, NetDesign looks towards cooperation with the local Energy Utility Companies
(EUC) to deploy fiber from their PoPs to individual users. Their view is that public organizations such as EUCs
are the only investor with long enough time horizon and Rate of Interest (ROI) to see financial sustainability in
FTTH platforms. NetDesign is confident that their competences in design and operation of technically advanced
backbone networks make them an attractive partner for the EUCs.
On a competitive level, NetDesign considers their established infrastructure and their critical mass of customers
to guard them against competing infrastructure establishment, as long as they maintain the ‘open access’
business model. Their future focus is on FTTH rather than advanced DSL as regulation only grants them access
to incumbent Local Exchanges but not street cabinets that are required for short range DSL technologies such as
VDSL.
NetDesign has the technical platform to guarantee Quality of Service (QoS), negotiate and report Service Level
Agreements (SLA). How this platform will be used to implement the details of the ‘open access’ business model
is not determined, but in general, NetDesign wants to distance themselves from all aspects of service
development and implementation. They therefore identify problems such as standardization in IPTV and set-top
boxes as a potential barrier to the development of multimedia services in their network but position the problem
within service providers.
Risk Level
High
Low
CONTENT
ISPs TV SP xSPs
Active infra-
operator 1
Active infra-
operator 1
Passive local infrastructure company
Figure 52: Expected ROI for different levels of the value chain [Chlamtac, 2005]
NetDesign feels that by providing the critical mass through public-private partnerships, the public is the driver
for broadband deployment in Denmark. Furthermore, they believe that the ROI will define the future of the
broadband market according to Figure 52.
Conclusion
AarhusNet is an operator owned and operated regional backbone network established through a public-private
partnership between NetDesign and Aarhus Muicipality. The network was designed to be extended to the
enterprises and residential market. The network is currently operated according to the ‘open-access’ paradigm
on the public and enterprise market and wishes to diversify to the residential market. Driven by a critical mass
provided by the regional government the main barrier to residential deployment is partnership with local FTTH
projects.
ROI
2-3 years
5 years
20 years

8.7.4 Conclusion
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There are structural and technical limitations connected to the development of traditional broadband. The main
limitations are that these developments are carried out primarily within the traditional telecom paradigm with its
already listed limitations. Even though these networks are opened up to the competitors through interconnection
legislations, the structural barriers still exist and are directly connected to the ownership of physical
infrastructure. The technical limitation is connected to the capabilities of the ‘old’ telecom and cable TV access
networks to offer real broadband services. This ‘path dependent’ limitation will, at best, facilitate a development
of incremental innovations in the network. The radical changes and innovations seem to come from another side,
namely development of ‘alternative networks’.
The alternative networks’ development is characterized by a converged IP platform that is used to offer different
types of content in an affordable and/or efficient way by:
• Establishment of LAN in residential areas using a combination of existing infrastructure and
establishment of new cables and network components.
• Extension of LAN technology to MAN and WAN, resulting in bypassing traditional telecom
• Establishment of wireless IP based network in residential and work environments using, e.g., WLAN
• Establishment of wireless hot spots in pubic and private places
• Establishment of wireless network in larger geographical places
Through an empirical study of the Danish alternative broadband market this report can conclude that two main
factors have acted as drivers in the establishment of alternative broadband operators: lower barriers to entry due
to inexpensive standardized equipment and technologies, and direct or indirect form for public sector
involvement
Furthermore, the interviews indicated that alternative broadband operators, opposed to the traditional broadband
market, are leading a trend from closed integrated infrastructure and service systems using closed value-chains,
towards more open, disintegrated and standardized networks using operator independent business models, where
competing service providers can offer content and services on a common delivery platform.
The study has also revealed that technical problems with implementing advanced services weigh less on
alternative broadband operators’ scales today, than structural, organization and financial concerns. Commonly,
most operators pointed out that video and television services over converged IP networks was the biggest future
barrier to their service portfolio, mainly due to the lack of standardization in encoding, digital rights
management and set-top boxes. All operators were positively expecting resolution to these problems within the
next two years.

8.8 Estonia
8.8.1 Introduction
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Estonia, which has joined the European Union on 1 May 2004, has 1 350 600 inhabitants on a territory of 45
215 square km, which means that its population density is 30 inhabitants per square km. The density is thus at
the lower end of the EU rang. Purchasing-power adjusted GDP stood at 50.4% of the EU 25 average in 2004.
8.8.2 The broadband market
Estonia has an average usage of mobile telephony with a penetration rate of around 93%, somewhat above EU
average. It has a low density of fixed lines, equivalent to only 34.2% 220 of the population, but this is within the
average of the new member states and significantly higher than the other two Baltic states. However, the fixedline
density has recently decreased. The fixed line network is open to competition, but still dominated by Elion
(brandname of Eesti Telekom) with a share of over 80% of telecom services 221 . The mobile telephony market is
competitive. Eesti Telekom’s EMT has a 46.6% market share, while Tele2 has 35.6% and Radiolinja 17.9% 222 .
The Estonian broadband market continues its rapid expansion from an already high level. Penetration as
measured in broadband connections per population stood at 10.2% at the end of 2004, as compared to 7.6% six
month earlier. In percentage terms, this represents an impressive 35% growth from 103 000 to 139 000 in just
half a year. Of that total, 68 000 are DSL, corresponding to 49.4%, down from 53.6% at the end of June. 31.2%
of the broadband connections are through the cable network, while 19.4% use other infrastructures. The DSL
market is overwhelmingly controlled by Elion and its subsidiaries, which account directly for 94.3% of DSL
subscriptions. The remaining 5.7% are unbundled DSL access lines; no lines are retailed on its infrastructure by
other ISPs. 223 It is interesting to note that the fast start of broadband in Estonia took place while digitalisation of
the fixed network was still lagging behind; in June 2003 only 82% of the network was digitised, yet broadband
had already taken off.
For the further roll-out of broadband there is, on the positive side, the cable network of Starman, the major
provider of cable TV and Internet connections, which passes nearly 200,000 households or almost one third of
Estonian homes 224 , thus providing potential for further infrastructure-based competition for a significant minority
of the population. On the negative side, the low population density combined with the low income level means
that rural areas’ access to infrastructure remains limited. Only 23% of households in rural areas (up to 2 000
inhabitants) have fixed lines 225 , which clearly inhibits DSL roll-out.
There was no 3G network operating in Estonia at the start of 2005, but two of the three operators were providing
GPRS services.
8.8.3 Broadband policy
Concerning the information society in general, Estonia is in a different situation from most of the new member
states. Internet take-up and broadband roll-out has been extremely fast for a country of its income group, at least
part of which is due to strong policy support. The state has taken the lead in offering online services by rapidly
deploying e-government services: for example, in 2004 (income year 2003), 59% of natural persons’ income
declarations were declared electronically. E-government services are mostly based on the PeaTee (EEBone)
broadband network of data communication between government, to which more than 21 000 computers and
more than 1300 governmental and local institutions are connected. Online services offered by companies are
equally successful, at least in some sectors: 95% of banking operations are carried out electronically with the
number of Internet bank clients amounting to nearly 800,000 (out of a total population of 1 350 000) 226 .
Even so, the further development of e-government services is a key element of the current overall information
society strategy, together with e-learning and research, and e-health. A functioning eVoting system is planned to
220
Eurostat, Statistics in Focus 8/2005: Telecommunications in Europe, 7.2.2005, http://epp.eurostat.cec.eu.int/cache/ITY_OFFPUB/KS-
NP-05-008/EN/KS-NP-05-008-EN.PDF (figure refes to 2003, but any change is unlikely to be signficant)
221
Annex II to European electronic communications regulation and markets 2004 (10th report), {COM(2004)759 final}, 2.12.2004
222
European Mobile Communications Report, Issue 189 – February 2005
223
Source: ECTA
224
http://www.ria.ee/atp/
225
Central and Eastern Europe Information Society Benchmarks, Country Analysis, September 2004, EU Commission
226 http://www.ria.ee/atp/

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operate in the local government elections in 2005 227 . In addition, concerning network roll-out, Estonia has very
recently adopted a national strategy for developing broadband Internet access that sets out basic principles until
2007. It aims in particular to bring high-speed Internet access to all regions. Construction of networks will not
be subsidized significantly, but the possibility to do it is provided for, as far as pilot projects are concerned. The
ministry is preparing for a tender later this year to find a service provider 228 .
8.8.4 Conclusion
Estonia’s challenges in broadband policy are quite different from those of the other new member states, in that it
is at a much more advanced stage than all of them, both in terms of infrastructure penetration rates and in terms
of services offered, and from those of the old member states, in that low income levels pose quite different
constraints. The public sector continues to play a leading role, notably by issuing 700 000 cards digital ID-cards,
which include personal certificates and private keys of the card-owner, and by pushing forward with edemocracy
projects. In both cases, Estonia remains at the forefront of innovative applications as a means of
fostering infrastructure development.
227 Estonian IT Policy: Towards a More Service-Centred and Citizen-Friendly State - Principles of the Estonian Information Policy 2004–
2006; Ministry of Economic Affairs and Communications
227 Baltic Times, 13.4.2005

8.9 Finland
8.9.1 Introduction
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Finland, an EU member since 1995, is a fairly new broadband success story. As lateas 2003, Finland was often
noted to be a laggard in broadband use, a somewhat surprising fact, given its early lead in the use of mobile
telecommunications and the Internet. Broadband, however, started to advance rapidly in Finland in 2003. At the
end of 2003, the leading EU countries, Denmark and Belgium, seemed to be only about 6 months ahead in the
penetration curve, and the next ones, the Netherlands and Sweden about 3 months. Behind these countries,
Finland was close to the U.S. penetration rates.
8.9.2 The broadband market
The access and use of broadband has been increasing at a very high rate in Finland during the last two years.
According to the Finnish Ministry of Transport and Communications, the number of broadband connections was
500,000 in January 2004, about 750,000 in December 2004, and about 950,000 in May 2005. Due to the fact
that some operators count multi-dweller building access as one subscription, the actual number of broadband
subscribers in May 2005 was close to one million. This equals to almost 20 broadband subscriptions per 100
inhabitants. About 95 percent of households were within the reach of broadband services, in most regions the
coverage was close to 100 percent, and 36 percent of households actually subscribed to broadband in May
2005. 229 The number of broadband connections almost doubled in 2003, and the growth increased in the second
half of the year. This pace exceeds all previous forecasts. The speed of diffusion of broadband has been the
fastest in the world in Finland during the last couple of years.
The growth of different broadband technologies can be seen in Figure 53, 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. 230 At the end of 2003, there were about 4.747 million
mobile subscriptions, 231 implying that many mobile users have several phones. According to the operators,
analogue subscriber lines are also increasingly being replaced by DSL lines that are used to carry Voice over
Broadband. In 2003, the number of calls made using fixed line decreased 22 percent.
From Figure 53 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.
Due to the rapid growth, the existing estimates for future broadband penetration have been conservative. In
2003, the IDC estimate expected the household penetration to reach 35.7 percent in 2007 (Figure 54). In fact,
this number was reached in April 2005.
In making international comparisons, one has to note that, at present, the varying methods used to collect
broadband statistics make comparisons difficult. Different data sources give different numbers for individual
countries, and different countries collect their broadband statistics using different definitions and methods.
According to IDC 232 and ECTA 233 estimates, cable modems represented about one fifth of broadband connections
in Finland in 2003, and less than that in December 2004, about 17 percent. 234
229
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 goal of the government broadband strategy, to get one
million broadband subscribers by the end of 2005, has already been exceeded.
230
Data provided by Juha Nurmela, Statistics Finland.
231
Data from Statistics Finland.
232
IDC 2003: European Broadband Access Services Market Analysis, 2002-2007.
233
ECTA 2003: DSL scorecard, end of September 2003.
234
ECTA 2005: DSL scorecard, Q4 2004. One should, however, note that the ECTA numbers are considerably lower than the numbers
reported by five large broadband operators in their stock exchange reports (about 716,000). ECTA reports about 656,000 broadband
connections, whereas the Ministry of Transport and Communications reports conservatively at least 750,000 subscribers.

2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
Access lines for residential use
ISDN subscribers - basic rate
DSL Lines
Cable Modem Internet subscribers
Other broadband access technologies to Internet
Total broadband
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1990 2001 2002 2003 2004
Figure 53. Broadband growth in Finland. 235
Figure 54: Estimated broadband access in households in Finland. IDC / OECD 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 final subscribers are counted. According to FICORA 236 , 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, 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
235 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. The numbers may underestimate residential Ethernet subscribers, which were estimated
to be 100,000-150,000 at the end of 2004. Some operators count connections to multi-household buildings as a single subscription.
236 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

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percent of total broadband connections at the end of 2003. There were also at least two satellite broadband
providers, although their relative share remained low, partly because marketing and installation services for
satellite broadband equipment had started only recently.
Figure 55: 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 has not been 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 56.
percent of total
100
90
80
70
60
50
40
30
20
10
0
Finland
Sweden
United States
Korea
Spain
1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Figure 56: Percent of digital access lines. 237
In mid-2005, the fastest commercially available ADSL 2+ service was 24Mbps/1Mbps, at 69 euros per month.
The first WiMAX networks were taken into use in March 2005. A call for wireless broadband licenses was
closed at the end of April, with seven firms applying for spectrum that had become available in the NMT 450
megahertz area. This spectrum was to be used in particular for providing broadband access to remote areas. One
of the operators, Saunalahti, announced that it would use flash-OFDM and invest 30 million euros in 2005-2007
237 OECD, Telecommunications Database 2003.

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to build a network that covers the whole country. Another bidder, Cubio Networks, announced that it would
invest 100 million to cover 99 percent of the population at speeds of up to 2.4 Mbps using cdma450.
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. 238 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.
In general, observing broadband subscriber growth in different countries, it seems that during the last years
broadband diffusion has been much more rapid that other network technologies. One possible reason for this is
that broadband substitutes earlier technologies and its deployment can rely on user skills and usage patterns that
have developed using narrow-band and LAN networks. This removes a major bottleneck from the diffusion
process. 239 This, in fact, could be one of the explanations why broadband did catch up quickly in Finland in the
last few years. Although statistics show that Finland has relatively low rate of secure servers—often interpreted
to imply a low rate of eCommerce—Finns have extensively been using international web content for a long
time. As international sites start to use multimedia content, the demand for fast access and download has
increased. In particular, the relatively good Internet backbone network has made end-subscriber access speed an
important factor in the user experience. The bottlenecks, then, have been availability and pricing. As technical
developments have made fast deployment possible and as subscription prices have dropped, broadband
penetration has increased rapidly.
8.9.2.1 Pricing
Since 2003, broadband subscription costs have decreased extremely rapidly in Finland. Table 20 shows the
prices in euros at the beginning of 2005 and 2004, weighted by market shares between cable modem and DSL
access. In 2004, the subscription fees dropped about 44 to 48 percent. In 2003, the fees dropped on average 22-
40 percent, depending on the connection speed.
Average monthly
fee in euros
Annual change
bit rate, kbps 1.1.2005 1.1.2004 2004 2003
256/256 21 39 -48% -22%
512/512 26 48 -46% -25%
1000/512 35 62 -44% -40%
2000/512 47 99 -48%
Table 20. Weighted ADSL and cable broadband monthly subscriber fees in 2004 and 2005. 240
The cheapest cable modem subscription prices were 18.90 € per month and the cheapest 256 kbps ADSL was
19.90 € per month in May 2005. The operators have frequently had special offers where, for example, service
installation costs have been lowered or waived. For example, a 1Mbps/768kbps ASDL subscription was
available for 36 € per month with zero installation cost in May 2005. The monthly subscription fees and setup
charges at 1 st January 2005 are shown in Table 22.
The broadband subscription fees have decreased rapidly, but Finland started with fees that were considerably
above those of many other EU countries. The relative subscription fees for 256 kbps and 2 Mbps ADSL among
EU countries is shown in and Table 24, using the Finnish service basket as a reference point. Finland had about
twice as high subscription fees than U.K. in 256 kbps ADSL and about four times higher fees in 2 Mbps ADSL
than Belgium. In general, the price differences were considerable across EU when higher speed connections are
compared.
238 Statistics Finland, 2004: Tilastouutisia 3.3. 2004, Kuluttajabarometri: Digiboksi yli 250 000 taloudessa helmikuussa.
239 Cf. Yang et al. 2003: Diffusion of Broadband Mobile Services in Korea: The Role of Standards and Its Impact on Diffusion of Complex
Technology System, http://weatherhead.cwru.edu/pervasive/Paper/UBE%202003%20-%20Yoo.pdf
240 Compiled from Ministry of Transport and Communications data, LVM 21/2004 and LVM 27/2005.

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Operator Type Speed Connection cost Monthly fee, €
Sonera ADSL 512/512 kbit/s 129 48
Sonera Cable ~750/256 kbit/s 49 49
Elisa ADSL 512/512 kbit/s 126 49
Elisa Cable 512/128 kbit/s 50 46
ADSL 256/256 127.89 44.26
Finnet
ADSL
ADSL
512
1Mb
129.42
124.92
50.91
70.73
ADSL 2Mb 127.20 109.33
HTV Welho Cable 525/200 50 49
Saunalahti ADSL 512/512 kbit/s 160 46
Jyväsviestintä KaNetti Cable 700/200 kbit/s 49 48
PäijätVisio Cable 500/100 kbit/s 80 49.90
Vattidata PLC 1Mb/256 kbit/s 70 49
Turku Energia PLC ~750/? kbit/s 50 46
RS-Solutions WLAN 512/512 kbit/s 0 42
Wireless Solutions
Finland
TiscaliSat
WLAN
Satellite
512/512 kbit/s
400/- kbit/s
0
49.90
42.05
39.90
Table 21. Some broadband service offers in Finland, October 2003. 241
241 Source: “Kansallinen laajakaistastrategia” (The National Finnish Broadband Strategy). Publications of the Finnish
Ministry of Transport and Communications, 50/2003, December 2003.

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Monthly fee, €
Operator Setup, € 256/256 512/512 1M/512 2M/512
Auria Oy, (Sonera Adsl) 198 24,9 29,9 33,9 39,9
dna Laajakaista (H:gin seutu) 157 19,9 23,9 37 48
Elisa Oyj / Helsinki 123 19,9 24,9 36 49
Elisa Oyj/ Tampere 123 25,9 33 37 47
Etelä-Satakunnan Puhelin Oy 50 35 46 55 65
Forssan Seudun Puhelin Oy *) 49 24 - 44 54
Hämeen Puhelin Oy, (Son Adsl) 129 - 24,9 36 47
Kajaanin Puhelinosuuskunta *) 50 22,9 24,9 32 45
Kokkolan Puhelin Oy 133 - 24,5 34,9 43
Kotikaupungin Puhelin Oy *) 92 - 41 47 49
Kuopion Puhelin Oyj 188 24,9 28 32 47
Kymen Puhelin Oy 199 - 24,9 30 46
Lohjan Puhelin Oy 99 23,5 - 34,5 44,5
Lounet Oy (Elisa Adsl) 143 25,9 29 33 39
Lännen Puhelin Oy 165 29,4 34,4 39,4 46,4
Mariehamns Telefon Ab 1) 49 29 - - 49
Mikkelin Puhelin Oyj *) 49 - 24,9 36 47
Multi.fi (Pietarsaari) 139 - 25,9 34,9 41,9
Oulun Puhelin Oyj 138 - 25 33 47
Pohjanmaan PPO Oy 78 25 28 36 48
Pohjois-Hämeen Puhelin Oy 158 25,9 32 38 48
Päijät-Hämeen Puhelin Oyj 169 19,5 23,5 30,9 45,9
Salon Seudun Puhelin Oy 127 19,9 26,9 30,9 36,9
Satakunnan Puhelin Oy 158 - 25,9 35,9 41,9
Saunalahti ADSL 227 19,9 24,5 36 42
Savonlinnan Puhelin Oy *) 99 24 28 36 48
Sonera Oyj 198 - 25,9 34 47
Tikka Communications Oy 143 - 24,9 31 38
Vaasan Läänin Puhelin Oy 145 - 29 37 47
Vakka- Suomen Puhelin Oy *) 79 25,9 33,9 38,9 45,9
Weighed average 151 21 26 35 47
for items marked *), setup charge only, for others, setup and installation
Marienhamns Telefon Ab offers only speeds of 8M/600kbps-12M/800kbps
Table 22. ADSL setup charges and montly fees by some Finnish operators, 1 January 2005

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Country Monthly fee Operators Price (Finland =100)
UK 28,55 1 57,8
Netherlands 30,21 6 61,1
Sweden 33,27 1 67,3
Italy 36,95 1 74,7
Luxemburg 39,00 2 78,9
Denmark 45,81 2 92,7
Spain 47,82 5 96,7
Finland 49,43 15 100,0
Greece 52,54 2 106,3
Portugal 65,00 1 131,5
Table 23. ADSL subscription fees for 256 kbps, index, FI=100. 242
Country Monthly fee Operators Price (Finland =100)
Belgium 243 26,07 5 23,9
Sweden 52,85 1 48,5
Austria 59,00 1 54,2
Germany 60,84 1 55,9
UK 63,75 1 58,5
Italy 104,03 2 95,5
Denmark 105,16 4 96,5
Netherlands 105,16 4 96,5
Finland 108,92 22 100,0
Spain 174,27 3 160,0
Greece 300,00 1 275,4
Table 24. ADSL subscription fees for 2Mbps, index FI =100. 244
242 Source: “EU-maiden ADSL- ja kaapelimodeemiyhteyksien kuluttajahinnat” (ADSL and cable modem subscriber prices in the EU
countries), Publications of the Finnish Ministry of Transport and Communications, 49/2003, October 2003.
243 The price for Belgium is calculated from 3-4 Mbps service offerings.
244 Source: “EU-maiden ADSL- ja kaapelimodeemiyhteyksien kuluttajahinnat, lokakuu 2003” (ASDL and cable modem subscriber prices in
the EU countries). Publications of the Finnish Ministry of Transport and Communications, 49/2003, October 2003.

8.9.2.2 Competition
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Finnish telecommunications operations were opened up for competition in the early 1990s. The GSM networks
and data transfer were opened up to competition in 1990, and full-fledged competition in local, trunk and
international telecommunications began in 1994. Today, setting up telecommunications services generally only
requires notification to the Ministry of Transport and Communications, with only the construction of mobile
phone networks requiring a government license. 245
The three biggest operators had relatively similar market shares (18-27 %) in year 2003, and there are no
dominant players. The Finnish telecom market, however, is rather unique in Europe in that historically there has
not been a single national telecom operator. There exist a large number of typically small regional operators that
dominate their local markets both for cable TV and fixed line telephony. These operators often have 80-90
percent market share in their regions. The regional operators also often own the regional cable networks. The
large number of regional operators has created problems in access to the local loop, both because of
monopolistic pricing and because of varying terms of access in the different regions that has made country-wide
services difficult to roll-out. In total, there were 220 telecom service providers in Finland in March 2005.
Operator %
TeliaSonera 32.5
Elisa 27.2
Finnet 17.1
HTV Welho 11.3
Others 11.9
Table 25. Market shares of the biggest broadband providers in 2002. 246
The Finnish Competition Authority has actively intervened in the broadband market. During the first half of
2003, the FCA investigated over 40 local operators. The Finnish Competition Authority told in December 2003
that it was planning to sue those operators that still use their monopoly positions to limit competitor access to
local loop. Prior to the start of the FCA’s project, almost all the local telecom companies collected such high
broadband access charges that the entry of competing operators into the retail market was virtually impossible.
When the average broadband access charge exceeded the average 50€ consumer price by 15 percent, outside
ISPs could in no way provide the service commercially. The telecom companies have also asked from ISP
operators a wholesale price that has been several times as high as that asked by the company itself from
consumers and other retail customers. Additionally, some telecom operators have totally refused to lease
broadband service connections to competing operators. 247
Since then the Finnish Communications Regulatory Authority (FICORA) has systematically followed broadband
competition and pricing. It has rather aggressively pushed for non-discriminatory backbone pricing, organized
industry meetings to discuss access pricing and policies, and monitored regional operators who have significant
market power. Although the very large number of regional operators makes active intervention difficult in
Finland, FICORA has quite successfully intervened in monopolistic pricing and, for example, delays in
providing access to competing providers.
Also the Finnish Ministry of Transport and Communications has put considerable pressure on telecom operators
to improve competition in the broadband area. Partly this has occurred through systematical studies that show
pricing differences and which create pricing transparency and reveal anomalies in the competitive landscape.
FICORA has also requested that all the major broadband service providers publish their pricing on the web. This
information is now readily available to consumers through a broadband portal that has been set up as part of the
Finnish Government Broadband Strategy. It seems that these Government initiatives are at least partly behind
the fact that access and retail prices have rapidly decreased.
245
Ministry of Finance: Product and capital market reforms in Finland. November 2001.
http://europa.eu.int/comm/economy_finance/epc/documents/sf02_en.pdf.
246
Source: IDC 2003.
247
Finnish Competition Authority, press release, 27 June 2003, http://www.kilpailuvirasto.fi/cgi-bin/english.cgi?luku=newsarchive&sivu=news/n-2003-06-27

percent
120
100
80
60
40
20
0
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United States
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Figure 57: Total PTO investment per revenue in some countries. 248
The development of broadband services also crucially depends on the investments that service providers make.
This is obviously limited by the revenues that operators get from their operations. In general, public
telecommunication operators have decreased their investments as a ratio of their total revenues since the 1980s.
This can be seen from Figure 57. The investments in Figure 5 do not include 3G spectrum license fees, which
were about 93.5 billion in 2000 in OECD countries. 249 The Finnish Government did not auction spectrum, but
Finnish telecom operators paid considerable sums for licenses in Germany and Italy.
The investments made by the Finnish public telecommunication operators have been around 100 USD per
inhabitant during the last decade, without 3G license fees. Since 1997, the total revenue per inhabitant has been
over the OECD average, reaching 800 USD in 2001. Finnish PTOs have typically invested less per inhabitant
than OECD average but more than, for example, Korea. The household consumption of telecommunications
services has been growing continuously during the last decade, reaching 850 euros per household in 2004.
Given the rapid decline in telecommunication costs, this implies a large increase in the use of
telecommunications services. In 1996, the consumption of telecommunication services was only 360 euros per
household. 250
8.9.2.3 Demand: consumers
Broadband use has rapidly expanded in the recent years, and there are few detailed studies on its actual use in
Finland. Often the consumer benefits of broadband are described as potential benefits, such as improved speed
of downloading large files, capability for interactive video, and efficient teleworking. In practice, the current
major broadband benefits seem to be its “always on” characteristic, its usually predictable flat-rate pricing, and
the fact that normal phone calls are available while the Internet is being used. Compared with traditional dial-up,
the improvement of connection setup time is a considerable change, and broadband connections facilitate
efficient use of networked resources and communication. On the other hand, when broadband connections are
always on, their security risks have also become of major concern.
For specific user groups, such as active users of peer-to-peer music and video sharing systems, high-speed
connections represent a considerable improvement over narrow-band connections, and make the peer-to-peer
248 Source: OECD Telecommunications Database 2003.
249 OECD Communications Outlook 2003, p. 18.
250 Source: Ministry of Transport and Communications, LVM 27/2005.
Korea
OECD
Ireland
Finland
Sweden

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server architecture possible in the first place. Much of the current peer-to-peer network traffic, however, is
created by the unclear situation with copyright enforcement on the net. Similarly, most of the email traffic today
is created by spam and, indeed, many broadband-connected computers are today used to send spam mail by
breaching their security. As the legal status of spam and digital rights management systems becomes clarified,
the need for broadband may be somewhat reduced. According to the Pew Internet & American Life project, the
percentage of online Americans downloading music files on the Internet dropped by half between April and
November 2003, when RIAA began filing suits against those suspected of copyright infringement. Peer-to-peer
traffic represented one fifth to half of the total network traffic in the mid-2003. 251 Efficient enforcement and
digital rights management systems could, therefore, considerably diminish network traffic in the short term.
The Finns are among the most active Internet users within the EU. 61 percent of Finns in the 15-74 age group
had their own email addresses in October 2003 and 63 percent of email address owners used their email daily. 252
In February 2004, however, only 59 percent of households had PCs. 253 The relatively high percentage of Internet
users compared with the households with PCs results from the fact that larger households typically have PCs and
almost all households with PCs are connected to the Internet, as well as from the fact that some people get
access to the Internet at their workplaces and using public access points.
People who acquired broadband connection in 2003 increased their Internet use considerably. On average, the
weekly use of Internet increased 4 hours. The increase was most striking in sparsely populated areas, where men
increased their weekly use by 6 hours and women by 2.5 hours on average. Increase by people aged under 40
averaged 1.5 hours more than that of people aged over 40. Broadband users also seem to be relatively well
aware of the security problems associated with broadband. About 70 percent of household with broadband have
a firewall in their home PC and about 60 percent have virus protection for incoming email. 254
percent of Internet users
100
90
80
70
60
50
40
30
20
10
0
Information search
email
Banking
Entertainment surfing
Public services
Dowloading programs and files
Newsgroups and news
Buying
Studying
Remote work
Figure 58: Internet use in the Tampere region, Finland. 255
Chat / IRC
Voice over IP
Personal email, information retrieval, net surfing, and e-banking are the most common uses of the Internet in
Finland. The popularity of different services is shown in Figure 58.
251 Hadenius, P. (2004): Relieving peer-to-peer pressure. Technology Review, February 25, 2004.
http://www.technologyreview.com/articles/wo_hadenius022504.asp. Sandvine has recently claimed that up to 80 percent of residential
Internet traffic can now be peer-to-peer traffic generated by KaZaA, eDonkey, and WinMX
(http://www.sandvine.com/news/pr_detail.asp?ID=40).
252 Data from Juha Nurmela, Statistics Finland, March 2004.
253 Statistics Finland, 2004: Tilastouutisia 3.3. 2004, Kuluttajabarometri: Digiboksi yli 250 000 taloudessa helmikuussa.
254 Data from Juha Nurmela, Statistics Finland, March 2004.
255 Data from eTampere / Infocity 2003 survey conducted in October 2003 by Taloustutkimus Oy.
2000
2003

percent of all Internet users in the age group
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
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10-29 years
30-54 years
55+ years
Personal email
Information retrieval and free services
Surfing the net
Banking and other financial services
Playing games with others online
Shopping
Chatting
Downloading music
Electronic questionnaires and forms
Noticeboard discussions
e-learning
Making own web pages
Found a friend through the web
Has used email on a domestic trip
Has used email on a trip abroad
Internet users in age group
Figure 59: Use of Internet applications in different age groups at the end of 2002. 256
Some recent studies have focused on the use of the Internet among the elderly population of over 50 years of
age. In this demographic group, the use of the Internet appears to be limited by relatively high perceived costs
when compared with expected benefits, difficult non-ergonomic working positions, difficulties in using the
mouse and keyboard, and representation of content in ways that require good eyesight.
100%
90%
email
information search and free services
www-browsing
banking
games
filling of electronic forms
shopping
distance learning
creation of web pages
discussion boards
dating and meeting new friends
chat
music downloading
buying groceries
buing other goods
buying tickets
library services
searching for job
tax services
social security services
80%
70%
60%
50%
40%
30%
20%
10%
0%
All
Nurmela & Ylitalo, 2003
Tuorila, 2004
Figure 60: Uses of the Internet in the 50+ age group in Finland. 257
public health service information
other
256 Nurmela Juha & Ylitalo Marko (2003): The Evolution of the Information Society. How Information Society skills and attitudes have
changed in Finland 1996 - 2002. Reviews 2003/4, Statistics Finland, Table 6.5.

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The Finnish Ministry of Transport and Communications has launched a research program in 2002 that focuses
on the use and user perceptions of broadband. In a survey conducted in May 2002, 21 percent of Finns without
broadband access felt that they would need one. In general, the various studies show that both the use and
perceived benefits of broadband increase with higher household income, higher levels of education, and
household size. Low incomes, low levels of education, unemployment, lack of children under 18 years in the
household, and age of over 44 years decrease both the use and perceived benefits of broadband. 258
It is possible that the gains from broadband would be similar to those in other countries. Experts have argued
that applications of particular importance for broadband diffusion include IP telephony, video, audio, gaming,
online photos, teleworking, e-commerce, and local content. 259
8.9.2.4 Demand: businesses
Many medium sized and large companies have been connected to the Internet using leased lines. At the end of
2001, Finland had about 60 leased lines per 100 000 inhabitants, the fifth highest in EU after Denmark, Sweden,
Luxembourg and the Netherlands. In the spring 2003, 94 percent of all businesses that employed more than five
persons used the Internet, and 99 percent of firms with 20-49 employees had Internet connections. In business
services and wholesale trade the number reached 99 percent, whereas in construction and car sales it was around
85 percent. 58 percent of all firms with more than five employees had their own web site. 260 Broadband was used
by 63 percent of firms employing five or more people in spring 2004. 261 The connection types used by firms can
be seen in Figure 61.
Figure 61: Internet connection types in Finnish firms, spring 2003. 262
257 Tuorila, H., 2004: Yli 50-vuotiaat Internet-palvelujen käyttäjinä (People over 50 as users of the Internet), National Consumer Research
Centre, Publications 2/2004. Nurmela Juha & Ylitalo Marko (2003): The Evolution of the Information Society. How Information Society
skills and attitudes have changed in Finland 1996 - 2002. Reviews 2003/4, Statistics Finland.
258 Koivumäki, M. & H. Soronen, 2003: Laajakaistapalvelujen käyttötarpeet: Internetiä käyttämättömät lähikuvassa (User needs for
broadband services: close shot of non-users of internet). Publications of the Ministry of Transport and Communications, 27/2003, May
2003.
259 Reynolds, T. 2003: Promoting Broadband.
260 Statistics Finland: Internet ja sähköinen kauppa yrityksissä 2003 (Internet and electronic commerce in business firms 2003).
261 Statistics Finland: Internet ja sähköinen kauppa yrityksissä 2004.
262 Source: Statistics Finland: Internet ja sähköinen kauppa yrityksissä 2003.

8.9.3 Broadband policy
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The current Finnish Information Society Programme is coordinated by the Prime Minister and the program
management is located at the Prime Minister’s Office. An important rationale for this arrangement has been the
belief that efficient implementation of Information Society initiatives requires collaboration across the
Ministries, and coordination at the highest policy levels. The Ministry of Transport and Communications has set
up a project to follow the implementation of the Finnish broadband strategy, and an associated web-site that acts
as a portal for broadband information. 263 The national regulatory agency FICORA and the Finnish Competition
Authority have important roles in monitoring and enforcing competition and standards.
The Finnish government published a resolution on the national broadband strategy at the end of January 2004. It
states that:
“High-speed telecommunications with nationwide coverage are essential for achievement of the Government's
objectives. A high-quality, efficient communications infrastructure will improve productivity and promote
economic growth in all sectors. It will also advance the development of new forms of work and business, thereby
improving the ability of companies to compete. Furthermore, good telecommunications infrastructure will
facilitate improvements in the quality and availability of public services, providing a useful tool for developing
these services, especially in sparsely populated areas. Comprehensive provision of high-speed
telecommunications is also vital in ensuring regional equality..” 264
The strategy is:
• to promote competition within and between all communications networks,
• to promote the provision of electronic services and content,
• to stimulate demand for broadband services,
• to continue and develop special support measures in those areas in which there is insufficient demand
for the commercial supply of broadband facilities.
The accompanying strategy targets include having 1 million broadband connections in Finland by the end of
2005, including all access technologies; affordable high-speed access for everyone, with comprehensive
geographical coverage. The goal is also that Finland will be a European leader in the availability and use of
high-speed telecommunications.
The strategy notes that the appropriate connection methods depend on regional factors and the level of demand.
The measures and initiatives included in the strategy are designed to be technology neutral to guarantee the
parallel development of alternative technologies and effective competition. The strategy explicitly discusses
cable networks, DVB-T, UMTS, FTTH, FTTC/Ethernet, WLAN, PLC, xDSL, and satellite.
The broadband strategy is closely linked to the Finnish information society policy programme. The current
programme was adopted by the government in September 2003, and it continues the previous government
information society programmes and strategies. The programme is coordinated by the Prime Minister. The
information society, as a means to promote welfare, sustainable development, transparency, accountability,
democracy, good governance and societal and economic development, has been a central theme in the Finnish
government programs since the mid-1990s. Nevertheless, recent research has shown that up to 77 percent of the
Finnish households did not feel that they needed broadband services:
There have been several initiatives to extend the discussion on the challenges and priorities of the information
society beyond traditional policy circles and to engage the citizens in the policy definition. An online forum
“Knowledge society – society of the future?” was launched on 17.2.2004. Comments and contributions from the
citizens were used to focus the information society programme and the inputs from the discussion will be fed
back to the group of ministers and to the Finnish Information Society Council.
There also exist several regional information society strategies and initiatives that try to promote broadband use.
These include initiatives at the Turku265 , Tampere266 , and Oulu267 regions. In general, the Finnish initiatives
emphasize convergence and multiplatform solutions where services and applications can be accessed using fixed
and mobile terminals.
263 http://www.laajakaistainfo.fi
264 http://www.laajakaistainfo.fi/english/index.php
265 http://www.turku.fi/tietoyhteiskunta/Ihminen_turku_engl.pdf
266 http://www.etampere.fi/office/en/
267 http://www.oulu.ouka.fi/smartoulu/english/paasivu.htm

8.9.3.1 Open policy issues
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Open and emerging policy issues include regional coverage and universal service provision. The current policy
emphasizes the role of regional authorities and commercial actors in service development, as well as technology
neutrality. To increase regional availability, the Finnish Competitive Authority and the Finnish Communications
Regulatory Authority have actively pursued local loop unbundling and competition in broadband wholesale
market. Finland also released wireless spectrum in the 450 megahertz band for launching commercial services
that can reach remote areas and cover the whole country at 1-2 Mbps speeds.
The regulation of Voice of Broadband is becoming an increasingly visible topic as many consumers will
potentially switch to broadband telephony services, where, for example, emergency service access may require
new approaches. The December 2004 update of the Finnish Broadband Strategy highlighted the promotion of
VoIP as one of its new strategic areas. It also set a new goal of having at least 90 percent of all Internet
connections broadband, with at least 8Mbps speeds, by 2007.
The diffusion of powerline broadband (PLC) was also delayed as measurement revealed that PLC technology
creates electromagnetic interference levels that exceed accepted limits. The newer PLC technologies, however,
seem to avoid most of these problems.
Local actors in counties have become active in deploying their own fiber networks across the country. A number
of cities and regional actors, such as universities, have also started to roll-out wireless WiFi networks that
support national roaming. Some of these provide free broadband access for visitors and citizens, others are free
but closed, serving university students and teachers. There are also networks that are based on opening up
private WiFi base stations so that free access is reciprocally provided to those who participate in the network.
Security and privacy are important areas for policy development. The Finnish Consumer Agency notified
operators in November 2004 that in their marketing they have to clearly show whether essential services such as
virus and spam filters are included in the subscription price. FICORA, in turn, gave new email configuration
guidelines for operators, so that the use of external mail addresses will be possible without allowing spam
mailing.
The Finnish universities and research centers are connected by the FUNET network (Figure 62). This is the
original Internet backbone in Finland. It has some 80 user organisations and 300 000 users. Funet is managed by
the Finnish Center for Scientific Computing (CSC). It has recently installed routers that are capable of 10 gigabit
rates within Finland. The main backbone service provider is currently TeliaSonera. The customer organisations
are typically connected using black fibre, Ethernet, or Gigabit Ethernet. Funet makes international connections
through Nordunet with 10 Gbps and 2.5 Gbps, and the connections to commercial service providers through
Ficix 268 , via 1 Gbps connections.
8.9.3.2 Broadband Rollout Scenarios
The broadband rollout scenarios and cost estimates described below are based on an earlier version of this
report. They are not updated for this version. As the equipment, installation and operation costs are changing
rapidly and as new technical architectures such as WiMAX and flash-OFDM are becoming available, the cost
estimates would require some adjustments. For example, the bidders for the new 450 megahertz license have
argued that they can cover the whole country and about 150,000 remote users by investments of 30 million
euros.
The Finnish Ministry of Transport and Communications conducted an early study on technical and financial
viability of broadband in Finland. 269 This study is useful, as it gives some baseline estimates for the costs and
requirements of rolling out broadband in the difficult geographical setting of Finland. The study analyses
information society services and their data transmission requirements, the status of backbone, regional and
access networks, and surveys the main bottlenecks and challenges for broadband roll out, as seen by potential
service providers. The study also analyses existing technologies that could be used to roll-out broadband
services in Finland, and calculates costs for various alternative approaches.
According to the study, 95 percent of the Finnish population was living within a less than a few kilometers from
optical fiber in year 2000. Although in some rural counties up to half of the exchanges and concentrators did not
have optical fiber links, more than 90 percent of the population also in these counties were within the access.
Most of the households and businesses were less than 2 km from exchanges or concentrators.
268 Finnish Communication and Internet Exchange: http://www.ficix.fi
269 Laajakaista kaikille ? Tekniset ja taloudelliset edellytykset Suomessa (Broadband for everyone? Technical and financial viability in
Finland), Publications of the Ministry of Transport and Communications, 41/00.
http://www.mintc.fi/www/sivut/dokumentit/julkaisu/julkaisusarja/2000/rapt41a.pdf

Figure 62. FUNET Internet backbone.
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More recently, these figures have been updated, showing that 448 counties, or 95 percent of all Finnish counties,
were connected to fiber. This represented 99 percent of the population. Over 50 percent of the counties had more
than one fiber network provider. In 2002 fiber was connected to about 5200 concentrators, representing 85
percent of all concentrators and 98 percent of population. 270
The study notes that already the existing access network has so much capacity that if it would be fully used,
international connections would become a major bottleneck. The reason is that the operators have to pay
relatively high prices for international connections and therefore they only provide limited capacity. The study
also refers to tests that showed that a 128 kbps ISDN was clearly faster than most megabit-connections when
used for international web surfing.
270 Pentti, J., Sassi, J. & M. Kääriäinen 2003: Ruotsin ja Suomen laajakaistayhteyksien kattavuus (Broadband coverage in Sweden and
Finland). Publications of the Ministry of Transport and Communications, 21/2003, April 2003.

Total
In counties with fiber
access
Counties 460 430 / 95 %
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Within regional fiber
networks
Population 5.1 M 5.1 M / 99 % 4.8 milj. / 95 % *)
Switches and
concentrators
5 900 5 800 / 99 % 4700 / 80 %
Phone lines 2.8 M 2.8 M / 99 % 2.65 M / 95 %
Table 26. Optic fiber in backbone and regional networks, Finland, year 2000,
The study estimates that only about 2000 km fiber cable would be needed to cover all the counties that still
remained without fiber connections in year 2000, corresponding to an investment of approximately 15 million
euros. 271 When fiber would be extended also to the smallest concentrators, 10,000 km new cable would be
needed, corresponding to roughly 170 million euros. Assuming that optical fiber would be extended to all
200,000 businesses and 2.3 million households, the cost could be 3,300 million euros. 272
The amount of traffic through the Finnish Internet exchange FICIX is available trough the FICIX web site
http://stats.lanwan.fi/ficix. This covers the traffic only partially, as there exist direct peering arrangements
among the network operators, and as the academic networks are connected to the rest of the world through
NORDUNET. Finland has one of the four Internet root servers that are located outside the US. The Internet
traffic has roughly tripled annually in Finland during the last decade. There is currently no data available about
the share of different protocols in the Finnish internet backbones.
8.9.3.3 Ongoing and planned broadband pilots
A IPDC (IP datacast) DVB-T pilot was announced in December 2003 that will recruit about 500 pilot users in
the Helsinki region. TeliaSonera Finland and Radiolinja provide mobile access for protected TV-like services to
the end-users. Broadcast firms MTV Oy, Nelonen (Channel Four Finland) and The Finnish Broadcasting
Company will produce the content available for the pilot users. Digita will operate the IPDC service system and
network. In this role it will manage the services and broadcast them on-air. Nokia will provide the IPDC specific
equipment such as the terminals, which enable the devices to receive the broadcast signal. Technical IPDC tests
have been going on since September 2002, providing up to 12 Mbps to mobile terminals. 273
Nokia is also actively involved with DVB-X that tries to adapt DVB-T to small mobile devices. According to
Nokia, DVB-T is well suited for broadcasts that can be received at users moving at speeds of up to 170 km/h,
but DVB-X may be needed for battery operated devices. 274 Nokia is also investing in WiMAX 802.16 wireless
broadband, and it announced in May 2005 that it will deliver its first 4G network to Kuwait later this year.
WiMAX is currently being launched by several operators in Finland, using . Currently the technology providers
claim that WiFi, 3G, and WiMAX will complement each other.
The deployment of wireless local area networks has also generated a new open model for wireless broadband
access. For example, SparkNet in the Turku are now shares about 500 WiFi base stations among some 5000
users. The promoters of SparkNet claim that the current base stations could provide access for about 100.000
users. This has been achieved with simply opening access to existing base stations to the members of SparkNet,
with minimal additional investments. The concept is now being extended as OpenSpark that will be free for all
users. As part of the OpenSpark project, SparkNet will give free base stations to about 350 households, on the
condition that they will be kept open for any users. About 100 base stations will be given to associations, and
about 60 will be installed in public locations. The base stations are funded by the city council of Turku.
271
At the same time, some interviewed operators intended to make backbone investments of about 50 million euros during the next four
years.
272
The last calculation assumes that the material and installation costs for optical fibre are similar to copper (about 100 euros per
connection), and that the terminal equipment and other active components are about 700 euros.
273
IP Datacast Forum (2002): IP Datacast test network launched in Helsinki. http://ipdc-forum.org/news/press-release-2.htm
274
Henriksson, J. DVB-X. DVB Scene 05, March 2003. http://www.dvb.org/documents/newsletters/DVB-SCENE-05.pdf

8.10 France
8.10.1 Introduction
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France is a republic of 22 regions and subdivided into 96 “départements” and encompasses a geographic area of
547,030 square kilometres (+ a few “Départements et Territoires d’Outremer (overseas)” situated all over the
world). The population numbers more than sixty four million people (60,424,213 in July 2004), about 10 million
of whom live in the capital, Paris. Despite urban concentration, rural areas remain important with around 14
million people.
8.10.2 The broadband market
11 278 000 households had a PC in the third quarter of 2004, representing 45.1% of all households (source
Mediametrie), and 44 million mobile phone subscriptions existed, corresponding to a 75% penetration rate. 24
580 000 French person above 11 years had used the Internet in March 2005. Business-to-consumer e-commerce
is projected to amount to 6,7 bn € in 2005, a progression of 36.7 %, on the back of 10.617.000 Internet
customers (source : Benchmark Group, updated 23/03/2005).
As of 30 September 2004 (Figure 63), there were 5.8 million dial-up connections 275 , and 5.5 million high-speed
Internet connections for a total of 11.3 million 276 . The number of high-speed accesses continued to rise by close
to 12% per quarter, while the number of dial-up accesses Internet declined again this quarter, by about 6.7%.
With prices falling, Internet Access Providers’ sales reached €602 million in the third quarter, declining 1.8%
over the previous quarter, and returning to first quarter levels. The decline in sales generated by dial-up access
accelerated (-13.2%), and was not entirely compensated by the increase in sales generated by high-speed access
(+3.9%). In addition to price decreases, this result is probably due to the unfavourable seasonal effect of the
summer months.
Figure 63: Internet Access in France
The number of high-speed accesses grew (Table 27) by 80% from 3.6 millions on 1 st January 2004 to 6,1 million
at the end of 2004 277 . High-speed Internet is provided by xDSL (primarily ADSL), cable, wireless local loop
(WLL), fiber optics and satellite. Most XDSL and cable subscriptions are purchased by residential customers
whereas the other technologies target business customers.
The number of XDSL lines rose 12.9% in the third quarter 2004, for growth equalling that of the second quarter.
Sales reflected significant decreases in prices, and rose by just 4.4%. The number of high-speed Internet
accesses via cable grew regularly, but more slowly (+1.8%).
275 he number of dial-up accesses might be slightly over reported: in particular, the concept of effective activity for dial-up access using a
"free access account" and calls paid by the minute can sometimes be difficult to calculate.
276 http://www.art-telecom.fr/observatoire/marcheinternet/index-mar-inter0304-eng.htm
277 http://www.journaldunet.com/cc/02_equipement/equip_hautdebit_fr.shtml

Table 27: Growth of high-speed access
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For the third year in a row, the French market grew by close to 100% in 2004. As of 1st January 2005, with 6.1
million ADSL lines, France is one of the leaders among European countries, both for the number of ADSL
accesses and penetration rate 278 . Close to one out of every four French households now has high-speed Internet
access.
Retail prices for high-speed Internet access declined significantly in 2004 and are currently among the lowest in
Europe. At the same time, players innovated and diversified their services, offering voice over IP, unlimited
telephone and ADSL packages, audiovisual streaming, videophone and broadband using the ADSL 2+
technology, with speeds of over 10 Mbit/s.
8.10.2.1 Unbundled lines
Unbundling was officially launched in 2001, with the commercial phase starting in 2002, and the first
geographic deployments in 2003. In 2004, unbundling has taken off.. There are two possibilities for
unbundling;
• Partial unbundling allows alternative operator to propose a high bit-rate service xDSL on the band of
high frequencies of telephone line, while France Telecom continues to deliver the telephony service on
the low band. The customer preserves the telephone subscription of France Telecom.
• Full unbundling allows alternative operators to link the entire line to its own equipments, and furnish at
once the telephony and the high bit-rate. There is no more subscription to France Telecom in case of
total unbundling.
There are several companies who provide unbundled services like Altitude Telecom, Axione, Bretagne Telecom,
Cegetel, Cambio, Colt, Dauphine Telecom, Easynet, Free Telecom, Neuf Telecom, Outermer Telecom, Pacwan,
Telecom Italia France, Tiscali France 279 .
Until the end of 2003, wholesale broadband offers provided by France Telecom at the regional or departmental
level were used very little. Operators and Internet Service Providers (ISPs) primarily used the IP/ADSL offer,
delivered to a national collection point located in the Paris region, regardless of their subscribers’ location. The
operational and pricing conditions of the ADSL Connect offer, delivered at the department or regional level,
were improved in late 2003. In early 2004, France Telecom also introduced its IP/ADSL Regional offer.
278 http://www.art-telecom.fr/observatoire/blr/janvier05/deg170105.pdf
279 http://www.art-telecom.fr/telecom/faq/degroup.htm#25

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In 2004, most alternative operators used these regional wholesale offers purchased from France Telecom to
provide a major share of their retail offers. As of 1 January 2005, France Telecom sold almost one million highspeed
accesses at the regional level to alternative operators. Regional offers represented about 6% of accesses in
early 2004, rising to around 20% at the start of 2005.
By 1 January 2005, France Telecom had delivered 893 sites to unbundling operators, representing coverage of
over 50% of the population. Currently, just six departments do not have a single unbundled site. All of the
overseas departments have at least one unbundled site.
A disparity appeared between the competitive unbundled areas and areas in which France Telecom has a de
facto monopoly over the networks. In the latter areas, retail prices are generally higher, and speeds lower.
As a result, on 1 January 2005, there were 1 590 707 unbundled lines in France, of which 1 495 517 lines were
partially unbundled and 95 190 lines were fully unbundled. The number of unbundled line at 1 st January 2005
was almost six times higher than on 1st January 2004 (0.27 million). The rate of growth accelerated during the
year, with 500 000 new lines during the last three months alone. This brings the share of unbundled accesses up
from 10% of ADSL accesses to 25% in one year, but full unbundling affects just 0.5% of telephone lines, and
less than 2% of high-speed accesses. However, France ranks second in Europe for the number of unbundled
lines, behind Germany, and first if we consider just the number of unbundled lines used to provide high-speed
Internet access.
Free was the first internet access provider (ISP) to propose offers through his «Freebox » at a competitive price
with a unlimited calls to all fixed telephones and calls towards French mobiles cheaper than France Telecom.
The current offer by Free (ADSL 2+) in unbundled areas is up to 20 Mbs downstream and 1Mbs upstream and
in non-unbundled areas 10 Mbs downstream and 320 Kbs upstream for 30 € per month (free connection)
allowing access to telephony and digital television.
Triple-play offers (Internet, Telephone and TV) appeared as early as the fall of 2003. Also, the historic operator
signed an agreement with TPS for launching of a TV ADSL: « my line-TV » is available on Lyon since that
month. It is in launching phase on the Paris region. In triple-play, one can use each of the three “plays”
(services) at the same time because they are attributed as part of the band-width. 2 Mbit/s are reserved to
Internet, but it can become more. In theory, if the television is turned off, the total 5.5 Mbit/s can be used for the
Internet. In practice, that depends on proximity of the DSLAM 280 , i.e. the central telephone switch. But in France
Telecom’s service, the flows are stationary: 2 Mbit/s are allocated to the telephone, 2 to Internet and 4 to the
television. It is important to note that it is not necessary to turn on one’s PC in order to telephone or watch
television. Only the modem must be on.
280 Digital Subscriber Line Access Multiplexer
Table 28

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Other ISPs attempt also to fill the gap by proposing unlimited telephony without the service TV by ADSL as
Club Internet or Alice ADSL. Simultaneously the consumers have the possibility to benefit from the unbundling
of their telephone line, which means the disappearance of the monopoly of France Telecom to propose telephone
services. The rivals of Wanadoo, France Telecom's internet service provider, won 40% of the retail market and
unbundled local loop operators (ULL) took around 10% of the wholesale market.
A number of rural zones remain lacking in the advantages of the cable or ADSL. There, only WiMax or satellite
allow to bypass 56k-modem connection, but these costly solutions represent less than 1% of the market and
stagnate.
Concerning fiber-to-the-home (FTTH), the town of Pau 281 has developed a local initiative aiming at the
deployment of a fibre optic access network for (155.000 people) complemented with a Wi-Fi system. End-toend
100Mbs sysmetric connection will be provided to “most” customers. In Paris, a new operator CitéFibre 282
(Nicominvest) has announced the commercialisation of 100Mbs symetric FTTH services (they have obtained an
agreement to use Paris sewage) for 70 € per month before the summer 2005.
8.10.3 Broadband policy 283
The fall in wholesale prices (options 3 and 5) at the end of 2003, as well as tariffs being differentiated as a
function of production costs, allows the substantial productivity gains in the sector to be passed on to the enduser,
while still encouraging alternative operators and France Telecom to persist with geographical rollout of
ADSL.
Broadband challenges
• Multi-service offers: development of innovative "double or triple play" offers on ADSL (bundling
access to broadband Internet, TV on ADSL and telephony) will likely lead to comprehensive changes
in the broadband market. It will also raise complex issues for the regulator, notably in terms of the
potential leverage provided by content access.
• Service quality : improving unbundling service quality to ensure that it is comparable to that of France
Telecom's wholesale and retail offers is a challenge for the development of broadband and, particularly,
of full unbundling.
• Coverage: facilitating development of ADSL in less densely populated areas without any price
discrimination compared to densely populated urban areas and supporting local authority efforts in
regional digital development. The digital economy law, proclaimed in the summer of 2004, authorises
local authorities to intervene in the telecommunications field, in particular to reduce disparities in
coverage and competition.
• Implementation of the new regulatory framework: the outcome of the market analyses should ensure
that there are France Telecom’s wholesale offers and regulation mechanisms commensurate with the
challenges and expectations of the sector and end-users.
Renewed interest in use of the abandoned WLL frequencies in the 3.5 GHz band to operate services based on
Wimax wireless technology raises important challenges in terms of competition, innovation and regional
development. The regulator intends to assess the situation by launching a call for comments.
Voice over IP constitutes a radical breakthrough in the traditional value chain of voice telephony by doing away
with the cost constraints linked to time and distance. The question is whether this development will eventually
lead to a more balanced breakdown of fixed and mobile use.
8.10.4 Conclusion
Although France had a slow start in IT and internet penetration, evolution over the years 2003/4 has placed it in
a good position as far as unbundling and penetration is concerned. A very aggressive policy from an alternative
ISP delivering triple play over ADSL has triggered a fast reaction from France Telecom and other operators.
Cable operators keep a small share of Internet access (2% households, 10% connections), although it is
declining. Fibre optics solutions start appearing in very few places.
281 http://eco.agglo-pau.fr/Initiatives/PBC/presentation/presentation1.htm
282 http://www.nicominvest.com/fr/participation/citefibre.html
283 http://www.art-telecom.fr/eng/index.htm

8.11 Germany
8.11.1 Introduction
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The Federal Republic of Germany covers an area of about 357,000 square kilometers. The furthest distance from
north to south as the crow flies is 876 kilometers, from west to east 640 kilometers. The total length of the
country’s borders is 3,758 kilometers. Germany has a population of about 83 million (about 3.4 million of whom
live in the capital Berlin) the largest in Europe after the Russian Federation, followed by the United Kingdom
and France. Germany is a Federal Republic comprised of 16 States.” 284 Main sources for information on
broadband in Germany are BITKOM 285 , BMBF 286 , DFN 287 and DIW 288 .
8.11.2 The broadband market
Figure 64: Broadband access per 100 households 2004 in Germany compared to other
European countries, Japan and USA.
8.11.2.1 Key Applications
In 2004, 134 experts from the German economy and public sector, as well as 3,036 laypeople, were interviewed
regarding future broadband use. 289 While past and current internet usage has been dominated by information
(e.g., news and product research) and communication services (e.g., chatting and e-mail), the experts predict a
shift of use will take place in the years 2007 to 2010 (Table 29). The use of e-commerce (e.g., on-line shopping)
and entertainment content (e.g., online games) will increase from 41% to 49%; the use of information and
communication will decrease from 59% to 51%. The majority of the experts (72%) agree that a better selection
of attractive broadband content substantially contributes to a stronger spreading of the broadband Internet.
284 EREC (European Renewable Energy Council) (2004). “Renewable Energy Policy Review Germany.” [Online]. Available: www.erecrenewables.org/documents/RES_in_EUandCC/
Policy_reviews/EU_15/Germany_policy_final.pdf [22.04.04]
285 BITKOM -Bundesverband Informationswirtschaft, Telekommunikation und neue Medien e.V. (2005). “Daten zur
Informationsgesellschaft. ” [Online]. Available:
http://www.breitbandinitiative.de/site/upload/presse/DatenzurInformationsgesellschaft2005.pdf [22.3.04]
286 Federal Ministry of Education and Research (2004). “Ziele und Aufgaben..” [Online]. Available: http://www.bmwi.de/de/90.php
[16.3.04]
287 Deutsches Forschungsnetz (DFN) e. V. (2004). “Gigabit-Wissenschaftsnetz (G-WiN).“ [Online]. Available: http://www.dfn.de
[22.3.04].
288 DIW Berlin (2004). “ DIW Berlin.“ [Online]. Available: http://www.diw.de/english/dasinstitut/abteilungen/iut/index.html [16.3.04]
289 Wirtz, B.W., Schmidt-Holtz, R. & Beaujean, R. (2004). “Studie Deutschland Online 2”, . [Online]. Available: http://www.studie-
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Figure 65: Broadband growth and forecast for Germany both by absolute numbers per 100 households and
growth percentages. 290
Broadband content
Video-on-Demand
Online games
E-Commerce
Broadband applications
Future potential [%]
high very high
Education 18.2 ---
Information 36.4 4.5
Infotainment 50.0 4.5
Entertainment 45.5 45.5
Documentaries and educational video 22.7 ---
Sports 40.9 18.2
Movies 68.3 13.6
Adult content/services 31.8 59.2
Strategy 25.0 20.0
Role-playing 30.0 25.0
Sports 47.4 15.8
Adventure 55.0 15.0
Action 70.0 20.0
Financial services 37.1 7.4
DVD/CD 33.3 18.5
Computers/ Computer accessories 44.4 11.1
Adult goods 40.7 22.2
Travel 33.3 37.0
Table 29: The experts predictions of the future importance of Broadband applications for 2007 to 2010.
290 BITKOM -Bundesverband Informationswirtschaft, Telekommunikation und neue Medien e.V. (2005). “Daten zur
Informationsgesellschaft.” [Online]. Available: http://www.kibnet.de/fix/doc/BITKOM_Daten_zur_Informationsgesellschaft_2004.2.pdf
[22.3.05]

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Table 30 informs additionally on success factors of E-commerce from the perspective of experts and laypeople.
Expert ratings
Laypeople ratings
Factors of E-commerce success
8.11.2.2 Technical infrastructure 291
Relevance [%]
high very high
Higher experience value of on-line shopping 33.3 18.5
Faster product search and price comparison 44.4 14.8
Comfortable use of shopping tools (Configurator application) 37.1 25.9
Immediate distribution of digital products 51.9 25.9
Smaller load times for shopping websites 55.6 29.5
Low prices 38.8 44.5
Product information 36.3 42.1
Large variety of products 41.7 39.3
Quality of website 43.0 38.6
Reputation and reliability 26.9 65.8
Table 30: Success factors of E-commerce.
The technology with the widest penetration in Germany is DSL. Thus over 90% of all households are or can be
connected to DSL based on the available infrastructure and 97% 292 of all existing broadband access lines are
based on DSL.
The cable TV network is the second largest German communication network including direct access to the end
user. 53% of all households are connected, while 76% could be connected. However, compared to DSL cable
TV is only of minor importance, as is also evident from figure 1. It is estimated that to use cable TV as
broadband access network very high investments (about 9 billion €) would be required. In view of the capacity
of DSL an upgrading of cable TV to interactive broadband communication networks can only be justified if the
cable TV network will be digitalised all over the country to supply more TV programs, interactive TV or voice
over IP.
Internet access on the basis of Powerline Communications (PLC) is of minor importance. There are still
technical problems to be solved and even if these obstacles are eliminated PLC is expected to fill a market niche
only, particular inside houses. With regard to broadband via satellite it is estimated that this technology will be
used only in those areas where the above technologies are not available. Other technologies as UMTS, WiMax
and FTTH are not used by private households at present, but are to a small extent relevant for companies (about
4% 293 ).
An exception is Germany’s National Research and Education Network called “DFN – Deutsches
Forschungsnetz 294 . The DFN provides a high-performance infrastructure for the German research and education
community. DFN connects universities and research institutions and supports the development of innovative
applications as part of the Internet 2 community in Germany. The national backbone of DFN is the G-WiN
(Gigabit research net). G-WiN is an integral part of the world-wide community of research and education
networks. Based on contracts and peering agreements G-WiN is connected to the global internet as well.
DFN internet service provides high-performance access to the world-wide internet as well as connectivity to the
North American and European scientific networks ABILENE (2.5 Gbit/s) and GÉANT (10 Gbit/s). The G-WiN
allows services to be connected with rates from 0.128 Mbit/s up to 2.4 Gbit/s. The transport platform of G-WiN
291
Preissl, B.; Lattemann, C., Köhler, T., Ebner, G.; Rentmeister, J. (2004). „Studie für die Deutsche Telekom AG - Rahmenbedingungen
für eine Breitbandoffensive in Deutschland“, DIW-Berlin, [Online]. Available:
http://www.diw.de/deutsch/produkte/publikationen/gutachten/docs/diw_rahmen_Breitbandoff200401.pdf
292
ZEW (Zentrum für Europäische Wirtschaftsforschung GmbH) (2005). „Benchmark „Internationale Telekommunikationsmärkte““,
[Online]. Available: http://www.founders.de/Studien/Benchmark2.pdf
293
Statistisches Bundesamt (2004). “Informationstechnologie in Unternehmen und Haushalten.” [Online]. Available:
http://www.destatis.de/informationsgesellschaft/d_home.htm
294
Deutsches Forschungsnetz (DFN) e. V. (2004). “Gigabit-Wissenschaftsnetz (G-WiN).“ [Online]. Available: http://www.dfn.de
[22.3.04].

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uses the synchronous and plesiochronous digital hierarchy and is based on wavelength multiplexing (WDM).
This technology allows in addition to the standard services of the DFN-Verein also the design of special
solutions like private networks or other transport structures.” In addition to a multitude of public organisations,
particularly universities and research institutes and commercial enterprises like T-Systems, Schering or the
Springer publishing house are connected to the DFN. In 2003 DFN was used by 760 organisations and end
users. The complete data volume tranported by G-WiN summed up to about 1.198 TByte.
The various technologies available are offered by many providers. Here the most important ones are 295 , 296, 297 :
• DSL: Deutsche Telekom, Faventia, NGI, Lycos, GMX, 1XNET, Avego, 1click2, 1&1 Internet AG,
Arcor AG & Co. KG, Freenet.de AG, CMO, Schlund + Partner AG, Strato Medien AG
• Cable: Wikom Elektrik GmbH, ish GmbH & Co. KG, Kabel Deutschland Vertrieb und Service GmbH
& Co. KG, Iesy Hessen GmbH & Co. KG, Kabel Baden-Württemberg GmbH & Co. KG, Bosch
Breitbandnetze GmbH, Kabelfernsehen München ServiCenter GmbH & Co.KG, ddkom - Die Dresdner
Telekommunikationsgesellschaft mbH, ewt GmbH, km3 teledienst GmbH, komro GmbH
• WLAN: T-Mobile/T-Com, Eurospot, Airnyx, AOL, GlobalAirNet, M3-Connect, Vodafone, BerlinNet,
Personal WLAN, HH@Work, NetCheckIn, Spektrum, ISIS Multimedia
• SDSL: manCityNet, Easynet, flat2surf, VIA NET.WORKS, ISR, Claranet, ecore, Bisping & Bisping,
MDlink, complete, IN-Berlin, K-DSL
• PLC: Vype GmbH, EnBW Energie Baden-Württemberg AG, RRS Ross-Router-Systems, MAnet
GmbH, Witte Bürotechnik GmbH, HomePlug Powerline Alliance, Stadtwerke Neustrelitz GmbH etc.
8.11.3 Broadband policy 298
With regard to the importance of information and communication technology an “Information Society Germany
2006” strategy was adopted by the Federal Government. It stresses activities on: a digital economy aimed at
growth and competitiveness, education, research and equal opportunities, e-government, security and confidence
in the Internet and e-health. An overview on specific objectives of the “Information Society Germany 2006”
programme is contained in the annex.
8.11.4 Conclusion 299
It appears that DSL will remain the dominant broadband access technology in the next years. Other access
technologies require high investments or elimination of technical obstacles to be of wide use. Competition with
regard to the establishment of alternative infrastructures would be helpful to increase the spread of broadband
connections. Such a competition could be possible if cable TV owners could come to an arrangement and would
be willing to finance the necessary investments. Such investments would not only assure a wider availability of
broadband access but also sustainability of networks as one may expect that in future a higher bandwidth is
demanded than at present. Additionally it appears necessary to take care of development and supply of
broadband applications that are adapted to the needs of society as listed in the Federal Government programme
“Information Society Germany 2006”.
295 A section on pricing will be supplied in another update of this text.
296 http://www.onlinekosten.de
297 http://www.teletarif.de
298 Federal Ministry of Education and Research / Federal Ministry of Economics and Labour (2004). „Information Society Germany 2006“,
Action Programme by the Federal Government, Berlin, [Online]. Available:
htttp://www.bmwa.bund.de/Redaktion/Inhalte/Downloads/information-society-2006,property=pdf.pdf
299 Preissl, B.; Lattemann, C., Köhler, T., Ebner, G.; Rentmeister, J. (2004). „Studie für die Deutsche Telekom AG - Rahmenbedingungen
für eine Breitbandoffensive in Deutschland“, DIW-Berlin, [Online]. Available:
http://www.diw.de/deutsch/produkte/publikationen/gutachten/docs/diw_rahmen_Breitbandoff200401.pdf

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Table 31: Specific objectives of the “Information Society Germany 2006” programme.

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Table 3 continued: Specific objectives of the “Information Society Germany 2006” programme.

8.12 Greece
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The fixed incumbent remains dominant on the fixed markets. The mobile penetration rate has reached 93% of
the population and the development of the mobile market is progressing well due to good competition in place.
Despite recent positive signs, broadband access is one of the major problems in the electronic communications
markets in Greece. As of July 2004, the penetration rate for retail broadband access is the lowest among the
15 EU Member States, standing at only 0.24%.
The fixed incumbent operator in Greece also maintains its dominant position as the access network
provider in the fixed market. OTE, the incumbent, offers both retail and wholesale DSL in Greece. It began
providing commercial DSL in April 2003. Its main competitor, Tellas, is a JV between the Greek Public Power
Corporation (PPC) and the Italian operator WIND. Forthnet and Vivodi are the other operators, which offer
DSL services in the country.
In view of the absence of a major cable operator in Greece, the only fixed network which has started
competing with the incumbent is that of the national power enterprise. The Greek public utilities are keen to
exploit the new opportunities offered by the deregulation in the market. State power, transport and water
companies have announced plans to enter into telecom market that will install new networks for fixed line
telephony.
The ICT market is relatively new in the Greek economy and therefore there is potential for new business
opportunities. Though penetration is very low, the trend of the ICT sector is in line with the EU trend.
Number of subscribers
12000
10000
8000
6000
4000
2000
0
Broadband Take-up by Technology GREECE
January 2003 July 2003 January 2004
Figure 66: Broadband take-up in Greece
DSL
Total lines
As of 2004, there were only 26 000 broadband subscribers in Greece. In 2002, the Greek Broadband Taskforce
was founded to draft the national broadband strategy. However, due to non-existent competition the penetration
of broadband is still very limited. Nevertheless, there are some interesting projects launched to promote the use
of broadband access, recently:
• The SYZEFXIS project aims to provide broadband access to the entire population of public buildings
(including administration, schools, hospitals, local administrations, etc), on the basis of demand
aggregation. It is a €71.5 million project, currently in the tendering process. Satellite infrastructure will
be used to connect remote public administration sites.
• SMEs can receive funding for initial installation costs and service costs for the creation of wireless
hotspots via ADSL, LMDS and satellite link technologies.
Other

8.13 Hungary
8.13.1 Introduction
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In 2003, Hungary has a PPP-adjusted GDP of 15 200 US $ per capita which is considerably lower than the EU
average of 27 300 US $ and OECD Europe (23 100 US $). 300 It is at the end of the low middle income group
with a score of 49 (a high income country has a score of 100). 301 Hungary had a population of 10.1 million and a
population density of 110 in 2001. More than 35% of the population live in rural areas.
8.13.2 Demand
A study commissioned 302 by the ministry of Informatics and Communications shows that Hungary significantly
lacks behind in terms of BB penetration and uptake rates. On a more positive note, the ratio between dial-up and
BB users is almost even with BB access to account for nearly 60% by the end of 2006. Other positives trends
relate to the decrease in prices for telecommunications services (on a very high level though) and a higher
spending on infocom services by end users and companies.
According to the OECD, Hungary ranks 23 rd with a BB penetration rate of 3.6% per 100 inhabitants. 303 For July
2004, the EU reports a fixed BB penetration rate of 2.2%, considerably lower than the EU 25 average of 6.5%. 304
In absolute figures, in July 2004 there were 222 979 fixed BB lines in Hungary. 305 While Hungary has a low
penetration rate in comparison with other developed countries, recent growth rates are very high, surpassing
growth rates of Portugal for instance. 306 As for the economic value of the Hungarian communications market in
a European perspective, Hungary accounts for 1.3% of the enlarged EU electronic communications market and
is – after Poland – the second biggest market of the new MS. 307
Figure 67: Broadband availability and town size 308
In 2003, 45% of all households were able to get DSL BB access services. 309 There is a big gap between bigger
and smaller cities. IHM reports that in cities with less than 10 000 inhabitants BB coverage is only 4% (Figure
67).
DSL was overtaking cable as leading access technology in 2003 and accounted for 142 261 BB lines (of a total
of 222 979). Non-DSL technologies (i.e. cable) accounted for 80718 lines. 310 IHM reports that ADSL was
300
http://www.oecd.org/dataoecd/48/5/34244925.xls
301
http://www.oecd.org/dataoecd/33/0/34256797.pdf
302
http://www.ihm.gov.hu/kutatasok/ihm_kutatasok/nszs2005 (in Hungarian). English summary available at
http://en.ihm.gov.hu/pressreleases/pressreleases_20050420.html
303
http://www.oecd.org/document/60/0,2340,en_2825_495656_2496764_1_1_1_1,00.html
304
EU Commission (2004) European Electronic Communications Regulation and Markets 2004 (10th report), Annex 3 p. 72.
305
EU Commission (2004) Annex 3 p. 67.
306
IHM (2004), p. 22.
307
EU Commission (2004) Annex 3 p. 11.
308
IHM (2004), p. 23.
309
OECD (2004) The Development of Broadband Access in Rural and Remote Areas; p. 71. (OECD 2004). Available at
http://www.oecd.org/dataoecd/38/40/31718094.pdf.

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available to some 40-50% of all households. 311 Cable television coverage now stands at 70%. However, not the
whole cable infrastructure is capable to deliver bi-directional BB.
Infrastructure competition between cable and DSL platforms has benefited the BB uptake of both private and
business users. As in most other countries, FWA and Fibre are not serious concerns to the incumbent. However,
especially cable operator UPC is putting some pricing pressure on the – fully privatised – incumbent Matav,
which now has a market share of 50% in the fixed BB retail line market, slightly lower than the EU average of
56%. 312
Especially initial connection prices for full ULL remain extremely high in Hungary. While the EU 22 average
for the initial connection is 75.67 €, in Hungary costs are 185.6 €. This includes a charge (148 €) whether the
line is suitable for unbundling. 313 Costs of shared access is also extremely high. While the EU 21 average for the
monthly rental is 3.3 €, it is 4.3 € in Hungary. Likewise average costs for connections in the EU 21are 79.6 €
compared to 151.4 € in Hungary. 314 Especially when put in relation to the level of personal income, high prices
are a major barrier for mass uptake of BB. An ADSL BB user in Hungary needs to spend nearly ten times as
much of his income as a subscriber in Austria or Germany. 315
Table 32 shows BB subscription prices in Hungary from October 2003 compiled by the OECD 316 . Compared
with other countries BB access costs are very high.
Company
Access
type
Payment plan
Speed
(Kbps)
Monthly
charge
($/PPP)
Download
Limit
Installation
charge
($/PPP)
Incumbent
Matav ADSL ADSL Hobbi 384/64 85 Unlimited 256
Matav ADSL ADSL OTTHON 512/128 102 Unlimited 256
Vivendi ADSL V-Net ADSL 384 384/64 85 Unlimited 127
Vivendi ADSL V-Net ADSL 512 512/128 94 Unlimited 170
Independent ISP access using incumbent local loops
Elender ADSL eDSL Expressz 384 384/64 84 Unlimited 0
Elender ADSL eDSL Expressz 512 512/128 106 Unlimited 0
Elender ADSL eDSL Irodai 768 768/128 213 Unlimited 0
Elender ADSL eDSL Uzleti 1500 1500/368 641 Unlimited 0
Alternative Infrastructure
UPC Chello Cable Chello Classic 512/128 93 15 GB 0
UPC Chello Cable Chello Plus 768/256 137 20 GB 33
Table 32: BB Prices
310 EU Commission (2004) Annex 3 p. 68.
311 IHM (2004), p. 23.
312 EU Commission (2004) Annex 3 p. 69.
313 EU Commission (2004) Annex 3 p. 75.
314 EU Commission (2004) Annex 3 p. 77.
315 (MH (2004), p. 24.
316 OECD (2004): Benchmarking Broadband Prices in the OECD, p. 31. http://www.oecd.org/dataoecd/58/17/32143101.pdf .

8.13.3 Broadband policy
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Recently, the Hungarian Ministry of Informatics and Communications has commissioned a report on the
national BB strategy which outlines the main problems and proposes concrete measures as to how to address the
identified barriers. 317 Prices for BB services are far too high for the mass market and there is a limited selection
of services. Another serious barrier is that nearly 60% of Hungarians can be considered digitally illiterate. Other
chief problems are the lack of relevant content and the unequal access of men and women. 318
In a response to these key problems, main priorities relate to access, content and equality of opportunities.
Proposed measures are of regulatory nature (e.g. regulation of competition and convergence), public policy
measures (e.g. focussed informational campaigns, demand aggregation) and financial measures (e.g., support of
the creation of broadband infrastructure and community Internet access points in villages, small settlements and
in public education; tax benefits, funding of innovative developments etc.)
Concerning infrastructure, eHungary and "Közháló" are programs which provide for the establishment of BB
end points. 319 In addition, focus lies on connecting schools (see also programmes mentioned below in the “User
related” section). Hungary also has an extensive tele-centres programme for and has the highest density of Telecentres
within Europe.
Regarding content, Hungary has put aside 17-18 billion HUF (70 million Euro) for its BB Public infrastructure
program. 320 Around 70% are used for the “Intelligent School” program and e-education. In addition, the
National Audiovisual Archives and National Digital Archives programmes are being funded with 2.4 billion
HUF. Moreover, eLocalGovernment initiatives aim to bring the local governments on the Internet.
As to users, various measures 321 are undertaken to make people more familiar with the Internet and the computer
in general. For instance, the ministry of Communications and Informatics has launched an online game in cooperation
with the private sector to show users the benefits and potentials of BB services. The project was
undertaken in close co-operation with the private sector. 322 Similarly, with a view to address user's attitude
towards new technologies, public funding is available for the purchase of multi-media presentation equipment
for secondary schools, support for the purchase of IT tools for the disabled, kindergarten computer programs,
multi-centre education IT system installations, satellite broadcasting for secondary and vocational schools. 323
Finally, following other countries’ examples, the establishment of a National Task Force is planned.
317
IHM (2004) Broadband Electronic Communications in Hungary http://www.ihm.gov.hu/data/20175/broadband_eng.pdf
318
http://www.ihm.gov.hu/kutatasok/ihm_kutatasok/nszs2005
319
http://en.ihm.gov.hu/programmes
320
http://en.ihm.gov.hu/pressreleases/pressreleases_20050420.html
321
IHM (2004), p.34-35.
322
http://en.ihm.gov.hu/pressreleases/pressreleases_20050426.html
323 IHM (2004), 34.

8.14 Ireland
8.14.1 Introduction
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In 2003, Ireland had the highest GDP per capita based on PPP (33 200 US $) of any country of the European
Union (with the exception of Luxembourg). Ireland has a higher GDP per capita than the major 7 OECD
average (32 000), far exceeds the OECD average (26 300) and the EU-15 (27 300). 324 Yet, when looking at BB
penetration and uptake figures Ireland has a penetration rate of 0.9% per capita compared to an EU average of
6.1% and Denmark as a European BB leader with 12.7%. 325
Forfas, a national advisory board in technology matters, produced a report on the current state of BB in Ireland
and sets out some recommendation which address key obstacles in the further development of BB. 326 Section
three on public policy summarises its key points.
8.14.2 The broadband market
Ireland is considerably lagging behind in terms of BB uptake and penetration rates. According to the OECD,
DSL was launched in Ireland only in May 2002 327 and by June 2003 DSL was available to around 52% of all
lines. 328 The projected weighed OECD average for 2003 is 76.3%. Forfas 329 attributes this lagging behind to a
lack of growth in competing technologies (primarily cable) and a lack of competition and innovation within the
DSL market. Recommendations as to how to increase competition and generally foster BB penetration and
uptake are mentioned in section three.
Pricing
By looking at Table 33 it becomes evident why BB uptake in Ireland is so low. Transmission speeds generally
do not exceed 512 kpbs and pricing is extremely high. 330 Competition from FWA providers is only existing in a
few selected areas. One of the prime reasons why prices are high (and uptake consequently low) is that Ireland
has a very high rural population. According to the OECD, the rural population accounts for 40.7% while the
OECD average is 22.9%. 331
Another reason why prices are high relate to the lack of infrastructure competition. In 2003 only 4% of all Irish
households are passed by BB capable cable networks. The weighed OECD average is 42%. 332 Hence, cable is
not a serious competitor to DSL and Eircom.
8.14.3 Broadband policy
In order to increase market transparency, the Irish government has established a website which enables users to
see which broadband providers are in their area together with available offers and prices.333 In order to measure
demand ex-ante (i.e. before making an investment) and reduce investment risk for infrastructure providers, the
website includes a tool enabling potential users to register their interest in subscribing to a broadband service
with only aggregate data being passed to service providers. 334
324 http://www.oecd.org/dataoecd/48/5/34244925.xls
325 BB data has been taken from the Commission Staff Working Paper: Connecting Europe at High Speed: National Broadband Strategies
(May 2004).
326 Forfas (2004) Broadband Benchmarking Study November 2004, p. iii.
http://www.forfas.ie/publications/broadbandbenchmarking041126/index.html
327 OECD (2004) The Development of Broadband Access in Rural and Remote Areas; p. 12. (OECD 2004). Available at
http://www.oecd.org/dataoecd/38/40/31718094.pdf.
328 Eircom the incumbent has announced some plans to extend the reach of their BB network. OECD (2004) p. 26.
329 Forfás is the national board responsible for providing policy advice to Government on enterprise, trade, science, technology and
innovation in Ireland. The primary function of Forfás is to promote economic development in Ireland. http://www.forfas.ie/.
330 OECD (2004a) Benchmarking Broadband Prices in the OECD, June 2004; p. 34.
http://www.oecd.org/LongAbstract/0,2546,en_2649_34223_32143102_119666_1_1_1,00.html
331 OECD (2004), p. 71.
332 OECD (2004), p. 13.
333 http://www.broadband.gov.ie
334 A similar initiative has been undertaken by Eircom (and BT of the UK) which has also maintins a Web site allowing potential
subscribers to register their interest in broadband access.

Company Access type Payment plan
Incumbent
Speed
(Kbps)
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Monthly
charge
($)
Download
Limit
Eircom ADSL i-stream (res) 512/128 54 4 GB 0
Eircom ADSL i-stream (bus) 512/128 42 4 GB 197
Eircom ADSL i-stream solo 512/128 106 6 GB 197
Eircom ADSL i-stream enhanced 512/128 201 Unlimited 197
Independent ISP access using incumbent local loops
ESAT BT ADSL IOL BB 512 49 8 GB 89
Alternative infrastructure
NTL CATV Always on 150 150 30 Unlimited 64
NTL CATV Always on 600 600/150 39 Unlimited 64
Amocom FWA Home 512/512 60 Unlimited 316
Amocom FWA Business 3 1024/1024 238 Unlimited 316
Irish BB FWA Ripwave Home 512/128 30 Unlimited 118
Irish BB FWA Breeze Home 512/512 48 Unlimited 147
Table 33: Broadband prices in Ireland October 2003
Installation
charge ($)
Forfas recommends the NRE to review the BB spectrum usage with the objective of encouraging operators to
maximise the use of spectrum resources when delivering broadband services (e.g. freeing up spectrum for
WiMax technologies in order to increase the range and penetration of wireless services enabling them to be
more competitive with DSL). 335 Another regulation recommendation put forward by Forfas is for ComReg to
continue to put pressure on Eircom to reduce their LLU charges further in order for other companies to access
local exchanges and provide innovative services. Moreover, Forfas calls for the establishment of a competitive
single national rate for national backbone access (over state owned networks). It is hoped that this would
facilitate uptake of broadband by businesses and consumers in the regions, as well as helping to attract foreign
investment to the regions.
The government intervenes in the provision of BB to schools, libraries and community learning centers. 336 This
is in line with recommendations made by a government advisory body. 337 Funding for this project comes from a
tax levied on major telecom firms. 338
Ireland’s South West Regional Authority is undertaking a broadband trial aimed directly at rural communities. 339
The scheme is jointly funded by the European Space Agency and aims to provide broadband access to 2 000
residential and small-business subscribers. Backhaul is being provided by satellite with local access via wireless
platforms. One novel part of the scheme is that it allows users to roam in those rural areas covered by the
project. In other words, a user can access the service at any location using the same account. The initial three
months are free for subscribers, with a reported aim of eventually providing a commercial service at USD 28 per
month (or about half the price of baseline DSL in urban areas of Ireland).
335 Forfas (2004), p. iii.
336 “Dermot Ahern To Link All Schools to Broadband: Telco Levy May Fund New Development”,
18 June 2003. http://www.marine.gov.ie/
337 Telecom Strategy Group, “Getting Ireland Online”, http://www.dcmnr.ie/files/tsg.pdf . The report also suggested that local communities
and telecoms should agree to "trigger points," or a preset number of customers who would buy broadband if it was available in their area.
338 “Telecoms levy to fund schools' internet service”, The Irish Independent, 17 July 2003.
http://home.eircom.net/content/unison/national/1037017?view=Eircomnet and
http://www.enn.ie/news.html?code=9368851
339 Matthew Clark, “Broadband services uses Wi-fi, satellites”, 7 July 2003. http://www.enn.ie/news.html?code=9367653 and 3COM
“3Com Brings the Last Green Mile to Ireland with Ildana and the South West Regional Authority”, 7 July 2003
http://www.3com.com/corpinfo/en_US/pressbox/press_release.jsp?INFO_ID=151577

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As another direct intervention measure, the Irish Government announced a BB program funded with 65 million
Euro which is being used to connect high speed access to 19 towns and cities around the country by the end of
2004. 340 Owner of the network will be the state, marketing, management and maintenance of the infrastructure
will be undertaken by a Management Service Entity (MSE) on a concession basis. 341 In addition to the fibre rings
and MSE initiative, low cost backhaul is being provided to the regions of Ireland. 342 Moreover, in January 2003
the Irish Government announced five trial programs which aim to deliver wireless BB Internet access across the
country. 343 However, funding is limited and accounts for less then 300 000 Euro.
8.14.4 Conclusion
Ireland has been considerably lagging behind other countries. While Ireland is one of the richest nations, it has a
high rural populations which makes BB rollout (and consequently pricing) expensive. However, clearly the lack
of competition needs to be addressed. In this respect, Forfas recommends a few specific measures such as
demand aggregation, freeing up of wireless spectrum and lowering LLU access charges.
Because BB uptake is so low, measures are being implemented by the State and other governmental institutions.
Most notably, the rollout of a State owned and privately managed network is a promising – though disputed –
approach towards putting some market driven pressure on the incumbent Eircom.
340 http://www.rte.ie/news/2003/0210/broadband.html
341 Dermot Ahern “Broadband Metropolitan Area Networks on Schedule”, Press release, 29 July 2003.
http://www.marine.gov.ie/modules/pressreleases.asp
342 OECD (2004), p. 27. Department of Communications, Marine and Natural Resources, “Dermot Ahern Announces Breakthrough in
Broadband Pricing For Regions”, Press Release, 16 December 2003. www.dcmnr.ie and “Dermot Ahern Welcomes eircom DSL Move”,
Press Release, 15 December 2003.
343 Sheila McDonald, “Irish WLANs win government funding”, 27 January 2003. http://www.electricnews.net/news.html?code=9155309

8.15 Italy
8.15.1 Introduction
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Italy, which was a founder member of the European Union on 1 January 1958, has 57 888 200 inhabitants on a
territory of 301 262 square km, which means that its population density is 189.7 inhabitants per square km. The
density is thus in the upper part of the EU range. Purchasing-power adjusted GDP stood at 105.4 of the EU 25
average in 2004.
8.15.2 The broadband market
Italy has traditionally one of the highest usages of mobile telephony with a penetration rate of over 106%, far
above EU average, but a relatively low number of fixed lines, equivalent to only 45.9% 344 of the population,
among the lowest of the old member states. The fixed line network is still dominated by Telecom Italia, but
around one third of the market by revenue is now accounted for by its competitors 345 . The mobile telephony
market is very competitive. Telecom Italia’s TIM has a 42.7% market share, while Vodafone has 33.2% and
Wind 19.3% of the market, while Hutchinson’s “3” has 4.8% 346 .
The Italian broadband market is rapidly expanding. Penetration as measured in broadband connections per
population stood at 8.3% at the end of 2004, as compared to 6.2% six month earlier (and to 2.8% in July 2003).
In total numbers, this represents an impressive 32.6% growth from 3.6 to 4.7 million in just half a year. Of that
total, 4.4 million are DSL, corresponding to 93.7%, up from 92.1% at the end of June. Fiber-to-the-Home
provides 196 000 connections (4.1%), overwhelmingly accounted for by FastWeb, a new entrant operating in
the big cities Milan, Torino, Roma, Naples and Genoa, while satellite has 105 000 connections (2.2%), but the
latter are mostly one-way connections using the phone line as a return channel. Italy has no significant cable
network. The DSL market is overwhelmingly controlled by Telecom Italia and its subsidiaries, which account
directly for 76.3% of DSL subscriptions, with another 13.5% retailed on their infrastructure by other ISPs. The
remaining 10.2% are unbundled DSL or shared access lines. 347
The rapid DSL development in Italy is facilitated by the fact that a high proportion of its local copper loops
serve relatively short distances. More than 80% of twisted pair connections are less than 2 kilometres in length,
some 95% are within 3.5 kilometres from an exchange, and nearly all are less than 5 kilometres from an
exchange 348 . Even so, around 4,400 out of 10,400 local exchanges are not connected to the backhaul broadband
infrastructure. As a consequence, in May 2004 only 76% of the Italian population could access ADSL services,
and the average was significantly lower in the Mezzogiorno regions, dropping as low as 48% in Basilicata.
The demand for fixed broadband connections is also affected by the rapid spreading of 3G services, where Italy
is Europe’s leading country. The 3G services, offered by two of the three incumbent mobile networks and a by a
new entrant, had 2.9 million subscribers by the end of 2004 and are growing rapidly, adding another 200 000
subscribers in January 2005 349 .
8.15.3 Broadband policy
The current strategy, the “National Executive Broadband Programme”, intends to provide a favourable
environment for ICT investments through a balanced approach towards the development of broadband
infrastructure and services. The objectives of the programme are fourfold: a broadband network for public
services, an increase in broadband connected schools, the stimulation of private demand through incentives for
the use of digital technologies and facilitation measures for infrastructure building. Furthermore, the Italian
Broadband Observatory was set up as a three-year project to monitor the development of broadband in Italy
The first-stage implementation of the national programme includes two sub-programmes. An infrastructure
programme run by Infratel, a company set up by the Ministry for Communications, and a demand-support
344
Eurostat, Statistics in Focus 8/2005: Telecommunications in Europe, 7.2.2005, http://epp.eurostat.cec.eu.int/cache/ITY_OFFPUB/KS-
NP-05-008/EN/KS-NP-05-008-EN.PDF (figure refes to 2003, but any change is unlikely to be signficant)
345
Annex II to European electronic communications regulation and markets 2004 (10th report),{COM(2004)759 final}, 2.12.2004
346
European Mobile Communications Report, Issue 189 – February 2005; including 3G networks
347
Source: ECTA
348
http://www.oecd.org/dataoecd/38/40/31718094.pdf
349
European Mobile Communications Report, Issue 189 – February 2005

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programme promoting the implementation of high added value applicative multimedia services, run by
Innovazione Italia, a company set up by the Ministry for Technological Innovation.
Infratel is currently developing an operative model aimed at attracting additional resources from a variety of
sources including regions, local branches of the public administrations, telecom operators, private enterprises
and Innovazione Italia. For example, in March 2005 it has launched a call for tender for 127 mio € for a
broadband network in municipalities and villages in 8 southern regions (Sicilia, Puglia, Campania, Basilicata,
Calabria, Abruzzo, Molise and Sardegna) to reduce the digital divide in the regions. For the same reason, the
wealthy northern region of Lombardia has signed a 200 mio € agreement with 5 telecom providers (Albacom,
Colt, Fastweb, Telecom Italia, Wind) for the development of a broadband network in its region within three
years. 350 All Information Society actions (strategies and programmes) are expected to be agreed and implemented
by central and regional/local government through specific framework agreements 351 .
8.15.4 Conclusion
Broadband development is clearly taking off very fast in Italy. From July 2003 to December 2004, the
penetration rate tripled. In doing so, Italian penetration kept in line with the EU average – indeed, the Italian
figure was virtually identical with the EU average both in June and in December 2004. If the 3G subscriptions
are added, where Italy is among the most advanced EU countries, overall broadband penetration rises another
5%.
The favourable structure of the local loop should enable further rapid DSL development. However, the
geographic structure of the country, with many mountainous areas, which is reflected in the limited coverage
and in the corresponding lower population density, as well as economic imbalances between north and south,
may lead to a lack of broadband development in a significant part of the territory. On the other hand, the strong
development of Fiber-To-The-Home in the big cities puts Italy in the lead in this technology, together with
Sweden.
350 http://www.osservatoriobandalarga.it/
351 EU Commission, Staff Working Paper Annexes of the “Communication Connecting Europe at High Speed: National Broadband
Strategies”, COM (2004) 369 of 12.5.2004

8.16 Latvia
8.16.1 Introduction
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Latvia, which has joined the European Union on 1 May 2004, has 2 319 200 inhabitants on a territory of 64 589
square km, which means that its population density is 36.2 inhabitants per square km. The density is thus at the
lower end of the EU range. Purchasing-power adjusted GDP stood at 43.7% of the EU 25 average in 2004.
8.16.2 The broadband market
Latvia has a one of the lowest usages of mobile telephony among the new member states with a penetration rate
of over 69%, far below EU average. It has also one of the lowest fixed-line density, equivalent to only 28% 352 of
the population, which is fairly low even by the standards of the new member states. Furthermore, Latvia has also
seen significant recent decrease in fixed-line density. The national fixed line network is still a virtual monopoly
of Lattelekom 353 , but the mobile telephony market is competitive. Lattelekom’s Latvijas Mobilais Telefons
(LMR) has a 46.7% market share, while Tele 2 has 53.1%, and 0.2% are held by Telekom Baltija, a new
entrant 354 .
The Latvian broadband market is just emerging from its infancy. Penetration as measured in broadband
connections per population stood at 1.4% at the end of September 2004 (no figures available for December), as
compared to 1.2% three month earlier. This corresponds to a total of 33 000, the second-lowest absolute figure
in the EU after Cyprus. Of that total 79% are DSL, 6% cable and the remaining 15% provided by other means.
The DSL market is overwhelmingly controlled by Lattelekom and its subsidiaries, which account directly for
95.4% of DSL subscriptions. The other 4.6% are retailed on its infrastructure by other ISPs. 355
The low population density combined with the low income level means that rural areas’ access to infrastructure
remains limited. A world bank estimate of Latvia’s teledensity (at 30.3) spells out the difference between Riga,
where the figure is 52.6, and the rest of the country, including towns, where it is 19.6. 356 Mobile broadband in
Latvia is still at the beginning. The new entrant has launched a 3G network, but had only just above 3 000
subscribers in January 2005 357 .
8.16.3 Broadband policy
Latvia does not seem to have adopted a specific broadband strategy (yet). In did have a National Programme
Informatics in 1999, updated by e-Latvia in 2000, which is still valid until the end of 2005, but there is no recent
strategic document focussing on high-speed access. In the Basic Guidelines of Electronic Communication Sector
Policy of the Republic of Latvia 2004-2008 ensuring availability of secure internet services is identified as one
of a set of eight priorities. In terms of implementation, the Single Strategy of National Economy emphasises the
role of public procurement for the implementation of information society projects and a functional model of egovernment,
which would include the recognition of electronic documents and electronic signature in order to
foster e-government services as well as e-commerce. It also identifies two other action lines as priorities: the
computerisation of educational establishments and local governments and the creation of a wide network of
publicly accessible internet connection points. These are addressed within three programmes: the Unified
Information System for Local Governments, the Education Information System of Latvia, and the State Unified
Library Information System. 358
352
Eurostat, Statistics in Focus 8/2005: Telecommunications in Europe, 7.2.2005, http://epp.eurostat.cec.eu.int/cache/ITY_OFFPUB/KS-
NP-05-008/EN/KS-NP-05-008-EN.PDF (figure refes to 2003, but any change is unlikely to be signficant)
353
Annex II to European electronic communications regulation and markets 2004 (10th report), {COM(2004)759 final}, 2.12.2004
354
European Mobile Communications Report, Issue 189 – February 2005
355
Source: ECTA + footnote 1
356
Central and Eastern Europe Information Society Benchmarks, Country Analysis, September 2004, EU Commission
357
European Mobile Communications Report, Issue 189 – February 2005
358
Republic of Latvia Ministry of Economics: Single Strategy of National Economy, 18.8.2004

8.16.4 Conclusion
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Broadband in Latvia is lagging behind. In penetration terms, Latvia is at the very end of the table, together with
Poland and Slovakia (and Greece), but it has neither the potential DSL vs. cable competition (like Poland and
Slovakia), nor a growing number of fixed lines (like Poland), nor a specific broadband strategy (like everybody
else). The combination of these factors with low population density and low per-capita income levels makes
infrastructure access at affordable prices the most likely bottleneck for the years to come.

8.17 Lithuania
8.17.1 Introduction
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Lithuania, which has joined the European Union on 1 May 2004, has 3 445 900 inhabitants on a territory of 65
200 square km, which means that its population density is 53.1 inhabitants per square km. The density is thus at
the lower end of the EU range. Purchasing-power adjusted GDP stood at 48% of the EU 25 average in 2004.
8.17.2 The broadband market
Lithuania has now an above-average usage of mobile telephony, with a penetration rate of over 95%, after the
strongest growth of all Member States in 2004. However, it has also the lowest fixed-line density, equivalent to
only 23.9% 359 of the population, which is extremely low even by the standards of the new member states.
Furthermore, Lithuania has also seen the largest recent decrease in fixed-line density. The fixed line network is
still a near monopoly of Lietuvos Telekomas with a market share of 97% 360 . The mobile telephony market is
competitive. Lietuvos Telekomas’ Omnitel has a 39.8% market share, while Tele2 has 32.1% and Bité 28.1% 361 .
The Lithuanian broadband market is now rapidly expanding, after an early but slow start – the first ADSL was
made available in May 2001. Penetration as measured in broadband connections per population stood at 3.7% at
the end of 2004, as compared to 2.5% six month earlier. In percentage terms, this represents an impressive
46.2% growth, but in actual figures the increase was only 41 000 from 88 000 to 129 000 in just half a year. Of
that total, 50 000 are DSL, corresponding to 39.2%, up from 38.6% at the end of June. Cable accounts for 25%,
while the remaining 35.8% are made up of various technologies, including FWA, fibre and PLC. The DSL
market is overwhelmingly controlled by Lietuvos Telekomas and its subsidiaries, which account directly for
93.6% of DSL subscriptions, while the other 6.4% are retailed on their infrastructure by other ISPs. There are no
unbundled DSL access lines. 362
Only 35% of households in rural areas (up to 2 000 inhabitants) have fixed lines 363 , which clearly inhibits DSL
roll-out, yet this is where 31% of the population live. There was no 3G network operating in Lithuania at the
start of 2005, but two of the three operators were providing GPRS services.
8.17.3 Broadband policy
Lithuania has followed the eEurope+ strategy since 2001. For the purpose of implementing the strategic plan,
detailed plans 364 for development of information society in Lithuania are drawn on annual basis, establishing the
key measures, the necessary resources, and the responsible institutions. Lithuania’s actions focus on ensuring
availability of Internet access and organisation of training 365 .
Free-of-charge public Internet access point in Lithuania in public libraries and rural areas are an important tool
for access. At the close of 2003, there were more than 300 public Internet access centres in Lithuania, where
people could enjoy free Internet service 366 . The plans for the next few years include establishing another 600
Internet access points. For training, for example a free tool “Remote Training Course: Computer Textbook” was
created and was available on the Internet (the Information Society Development Committee website at
http://www.ivpk.lt).
Other priorities include e-government, e-health and e-business. A particular success has been e-banking: the ten
Lithuanian commercial banks had 926.7 thousand Internet banking users in the beginning of this year, which is
45% more than the respective number in the beginning of 2004 (639.4 thousand) 367 .
359
Eurostat, Statistics in Focus 8/2005: Telecommunications in Europe, 7.2.2005, http://epp.eurostat.cec.eu.int/cache/ITY_OFFPUB/KS-
NP-05-008/EN/KS-NP-05-008-EN.PDF (figure refes to 2003, but any change is unlikely to be signficant)
360
Annex II to European electronic communications regulation and markets 2004 (10th report), {COM(2004)759 final}, 2.12.2004
361
European Mobile Communications Report, Issue 189 – February 2005
362
Source: ECTA
363
Central and Eastern Europe Information Society Benchmarks, Country Analysis, September 2004, EU Commission
364
The plan of 2003 approved by the Government Resolution No. 1127 “On Approval of Lithuanian Information Society Development
Detailed Plan for 2003” dated September 4, 2003 (Žin., 2001, No. 86-3905).
365
“Report on information society development in Lithuania 2003”; Information Society Development Committee under the Government of
the Republic of Lithuania, 2004
366
Source: the Information Society Development Committee.
367
http://www.ivpk.lt/

8.17.4 Conclusion
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Lithuania has been relatively successful in terms of broadband penetration in comparison with its immediate
neighbours, Latvia and Poland, but is significantly lagging behind the overall EU average. Its main challenge
will the same as most new member states, that is, ensuring broadband access in rural areas, despite very low
population density and very low fixed-line teledensity.

8.18 Luxembourg
8.18.1 Introduction
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The government of Luxembourg is making a big effort in order to place the country among the leaders of the
digital access. In a recent benchmark published by the ITU (International Telecommunication Union),
Luxembourg was ahead of all its neighbours, i.e. Belgium, Germany and France. In order to reach this position,
the government of Luxembourg drives an aggressive policy of investments in the infrastructures as showed in
Table 34.
Country Total (M US$) Per capita (US$)
Per phone
subscriber
(US $)
Luxembourg 72.3 164.5 95.7 21.0
Europe 61 011 76.4 84.1 17.8
World 182 763 31.1 83.5 23.2
US 29 620 104 92.7 -
France 5 471.7 91.8 75.5 17.1
Germany 6 632.1 80.4 58.3 11.4
Belgium 753.8 72.8 56.9 11.0
Table 34: investments in infrastructure (UIT 2003).
% Income
These efforts provided the country with a good optical fiber architecture, a sharp rise of high bit rate links and a
global cover of ADSL access. Luxembourg is now 10th in the world in term of bandwidth per capita. The
country is also the home of one of the most important satellite operator (SES-GLOBAL) and of the European
leader in radio and TV services, RTL.
8.18.2 The broadband market
95% of the population can access broadband services through ADSL or cable networks. 75% of households
have PCs, and 60% have Internet access. 7% have broadband, of which 89% ADSL and 11% cable, with a
growth of 66% in 2003 (source: ILRes). The connected households use services intensively: 50% use ecommerce
and e-banking, 60% e-travel and 33% e-government (i.e. 20% of the population).
Households’ equipments are really good, but mobile equipments are even better, which should allow a good
success for the next 3G services.
Country
Phone lines
/ 100 people
Mobile subscriber
/ 100 people
Luxembourg 78 106
Europe 41 20
World 17 18
US 66 49
France 57 64
Germany 65 71
Belgium 49 78
Table 35:

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With a market share of 89% in the broadband market DSL networks are mainly operated by EPT or rented from
EPT by external providers (Cegecom or Luxembourg Online for instance). The good quality of the phone
architecture allows to the operators to offer broadband services all over the country.
Offer name
Speedsurf
Downstream
(Mb/s)
Upstream
(Kb/s)
Data Volume 368
(GB per month)
Subscription
(euros / month)
Junior 1 128 1 29
Run 2 192 15 47
Express 3 192 25 79
Table 36: Main EPT products
For gaming applications, the subscriber can use a FastPath, with higher upstream speed reducing the error
control.
368 Extra data volume cost: 0.3€ / MB.
Figure 68: Territorial coverage

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Cable networks are really popular in Luxembourg: 90% of households receive up to 46 different TV programs
in this way. But the cable operators need to face two important challenges: the network infrastructures are old,
and the important number of small cable operators makes connecting the different networks difficult. However,
cable networks already exist and are an important part of the telecommunication landscape in Luxembourg. It is
the reason why the government pushes the operators to connect and digitalise the networks in order to offer a
broadband access beside the TV channels. But once again investments are heavy. The market share is only 11%
of the broadband services for the cable operators, and only 33% of the population is able to receive digital
signals at home using these networks.
The main offers are proposed by Coditel, Cegecom, TV Surf and Luxembourg Online. Their relevant offers are
described below:
CODITEL:
Downstream
(bit/s)
Upstream
(bit/s)
e-mail
address
(number)
Available
Web
space
(MB)
PC connected Subcribtion
(euro
/month)
Modem
(euro)
LightClick 1M 128 k 1 10 Unlimited 24.90 € 0 €
SpeedClick 4 M 256 k 1 10 Unlimited 45,00 € 0 €
Table 37: Main offers by CODITEL
A caution of 50€ is required for the cable modem. The data volume is limited respectively 1 and 15 GB, the
extra data is sold 5€ (respectively 10€) per GB.
CEGECOM:
Downstream
(bit/s)
Upstream
(bit/s)
e-mail
address
(number)
Available
Web
space
(MB)
PC connected Subcribtion
(euro /month)
Modem
(euro)
Easy 512 k 64 k 1 25,00 € 150,00 €
Standard 1 M 128 k 1 1 46,00 € 150,00 €
Advanced 2 M 192 k 5 5 1 69,00 € 150,00 €
Advanced 4 2 M 192 k 5 5 4 79,00 € 150,00 €
Pro 3 M 256 k 10 10 1 89,00 € 150,00 €
Pro 4 3 M 256 k 10 10 4 99,00 € 150,00 €
Table 38: Main offers by CEGECOM
Cegecom is also a pioneer in the PLC domain and an important actor of the DSL world.

TV SURF (the cable offer of EPT in partnership with Siemens):
Downstream
(bit/s)
Upstream
(bit/s)
e-mail
address
(number)
Available
Web
space
(MB)
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PC connected Subcribtion
(euro /month)
TV Surf 1M 128 k 1 - - 49.91 € -
Table 39: Main offers by TV SURF
The data volume is limited to 12 GB per month. Extra data volume cost: 0.3€ / MB
LUXEMBOURG ONLINE:
Downstream
(bit/s)
Upstream
(bit/s)
e-mail
address
(number)
Available
Web
space
(MB)
PC connected Subcribtion
(euro /month)
Hispeed Lite 512k 96 k 3 Yes - 28 €
Hispeed
1000
Hispeed
2000
Hispeed
3000
1M 128 k 3 Yes - 40 €
2M 192 k 3 Yes - 50 €
3M 256 k 3 Yes - 70 €
Modem
(euro)
Modem
(euro)
Separated
offer
Separated
offer
Separated
offer
Separated
offer
Download capacity is unlimited. Luxembourg OnLine is also a DSL operator and a satellite operator. The
satellite offer allows only delivering downstream data but the return path is through a dial-up line. Three offers
exist:
• Flat: 256 kb/s downstream for 25€ per month
• Time: 256 kb/s downstream for 10€ per month plus 0.331€ per minute.
• Time: 1024 kb/s downstream for 25€ per month plus 0.595€ per minute.
Regarding 3G, the government attributed 4 UMTS licenses: Tango (Tele2), LuxGSM (EPT), Orange (France
Telecom) and Lux Communications SA. The tests are still running, but the lack of innovative services is the
main reason for the fact that the providers are waiting for the development of mobile TV or radio streaming, and
for a real broadband Internet access currently limited to 384 kb/s. This limited bandwidth of the Internet access
and the poor content of the offered TV streaming are the main explanations of the very slow take-up of UMTS
services despite the attractive pack offered by LuxCommunications including a PC and a multimode data board
(UMTS/WLAN/GPRS/GSM) for 1500€, in a first UMTS commercial offer described in Table 40:
Install fees Subscription Data Volume Extra MB
UMTS Data 500 Free 37.5€ 500 MB 0.8€
UMTS Data 150 Free 25€ 150 MB 0.9€
UMTS Data 50 Free 12.5€ 50 MB 1.3€
UMTS Data 10 Free 10€ 10 MB 1.9€
Table 40: UMTS products

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The objective in 2005 is 25% of households accessing to the broadband services. The government of
Luxembourg provides also a good toolbox for the promotion of the interactive services:
• eLuxembourg is an action plan which allowed to launch an e-government portal
•
(www.gouvernement.lu) but also a statistical portal, a portal allowing to make easier the relations
between the administration and the companies and several others (innovation, health, culture, youth…),
the label “Luxembourg e-commerce certified” is a good tool in order to promote e-commerce,
• security is pushed by the Luxtrust consortium promoting the use of the PKI (Public Key Infrastructure)
technology, and the country was the first to promote e-Commerce with a label and to push initiatives
about security and electronic signature,
• the deployment of “InternetStuffen” allowing to educate the citizens to the Internet technologies,
• the creation of a technical area (Esch sur Alzette) in order to host R&D centers.

8.19 Malta
8.19.1 Introduction
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Malta has a population of 400 000 and is the smallest country in the EU. 369 As for its GDP, in 2003 Malta's
economy had a score of 72.8 with the EU-25 average value at 100. 370 According to the Worldbank, GNI per
capita was 10 220 (a high income country has an average of 28 550). 371 Despite the rather low wealth of the
country, BB penetration rate is 5,8% which is only marginally below the EU average of 6.03% . 372
8.19.2 The broadband market
According to MCA, in the last quarter of 2003 30% of all subscriptions were BB. BB uptake rate is 17% of all
households (with a further 41% connected via narrow-band. 373 As for growth rates, though the number of dialup
connected households is increasing (from 38.9% in 2002 to 41.3% in 2003), BB access – in terms of
households – is growing at a much faster pace (from 12.3% in 2002 to 17.3%).
Regarding access technologies, 57% are DSL and 43% are cable. Fibre to the home is not available but the
backbone of the country is linked via fibre. As for network dimension, 95% are covered by DSL and 81% via
bi-directional cable. 374 Both access technologies witness similar growth rates. 375 Figure 69 376 shows BB
availability in Malta. Basically, the whole country is covered.
Figure 69: Broadband availability in Malta
369 http://epp.eurostat.cec.eu.int/cache/ITY_PUBLIC/3-31082004-BP/EN/3-31082004-BP-EN.PDF
370 Malta GDP
371 http://www.worldbank.org/data/countrydata/aag/mlt_aag.pdf
372 MCA (2004) p. 5.
373 MCA (2004) The National Broadband Strategy. Available at http://www.miti.gov.mt/docs/broadband.pdf (Annex 2, p.34)
374 MCA (2004) p. 5.
375 MCA (2004) The National Broadband Strategy. Available at http://www.miti.gov.mt/docs/broadband.pdf (Annex 2, p.33)
376 MCA (2004) The National Broadband Strategy. Available at http://www.miti.gov.mt/docs/broadband.pdf (Annex 3, p.35)

8.19.3 Broadband policy
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The Maltese Communications Authority (MCA) Malta has produced a very comprehensive and useful report on
the national Broadband Strategy. 377 It identifies key drivers and barriers and contains a Broadband model378 with
the main stakeholder and how to implement successfully national BB goals.
The quality of BB services is one of the key drivers and advantages over Internet via dial-up. Closely related, the
availability of new content and services are another main reason why people sign up for BB. Infrastructure
competition between cable and DSL is another key driver as it lowers prices. Awareness about new services and
education on the use of ICT in general are other key drivers379 .
Lack of BB based local services and content is perhaps the main barrier for people to sign up for BB. In
particular, content in the Maltese language is lacking. Start up costs are high, as BB access terminals (PCs in
particular) are still expensive for many people in the society. In addition, running costs for connection are too
high as well. Lack of trust and confidence are other barriers to a higher BB uptake rate. Generally, people are
hesitant to use new technologies, especially for e-commerce purposes. The limited size of Malta, geographical
facts (island) and low economies of scale are other barriers. Private investors often expect a higher return on
investment. Last, BB pricing in Malta is still inflexible, as pricing is based on the type of connection speed.
Alternative pricing models taking actual usage pattern into account are suggested. 380
The Maltese broadband strategy includes four strategic objectives to be fulfilled 2004-2006:
• Secure a ubiquitous multiple broadband infrastructure which covers 99% of the population and is
capable of delivering a minimum of 512 kbps in the downstream direction to the end user
• Ensure a regulatory framework which supports and encourages a competitive environment which in
turn sustains the availability of multiple technological platforms
• Increase the accessibility of broadband technology to all residential and business set – ups
• Sustain the development of broadband content, applications and services targeted at the local
population and which expose the Maltese industry to the global virtual market381 377 MCA (2004) The National Broadband Strategy. Available at http://www.miti.gov.mt/docs/broadband.pdf
378 MCA (2004), p. 17-29.
379 Ibid. p. 14-15.
380 Ibid. p. 15-16.
381 Ibid. p. 14-15.

8.20 Poland
8.20.1 Introduction
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Poland, which has joined the European Union on 1 May 2004, has 38 190 600 inhabitants on a territory of 312
677 square km, which means that its population density is 122.3 inhabitants per square km. The density is thus
broadly in the middle of the EU range, although somewhat higher than the average. Purchasing-power adjusted
GDP stood at 47.5% of the EU 25 average in 2004.
8.20.2 The broadband market
Poland has by a wide margin the lowest usage of mobile telephony of all Member States, with a penetration rate
of just under 61% - among the others, only Latvia (69%), France (71%) and Malta (74%) are below 80%. In
terms of fixed lines, while Poland has an extremely low density, equivalent to only 32.2% 382 of the population,
this is within the norm of the accession countries bar Cyprus and Malta. Moreover, Poland is one of only three
member states where fixed-line density is still growing strongly The fixed line network is still very much
dominated by Telekomunikacja Polska, which accounts for 80-90% of all markets 383 . It was 95.5% digitalised by
the end of 2003, but is not scheduled to reach 100% before 2006 384 . The mobile telephony market is very
competitive. TP’s Centertel has a 32.2% market share, while Polkomtel has 30.3% and Polska Telefonia
Cyfrowa (PTC) 37.5% 385 .
The Polish broadband market is still in its infancy. Penetration as measured in broadband connections per
population stood at 0.5% at the end of September 2004 (no figures available for December), as compared to
0.4% three month earlier. This corresponds to a total of 180 000, only slightly above Estonia, which has twenty
times less population. Of that total, 139 000 are DSL, corresponding to 77.2%, up from 92.1% at the end of
June, with the remaining 22.8% provided by cable. Cable has a significant potential, as there are 4.5 million
cable TV subscribers, which corresponds to 54% of households passed by the more than 600 cable network
operators. The DSL market is overwhelmingly controlled by Telekomunikacja Polska and its subsidiaries, which
account directly for 96.4% of DSL subscriptions, The remaining 3.6% are unbundled DSL access lines; no lines
are retailed on its infrastructure by other ISPs. 386 Fixed wireless access in the form of LMDS (local multipoint
distribution services) is also offered, but mostly for the business market, and take-up is very low.
Mobile broadband in Poland is still at the beginning. Only of the three 2G operators, has launched a 3G network,
but the subscribers were still in the hundreds in January 2005 387 . The deadline for launching the other 3G
networks has been rescheduled to the beginning of 2006.
8.20.3 Broadband policy
The current “National Strategy for Developoment of Broadband Access to Internet for 2004-2006” was adopted
in December 2003 388 and subsequently turned into an implementation programme in August 2004. It is part of
the larger Information strategy of the Republic of Poland – ePoland for 2004-2006. The goal of the broadband
strategy is to multiply the use of broadband access to the Internet by building information and services, the
construction of access infrastructure, and focusing on the role of public administrations.
On the demand side, e-government, e-health and e-learning services are to be developed and offered to the
citizens by the various state bodies involved. For e-government, the focus is on an active involvement of local
and regional administrations. E-education is of particular importance, because Poland is experiencing an
382
Eurostat, Statistics in Focus 8/2005: Telecommunications in Europe, 7.2.2005, http://epp.eurostat.cec.eu.int/cache/ITY_OFFPUB/KS-
NP-05-008/EN/KS-NP-05-008-EN.PDF (figure refers to 2003, but any change is unlikely to be significant)
383
Annex II to European electronic communications regulation and markets 2004 (10th report),{COM(2004)759 final}, 2.12.2004
384
National Strategy for Development of Broadband Access to Internet for 2004-2006, Ministry of Infrastructure, Ministry of Science and
Information, 23.12.2003
385
European Mobile Communications Report, Issue 189 – February 2005
386
Source: ECTA ; the source in footnote 2 reckons there were 192 000 DSL lines in July
387
European Mobile Communications Report, Issue 189 – February 2005
388
Program "Upowszechnienie szerokopasmowego dostępu do Internetu na lata 2004 - 2006" - dokument przyjęty przez Radę Ministrów w
dniu 31 sierpnia 2004 r.

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education boom, with rapidly increasing enrolment numbers. Concerning e-business, the priority lies in creating
a conducive framework, especially for the numerous SMEs.
On the supply side, all schools are to be connected by broadband by 2006, while the PIONIER scheme should
bring broadband to scientific and academic centers by the end of 2005. One of the biggest challenges for Poland
is how to ensure connectivity in its rural areas. At the end of 2003, according to a survey, 30% of respondents
who live in Polish rural areas (less than 2 000 inhabitants) did not have a fixed telephone, and therefore no
chance to get ADSL, while 12.4% did not have any telephone at all 389 . This challenge is recognised in the
broadband strategy. Local and regional administrations are scheduled to get broadband connections within the
framework for the European Regional Development Fund. Altogether, there are 140 mio € earmarked for
information society infrastructures in the Polish Operational Programme of the ERDF, of which 93 mio € are to
come from the EU.
8.20.4 Conclusion
Poland’s starting point for developing broadband access is not easy. It has, together with Greece, the lowest
penetration rate of the entire EU, with such a gap to the most of the other member state, including some poorer
ones, that even five consecutive years of annual doubling would not be sufficient to catch up with the average.
In addition, with the lowest mobile phone penetration - again with a significant gap - the development of 3G is
likely to be slower than in many other member states, too. As a large country with an above-average share of the
population living in rural areas, roll-out of all networks is also more expensive than in other countries. On the
positive side, Poland’s fixed-line density has been growing recently, thus increasing the potential for DSL rollout,
cable networks are a source of potential competition for considerable parts of the population, and the limited
data available points to fast growth of broadband connections, albeit from the low base described.
389 Central and Eastern Europe Information Society Benchmarks, Country Analysis, September 2004, EU Commission

8.21 Portugal
8.21.1 Introduction
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Portugal, which has joined the European Union on 1 January 1986, has 10 474 700 inhabitants on a territory of
92 389 square km, which means that its population density is 112.8 inhabitants per square km. The density is
close to the EU average. Purchasing-power adjusted GDP stood at 73.4% of the EU 25 average in 2004.
8.21.2 The broadband market
Portugal has a high usage of mobile telephony with a penetration rate of over 96%, significantly above EU
average, but a very low number of fixed lines, equivalent to only 40.3% 390 of the population, the second-lowest
of the old member states. This means that among the new member states not only Malta and Cyprus, but also
Slovenia have overtaken Portugal’s fixed line density. The fixed line network is still overwhelmingly dominated
by Portugal Telecom, with a mere 13% of the market by revenue accounted for by its competitors 391 . The mobile
telephony market is competitive. Portugal Telecom’s TMN has a 51.3% market share, while Vodafone has
32.9% and Optimus 15.8% 392 .
The Portuguese broadband market is rapidly expanding. Penetration as measured in broadband connections per
population stood at 8.3% at the end of 2004, as compared to 6.4% six month earlier. In percentages, this
represents an impressive 29.8% growth from 660 000 to 860 000 million in just half a year. Of that total, 428
000 million are DSL, corresponding to 49.7%, up from 44.8% at the end of June; the remaining 433 000, or
50.3% are overwhelmingly provided by cable, with a small and decreasing share, currently standing at 0.4%,
consisting of dedicated access by other technologies, including fixed wireless access 393 . This puts Portugal in the
uncommon position of a parity between DSL and cable as the main broadband vehicle at this already advanced
stage, although DSL is growing faster, as it is in most other countries. However, it should be noted that both
networks belong to the same operator, which seriously limits infrastructure-based competition. The DSL market
is overwhelmingly controlled by Portugal Telecom and its subsidiaries, which account directly for 89.5% of
DSL subscriptions, with another 8.7% retailed on their infrastructure by other ISPs. The remaining minuscule
1.9% are unbundled DSL access lines. 394
Mobile broadband in Portugal is still at the beginning. All three 2G operators have launched 3G networks 395 , but
the two for which figures are available had only 46 000 subscribers between them in January 2005 396 .
8.21.3 Broadband policy
The National Broadband Initiative of Portugal currently in force is part of the wider Information Society Action
Plan 397 , where it is chiefly inserted under the first of seven pillars, An Information Society for
All, which focuses on the multiplication of digital connectivity, particularly by means of
making Internet access and use more widespread. The NBIP sets out specific targets to be achieved
by 2005, in particular that 50% of all households and enterprises will have broadband access to the Internet by
then, which corresponds to an extremely ambitious target of a penetration of 18% by the end of this year 398 . To
achieve the aims of the strategy there are several projects which are grouped under the themes of Infrastructure
and Access; Multimedia Content; Broadband Usage; Bridging the Digital Divide and National Competitiveness.
Broadband access in less favoured areas is facilitated by the establishment of Community Networks. Projects
foreseen within this measure include the building of new infrastructure, the sharing of infrastructure with private
operators and taking advantage of existing public infrastructures. Portugal intends to use Structural Funds to
390
Eurostat, Statistics in Focus 8/2005: Telecommunications in Europe, 7.2.2005, http://epp.eurostat.cec.eu.int/cache/ITY_OFFPUB/KS-
NP-05-008/EN/KS-NP-05-008-EN.PDF (figure refes to 2003, but any change is unlikely to be signficant)
391
Annex II to European electronic communications regulation and markets 2004 (10th report), {COM(2004)759 final}, 2.12.2004
392
European Mobile Communications Report, Issue 189 – February 2005; include 3G networks
393
www.anacom.pt
394
Source: ECTA
395
Annex II to European electronic communications regulation and markets 2004 (10th report), {COM(2004)759 final}, 2.12.2004
396
European Mobile Communications Report, Issue 189 – February 2005
397
IS policy development is entrusted to the Innovation and Knowledge Society Mission Unit (UMIC), strategically created within the
Presidency of the Council of Ministers.
398
Iniciativa Nacional para a Banda Larga, p. 44

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bring broadband to under-served areas. A social cohesion approach (using a ranking model based on supply and
demand-side criteria) and a market-based approach (using aggregation of public demand) are used to determine
areas to be considered eligible for public co-financing.
All central public administration offices and hospitals are to be connected by broadband; achieving a broadbandconnected
PC/pupil ratio superior to the EU average; establishing at least 16 public access points with
broadband per 100,000 inhabitants. In poorer municipalities access will be free. Concerning SMEs, particularly
important for Portugal, which lacks large companies, the two main targets are supporting broadband access and
use in 10,000 SMEs by the end of 2005 and supporting the development of websites of 10,000 SMEs over the
same period. Concerning households, PC penetration should achieve 55% of households by the end of 2005
through the creation of PC recycling centres and financial incentives. On content, the NBIP encourages the
creation and implementation of 500 multimedia content and application projects by the end of 2005 399 .
8.21.4 Conclusion
Broadband development is clearly taking off very fast in Portugal. From June to December 2004, the penetration
rate increased by half and stands just under the EU average. Given the relatively poor recent performance of the
overall Portuguese economy, combined with the significantly below-average income of Portuguese households,
it is quite an achievement that Portugal’s broadband density is on a par with countries such as Germany, Italy
and Luxemburg. However, the policy has set some extremely ambitious goals, and while their creation has
probably contributed to the fast growth, it can be questioned whether they can indeed be attained.
399 EU Commission, Staff Working Paper Annexes of the “Communication Connecting Europe at High Speed: National Broadband
Strategies”, COM (2004) 369 of 12.5.2004

8.22 Slovakia
8.22.1 Introduction
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Slovakia, which has joined the European Union on 1 May 2004, has 5 380 100 inhabitants on a territory of 49
037 square km, which means that its population density is 109.7 inhabitants per square km. The density is thus
close to the EU average. Purchasing-power adjusted GDP stood at 54% of the EU 25 average in 2004.
8.22.2 The broadband market
Slovakia has an average usage of mobile telephony with a penetration rate of around 79%, a bit below EU
average. It has however, together with Lithuania, the lowest density of fixed lines, equivalent to only 24.1% 400 of
the population, which is extremely low even by the standards of the new member states. In addition, the fixedline
density has recently seen the second-biggest decrease in the EU, again behind Lithuania. The fixed line
network, which was 86% digitalised at the end of 2003 401 , is still a virtual monopoly 402 , but the mobile telephony
market is competitive. Slovak Telecom’s Eurotel has a 44.7% market share, while Orange has 55.3 403 .
The Slovakian broadband market is expanding after a late start (broadband offers have only been available since
mid-2003), but at a still very low level. Penetration as measured in broadband connections per population stood
at 0.9% at the end of 2004, as compared to 0.4% six month earlier. In percentages, this represents an explosive
122.6% growth in just half a year, but in actual numbers it is an increase of only 27 000, from 22 000 to 49 000
million. Of that total, 4.4 million are DSL, corresponding to 77.9%, up from 75.4% at the end of June. All of the
DSL connections are directly controlled by Slovak Telecom and its subsidiaries. 404
The remaining 22.1% of the market are provided by the cable network. In theory, Slovakia is very well
positioned for infrastructure competition by cable companies, because it is among the leading countries in cable
TV penetration: 125 cable operators have reached more than 60% of households. However, there are very few
Internet customers with cable TV connection, because most of the cable TV network needs upgrading before it
can be used for broadband Internet access 405 . Only one of the cable operators provides broadband services.
There was no 3G network operating in Slovakia at the start of 2005, although both mobile operators offer GPRS
services, and Eurotel furthermore offers EDGE services, too. Both are obliged to start 3G services no later than
1 April 2006 406 .
8.22.3 Broadband policy
Slovakia is not only lagging behind in broadband roll-out, but also in broadband policy. The National Policy on
Electronic Communications (2003) did contain a chapter about the desirability of broadband, but no specific
measures. As recently as January 2004, a National Strategy for Information Society was approved which did not
specifically mention broadband under its six priorities, which were a competitive environment, e-government,
IS-education, e-commerce, IT research and online trust.
Slovakia’s broadband policy is thus very recent. The National Strategy for Broadband Internet Access has been
approved by the government only on 13 April 2005. The strategy sets a fairly modest target of connecting one in
10 Slovaks to the Internet by broadband by 2012. It assumes that state support will be provided for the
construction of optical networks in poorer regions. The state also wants to contribute to the co-financing from
EU funds. However, the Telecommunications Ministry has not yet calculated impacts on the state budget or the
conditions for granting support, a fact that has been criticised by the Finance Ministry 407 .
400
Eurostat, Statistics in Focus 8/2005: Telecommunications in Europe, 7.2.2005, http://epp.eurostat.cec.eu.int/cache/ITY_OFFPUB/KS-
NP-05-008/EN/KS-NP-05-008-EN.PDF (figure refes to 2003, but any change is unlikely to be signficant)
401
www.telecom.sk
402
Annex II to European electronic communications regulation and markets 2004 (10th report), {COM(2004)759 final}, 2.12.2004
403
European Mobile Communications Report, Issue 189 – February 2005
404
Source: ECTA
405
Central and Eastern Europe Information Society Benchmarks, Country Analysis, September 2004, EU Commission
406
II to European electronic communications regulation and markets 2004 (10th report), {COM(2004)759 final}, 2.12.2004
407
Pravda, 14.4.2005, quoted on aol.countrywatch.com

8.22.4 Conclusion
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Broadband in Slovakia is still in its infancy. Penetration rates are lagging significantly behind not only all of the
old member states bar Greece, but also behind most of the new member states. Moreover, a specific broadband
policy has only been adopted very recently, again lagging behind most other member states. Given the low
baseline, very high growth rates are to be expected for the coming years, but this may well be insufficient to
catch up with the EU: even with 100% growth each year in 2005, 2006 and 2007 Slovakia would still not reach
the end of 2004 EU average penetration. On the positive side, the widespread availability of cable networks
should eventually facilitate stronger infrastructure-based competition than in many other countries.

8.23 Slovenia
8.23.1 Introduction
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Slovenia, which has joined the European Union on 1 May 2004, has 1 996 400 inhabitants on a territory of 20
226 square km, which means that its population density is 98.4 inhabitants per square km. The density is thus in
the lower part of the EU range. Purchasing-power adjusted GDP stood at 78.1% of the EU 25 average in 2004.
8.23.2 The broadband market
Slovenia has a one of the highest usages of mobile telephony among the new member states with a penetration
rate of about 97%, far above EU average, but a low number of fixed lines, equivalent to only 40.8% 408 of the
population. However, this is the highest fixed-line density among the new member states bar Cyprus and Malta,
and it is higher than Portugal’s. Furthermore, Slovenia is one of only three member states where fixed-line
density is still growing strongly. The fixed line network is still a virtual monopoly of Telekom Slovenije 409 . The
mobile telephony market has some limited competition. Telekom Slovenije’s Mobitel has 79.6% market share,
while Si.mobil has 19.3% and Western Wireless 1.1% 410 .
The Slovenian broadband market is rapidly expanding. Penetration as measured in broadband connections per
population stood at 5.8% at the end of 2004, as compared to 3.8% six month earlier, a very high number for a
new member state. Percentage-wise, this represents a very impressive 50.3% growth, although the actual
numbers are fairly low due to the size of the country, from 76 000 to 115 000 in just half a year. Of that total, 74
000 are DSL, corresponding to 64.3%, down from 70.5% at the end of June, with cable accounting for the bulk
of the rest (34%). Slovenia is thus in the unusual position of seeing cable subscription growing faster than DSL
connections. The country has 230 000 cable TV subscriptions, which corresponds to about 30% of households;
cable has therefore the potential to remain a significant competitor while ADSL roll-out continues. The DSL
market is completely controlled by Telekom Slovenije and its subsidiaries, which account directly for 98.3% of
DSL subscriptions, with the remaining 1.7% retailed on their infrastructure by other ISPs. There are no
unbundled DSL access lines. 411
Concerning Fixed Wireless Access, there is the Slovenian public wireless Internet network, based on Wireless
Local Area Network, called NeoWLAN. It is Slovenia’s first public wireless access network using Wi-Fi
technology, but currently covers only important parts of Ljubljana and some business and tourist areas in the rest
of Slovenia; it is operated by Mobitel and Siol, the incumbent’s ISP provider 412 . Mobile broadband in Slovenia is
still at the beginning. The dominant mobile operator Mobitel has launched a 3G network, but had only 3 500
subscribers in January 2005 413 . Si.mobil has begun introducing EDGE.
8.23.3 Broadband policy
Slovenia adopted a Development Strategy For Broadband Data Networks in Slovenia in September 2004. This
strategy sets the rather modest overall objective to enable access to broadband data networks by 2008 by all
public institutions and a large majority of those residents who want it. In order to achieve this, it defines 6
priorities: data collection and broadband mapping, the development of underdeveloped regions with help from
structural funds, the construction of open-access networks, an active role for local government, network access
from different platforms and optical fibre-networks for educational and research institutions.
The need for an active role of local governments and for the development of underdeveloped regions are
addressed jointly in the new method of comprehensive planning, the Integrated Regional Strategies for the
Information Society (IRSIS), which will in turn be crucial tools for the use of structural funds (the whole of
Slovenia is currently classified in the most favourable “objective 1” category). The budget for projects funded
by ERDF, including Slovenia’s participation, amounts to SIT 3826m (16 mio €)
408
Eurostat, Statistics in Focus 8/2005: Telecommunications in Europe, 7.2.2005, http://epp.eurostat.cec.eu.int/cache/ITY_OFFPUB/KS-
NP-05-008/EN/KS-NP-05-008-EN.PDF (figure refes to 2003, but any change is unlikely to be signficant)
409
Annex II to European electronic communications regulation and markets 2004 (10th report), {COM(2004)759 final}, 2.12.2004
410
European Mobile Communications Report, Issue 189 – February 2005
411
Source: ECTA
412
Development Strategy for Broadband Data Networks in the Republic of Slovenia; 2004. Ministry of Information Society
413
European Mobile Communications Report, Issue 189 – February 2005; according to the source of footnote 2, there were already 9 000
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In terms of the construction of open-access networks, i.e. public access broadband networks that enable equal
access by operators and service providers to all those connected to the network, the strategy envisages two
options. One is the construction of a broadband access network owned by end users, which ends in a public
access space in which network hubs are located and to which all interested operators have access (“fibre
condominium”). The other is the construction of broadband networks and pertinent municipal infrastructures as
public-private partnerships.
A particular focus is put on broadband for educational and research institutes. The project “Broadband Internet
to each student bed” has been allocated SIT 500m (2.1mio €), although the intentions of upgrading of the access
to ARNES (Academic and Research Network of Slovenia) to optical fibre network is not concretised in terms of
funding. However, non-specified activities from the action plan are awarded SIT 250m (1.05 €) annually in
cooperation with local government 414 .
8.23.4 Conclusion
Broadband in Slovenia is fairly advanced for a new member state, lagging behind only Malta and Estonia, but
ahead of Ireland and Greece. Growth rates are still high, and the relatively important presence of a cable
network should provide for some competitive impetus. Given the mountainous topography, there is a risk that
broadband development will be very uneven, which is however recognised in the national broadband strategy.
414 Development Strategy for Broadband Data Networks in the Republic of Slovenia; 2004. Ministry of Information Society

8.24 Spain
8.24.1 Introduction
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Spain, which has joined the European Union on 1 January 1986, has 42 345 300 inhabitants on a territory of 504
782 square km, which means that its population density is 83.9 inhabitants per square km. The density is thus in
the lower part of the EU range. Purchasing-power adjusted GDP stood at 97.6% of the EU 25 average in 2004.
8.24.2 The broadband market
Spain has a high usage of mobile telephony with a penetration rate of about 96%, significantly above EU
average, but a relatively low number of fixed lines, equivalent to only 42.7% 415 of the population, among the
lowest of the old member states. The fixed line network is still dominated by Telefónica; only around one fifth
of the market by revenue is accounted for by its competitors 416 . The mobile telephony market is competitive.
Telefónica Móviles has a 49.2% market share, while Vodafone has 26.3% and Amena 24.6% 417 .
The Spanish broadband market is rapidly expanding. Penetration as measured in broadband connections per
population stood at 7.9% at the end of 2004 418 , as compared to 6% six month earlier. In total numbers, this
represents an impressive 32.3% growth from 2.5 to 3.3 million in just half a year. Of that total, 2.6 millions are
DSL, corresponding to 78.4%, down from 83.8% at the end of June, while cable provides the bulk of the other
21.6%. Alternative technologies have minuscule or very small market shares: powerline communications have
0.04%, broadband satellite 0.06%, optical fibre 0.78% and fixed wireless access in the form of LMDS (local
multipoint distribution services) have 2.7% 419 . In June 2004, 93% of the population were covered by DSL
networks 420 ; the DSL market is dominated by Telefónica and its subsidiaries, which account directly for 69.8%
of DSL subscriptions, with another 26.6% retailed on their infrastructure by other ISPs. The remaining 3.6% are
unbundled DSL or shared access lines. 421
The overall figures mask a significant disparity in regional broadband development. On the positive side, aboveaverage
performance is not limited to the biggest metropolitan areas and their surroundings suspects, i.e. Madrid
and Barcelona (Cataluña), but also includes areas such as the Balear islands and the Basque country. On the
negative side, the regions at the end, i.e. Extremadura, Castilla-La Mancha and Castilla y Leon lag significantly
behind, and are unlikely to catch up quickly, since they are thinly populated rural areas with at least a good part
of their territory fairly remote. It has however to be noted that Extremadura in particular has put in place a
sustained programme of public access points.
Mobile broadband in Spain is still at the beginning. Two of the three 2G operators have launched 3G networks,
but had only 105 000 subscribers between them in January 2005 422 .
415
Eurostat, Statistics in Focus 8/2005: Telecommunications in Europe, 7.2.2005, (figure refers to 2003, but any change is unlikely to be
significant)
416
Annex II to European electronic communications regulation and markets 2004 (10th report), {COM(2004)759 final}, 2.12.2004
417
European Mobile Communications Report, Issue 189 – February 2005
418
By the end of February 2005, penetration had reached 8.7% (3.6 million) - CNN+ online, 17.3.2005
419
La Sociedad de la Información en España 2004, p. 71 ; Report issued by Telefónica 2005
420
COLLECTIVITES TERRITORIALES et HAUT DEBIT : Espagne. L’intervention publique dans le marché du haut débit. Etude réalisée
par le Cabinet Analysys pour le compte de l’Autorité de régulation des télécommunications et la Caisse des Dépôts et Consignations ;
Avril 2005
421
Source: ECTA
422
European Mobile Communications Report, Issue 189 – February 2005

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Figure 70: Broadband penetration in number of accesses per 100 inhabitants. Source: La Sociedad de la
Información en España 2004, p. 74 ; report issued by Telefónica 2005. MC = cable modem; data are
estimations for September 2004

8.24.3 Broadband policy
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The Ministry of Science and Technology launched the “Broadband Strategy in Spain” based on three main
goals: promoting the availability of broadband connectivity and services, particularly in rural and less favoured
areas; encouraging the use of new Information Society services among the less favoured communities; and
promoting the use of ICT for economic growth. The current objective is a 10% penetration rate by the end of
2005, with no region below 8% 423 .
On the infrastructure side, the EU has recently approved the “National programme for the roll-out of broadband
in rural and remote areas”, for which the Spanish authorities have earmarked a total of €26.4m in direct grants
and €111.9m in interest-free loans for the period from 2005 to 2008. Under the programme, which will be cofinanced
by EU funds, providers of electronic communications services may submit proposals for providing
broadband in specific areas where such services are currently not available. The scheme does not favour a
specific technology and enables open access for third party providers. 424 Some regions are also providing
substantial funding: broadband laggard Castilla y Léon has earmarked 80 mio € for network rollout in 2004-
2006, while broadband leader Catalunya has foreseen129 mio € 425 .
On the content side, several programmes have been launched. The España.es initiative includes informationsociety
strategies and aims at the development of the electronic administration. Under the programmes run by
Red.es, a public business entity attached to the Ministry of Industry, Tourism and Commerce, it is foreseen to
offer satellite access to up to 4000 schools and libraries by the end of 2006 426 . More than € 30 million have been
earmarked to provide libraries of at least 1,500 municipalities with satellite connections The educacion.es
initiative aims at improving the educational system through improved access, teacher training, and web site with
relevant content and services 427 .
8.24.4 Conclusion
Broadband development is clearly taking off very fast in Spain. From June 2004 to February 2005, the
penetration rate increased by half and stands just under the EU average, which is quite an achievement, given
the low population density, although it could be argued that the urban areas where penetration is highest actually
have a higher population density than comparable cities in other member states. Spain is on its way to achieving
the self-defined objective of a 10% penetration rate even before the target date of the end of 2005. However, it
remains to be seen whether indeed no region will be below 8%, as is envisaged.
423
EU Commission, Staff Working Paper Annexes of the “Communication Connecting Europe at High Speed: National Broadband
Strategies”, COM (2004) 369 of 12.5.2004
424 TH
COMMISSION PRESS RELEASE IP/05/398, BRUSSELS, 7 APRIL 2005
425
Source: ECTA
426
http://www.red.es/prensa/documentos/Dossier_ing.pdf
427
European Mobile Communications Report, Issue 189 – February 2005

8.25 Sweden
8.25.1 Introduction
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The Swedish populations is heavily concentrated, with three highly populated small areas (Stockholm, Malmo
and Gothenborg) and the vast northern part of the country only thinly populated. Stockholm has 765 000,
Gothenborg 480 000 and Malmo 270 000 out of a population of more than 9 million. 428 Sweden has a PPPadjusted
GDP per capita of 28 900 US in 2003. The EU-15 average is 27 300 US-$ and OECD average is 26
300. 429 According to the new OECD GDP comparisons based on PPP, Sweden is a high middle income country
with a score of 106 and ranks 13 th in this statistic. 430 However, in context with BB uptake for instance the US
(11 th ) and Ireland (25 th ) are behind Sweden despite a (considerable) higher GDP (US has a GDP per capita of 37
600 US and Ireland of 33 200 US) per capita.
In the Information Society Index 2004 by IDC, Sweden lost its first place to Denmark and now ranks second. 431
According to the OECD, in June 2004 Sweden ranked 9 th in terms of BB uptake with a total of 12.3% per 100
inhabitants using BB Internet. 432
Taking a more long term view, Sweden is the global leader in “other access platforms” (Fiber in particular) In
Sweden 2.2% of the population have (faster) BB access via other platforms (even ahead of South Korea where
2% access the Internet via other platforms). The OECD (citing Skanova) reports that 91% of all households and
95% of all companies are located in areas connected by a fibre optic backbone. 433 Due to the inherent
technological transmission limitations of xDSL and cable, Fiber networks are more promising with respect to
bandwidth intensive services such as IP broadcasting and HDTV over Internet. What are the reasons for this
Swedish success story? 434
Sources include two OECD reports, the ISA website (Best Practises) 435 and a report published by the NRA (PTS)
on broadband in particular 436 , as well as the ITS website 437
8.25.2 The broadband market
According to the NRA (PTS), 1.4 million Swedish households can connect to BB Internet (“technically possible
subscriptions”) which translates into around 33% of all households. From 2003, this is an increase of 20%. In
2003, the number of private end users increased by 30%. In 2004, around 868 000 private customers (or 20% of
the households) had BB Internet access. Thus, the uptake rate among private households is very high: 33% of all
households are connected and 20% actually subscribe to BB.
8.25.2.1 Demand
In 2004, PC penetration stood at 80%, and more than 90% of the all persons aged 16-24 had a computer at home
and access to the Internet. Even 65% of the persons aged between 55-74 had access to the Internet. 438 However,
“usage” requires interest and knowledge of the user. The Government produced a report which highlights the
importance (and government focus on) developing IT skills. 439 In addition, SCB (Statistics Sweden) regularly
conducts studies on use of IT in enterprises 440 and private individuals. 441
428
http://www.scb.se/templates/Publikation____119725.asp
429
http://www.oecd.org/dataoecd/48/5/34244925.xls
430
http://www.oecd.org/document/15/0,2340,en_2649_201185_34256911_1_1_1_1,00.html
431
http://www.idc.com/getdoc.jsp?containerId=pr2004_10_28_164010
432
http://www.oecd.org/dataoecd/19/42/34082810.xls
433
OECD (2004) The Development of Broadband Access in Rural and Remote Areas; Available at
http://www.oecd.org/dataoecd/38/40/31718094.pdf. p. 39-40. cited as OECD (2004), Development.
434
Insiders responded to the question “Why is Sweden so good at broadband?” that – in his view – the free exchange of ideas between
Swedish companies really facilitates progress and that the work force is very well educated and there is plenty of talented people on the
market. http://www.itsweden.com/docfile/4012_TV%20via%20broadband%20Sweden%20leads%20the%20way.pdf
435
http://www.isa.se/templates/Normal.aspx?id=2332
436
PTS (2004), Bredband i Sverige 2004; available at http://www.pts.se/Archive/Documents/SE/Bredband_i_Sverige_2004.pdf cited as
PTS (2004).
437
http://www.itsweden.com/
438
http://www.scb.se/templates/publdb/katLista.asp?id=2125&produktnr=IT0102 (in Swedish)
439
Ministry of Communication, The Development of IT Skills, http://www.itsweden.com/docfile/29709_n2000_076en.pdf
440
http://www.scb.se/templates/Product____15308.asp (in Swedish)
441
http://www.scb.se/templates/publdb/katLista.asp?id=2125&produktnr=IT0102 (in Swedish)

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Swedes are very interested and skilled in using technology. More than 500 000 persons earned a European
Computer Driver's License (ECDL) the only reconigzed international standard for IT skills which is being found
in more than 30 countries. 442 One of the currently most prominent Internet services is E-banking. Sweden is
ranked number one in actual use of Netbanking services with more than 51% of the Swedes logged on for more
than one hour per month to E-banking services. 443
It is not only young people who use the Internet, but also (wealthier) older people. For instance, SeniorNet is a
platform which specifically aims to bridge the divide between the old and the young, and it has 5500 members in
the age between 55 and 102. Members pay 200 SEK (around 20 Euro) per year. Banking group SEB and Telia
offer support as well. Seniors use the Internet primarily for E-Government services, E-banking and traveling. 444
SCB reports that 96% of all enterprises with more than 10 employees used computers and almost 95% had
access to the Internet. 445 There is no big difference between large and small Swedish companies. As for highspeed
access in particular, in 2004 74% of all enterprises had a fast Internet connection (compared to 44% in
2001 and 62% in 2003). Further, 82% of Swedish companies had a website and 75% of companies with between
10-19 employees had a web presence.
8.25.2.2 Supply
Sweden has an extensive BB network, and five backbone networks reach the northern part of the country. 446 The
national Fibre and radio network extend to 185 000 km. All municipalities are connected to the national
backbone and/or interurban networks. 95% of Sweden's urban areas have connections to an interurban network.
All urban areas with more than 6000 inhabitants have area networks in at least some part of the urban area. 45%
of the urban areas with 200 to 249 inhabitants have area networks. The national average for urban with area
networks is 65%. In the remote northern areas “only” half of the urban areas are connected. 447
The uptake and penetration levels are very high in Sweden despite the fact that less than 20% of the whole
population lives in the three largest cities. See annex for a map of the five backbone networks which connect
the northern regions. A rather strong government commitment (and not prime reliance on market forces) seems
necessary to achieve a high penetration and uptake rate under those geographic circumstances. See also part 3 on
public policy.
8.25.2.3 Pricing
Pricing for access and download limits are a major factor with respect to usage/subscription rates in particular.
The OECD reports that the entrance of Bredbandsbolaget exhibited a downward pressure on prices and
increased the BB uptake rates. Over time, however, prices increased and Sweden fell from 2 nd rank in 2001 to 7 th
in 2003 of the OECD BB ranking. Thus, access pricing certainly plays a major role in the uptake rates. 448
Infrastructure competition is a key driver to lower prices and increase BB uptake rates in turn. In this respect,
former Swedish telecom incumbent Telia and its Finnish counterpart Sonera merged in 2002. In order to receive
the approval of the European Commission, Comhem, the cable unit, needed to be divested. The OECD reports
that this had a positive influence on pricing as well. 449
Another important point with respect to infrastructure competition is Stokab. Stokab is a network owned by the
City of Stockholm where the Board of Directors consists of political appointees representing the City of
Stockholm. 450 The company owns and operates a secure and accessible fibre optic network and leases dark fibre
to various companies (e.g. banks and insurance companies) and municipalities on a non-discriminatory basis.
Stokab does not provide retail services or offer any managed service. One important benefit of Stokab is that
there is a high degree of co-ordination between the City of Stockholm and the company with respect to rights of
ways.
442 http://www.sweden.se/templates/cs/BasicFactsheet____3693.aspx
443 http://www.isa.se/upload/english/BestPractices/Sweden_the_future_is_here_and_its_scandinavian.pdf
444 http://www.isa.se/upload/Filer/pdf/Older_people_play_their_part_in_Swedens_Internet_revolution_2.pdf
445 http://www.scb.se/templates/publdb/publikation____2725.asp&plopnr=2056
446 Annex I shows the five Swedish backbone networks.
447 PTS (2004), p. 5-6.
448 OECD (2004): Benchmarking Broadband Prices in the OECD, p. p. 53-54. http://www.oecd.org/dataoecd/58/17/32143101.pdf . Cited as
OECD (2004), Prices.
449 OECD (2004), Prices, p. 53.
450 The City of Ottawa has a list of other Community BB projects. http://ottawa.ca/city_services/planningzoning/2020/bb/appen_d_en.shtml

Company Access type Payment plan Speed (Kbps)
Incumbent
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Monthly
charge
($/PPP)
Download
Limit
Installation
charge ($)
Telia ADSL Telia BB 250 250/64 31 Unlimited 72
Telia ADSL Telia BB 500 500/400 39 Unlimited 72
Telia ADSL Telia BB 2000 2048/400 49 10 GB 72
Independent ISP access using incumbent local loops
Tele2 ADSL Tele2 BB ADSL 500/4-500 37 Unlimited 62
Glocalnet ADSL 500 37 Unlimited 51
Bostream ADSL istream 500 31 Unlimited 207
Bostream ADSL Xstream 2500/768 47 Unlimited 259
Bostream VDSL Scream 26MB/26MB 41 Unlimited 259
Alternative Infrastructure
ComHem Cable Internet Cable 250 250/64 23 Unlimited 41
ComHem Cable InternetCable 2000 512/128 41 Unlimited 41
UPC Cable Chello classic 640/256 36 Unlimited 51
UPC Cable Chello plus 1024/384 41 Unlimited 36
Tele2 Cable Tele2 BB Cable 512/128 26 Unlimited 62
Bredbandsbolaget Ethernet
LAN
BB 10 MB 33 Unlimited 51
Bredbandsb DSL BB 10 MB 41 Unlimited 207
Table 41: BB Access Prices in Sweden, October 2003
Infrastructure competition is a key driver to lower prices and increase BB uptake rates in turn. In this respect,
former Swedish telecom incumbent Telia and its Finnish counterpart Sonera merged in 2002. In order to receive
the approval of the European Commission, Comhem, the cable unit, needed to be divested. The OECD reports
that this had a positive influence on pricing as well. 451
Another important point with respect to infrastructure competition is Stokab. Stokab is a network owned by the
City of Stockholm where the Board of Directors consists of political appointees representing the City of
Stockholm. 452 The company owns and operates a secure and accessible fibre optic network and leases dark fibre
to various companies (e.g. banks and insurance companies) and municipalities on a non-discriminatory basis.
Stokab does not provide retail services or offer any managed service. One important benefit of Stokab is that
there is a high degree of co-ordination between the City of Stockholm and the company with respect to rights of
ways.
451 OECD (2004), Prices, p. 53.
452 The City of Ottawa has a list of other Community BB projects. http://ottawa.ca/city_services/planningzoning/2020/bb/appen_d_en.shtml

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Innovative services are another important factor. Without such services users will not sign up for BB. Sweden is
at the forefront in development of ICT products and services. Perhaps most notably, Skype and KaZaa are of
Swedish origin. The Swedish private and public sectors alike are using the communication possibilities of the
Internet contributing to a range of innovative services making users want to sign up for Broadband.
As for BB intensive Services, an example would be betting operator ATG which has launched full scale, live
streaming of horse races. 453 Also, it has been announced that broadband HDTV will – as the first country in the
world – be offered in Sweden. 454 JM, Sweden's leading housing developer offers some customers services which
turn off the gas and water supply when the leave the house. Also, washing rooms can be controlled via the PC. 455
Those are just a few examples to illustrate the leading position of Sweden in the development of BB
applications.
As for e-government, the project 24/7 Government 456 implements the principle that people have a right to access
government services at a time that suits them. 24/7 Government focuses on using state-of-the-art technologies
for e-government applications and services 457 (customs, taxes, road administration, competition authorities and
government officies are the leading institutions). Tax returns can be filed online, via SMS or via telephone. Nine
out of ten Swedes can use this service.
Finally, health care has always played a major role in Sweden. Consequently, e-Health services are strongly
developed as well. For instance, Carelink 458 is a national cooperation to develop the use of IT in Swedish
healthcare. One of the most important projects of Carelink is Sjunet,a virtual private network connecting
Sweden's 80 public hospitals, 800 primary care centers, 900 pharmacies and some private health care
institutions. Many BB intensive services are possible such as videoconferencing, telephony services, secure file
transfers (teleradiology, telepathology) and a range of web-services. Proven benefits relate to costs savings (0.6
million Euro annually), 459 better access and quality of care. 460
8.25.3 Broadband policy
Sweden sees Broadband as a utility and every citizen should have access to it. 461 This belief is also expressed in
the public policy and projects like Stokab described above. The strong commitment of the government to have
affordable access to a high-speed infrastructure and the treatment of digital information like essential utilities
such as water and electricity is one of the key factors for Sweden's leading position. In this respect, already in
June 2000, the Swedish government passed the “An Information Society for All” bill. Market forces are
complemented by a considerable degree of co-ordinated measures. Public funding for infrastructure and the
possibility to give as many competitors as possible an opportunity to use this network are key points.
On basis of Article 7 of the Framework Directive, 462 PTS notified the Commission about its measures it is going
to impose on SMP undertakings. In particular, PTS imposes the following obligations on TeliaSonera (78%
market share): access obligations, price regulation, non-discrimination, cost accounting and a reference offer. 463
The Swedish NRA maintains a website which lists prices for various services and contact details of
companies. 464 In their FAQ, the website also mentions an application which allows consumers to check whether
the promised BB speed is indeed available to them. ISA 465 (as a public entity) has a useful search engine
allowing people to search for companies within the BB market. Information that can be searched for includes
453
Invest in Sweden Agency Broadband Sweden (2004); http://www.itsweden.com/docfile/35972_Broadband_30_8.pdf ((last visited 22.
March 2005))
454
http://www.itsweden.com/main.aspx?id=13&type=news&newsid=3635
455
http://www.isa.se/upload/english/BestPractices/Sweden_the_future_is_here_and_its_scandinavian.pdf
456
http://www.24-timmarsmyndigheten.se/DynPage.aspx?id=186
457
In 75% of Swedens 289 municipalities parents can sign up preschool children for an opening in day care centers.
458
http://www.carelink.se/pages/newsbill.asp?VersionID=1&Pages=1,124 Founders of Carelink are the Federation of County Councils, the
Swedish Association of Local Authorities, the Swedish Pharmacy chain, and the Association of Private Care Providers. (last visited 22.
March 2005)
459
The biggest cost savings resulted from expensive ISDN lines, improved collaboration, lower staff costs and less physical transportation.
460
For details of Sjunet: http://www.ehto.org/ehealth2003/sjunet.html (last visited 22. March 2005)
461
For an overview over Swedish regulatory measures see ollow-up of Swedish Government IT Policy (2002),
http://www.itsweden.com/docfile/68612_ITuppf_eng.pdf
462
Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic
communications networks and services (the “Framework Directive”), OJ L 108, 24.4.2002, p. 33.
463
http://www.pts.se/Archive/Documents/EN/Com_decision_Broadband_20040702.pdf
464
http://hosting.ibitec.se/pts/Default.aspx
465
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which companies are providing business and residential access services, who are FWA license holders, which
BB companies offer access to national and local BB infrastructure. 466
The “government” is also actively investing in (fibre) infrastructure. The leading position of Sweden in terms of
fibre networks is to a large degree attributable to those “interventions”. More than 1 billion US $ have been
allocated to implement the national BB strategy and 300 million were used for a rollout of high speed Internet
infrastructure (not only fibre) financed on commercial grounds. 467
A fibre network was built by the state owned electrical utility company and in 2003 the national Swedish Grid
had reached 215 of the 290 municipalities. 468 Municipalities can receive funding if they connect to the national
backbone. In 2004, the government funded municipalities with 1 900 million Kroner (more than 200 million
Euro). 469
Municipalities which are sparsely populated 470 and unlikely to have a commercial development of a fibre optic
network within five years can apply for the development of regional networks. This scheme covers 30% of the
Swedish population. 322 million US were allocated over a five year period. Two other conditions for funding
the regional networks are that at least 5% of the costs need to be contributed by the municipality and an
independent operator needs to run the network. In addition to national and regional networks, the rollout of local
networks is also subsidized. In a five year period, 391 million US have been allocated for the development of
local networks. 471
As a result of those measures, by June 2003 270 communities had received funding and 53 networks were being
deployed. In the private sector, Skanova (the network division of the incumbent Telia which provides access on
a non-discriminatory basis to competitors) has been a major beneficiary on the supply side of those measures.
Many municipalities were able to invest in the rollout of xDSL networks and contracted with Skanova.
Last – but by no means least -, tax incentives are granted for business and residential tax payers who sign up for
BB services. 50% of the costs are deductible up to a maximum of 5000 SEK. 472
Conclusion
Sweden is a global leader in terms of fibre penetration and uptake. To a large degree this can be attributed to
government action plans and national and regional funding schemes. As another key factor, many innovative
services are being developed, tested and first put on the market in Sweden. Certainly, the openness,
technological skills and attitude of Swedish people towards technology in general and the Internet in particular
are major reasons why Sweden is “so good at Broadband”.
466
http://www.isa.se/templates/BroadbandDB____25829.aspx
467
OECD (2004), Development, p. 39-40
468
OECD (2004), Development, p. 39-40
469
PTS (2004), p.85.
470
Follow-up of Swedish Government IT Policy (2002), p. 12-15. http://www.itsweden.com/docfile/68612_ITuppf_eng.pdf
471
OECD (2004), Development, p. 39-40
472
Follow-up of Swedish Government IT Policy (2002), p. 12-15. http://www.itsweden.com/docfile/68612_ITuppf_eng.pdf

8.25.4 Appendix
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Figure 71: The six backbone networks (taken from the 2004 PTS report “Bredband i Sverige 2004, p. 90-95)

8.26 The Netherlands
8.26.1 Introduction
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The Netherlands are one of the wealthiest nations. According to the OECD, GDP per capita accounted for US $
30 300 (EU15 average is US $ 27 300). 473 The Netherlands rank 9 th and is a “high middle income group” with a
score of 103. 474 . They also have a very low rural population with 10.4% (the OECD average is 22.9%) 475 and the
most people living in the area Amsterdam-Rotterdam-Utrecht and a few other cities.
The Dutch government is very active and has ambitous plans in terms of BB, outlined in a recent paper
published by the Ministry of Economics entitled The Broadband Paper: A Question of Pace and Better
Utilisation. 476 Part three of this case study is largely based on this source.
8.26.2 The broadband market
The Netherlands are in a leading position in Europe when it comes to BB uptake. In January 2004, the uptake
rate was 11.9% of the total population – almost double the EU average of 6%. 477 Even more, internationally the
Netherlands rank 2 nd in terms of growth in BB uptake rate between July 2003 and January 2004 behind
Finland. 478 The Netherlands is one of the few countries where there is roughly the same amount of cable and
DSL users, i.e. a high degree of infrastructure competition.
A high GDP per capita and fair distribution of income, the high degree of infrastructure competition,
consequently low prices and an open attitude of Dutch people towards Internet technologies are among the chief
(rather static) reasons which explain this high uptake rate. In addition, the Kenniswijk project in Eindhoven (see
below) is a promising public-private partnership program which for the collaborative testing and development of
new BB services. At the same time, it increases demand for BB applications from consumers who can get
subsidised access to those innovative services over high speed fibre networks.
As in most other European Countries (with the exception of Sweden and Italy), the most promising FTTH
technology is only being deployed on a very limited basis. FTTH initiatives are underway in some selected
citites (e.g. Eindhoven and the Kenniswijk project) but in the majority of the country fibre is not (yet) available
with the municipalities of Amsterdam and Rotterdam starting to adopt rollout measures (see below).
8.26.2.1 Kenniswijk
Kenniswijk 479 is a public-private co-operation with 27 share holders (inter alia Shell, Deloitte&Touche, Philips
Alcatel). It is a large-scale broadband experiment in the Eindhoven region where innovative consumer BB
services are being developed and tested on high speed fibre networks. The project is funded by the Dutch
General Directorate of Telecommunication and Post (DGTP) of the Ministry of Economics. As of February
2005, 30 BB services were offered in a selected area in Eindhoven relating to entertainment content (e.g. Movieon-demand;
LiveTV; VlinderTV; Lifestyle TV), education (e-campus; Rutlkng2me; Ontdeknet), e-commerce
(Kadoline; Way2Pay), health (Heartspoint; brighten your life; web trainer), and culture (Van Abbe Video Tour;
TheaterTV Het Klein).
Kenniswijk BV offeres subsidies (up to € 500 for the connection and € 300 for the first year) to consumers who
sign up for FTTH. In addition, consumers who are willing to set up their own Kenniswijk Project can receive up
to 80% of the investment costs refunded. Companies can apply for subsidies if they develop innovative BB
services and want to offer them in the Kenniswijk region. 480 It also offers five courses (club-membership
administration, making music-CDs, processing photos, building websites and processing videos).
Freeband Kennisimpuls is another public-private research project and compromises more than 40 (non-)
commercial organisations. Focus lies on researching 4G BB mobile networks. 481
473 http://www.oecd.org/dataoecd/48/5/34244925.xls
474 http://www.oecd.org/document/15/0,2340,en_2649_201185_34256911_1_1_1_1,00.html
475 OECD (2004) The Development of Broadband Access in Rural and Remote Areas; p. 71. (OECD 2004). Available at
http://www.oecd.org/dataoecd/38/40/31718094.pdf.
476 http://apps.ez.nl/publicaties/pdfs/04TP27.pdf
477 EU Commission, Summary of National BB Strategies (“Summary”) April 2004, p. 16.
http://europa.eu.int/information_society/eeurope/2005/doc/all_about/broadband/com_broadband_en.doc
478 EU Commission, Summary of National BB Strategies (“Summary”) April 2004, p. 17.
http://europa.eu.int/information_society/eeurope/2005/doc/all_about/broadband/com_broadband_en.doc.
479 http://www.kenniswijk.nl
480 http://www.kenniswijk.nl/personal/en/jsahtml/statichomepage/jsptemplates/subsidies.jsp
481 http://www.freeband.nl/kennisimpuls/ENindex.html

8.26.2.2 Pricing
Company Access type Payment plan Speed (Kbps/MB)
Incumbent
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Monthly
charge
($/PPP)
Download
Limit (MB)
Installation
charge
($/PPP)
KPN ADSL ADSL Lite 384/96 37 N/A 79
KPN ADSL ADSL Basic 1024/160 55 N/A 79
KPN ADSL ADSL Extra 2048/320 92 N/A 79
Planet ADSL ADSL Standart 384/96 37 1000 79
Planet ADSL ADSL Advanced 1024/160 55 Unlimited 79
Planet ADSL ADSL comfort 2048/320 93 Unlimited 79
Het Net ADSL ADSL Vooldeel 384/96 26 250 79
Het Net ADSL ADSL Surfen 384/96 35 1500 79
Independent ISP access using incumbent local loops
Zon ADSL Bredband Budget 324/128 21 250 0
Zon ADSL Bredband Extra 2048/320 88 Unlimited 79
Tiscali ADSL ADSL Start 324/128 20 1000 0
Tiscali ADSL ADSL Live! 3072/512 52 20 000 0
Cistron ADSL A1024 1024/512 51 20 000 0
Cistron ADSL Maxx 8192/1024 83 100 000 0
Alternative infrastructure
UPC CATV Chello Light 300/64 33 1 000 63
UPC CATV Chello Classic 1500/128 48 Unlimited 63
UPC CATV Chello Plus 3000/384 78 Unlimited 63
Essent Kabe. CATV @home Basic 312 31 Unlimited 0
Essent Kabelcom CATV @home Breedband 2580 50 Unlimited 0
Table 42: Selected Broadband prices in The Netherlands October 2003 482
482 OECD (2004): Benchmarking Broadband Prices in the OECD, p. p. 42-43. http://www.oecd.org/dataoecd/58/17/32143101.pdf .

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The Netherlands stand out because of its extensive cable network competition and its many BB providers.
Chello Cable is the dominant ISP BB provider followed by Planet ADSL, Wannadoo cable/DSL and @Home
Cable. 483 BB customers in The Netherlands pay comparably low prices for BB access services. Low prices and
high uptake rates can to a large degree be attributed to the high level of infrastructure competition between cable
and DSL networks. In this respect, upgraded cable networks pass 79% of all households (the OECD average is
42%). 484 In Europe, Denmark, Belgium and The Netherlands are not only leading in terms of BB uptake rates,
but have also the highest degree of facilities-based competition. 485
8.26.3 Broadband policy
In its Broadband Paper, the Dutch Government describes its ambitions and vision for BB development. The
paper investigates how BB can make an optimal contribution to the economy. 486 14 Actions are separated into
four tracks (dialogue and research, co-ordination, stimulation and regulations) and funding for the actions in
2004 accounts for € 13 300 000. 487 Kenniswijk and Broadband in Four Social Sectors are the most funded
projects (€ 9 000 000 and € 2 400 000 respectively).
Track One has two actions and relates to facilitating a dialogue between market players, municipalities and
provincial authorities (see the setting up of specialized BB institutions). Moreover, research relating to new
institutional forms for administrative and operational activities and the protection of public interest are
conducted. Also, costs and benefits of different regulation schemes are conducted within this action plan. 488
Track Two has two actions (development of guidelines and regular formal administrative talks). In order to
achieve a consistent government policy, guidelines are being developed for lower tiers of government and
housing corporations. Those guidelines complement legislation and regulation. The development of BB requires
a certain degree of co-ordination among market participants and government inistutions. Small scale initiatives
within the public sector are prevented from taking place. In particular, administrative and technological
fragmentation is avoided and the role of municipal authorities is to be strengthened. 489
Track Three contains seven actions. Four actions focus on “services” (Holland Broadband Land, Broadband in
four social sectors, conditions for use, Kenniswijk) and three on “infrastructure” (The Broadband Circle,
Broadband in urban policy and access to government buildings). Generally, the goal is to form public-private
partnerships (PPPs) which aim at the development and implementation of socially desirable services and
products. In addition, access to public services is also promoted within this track. 490
Lastly, Track Four contains three actions (implementation of the Electronic Communication Act, excavaction of
rights and copyrights).In addition, focus lies on removing restraints in terms of legislation and regulation. 491
In addition to the priorities identified in the Broadband Paper, Dutch facilitation measures focus on establishing
dialogues between industry and governmental institutions and the setting up of special BB institutions. For
example, the Smart Community International Network (SCIN), established in 2003 by the Dutch government,
seeks to actively promote and support international exchange and co-operation, joint research and development
activities. Currently, three communities are involved (City of Stockholm, Kenniswijk, and the multimedia Super
Corridor in Malaysia). 492
The Broadband Expert Group, established already in 2001, produced a report “Holland Broadband Land”. After
this report, the Cabinet produced a BB Action program focusing on stimulation, knowledge diffusion and the
removal of obstacles in legislation and regulation. The Broadband Impulse Committee was established in order
to steer the development of BB policy. Specifically, its task is to mobilise market participants and governments
and to facilitate dialogue. 493 Finally, the ICT Research and Innovation Authority has been set up which ensures
483 OPTA (2004) Regulatory Policy Note 2, Infrastructure and service based competition in the BB market,p.4;
http://www.opta.nl/download/RPN02.pdf
484 OECD (2004) The Development of Broadband Access in Rural and Remote Areas; p. 71. (OECD 2004). Available at
http://www.oecd.org/dataoecd/38/40/31718094.pdf.
485 EU Commission, Summary of National BB Strategies (“Summary”) April 2004, p. 19.
http://europa.eu.int/information_society/eeurope/2005/doc/all_about/broadband/com_broadband_en.doc.
486 See also the five pillars described in the Commisson Paper Summary of National BB Strategies, p. 24.
487 The Broadband Paper contains a list of 14 Actions and together with guarantueed expenditures. Broadband Paper p. 23-24.
488 Broadband Paper (2004), p. 18.
489 Broadband Paper (2004), p. 18.
490 Broadband Paper (2004), p. 19.
491 Broadband Paper (2004), p. 21.
492 www.smartcommunity.nl.
493 Broadband Paper (2004), p. 17-18.

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the structural increase in ICT research and the setting up of centres of excellence. One of the tasks is to draw up
a national ICT research agenda. 494
The Dutch market intervention measures take the form of private-public partnerships rather than “traditional”
public interventions. Gridforum.nl 495 is a collaborative project between companies, universities and other public
institutions. The project aims to be a focal point of Dutch Grid Computing and to bring together expertise and
innovative ideas from commercial and public sector.
The GigaPort Next Generation Network is a joint project between the Dutch Government, the IT industry,
educational and research institutes. Funding comes from the State and accounts for € 40 million. The goal is to
provide a bridge between the knowledge infrastructure and the market. Within GigaPort, a next generation
(research) network is being developed (SURFnet6) and the optical switch in Amsterdam is being expanded. 496
SURFnet6 is primarily intended for research institutions but companies can also connect in order to test new
applications.
Citynet Fiber Amsterdam 497 is owner of passive optical access network and ownership is shared with private
investors. 450 000 homes and businesses should be connected by 2010. The municipality expects 53% of the
inhabintants are willing to pay around € 50 for a connection. In Rotterdam, there is a city-owned (City
Development Corporation) open access FTTH project which connects 5000 homes, 2000 apartments and 70000
sqkm of office space. 498 The City of Rotterdam owns the collocation spots, duct and fiber (municipal network), a
“communication operator” owns the opto-electronics and sells the bandwidth to service providers on a nondiscriminatory
basis.
8.26.4 Conclusion
The Netherlands are among the leading countries in terms of BB uptake. Among the main (static) reasons are a
high GDP, low rural population, high degree of infrastructure competition. However, the Dutch Government is
also very active in its BB policy and part of the recent strong growth rates is attributable to the focused and
ambitious measures and activities undertaken by private-public partnerships. In addition, various task forces
have been set up with an exclusive focus on how to increase BB uptake. Moreover, municipalities actively roll
out fibre networks and research networks are also open to companies.
494 Ministry of Economic Affairs, Competing with ICT Competences Action Plan (May 2004), p. 16-17.
http://apps.ez.nl/publicaties/pdfs/04OI05.pdf
495 http://gridforum.nl:8080/gridforum/vmp/articles/contentsen.html
496 http://www.gigaport.nl/info/en/artikel_content.jsp?objectnumber=23477
497 http://www.citynet.nl/
498 http://www.obr.rotterdam.nl/

8.27 United Kingdom
8.27.1 Introduction
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In U.K broadband is the term used to describe ”higher bandwidth, always-on services, offering data rates of
128kbps and above”. Broadband services include high-capacity data transfer, video conferencing, video on
demand, interactive games and audio, online banking and shopping, local area network (LAN) access and web
services.
There are currently a number of options available for the delivery of broadband. These include ADSL, fibre,
cable, 3G mobile (with automatic switchover to GPRS when 3G coverage is not available), wireless, and
satellite.
8.27.2 The broadband market
For fixed lines, BT’s share of lines is static at around 84%, but its share of revenues is now only 71%. Roughly
50% of UK households - some 12 million homes - can now choose their direct-to-the-house fixed link telephone
provider. As a result, residential fixed telecoms prices fell 7% in the year 2004. There are now over 15 million
homes connected to the Internet, and the current number of broadband users is over 6 million at the end of 2004.
There were more than 60 million mobile subscribers by the end of 2004. Over 36 million subscribers use “payas-you-go”
mobiles; this has helped the emergence of the “virtual” operators, such as Virgin, who have over 5
million subscribers. UK mobile retail revenues were up 14% year-on-year largely as a result of volume growth.
Vodafone, Orange and T-Mobile have all launched 3G services in 2004. Wireless hotspots are widely available
in U.K. There are more than 9,500 WiFi “hotspots” in several locations throughout the UK, with an estimated
1,200 provide services in London, more than any other city in the world.
Broadband take-up has continued to grow, helped by the introduction of new services, including higher speed
services, and a number of price cuts. DSL broadband is now available to over 90% of the UK, with 100%
coverage planned by 2005 (see annex). Provisional estimates suggest the number of broadband connections
passed six million at the end of 2004; there are now more broadband connections than un-metered dial-up
Broadband users are more than twice as likely to download music and videos as dial-up users.
The major telecommunications companies are BT, COLT, Easynet, Energis Equinox, Kingston
Communications, Logicalis, MLL Telecom, Neos Networks, Networks by wireless, NTL.
A number of interesting developments have taken place in 2004:
• BT Wholesale announced it had reached 4 million DSL subscribers, with around 60,000 new
connections a week.
• Easynet’s consumer arm, UK Online, now offers an 8Mbit/s service for £39.99 a month at 230 BT
exchanges in 2005. The company is offering higher speed wholesale services to other ISPs.
• Telewest has completed its network upgrade and is now offering services up to 4Mbit/s for £50 per
month.
• NTL announced in November that it had completed the acquisition of Virgin Media Group’s remaining
interests in Virgin Net giving it 100% ownership of the ISP which it claimed has around 600,000
customers.
• Bulldog has launched a bundled voice and broadband service offering a 4Mbit/s broadband and voice
service from £40 a month.
• Other service launches include a 1Mbit/s capped service (2GB limit) from Tiscali for £15.99 a month, a
2Mbit/s capped service (1GB limit) from Eclipse for £14.99 a month and a 2Mbit/s capped service
(1GB) from Nildram for £17.99.
• Waitrose has reduced the cost of its broadband services to £18.99 per month for 256Kbps, £23.99 for
512Kbps and £29.99 per month for 1Mbps.
In mid November 2004, Vodafone announced the full launch of its 3G services. The company claims that its
network can serve 60% of the UK population with seamless handover to 3G from its 2G network where
necessary. Orange followed Vodafone into the UK 3G arena a couple of weeks later claiming 70% population
coverage of the UK, again with seamless 2G/3G handover. “3” UK announced that it had hit the regulatory
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T-Mobile continued to adopt a low-key approach to consumer 3G. The company also entered into an agreement
with TDC, a Danish telecoms company, to provide wholesale access to the T-Mobile network for a voice and
SMS mobile service using the “easy” brand name from the easyGroup. 02 is reported to be aiming for a 3G
launch in the early part of 2005. In preparation the company entered into an agreement with NTT DoCoMo to
use its i-mode based services across the UK.
Tesco announced that it had passed the half million subscriber mark for its mobile service at the end of 2004
since it launched in late 2003. BT announced the launch of BT Mobile as a “virtual network provider” with its
customer’s calls being carried over Vodafone’s network.
Providers and Pricing
The year 2004 was a significant one for the UK telecoms industry with the launch of consumer 3G services from
both Vodafone and Orange. Despite reaching close to saturation levels there continues to be growth in the
reported number of mobile subscribers. Average use and revenue per subscriber remains flat however. There
seems to be little downward pressure on consumer prices. Prices for fixed voice services, however, continue to
decline helped by increased competition arising from carrier-pre-selection services. Prices for residential fixed
voice telecoms fell by around 7% in the year. BT’s market share fell to 55% of calls in the quarter to September.
At least 30% of lines now take services from a provider other than BT.
The UK broadband market continues to grow apace. The total number of broadband connections have passed
the 6 million mark in 2004 (see annex). This means that broadband now accounts for 38% of all internet
connections. Competition in the broadband arena remains strong and there is a clear trend among ISPs to
increase the basic speeds available to consumers (see annex). Services are now available in some areas at speeds
of up to 8 MB/s. Demand for such speeds seems certain to increase if recent patterns of broadband use are a
guide. Latest research shows downloading music and video and playing games is very popular among
broadband users.
8.27.3 Broadband policy
Oftel is currently the regulator for the UK telecommunications industry. Ofcom will be the UK’s new
communications industry regulator with wide-ranging responsibilities across the UK’s communications markets.
The Government recognises that the Internet has enormous potential for education, entertainment and business
and wants everybody to be able to have access to it and to use it confidently.
Regional authorities (Adit) have been put in place to provide efficient public services. The Adits, with their
regional focus, are working to provide and procure solutions based on maximising existing infrastructure.
A Community of Interest Network (COIN) consists of one or more computers or organisations providing
services to people to gain access to those services and to each other. While many of these networks tie together
geographically, separated individuals linked by a common interest or profession i.e. care workers, GPs, doctors
and health bodies or other models such as the Peoples Network (libraries) exist and have been set up to offer
shared information services within the wider community. The information contained in such networks, as well
as the relationships between the participants, make up an ‘electronic greenbelt’ to reinforce and add value to the
community. These communities do include a variety of other interest groups whose needs and interests
transcend the geographic boundaries of the town, region or country.
COINs in the Health sector provide interlinking connectivity between a number of different health organisations
such as acute, mental health, care services, ambulance to name a few. The requirement to interlink connectivity
is borne out of the need to share common data sets to ensure continuity and standardisation across a given area
or region. COINs are now being seen in a wider context and that there is a real need to include other agencies
outside of the typical health sphere. Social Services, housing groups, welfare and charities as well as other Local
Government departments are seeing the need to share information with the health sector. This becomes more
apparent as you chart the patient cycle from start to finish or in some cases from start to continuing support.
The wider spectrum of support provides a common link for all agencies and bodies to interact and share vital
information. This concept works towards the aim of a Public Sector shared network enabling shared services and
information across a wide range of agencies. This requirement provides the Adits with the larger task of
identifying where these COINs are and how many organisations are involved.
8.27.4 Conclusion
UK is one of the leading European country with a growth rate of broadband penetration. Thanks to multiple
initiatives from the Government and community initiatives, and associated competition in the health economy,
the growth of broadband in fixed, mobile and wireless is shaping to reach the UK’s broadband strategy working.

8.27.5 Appendix
DSL map
ISP
Price / Month
(inc VAT)
Cable map
Figure 72: Broadband map of U.K
Download
Speed
Download
limit
Seriously 2Mbps £14.99 1Mbps 1 Gb
Telewest Blueyonder
265K (cable)
£14.99 256Kbps No limit
Virgin Broadband-3 P £15.99 512Kbps 1 Gb
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Extras
anti-virus, spam control, 200 Mb webspace, 1 free
.co.uk domain name, static ip address, 24 hour
national rate helpline
30 Mb webspace, 5 email accounts, 24 hour local
rate helpline
5 email addresses, email anti-virus and spam
protection, 10 Mb webspace

Tiscali Broadband x10 £15.99 512Kbps 30 Gb
Tiscali Broadband x20 £15.99 1Mbps 2 Gb
Virgin Broadband Plan 2 £17.99 512Kbps
NTL 1Mb (cable) £17.99 1Mbps 3 GB
BT Broadband Basic £17.99 1Mbps
1 GB, add. fees
apply if data
transfer exceeds
limit
Tiscali Business 250 £18.79 256Kbps No limit
Boltblue Silver £18.99 512Kbps
limited to 150
hours
Tiscali Broadband x40 £19.99 2Mbps 15 Gb
Tiscali Business 500 £23.4 512Kbps No limit
One.Tel Unplugged
500U
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6 email addresses, 100 mb webspace, national rate
helpline, anti-spam and anti-virus
6 email addresses, 100 mb webspace, national rate
helpline, anti-spam and anti-virus
55 Mb webspace, 15 email accounts, 24 hour local
rate helpline, no reconnection charge for moving
house
helpline 50p per minute; not Mac compatible
anti-virus, anti-spam, 20 email addresses, 1GB mail
storage, 100Mb webspace, free domain name, static
IP address, 30% off Norton Internet Security
5 email accounts, 15 Mb webspace
6 email addresses, 100 mb webspace, national rate
helpline, anti-spam and anti-virus
anti-virus, anti-spam, 20 email addresses, 1GB mail
storage, 100Mb webspace, free domain name, static
IP address, 30% off Norton Internet Security
£23.99 512Kbps No limit 1 email account, national rate helpline
BT Broadband £24.99 2Mbps 15 Gb 24 hour local rate helpline
NTL 2Mb (cable)
£24.99 (first
month free)
2Mbps No limit
Virgin Broadband Plan 1 £24.99 512Kbps 20 GB
55 Mb webspace, 15 email accounts, 24 hour local
rate helpline, no reconnection charge for moving
house
5 email addresses, email anti-virus and spam
protection, 10 Mb webspace

UK Online Broadband
500
£24.99 512Kbps No limit
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100 Mb email spam protection, 24/4 local rate
helpline
Boltblue Silver Plus £24.99 512Kbps No limit 5 email accounts, 15 Mb webspace, static IP address
Boltblue Gold £24.99 1Mbps / 150 hours 5 email accounts, 15 Mb webspace, static IP address
Telewest Blueyonder
1Mb (cable)
BT Yahoo! Broadband
Homechoice 1Mbps
(bundled with free
evening & weekend
calls)
Seriously 2Mbps
unlimited
yUK Online Broadband
2000
£25.00 1Mbps No limit
£26.99 2Mbps 15 Gb
£27.50 1Mbps No limits
£27.99 2Mbps No limit
£29.99 2Mbps No limit
30 Mb webspace, 5 email accounts, 24 hour local
rate helpline
11 email accounts, LAUNCHcast personal music
station, 15 Mb webspace, 100Mb online file storage,
anti-virus and spam protection, pop-up ad blocker,
parental controls, local rate helpline
free evening & weekend calls, digital tv & radio
incl. on-demand channels, anti-spam/virus, 100mb
webspace, 12 email addresses, local rate support line
8am-11pm 7 days a week, *Homechoice is only
available in London and surrounding areas
anti-virus, spam control, 200 Mb webspace, 1 free
.co.uk domain name, static ip address, 24 hour
national rate helpline
100 Mb email spam protection, 24/4 local rate
helpline
Boltblue Gold Plus £29.99 1Mbps No limit 5 email accounts, 15 Mb webspace, static IP address
One.Tel Unlimitted UK
Calls +Broadband
Homechoice 2Mbps
(bundle with free evening
& weekend calls)
Telewest Blueyonder
2Mb (cable)
£29.99 512Kbps No limit
£32.00 2Mbps No limit
£35.00 2Mbps No limit
Tiscali Business 1000 £35.24 1 Mbps No limit
1 email account, national rate helpline , unlimitted
UK landline calls
free evening & weekend calls, digital tv & radio
incl. on-demand channels, anti-spam/virus, 100mb
webspace, 12 email addresses, local rate support line
8am-11pm 7 days a week, *Homechoice is only
available in London and surrounding areas
30 Mb webspace, 5 email accounts, 24 hour local
rate helpline
anti-virus, anti-spam, 20 email addresses, 1GB mail
storage, 100Mb webspace, free domain name, static
IP address, 30% off Norton Internet Security

BT Business Single 500 £35.24 512Kbps No limit
Homechoice 1Mbps
(bundled with free UK
calls)
£36.50 1Mbps No limit
NTL 3Mb (cable) £37.99 3Mbps 1 Gb/day
UK Online Broadband
8000
£39.99 8 Mbps 500 Gb
One.Tel Unplugged 500 £39.99 512Kbps No limit
One.Tel Unlimited UK
Calls + Mobile +
Broadband Bundle
Homechoice 2Mbps
(bundled with free UK
calls)
Homechoice 4Mbps
(bundled with free
weekend & evening
calls)
One.Tel Unlimited UK
Calls + Mobile +
Broadband Bundle
Homechoice 4Mbps
(bundled with free UK
calls)
Telewest Blueyonder
4Mb (cable)
£39.99 512Kbps No limit
£42.00 2Mbps No limit
£45.00 4Mbps No limit
£49.99 512Kbps No limit
£50.00 4Mbps No limit
£50.00 4Mbps No limit
BT Business Single 1000 £52.88 1 Mbps No limit
BT Business Share 500 £52.88 512Kbps No limit
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for one computer, 24 hour local rate tech support
helpline, 10 mailboxes capacity 100mb, spam and
email virus protection, 20mb web space (can use
your own domain name), static IP address from £10
per month
free UK calls, digital tv & radio incl. on-demand
channels, anti-spam, anti-virus, 100mb webspace, 12
email addresses, local rate support line 8am-11pm 7
days a week, *Homechoice is only available in
London and surrounding areas
55 Mb webspace, 15 email accounts, 24 hour local
rate helpline, no reconnection charge for moving
house
upload speeds up to 400 Kbps (rather than the usual
256 Kbps), contention ratio 33:1 (rather than 50:1)
1 email account, static IP address, national rate
helpline, lower contention ratio
1 email account, national rate helpline , unlimited
UK landline calls, free mobile with 60 inclusive
minutes
free UK calls, digital tv & radio incl. on-demand
channels, anti-spam, anti-virus, 100mb webspace, 12
email addresses, local rate support line 8am-11pm 7
days a week, *Homechoice is only available in
London and surrounding areas
free evening & weekend calls, digital tv & radio
incl. on-demand channels, anti-spam/virus, 100mb
webspace, 12 email addresses, local rate support line
8am-11pm 7 days a week, *Homechoice is only
available in London and surrounding areas
1 email account, national rate helpline , unlimited
UK landline calls, free mobile with 120 inclusive
minutes and 50 texts
free UK calls, digital tv & radio incl. on-demand
channels, anti-spam, anti-virus, 100mb webspace, 12
email addresses, local rate support line 8am-11pm 7
days a week, *Homechoice is only available in
London and surrounding areas
30 Mb webspace, 5 email accounts, 24 hour local
rate helpline
for one computer, 24 hour local rate tech support
helpline, 10 mailboxes capacity 100mb, spam and
email virus protection, 20mb web space, static IP
address from £10 per month
for up to 4 computers, 24 hour local rate tech
support helpline, 10 mailboxes capacity 100mb,
spam and email virus protection, 20mb web space,
static IP address from £10 per month

One.Tel Unplugged 1000 £59.99 1Mbps No limit
BT Business Network
1000
£76.38 1Mbps No limit
One.Tel Unplugged 2000 £79.99 2Mbps No limit
BT Business Network
2000
BT Business Broadband
Advanced SDSL
BT Business Broadband
Advanced SDSL
BT Business Broadband
Advanced SDSL
BT Business Broadband
Advanced SDSL
BT Business Broadband
Advanced SDSL
£117.50 2Mbps No limit
£199.75
512Kbps No
limit
£270.25 1Mbps No limit
£405.38 2Mbps No limit
£270.25 1Mbps No limit
£405.38 2Mbps No limit
Table 43: Broadband pricing in UK
% of total exchange lines Total exchange lines (m)
30%
25%
20%
15%
10%
5%
0%
35.2
34.5
34.4
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1 email account, static IP address, national rate
helpline
for up to 10 computers, specialist network helpdesk,
service level agreement, 10 mailboxes capacity
100mb, spam and email virus protection, 20mb web
space, static IP address from £10 per month
1 email account, static IP address, national rate
helpline
for up to 20 computers, specialist network helpdesk,
service level agreement, 10 mailboxes capacity
100mb, spam and email virus protection, 20mb web
space, static IP address from £10 per month
symmetric DSL broadband service for businesses
with high data or bandwidth requirements, 10 email
addresses. 20 Mb webspace. Static IP addess.
Service Level Agreement. BT engineer installed.
34.0
0.3%
0.4%
1.2%
1.7%
4.1%
3.6% 5.3%
12.3%
2001
Q3
Q4 2002
Q1
12.7% 13.0% 13.1%
Q2 Q3 Q4 2003
Q1
Q2 Q3 Q4 2004
Q1
Q2 Q3
40
10.2% 32
Figure 73: Fixed telecom lines: Broadband lines increase compared to ISDN
24
16
8
0
DSL
Cable modem
ISDN channels
Total exchange lines (RHS)

15
12
9
6
3
0
2001
Q3
Q4 2002
Q1
Q2 Q3 Q4 2003
Q1
Q2 Q3 Q4 2004
Q1
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Q2 Q3 Q4 *
Figure 74: UK Internet connections compared to Dial-up (in million lines) 2004
UK broadband connections
000s
Dec 03 Mar 04 Jun 04 Sep 04
BT retail 829 967 1,102 1,283
BT wholesale 924 1,248 1,585 2,011
Other DSL: LLU & Kingston 18 21 29 38
ntl 951 1,030 1,097 1,174
Telewest BB 415 465 528 607
Other: Satellite & FWA 9 9 9 9
Total 3,146 3,740 4,350 5,122
Source: Ofcom / operators
Figure 75: UK Broadband connections
Percentage of UK adults with a PC/internet in the home
70%
60%
50%
40%
30%
20%
10%
0%
52%
45%
Q4 2002
Q1
53%
42%
Q2 Q3 Q4 2003
Q1
59%
50%
Q2 Q3 Q4 2004
Q1
65%
57%
Q2 Q3 Q4
Figure 76: Household PC and Internet penetration
Dial-up
Broadband
Line 4
PC
Internet

8.28 Non-EU country studies: United States
8.28.1 Introduction
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OECD reports that in 2001 the US had 285 million inhabitants. 499 Because of its huge size, population per square
meter is only 30 – well below the OECD average of 150. The rural population accounts for 22.6%, which
corresponds to the OECD average. The US has the highest GDP figures from OECD countries. In 2002, it was
36 100 US$ per capita.
This case study focuses, in the US context, on factors affecting primarily the demand side (e.g. lifestyle,
education, and income) as well as factors affecting the supply side (e.g. pricing, demographics) are examined. In
addition, it gives an overview over federal and state measures to increase BB uptake. Currently, these measures
primarily aim at increasing the supply with infrastructure while stimulating demand is only tackled secondarily.
Yet, there is a huge gap between availability of BB infrastructure supply and uptake by end users.
As for sources, general statistical data has been taken from the OECD in order to allow for international
comparisons. The report on BB access in rural and remote areas of May 2004 and the benchmarking BB prices
report of June 2004 provided empirical data. In addition, recent reports produced by the Pew Internet &
American Life Project and the US Department of Commerce were examined. Section two draws heavily on the
2004 report by the Alliance for Public Technology and categorises state measures into six types. A
comprehensive overview (from 2002) over state measures was also examined in this context. Finally, the Annex
contains useful links.
8.28.2 The broadband market
A distinction needs to be made between penetration and uptake rates. While the former focuses on the network,
the latter focuses on the end user. The purpose of this difference between supply of infrastructure and demand
for BB services is to underline the importance of measures targeted at stimulating demand (end user) are
necessary if a high BB uptake rate is the goal (and only this must be the real goal).
As for penetration rates, at the end of 2003, 75% of all telecom copper lines had been upgraded to provide DSL
BB services. Since most households have a copper line roughly 75% of all households could have DSL BB. 500
According to the OECD, BB over cable is available to 80% of all households (roughly 85 million). 501 Because
DSL is distant-dependent and therefore availability to end users difficult to measure, we’ll use cable access to
illustrate the difference between uptake and penetration rates: cable BB is available to 85 million households yet
only 12.6 million have signed up for BB. 502 Even if one adds the 9.3 million households which have BB access
via competing DSL services, it becomes clear that there is a huge gap between supply of infrastructure and
uptake of services. Hence, measures focusing primarily on the supply side will perhaps have a positive influence
on pricing 503 , but additional measures focusing on the end user are needed if one wants to increase – the more
decisive – uptake rate. 504
The US Department of Commerce reports that 19.9% of all households subscribe to BB access in October
2003. 505 According to the PEW Internet& American Life Project, in February 2004 24% of all adult Americans
(roughly 48 million) had Internet access at home and 34% had access either at work or home. 506 Compared with
March 2003, this translates into an annual growth rate of 60%. Figure 77 illustrates the increase in BB access at
home 507 .
499 The Development of Broadband Access in Rural and Remote Areas, OECD (May 2004), p. 71.
500 The Development of Broadband Access in Rural and Remote Areas, OECD (May 2004), p. 12. However, measuring availability of DSL
is difficult because DSL technology is distant-dependent. Even though local exchanges might have been upgraded, for peope living
further away than 6 km there is no DSL available. Hence, measureing availability only in terms of upgraded local exchanges gives an
incomplete picture. In this respect, see also OECD (May 2004), p. 47.
501 The OECD reports that 95% of all households are passed by cable networks and 80% are passed by upgraded cable networks. The
Development of Broadband Access in Rural and Remote Areas, OECD (May 2004), p. 13; Pages 46-52 contain some useful information
on BB in rural areas in the US.
502 A Nation Online: Entering the Broadband Age (September 2004), p. 5.
503 Too high pricing is cited by 38.9% of the Americans as the main reason why they dont use BB Internet from home.
504 Of course, another key driver is the market-driven development of new services which also positively affects the uptake rate.
505 A Nation Online: Entering the Broadband Age (September 2004), p. 1.
506 Pew Internet Project Data Memo (2004), p. 1.
507 Pew Internet Project Data Memo (2004), p. 10.

Figure 77: Broadband At Home
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Graph 2 shows the regional differences in terms of Internet usage in the US and has been taken from the
Department of Commerce report. There is a strong relation between education and income distribution level –
something which cannot be offset by merely installing more and cheaper routers and switches. 508
Figure 78: Distribution of Internet Use across the States, 2001 and 2003
(Internet Use by State Population, Ages 3 and Over) 509
Generally, richer regions where better educated people live have a higher uptake rate than poorer regions where
less educated people live. It is important to keep in mind that graph 2 does not make a distinction between dialup
and BB access and the quality of the network. Network capacity, in turn, is generally higher in richer areas. 510
508 Internet Use by Regions in the US, PEW (August 2003). Available at:
http://www.pewinternet.org/pdfs/PIP_Regional_Report_Aug_2003.pdf (last visited 14.12. 2004)
509 Because states can have very different confidence intervals, states were assigned to a category based on whether the upper confidence
bound includes the break point. For example, a state with a point estimate of 59.0 percent would be included in the 60 percent to 70
percent range because the confidence range of the estimate is 57.2 percent to 62.0 percent.

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Mississippi is the State with the lowest BB uptake rate with an estimated Internet population between 39.7% and
45.5%. It was only in July 2003 511 that a tax incentive program was introduced aimed at increasing investment in
BB infrastructure and services. 512 The countries with the highest penetration rates are Alaska (69.3% - 73.8%),
New Hampshire (68.2% - 72.6%), Utah (67.2% – 71.9%), Minnesota (66.8% - 71.1%), Wyoming (66% -
70.8%) and Washington State (65.7% - 70.3%). From States with a population of more than 3 million,
Minnesota is the State with the highest Internet population. Alaska has demographics similar to Canada where a
large part of the population is living in a concentrated area which is easier to connect (though it is remote).
Hence, the chapter on policy measures two investigates some of the measures undertaken in the leading states
and one, new public-private initiative in more detail. 513
As for metropolitan areas and Broadband Internet access, in Q4 of 2003, the top 10 local BB markets where San
Diego, CA (52%), Boston, MA (50%), New York (49%) NY, Providence, RI (47%), Kansas City, KA (46%),
Detroit, MI (45%), Tampa, FL (45%), Orlando, FL (44%), San Francisco, CA (44%) and Los Angeles, CA
(44%). As for metropolitan areas and dial-up Internet access, the top 10 narrowband markets are Albuquerque-
Santa Fe, NM (76%), Grand Rapids, MI (70%), Harrisburg, PA (70%), Indianapolis, IN (70%), Sacramento-
Stockton, CA (69%), Birmingham, AL (68%), Nashville, TN (67%), Loisville, KY (67%), Memphis, TN (66%),
and St. Louis, MO (66%). 514
8.28.2.1 Demand
Regarding factors affecting demand, this case study focuses on income and income distribution, PC penetration,
lifestyle and education. Generally, the higher the individual income, the higher the PC penetration, the more
technology-prone and the higher the level of education, the more likely it is that users subscribe to BB services.
Figure 79 515 shows the main reasons why Americans don’t use the Internet at home. The two main reasons are
lack of interest/need and pricing. Equally importantly, only 9.8% cite lack of infrastructure as the main reason
why they don’t use BB at home.
Figure 79: Main reasons why Americans don’t use the Internet at home
Income is another factors which affects BB penetration rates. Generally, the higher the income, the higher the
BB penetration rate. One can distinguish between the income of the state (measured in GDP) and the income of
the individual (income per household). Despite the highest per capita income of the OECD, the US is only
ranked 10 th in terms of BB penetration rates. When it comes to BB penetration rates what also matters
510
In Western and Northeastern Region roughly 23% of all Internet connected households are equipped with BB while this number is only
17% in the Midwest and South.
511
In 2002, according to the TIA, there was no BB initiative by Mississippi.
512
A Nation of Laboratories: Broadband Policy Experiments in the States (March 2004); available at http://www.apt.org/publica/ (last
visited: 18. Nov 2004); p. 24.
513
http://mcknight.org/about/news_detail.aspx?itemID=1414&catID=53&typeID=2
514
http://www.internetworldstats.com/articles/art047.htm (last visted 18. Nov 2004).
515
A Nation Online: Entering the Broadband Age (September 2004), p. s14.

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considerably is the income distribution. In particular, the absolute number of people having low income is
relevant.
Figure 80: Broadband in the Home
Unsurprisingly, the higher the household income, the more likely it is to have a BB connection at home. A PEW
survey shows that 47% of households with more than 75 000 US$ income have a BB connection at home –
while the overall BB penetration rate is only 24%. 516 As for the importance of education, Figure 80 shows that
40% of college graduates have BB at home while only 24% of all Americans have BB access at home. This
considerable gap shows the importance of education to teach people how to make use of the Internet and
computers. Finally, according to PEW, 69% of all American households had a PC in 2002 and 59% had access
to the Internet. 517 As almost all PC households have Internet access, there is a strong relation between the PC and
BB penetration rate.
8.28.2.2 Users
Lifestyle and education are two important factors affecting the demand for BB services and BB penetration
rates. The more technology interested and open towards new things people are the more they are likely to
subscribe to BB services. PEW conducted a study in 2003 and distinguishes between two information
technology user groups separating those two into four sub-categories each. As for user groups, PEW makes a
distinction between Trendsetting Tech Elites and Lower Tech Groups. 518
The Trendsetting Tech Elite make up for 31% of the American population and constist of young tech elites
(6%), older wired baby boomers (6%), wired generation Xers (18%) and wired senior men (1%). The Young
Tech Elite are on average 22 years old and pre-dominantly male with a good education (32% have at least a
college degree). In addition, this group has an income which is slightly above national average. 47% of the tech
elite primarily lives in urban areas and is creative (34% practise some kind of art). This group tends to spend
$161 on communication services (Internet, phone, cable TV) compared to a national average of $122.
The Wired Older Baby Boomers are on average 52 years old and live in sub-urban or urban areas. Their
annual income exceeds $75 000 (roughly three times the national average). This group is highly educated with
56% having at least a college degree (compared to 25% of all Americans). On average, this category spends
$175 for communication services. The Wired Generation Xers is the biggest category of the trendsetting tech
elite, which makes up roughly 18% of all Americans. This group is on average 36 years old and equally split
between men and women. The group is pre-dominantly white (85%) and are likely to live in suburbs. On
average, this category spends $169 for communication services.
516 Pew Internet Project Data Memo (2004), p. 4.
517 PEW Consumption of Information Goods ans Services in the US (Nov 2003), p. 5.
518 For details on the user groups and sub-categories see PEW (Nov 2003), p. 6-13.

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The Lower Tech Groups make up roughly two thirds of the total American population, PEW distinguished
between young marrieds (15%), low-tech Older Baby Boomers (21%), unwired young Baby Boomers (16%)
and low-tech elderly (16%). The Young Marrieds are roughly the same age as the young tech elites (24 years).
While age is roughly the same, leve of education and income distincts them from young tech elites. Only 12% of
young marrieds have a college degree (compared to the 34% for young tech elites) and their average monthly
income is less than $ 20 000. Unlike the young tech elite, young marrieds are racially diverse with 22% Latinos
(10% of the young tech elites) and 16% Afro-American (13% of the young tech elites). On average, young
marrieds spend $122 on communication services (as compared to $161 in the case of young tech elites). The
Low-Tech Baby Boomers corresponds to the Wired Older Baby Boomers category and is on average 54 years
old. They are mostly women (56%). Only 22% have a college degree (compared to 56% in the case of wired
older baby boomers). Moreover, only 23% have more than $75 000 income (compared to 60% of the
corresponding tech elite group). 26% of this group primarily lives in rural areas (compared to 15% of the older
baby boomers). Low tech baby boomers spend considerably less on commuication services ($ 124 – compared
to $ 175).
The Unwired Young Baby Boomers have an average age of 39 years and are racially diverse (14% are Black
and 13% Hispanic) compared to the corresponding tech elite category Wired GenXers (7% and 10%
respectively). Only 15% have a college degree and they have a lower than national income. Finally, the Low
Tech Elderly is on average 73 years old and are primarily women. Only 12% have Internet access. Their annual
income is also very low (80% live in households with less than $20 000 annual income). This group also spends
very little on communication services ($82).
Unsurprisingly, two features that distinguishes the trendsetting tech elite from lower tech groups are the high
level of education and an – above average – income level. Age plays an important role insofar as it represents a
rather big portion of the society (17%) and that this group is less likely to make use of Internet services. 519
8.28.2.3 Supply
With respect to BB penetration and uptake rates, technology is important for two reasons. 520 First, different
access technologies and infrastructure competition result in lower prices for the end user. Second, network
capacity and transmission speed is an important factor which makes people switch to BB from dial-up because it
allows for new services to be delivered. Pricing and new services, in turn, are key factors affecting BB uptake
and penetration rates. 521
As for access technologies in homes, cable is still in the lead (54%), but DSL accounts for already 42%. In 2003,
67% had access via cable modems and only 28% via DSL. In percentage terms, wireless or fixed-satellite access
accounts for 3%. In March 2003 this number was higher and stood at 4%. 522 FTTH as the most advanced
technology in terms of capacity and transmission speeds is not widely deployed in the US. 523 The OECD report
on BB pricing does not contain an US operator which is offering services exceeding 10 Mbps. 524
Wireless infrastructure relies on spectrum allocation. The more spectrum is available for BB, the better for the
BB users as prices come down. In this respect, the FCC adopted a Notice of Proposed Rulemaking in order to
promote continued rapid and efficient deployment of quality-spectrum based services. 525
519 PEW made a study on Older Americans and the Internet. March 2004. http://www.pewinternet.org/pdfs/PIP_Seniors_Online_2004.pdf
(last visited 18. 12. 2004)
520 see also OECD (May 2004), p. 47-48 on pricing of different access technologies in the US.
521 See also Figure 79: 38.9% cite too high prices and 44.1% lack of interest/need as the main reason why they dont subscribe to BB even
though it is available.
522 Pew Internet Project Data Memo (2004), p. 2-3.
523 The OECD report covers less than 65% of the combined retail market share of providers (as percent of the total BB market). See OECD
(2004), p. 96
524 Table 1 of the Annex OECD (2004), p. 61-62.
525 More specifically, the FCC proposes to lift power levels for BB service providers to cover larger geographic areas. Traditionally, the US
military controls a big part of the frequency spectrum. Negotiations between the Department of Defense and the US Technology Industry
are undergoing as to share spectrum in order to provide BB services over the air . OECD (May 2004), p. 52.

8.28.2.4 Pricing
Figure 81: Home BB Market (Source: PEW (2004a))
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PEW asked Internet users why they switched to BB from dial-up. 60% answered that connection speed was
more important than pricing. 526 This high number illustrates the importance of the quality (and usability) of the
network. PEW also asked end users how high their BB bill was. The average bill was $39 with DSL on average
$38 and cable $41. 527 Table 1 shows BB access pricing in the US. The OECD report mentions three trends with
respect to BB pricing (lowering prices by incumbents as a response to increased competition; raising or lowering
thresholds of their offerings to make their products more competitive; bundling of telephony with Internet
services). 528
526
Pew Internet Project Data Memo (2004), p. 4.
527
Pew Internet Project Data Memo (2004), p. 5.
528
The OECD report discusses gives a brief overview over how incumbent's responded to the increased competition. OECD (2004), p. 58-
60.

Company
Incumbent
Access
type
Payment plan Speed (Kbps) Monthly
char. ($)
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Download
Limit
Verizon ADSL With Telephony 1500/128 30 Unlimited 13
Verizon ADSL Without Telephony 1500/128 35 Unlimited 13
Verizon ADSL Business DSL 768/768 130 Unlimited 25
Verizon ADSL Business DSL 7100/768 205 Unlimited 25
SBC ADSL SBC/Yahoo - Basic 384/128 27/40 Unlimited 0
SBC ADSL SBC/Yahoo - Standard 384-1.5/128 27/50 Unlimited 0
SBC ADSL SBC/Yahoo - Deluxe 768-1.5/128 37/60 Unlimited 0
Independent ISP access using incumbent local loops
Covad ADSL TeleSoho 1500/384 70 Unlimited 0
Covad ADSL TeleSoho 3000/384 150 Unlimited 0
Earthlink ADSL High Speed DSL 768/128 50 Unlimited 0
Alternative infrastructure
TimeWarner CATV Road Runner 2048/384 45 Unlimited 0
TimeWarner CATV RR Pro 2048/384 110 Unlimited 0
TimeWarner CATV RR Corporate 3000/512 300 Unlimited 0
TimeWarner CATV RR Premier 4096/1024 800 Unlimited 0
Comcast CATV
High speed for CC
1500 43 Unlimited 0
customers
Amerilinx FWA Residential only 1500/128 25 Unlimited 199
Clearwire FWA Residential 512 50 Unlimited 0
Wheatland BB FWA 512 37 Unlimited 0
Wheatland BB FWA 768 57 Unlimited 0
Wheatland BB FWA 1024 87 Unlimited 0
Evertek FWA Residential 512 35 Unlimited 0
Earthlink Satellite
Earthlink powered by
500/60 70 Unlimited 600
Direcway
Table 44: Broadband prices in US October 2003
Install.
char.($)

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Table 44 also confirms that FTTH – as the most promising BB technology in terms of transmission capacity – is
not used by incumbents or alternative infrastructure providers.
Finally, the number of people living in rural areas affects the BB penetration rate because costs for connecting
those – less profitable – areas are higher than connecting urban areas. In addition, people living in rural areas are
less likely to use BB services. PEW reports that only 10% of people living in rural areas have BB connections at
home – compared to 28% who live in urban and suburband areas. 529 While the generally lower degree of
education, the lower income and the higher age are reasons why BB penetration lacks behind in rural areas, lack
of availability of infrastructure also plays a role.
8.28.3 Broadband policy
Broadband initiatives and programs are adopted on federal and state level, with state level measures
outnumbering those on federal level.
The largest Federal program supporting BB development in rural and remote areas is the Federal Rural
Broadband Access Loan and loan Guarantuee Program started in 2003. 1.4 billion US $ in loans and loan
guarantees to provide BB services in rural areas have been made available on Federal level. The program
focuses on connection speeds of 200 kbs and more provided to communities with less than 20 000 inhabitants. 530
Another Federal grant program was available for providers of BB transmission services on a “communityoriented
connectivity” basis. Focus lies on connecting rural schools and other education centers, health care
providers, other public institutions as well as residents and businesses. 531 In 2002, $ 20 million were made
available through the program.
Regarding state level initiatives, the Telecommunications Industry of America (TIA) has compiled a list of those
State measures. 532 Moreover, the Alliance for Public Technology (APT) 533 has published a useful report on
Broadband Policy Experiments in the States, which we have used for this section and for the annex534 . The APT
report makes a distinction between a couple of different types of policies regarding Broadband. In particular,
measures relate to:
• the setting up of facilitators (Broadband Authorities/Agencies),
• tax credits,
• state-owned (research and educational) networks,
• demand aggregation programs
• funding programs,
• and public/private partnerships.
In many cases there is no clear distinction possible. In addition, the projects have not been investigated in-depth.
Hence, table 2 merely sketches out initiatives undertaken by on state level in the US, showing that the main
focus lies on network expansion rather than on the uptake and end user (though only 9% of the users cite nonavailability
as the main reason why they don’t have BB at home).
Table 45 shows that most States have initiatives in place which focus on network rollout and funding this
expansion. Most of these networks are foremost for educational, governmental and medical usage, but in some
cases private parties can connect as well. The most successful states in terms of BB uptake rates are briefly
highlighted.
New Hampshire has a very high number of Internet users (between 68.2% and 72.6%). The State is rather
wealthy, small and there are only 1.2 million inhabitants. APT reports for instance that New Hampshire
introduced a demand aggregation program funded with $250 000. The New Hampshire program is modelled
after Berkshire Connect in Western Massachusetts. 535536 Another network initiative is North County Connect.
529
Pew Internet Project Data Memo (2004), p. 7.
530
http://www.usda.gov/rus/telecom/broadband.htm#info (last visited 14.12.2004).
531
Community Connect Broadband Grant Program:
http://www.usda.gov/rus/telecom/initiatives/index_initiatives.htm#broadband (last visited 14.12.2004).
532
Jon S. Beamer, “State Broadband Initiatives”, Fall 2002. http://www.tiaonline.org/policy/states.cfm
533
The Alliance for Public Technology is a nonprofit membership organization based in Washington, D.C., dedicated to ensuring
widespread access to advanced telecommunications technologies.
534
A Nation of Laboratories: Broadband Policy Experiments in the States (March 2004); available at http://www.apt.org/publica/ (last
visited: 18. Nov 2004).
535
http://itc.mit.edu/itel/docs/2001/Berkshire_Connect.pdf (MIT case study on the Berkshire Program).
536
http://www.bconnect.org/ (last visited: 08.12.2004).

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Agency Tax Credits Network Funding Programs Public-Private Partnership
Alabama ASA AREN
Alaska TIC TOPAZ
Arizona
Arkansas
ASPIN GADA
California CENIC CTF; CalTIP
Colorado MNT; Learning NW
Connecticut
Delaware
CET
Florida DDC
Georgia
Hawaii
Yamacra
Idaho Tax credit
Illinois ICN; IHA ICTF
Indiana ITN
Iowa ICN
Kansas KanEd
Kentucky ConnectKentucky
Louisiana LANet
Maine MSLN MTEAF
Maryland FiberNet MSTF
Massachusetts Berkshire Connect
Michigan MBDA LINK-Michigan Loan programs
Minnesota Conecting Minnesota (failed)
Mississippi
Missouri MOREnet
Montana Tax Credits METNET
Nebraska NITC IEF; CTF
Nevada
New Hampshire
NevadaNet
New Jersey Njedge.net ETIF
New Mexico BMAC
New York Diffusion Fund
North Carolina e-NC
North Dakota StageNet
Ohio Schoolnet ThirdFrontier
Oklahoma OneNet. Inc
Oregon ORTCC Tax Credit
Pennsylvania BFTDA
Rhode Island RINET
South Carolina SCINET RAIF
Table 45
Initially another demand aggregation program, it failed inter alia because of BB providers which selectively
offered their services to the most profitable North Country Communities. Now the Task Force within this project
hosts “tech fairs” which give communities the opportunity to hear from market participants on new products and
services. It has also been considered to roll out a wholly owned fibre network. 537 However, the last news on their
website are dated August 2003. 538
537
A Nation of Laboratories: Broadband Policy Experiments in the States (March 2004); available at http://www.apt.org/publica/ (last
visited: 18. Nov 2004).; p. 28.
538
http://www.northcountryconnect.org/update.html (last visit: 8. 12. 2004).

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Minnesota has a BB uptake rate of between 66.8% - 71.1% which puts it in the leading tier. Minnesota has
more than 5 million inhabitants and from States with more than 3 million inhabitants it has the highest Internet
uptake rate. Connecting Minnesota was an ambitious project aimed at rolling out a fibre network. However, due
to insufficient funding and bankruptcy of the private partner, the project was cancelled. 539 Subsequently, in July
2004, a regional program has been put in place which brings together private and public entities and a Regional
Economic Development (RED) group has been set up. 540 RED intends to share information and ideas, track
development initiatives and then help regions apply lessons about what works and what doesn't. 541 Members and
a few private not-for-profit organizations sponsor the program and institution.
Utah has a BB uptake rate of between 67.2% and 71.9%, with roughly 2.3 million inhabitants. It has a couple
of programs in place. By far the biggest is UTOPIA 542 , a $ 400 million project consisting of 14 cities in Utah
which aims to establish a fibre network between its members. A $ 700 000 study was conducted and it estimated
costs for connecting homes to be $1408 per household. After completion, the network will be offered to private
competitors at wholesale prices. However, this program has funding difficulties and some of members have
already abandoned the project. 543 Utah is also very active in public education. UtahEducationNetwork (UEN), 544
UtahLink 545 and EDNET (video conferencing) are some examples which focus not only on BB infrastructure
rollout, but also addresses the user and service level. For example, commercial entities can rent the EDNET
system for 100$ per hour. 546
Wyoming, with less than 500 000 inhabitants, has a BB uptake rate between 66% and 70.8%. SweetNet 547 aims
to establish a network which is owned by the communities Green River and Rock Springs. SweetNet is a
wholesale carrier-class network providing availability of connections to every residence, business and
government facility and marks the perfect partnership for the public and private sectors. Another project is the
Wyoming Equality Network which connects all public schools and provides various services. Specifically, the
network is used for distance learning. 548 Today, the network serves all state high schools and community colleges
and all of the University of Wyoming. Finally, the Wyoming Education Gateway is intended for teachers,
students and parents and allows them to gather information and participate in online courses. 549
Washington State has a BB uptake rate between 65.7% and 70.3%. Figure 82 is from 2004 and was published
by the Utilies and Transport Commission. It shows that in many counties there are more than 3 service
providers. 550
The public Department of Information Services of the State of Washington offers among others the following
“best practice tools and services” to administrative institutions to help preserve limited budget resources: Digital
Academy, Master Contracts – Technology, Satellite Broadcasting, Technology Brokering Services, Video
Production, Web Templates and Styleguides, Webcasting. These services are limited to state and local agencies.
Generally, these best practice tools and services allow for a demand aggregation and mass discounts. Eligible are
only state and local agencies. 551 Washington also has a K20 Educational Telecommunications Network put in
place. Most of the public educational institutions are connected to the FiberNetwork. 552 The website states it was
the first of its kind and started in 1996. Only public education institutions but not individuals and/or companies
are connected.
539 A Nation of Laboratories: Broadband Policy Experiments in the States (March 2004); available at http://www.apt.org/publica/ (last
visited: 18. Nov 2004).; p. 24.
540 http://www.bizjournals.com/twincities/stories/2004/05/31/daily23.html
541 http://www.mcknight.org/about/news_detail.aspx?itemID=1417&catID=54&typeID=2
542 http://www.utopianet.org/
543 http://www.thespectrum.com/news/stories/20040323/localnews/131254.html
544 http://www.uen.org/ (last visited: 08.12.2004).
545 http://www.nascio.org/awards/1998awards/Networking/utah.cfm (The program received an awarded from NASCIO in 2001. NASCIO
represents state chief information officers and information resource executives and managers from the 50 states. State members are
senior officials from any of the three branches of state government who have executive-level and statewide responsibility for information
resource management. Private-sector firms and non-profit organizations may join as corporate members. (last visited: 08.12.2004).
546 http://www.uen.org/policy/html/feeschedule.html (last visited: 08.12.2004).
547 Southwestern Wyoming Enhanced and Expanded Telecommunications Network; http://sweetnet.us/network/faqs/General.html (last
visited: 08.12.2004).
548 The network is the result of a State Supreme Court decision in 1995 and subsequent legislation in 1997 which mandated the development
and implementation of a statewide education technology plan. APT, p. 45.
549 http://wyoming.edgate.org/index.php (last visited: 08.12.2004).
550 http://www.wutc.wa.gov/webdocs.nsf/a23294935a25d43488256e77007df5dc/eafb92498fac081888256ed200561d7e!OpenDocument
(last visited: 8.12. 2004).
551 http://dis.wa.gov/bestpractices/disbestpractices.htm (last visited: 8.12. 2004).
552 http://www.wa-k20.net/members/index.html (last visited: 8.12. 2004).

8.28.4 Conclusion
Figure 82: BB Competition in Washington State
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The country with the highest GDP ranks only 10 th in terms of broadband uptake. Recent statistics show and
somewhat quantify the importance of education and income distribution on BB uptake at home. While 40% of
all college gradautes have a BB at home the national average is only 24%.
When asked for the main reasons why there is no BB connection at home, 38.9% say its too expensive and
44.1% are not interested or don’t need BB. Also importantly, only 9.8% say that non-availability is the main
reason for not having BB at home. While pricing can be addressed by investment in infrastructure, the “need and
interest” can only be tackled by investment in services and by making users more familiar with using the
Internet.
As for State measures, the most successful States (New Hampshire, Utah, Wyoming, Washington, Minnesota)
have some kind of initiatives which focus on the BB development. Generally, those initiatives focus on network
expansion, funding programs and often take the form of private-public partnerships.
8.28.5 ANNEX State Broadband Initiatives (Resources (taken from the 2004 APT report)
Alabama
Alabama Supercomputer Authority (ASA) http://www.asc.edu/index.shtml
Alabama Research and Education Network (AREN)http://www.asc.edu/network/index.shtml
Alaska
Telecommunications Information Council Activities Update: Office of the Lt. Governor – January 2002
http://www.gov.state.ak.us/ltgov/Telecommunications/TICupdate2002.PDF
Arizona
Arizona Telemedicine Program (ATP) http://www.telemedicine.arizona.edu/index.html
“Arizona’s 100 Million Dollar Plan for Rural Broadband Deployment”
http://www.digitaldividenetwork.org/content/stories/index.cfm?key=134
“News Release: TOPAZ Connecting Schools and Rural Areas Ahead of Schedule with Broadband”
http://gita.state.az.us/telecom/news/9_25_01_news_release.htm
Arkansas
No BB Strategy as of summer 2003
California
Rural E-commerce Grants
http://www.motherlodeexpress.org/Docs/State%20press%20release%20ecommerce%20grants__.pdf
California Technology Investment Partnership http://www.larta.org/Capital/caltip.asp
New Generation Internet (NGI) http://www.calngi.org/program/

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Corporation for Education Network Initiatives in California (CENIC http://www.cenic.org
Colorado
“The Multi-Use Network Project” http://www.colorado.gov/dpa/doit/mnt/
Connecticut
Commission for Education Technology http://www.ct.gov/ctedtech/site/default.asp?cenPNavCtr=|#30930
Delaware
No BB Strategy as of summer 2003.
District of Columbia
Internet Open Access Study Act of 2001: Bill 14-6
http://www.dcwatch.com/council14/14-6.htm
Florida
Digital Divide Council http://www.digitaldividecouncil.com/digitaldivide/index.html
Digital Divide Council: Annual Report 2002
http://www.digitaldividecouncil.com/digitaldivide/documents/annual_report.doc
Georgia
Yamacraw Initiative http://www.yamacraw.org/index.html
Georgia Centers for Advanced Telecommunications Technology (GCATT)
http://www.gcatt.gatech.edu/index.htm
Hawaii
No BB Strategy as of summer 2003.
Idaho
Broadband Tax Credit www.puc.state.id.us/telecom/28784.pdf
Illinois
Program to Foster the Elimination of the Digital Divide
http://www.state.il.us/gov/budgetpr/cmsbudget.htm
Illinois Community Technology Fund http://www.ictf.org/
Indiana
accessIndiana http://www.in.gov/
EPICS http://eic.co.orange.in.us/
Intelenet Grant Program http://www.in.gov/intel/schoolgrants/
Indiana Web Academy http://www.indianaacademy.org/
Indiana Telecommunications Network http://www.itn.gov/
IN-map http://www.in-map.net/
Iowa
Iowa Communications Network (ICN) www.icn.state.ia.us
Kansas
KanED www.kan-ed.org
Kentucky
“A Broadband Hookup in Every Home”
http://www.wired.com/news/politics/0,1283,57249,00.html
ConnectKentucky www.connectkentucky.org
Kentucky Information Highway http://www.state.ky.us/kirm/kih.htm
Louisiana
LaNet http://www.state.la.us/otm/lanet/
Maine
“Future MSLN” http://www.msln.maine.edu/msln/docs/adv_brd_letter.html
Maine School and Library Network (MSLN) http://www.msln.maine.edu/
Maryland
ARINC Expands FiberNet for Montgomery County, Connects 100th Site
http://www.arinc.com/news/2003/02-03-03.html

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TEDCO “Improving Access to Broadband Infrastructure in Mountain Maryland”
http://www.marylandtedco.org/WesternMD.htm
Massachusetts
Berkshire Connect www.bconnect.org
The MassBroadband Initiative http://www.massbroadband.org/
Massachusetts Technology Collaborative http://www.mtpc.org/InnovationEconomy/telecom_projects.htm
Michigan
Michigan Broadband Authority http://www.michigan.gov/cis/0,1607,7-154-28077_28233---,00.html
Link Michigan http://linkmichigan.michigan.org
Minnesota
Connecting Minnesota http://www.dot.state.mn.us/connect
“Minnesota Kills $200 Million Rural High-Speed Access Project”
http://www.govtech.net/news/features/news_feature.phtml?docid=3800
Mississippi
Mississippi Legislature 2003 Regular Session: Senate Bill 2979
http://billstatus.ls.state.ms.us/2003/pdf/history/SB/SB2979.htm
Missouri
eMINTS http://emints.more.net/
MOREnet http://www.more.net/
Montana
METNET www.metnet.state.mt.us/main.html
Nebraska
Internet Enhancement Fund http://www.nitc.state.ne.us/
Information Technology Commission http://www.nitc.state.ne.us/
Nevada
Commission on Educational Technology http://www.nde.state.nv.us/hrt/edtech/cet/
Nevada Net “System Computing Services” http://www.scs.nevada.edu/nevadanet/
New Hampshire
“Networking in New Hampshire: Third Rail deploys fixed broadband for state’s
National Guard” http://www.broadbandweek.com/news/010122/010122_apps_third.htm
“New Hampshire officials try to spread high-tech to all parts of the state”
http://www.seacoastonline.com/2001news/2_12biz.htm
New Jersey
“New Jersey Creates a $100-Million Broadband Network for Its Colleges”
http://chronicle.com/free/2002/04/2002040901u.htm
New Jersey Telecommunications Network Upgrade
https://www.nascio.org/publications/Newsletters/0601statetrends.cfm
Njedge.net http://www.njedge.net/
New Mexico
Broadband Management Advisory Committee http://www.cio.state.nm.us/BMACCharter.pdf
New York
Diffusion Fund www.nysed.gov/otpad/diffuse.htm
Regional Fiber Optic System http://www.uwnyc.org/technews/v2_n5_a6.htmltm
North Carolina
North Carolina’s Rural Internet Access Authority: e-NC http://www.e-nc.org/
North Dakota
STAGENet http://www.stagenet.nd.gov/
Ohio
Third Frontier Project www.state.oh.us/gov/thirdfrontier.htm
Ohio SchoolNet http://www.ohioschoolnet.k12.oh.us/
Oklahoma

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OneNET http://www.onenet.net
“Wireless Broadband Opens Doors for Rural U.S. Communities”
http://www.wirelessnesfactor.com/perl/story/12805.html
Oregon
ORTCC http://www.ortcc.org/
Oregon Broadband Tax Credit http://www.econ.state.or.us/telecom/div106.htm
Pennsylvania
“Digital Divide Projects Announced” http://www.121.org/news/newsarticle.html?ID=219
Technology Based Education Initiatives – Link 2 Learn/Pennsylvania Education Network/Ben Franklin
Technology Development Authority http://www.inventpa.com/default.aspx?id=135
Rhode Island
Rhode Island Network for Educational Technology (RINET) www.ri.net/RINET/index.html
South Carolina
“Bill Seeks to Exempt Internet Service From Regulation”
http://www.computeruser.com/news/03/02/17/news5.html
South Carolina Information Network (SCINET) www.state.sc.us/
http://www.edweek.org/sreports/tc/policy/states/sc.htm
South Dakota
“Building the Digital Dakota Network” http://www.state.sd.us/deca/DDN4Learning/Conclave/DDNHist.htm
Tennessee
ConnecTEN www.connect-tn.org
Texas
Telecommunications Infrastructure Fund http://www.lonestarbroadband.org
Utah
Utah Telecommunications Open Infrastructure Agency www.utopianet.org
Utah Education Network www.uen.org
Utah Telehealth Network http://www.utahtelehealth.net/
EDNET http://www.uen.org/ednet/
Vermont
Vermont Broadband Council www.vtbroadband.org/
Virginia
Blacksburg Electronic Village (BEV) http://www.bev.net/
eCorridors http://ecorridors.cc.vt.edu/index.shtml
Center for Innovative Technology (CIT) http://www.cit.org/
Net.Work.Virginia http://www.networkvirginia.net/
“Virginia’s Center for Innovative Technology Awards Grants to Augusta, Highland, and Nelson Counties”
http://www.cit.org/press_releases/01-07-25.PR%
Washington
Access Washington www.wa.gov/dis/k20
West Virginia
YAS Broadband Initiative http://www.lcsee.cemr.wvu.edu/yas/
West Virginia Department of Education Office of Technology http://access.k12.wv.us/
West Virginia Network (WVNET) http://www.wvnet.edu/wvndex.shtml
Wisconsin
Wiscnet http://www.wiscnet.net/
Wyoming
Southwestern Wyoming Enhanced & Expanded Telecommunications Network (SWEETnet)
http://www.sweetnet.us
Wyoming Equality Network http://www.k12.wy.us/

8.29 Non-EU country studies: Japan
8.29.1 Introduction
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Japan is well positioned country for the information society. The advanced state of BB networks – both in terms
of quantity (penetration rates) and quality (capacity) – competitive pricing and the attitude of Japanese people
towards technology are among the chief factors why Japan has an advantage over other countries. For those
reasons, this case study focuses on technology, pricing and users.
The prime source for this case study is a 2004 White Paper published by the Ministry of Public Management,
Home Affairs, Posts and Telecommunications in July 2004 (MIC). 553 In addition to “traditional” content (e.g.
most popular services) and infrastructure (e.g. pricing and penetration rates) related information, the 2004 MIC
White Paper contains some useful information on the important “human factor” (end user).
8.29.2 The broadband market
The converged information and communications industry accounted for 61 trillion Yen or 11.5% of Japan's real
GDP. While overall growth of the Japanese economy was 1% between 1995 and 2002, the information and
communication industry witnessed average growth rates of 7.1% in the same period. 554
Figure 83: BB introduction and uptake compared to other consumer goods
and communication services (Source: OECD) 555
Penetration of broadband Internet services was extremely successful. After only three years BB penetration rates
have reached roughly a third of all households. Figure 83 shows that this increase is even faster than
introduction of mobile phones and color TV in the early 90-ies and late 60-ies. In absolute figures, at the end of
2003, there were 77.3 million Internet users in Japan and 26.07 million (or roughly a third) were connected via
BB. 556 Important for the high BB numbers, 78.2% of the households are equipped with PCs which are as multimedia
terminals essential for any bandwidth intensive service. 557
With respect to supply-infrastructure dimensions, Japan is the clear global leader. At the end of 2003, roughly
15 million subscribers were connected to the Internet via various BB technologies. Figure 84 gives an overview
over different access technologies and subscriber numbers. No other country has such advanced communication
networks in place and nowhere are prices – measured in US$ per kbs – lower 558 . With the increasing creation of
553
Information and Communications in Japan 2004 Feature: Building a Ubiquitous Network Society That Spreads Throughout the World
(in the following cited as “MIC (2004)”. Online version available at:
http://www.johotsusintokei.soumu.go.jp/whitepaper/eng/WP2004/press_information01.pdf
554
For more info on the information and communication market see ICJ 2004 p. 41-44..
555
ICCP BB update, Oct 2003; http://www.oecd.org/dataoecd/18/9/18464850.pdf
556
MIC (2004), p. 6.
557
MIC (2004), p. 49.
558
OECD (2004), Benchmarking Broadband Prices in the OECD (June 2004). Available at:
http://www.oecd.org/dataoecd/58/17/32143101.pdf ; For more info on pricing see section XXX.

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bandwidth-intensive online services and content (online Music distribution; Video-on-Demand, Videoconferencing,
HDTV etc.) the existence of an advanced infrastructure becomes a key factor which determines
the global ranking. In a few years, formally BB penetration rates will reach levels like fixed telephone lines.
Once this point is reached, network quality (and not so much quantity in terms of connected nodes) will make a
crucial difference.
Figure 84: BB Subscribers and access technologies 559
As for the technologically most advanced access technology (FTTH), MIC reports that installation of a
nationwide optical fiber network was completed to 80% by the end of 2003. 94% of cities designated by the
government and 86% of cities with more than 100 000 inhabitants have been connected. In other cities
installation has reached 59%, but in some other cites there is still a big gap. 560 Figure 2 also shows that FTTH
witnessed a strong 3.7 fold increase from 310 000 in 2002 to 1.14 million in 2003. The uptake rate of FTTH is
important because it is virtually only FTTH which is capable of delivering a variety of high quality TV channels
to a mass market – one of the services that promises to be a “killer application”.
In addition to those mostly “fixed-line subscribers”, hotspots and wireless access points are also increasing
(from 1624 to 5350 at the end of 2003). Importantly, use of hot spots increased to 9.5% up from 0.7% in 2002. 561
Unlike fixed-line BB access at home or work, especially WLANs allow for “semi-mobile” access to bandwidth
intensive multi-media content and services. Figure 85 shows the impressive development of BB penetration in
comparison to other technologies. While ISDN and dial-up connections decreased from 2002 to 2003, BB
access witnessed strong growth. By the end of 2003 BB Internet has by far surpassed dial-up access. 562
559 MIC (2004), p. 6.
560 MIC (2004), p. 44.
561 MIC (2004), p. 9.
562 MIC (2004), p 6.
Figure 85: Broadband growth

8.29.2.1 Pricing
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The most advanced networks will not become attractive to the mass market if pricing remains at high levels. In
this respect, Japan has the lowest prices for BB access. Table 46 shows pricing for various access technologies.
There are only unlimited offers and the – slowest (!) – BB speed offered (covered by the OECD report) is 1.5
MB.
Company Access type Payment plan
Incumbent
Speed
(Kbps/MB)
Monthly
char. ($)
Download
Limit
Install.
charge ($)
NTT East ADSL 1.5 M type 1.5MB/512 40.25 Unlimited 34
NTT East ADSL 8 M type 8MB/1024 40.69 Unlimited 34
NTT East ADSL More II (24 type) 24MB/1024 41.57 Unlimited 34
NTT East FTTH Shared Connections for apartments 100MB 52.45 Unlimited 105
NTT East FTTH Shared connection for stand alone dwellings 100MB 67.05 Unlimited 240
NTT East FTTH Line dedicated to single connection 100MB 158.33 Unlimited 240
Independent ISP access using incumbent local loops
Yahoo BB ADSL Yahoo BB 8M 8MB/900 21.65 Unlimited 34
Yahoo BB ADSL Yahoo BB 26M 26MB/1024 25.19 Unlimited 34
eAccess ADSL ADSL Plus(Q) 40MB/1024 38.46 Unlimited 27
Alternative infrastructure
J-Com Net CATV J-Com Net 8MB/2048 42.25 Unlimited 114
USEN FTTH Stand alone dwellings 100 MB 50.42 Unlimited 292
USEN FTTH Apartments 100 MB 35.38 Unlimited 159
KDDI Fibre/VDSL Hikari Plus VDSL 563 70MB/30MB 28.02 564 Unlimited 186
KDDI Fibre/Ethernet Hikari Plus Ethernet 565 100MB 24.62 566 Unlimited 167
Table 46: Broadband prices in Japan October 2003 567
Pricing for BB ultra-high speed access is very affordable in Japan. A single ADSL line by the incumbent NTT
East with 24MB/1MB costs only 42 US $. Competitor Yahoo BB charges a mere 25 US $ for a higher speed. As
FTTH is not only offered by the incumbent but also by a range of competitors and alternative infrastructure
providers, infrastructure competition certainly is one of the reasons why pricing for access is so low and uptake
is rather high. Incument NTT East is heavily investing not only in their core technology (xDSL), but also in new
fiber networks (unlike Deutsche Telekom for example which prime focus is on a single xDSL technology).
563 Charges for these plans are only applied if 16 or more contracts are expected to be signed by the residents in the same building.
564 These monthly charges are applied if users subscribe to KDDI's package plan with their telephony service called Hikari Plus Phone.
565 Charges for these plans are only applied if 16 or more contracts are expected to be signed by the residents in the same building.
566 These monthly charges are applied if users subscribe to KDDI's package plan with their telephony service called Hikari Plus Phone.
567 OECD (2004), p. 37.

8.29.2.2 Content
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Another factor which has an impact on the end user decision to sign up for BB access services is the content that
is available. The more content is available and the lower its price in relation to comparable off-line services, the
more incentives do users have to sign up for BB. Traditionally, a distinction between content and infrastructure
has been made. Content encompasses not only audio-visual content, but includes also interactive, on-demand
services which are made possible over the Internet. In addition, in the near future, offline brick and mortar
devices (and not only PC and mobile phones) are also going to be connected to the Internet via RFID tags (see
below). One can expect that an increasing amount of services, content and brick-and-mortar devices which are
accessible and controllable over the Internet will have a positive influence on the number of BB subscribers.
The impressive advanced state of the networks and affordable pricing means that bandwidth intensive services
can already by delivered to Japanese BB subscribers. In 2003, there were 8860 operators providing Internet
services in Japan. 568 Such a high number clearly has a strong correlation to the sophisticated and affordable
infrastructure in place.
Figure 86: Most commonly used Services
The most common services used by individuals are shown in Figure 86. While “dial-up” services such as e-mail,
searching for information on goods and services, on news and purchasing of products online are still by far the
most common usages of the Internet, BB connections are much faster and more cost-efficient. In addition to
those “traditional” services, pure BB services such as the downloading of movies already accounts for 17%.
Interestingly, more people use the Internet to download/view movies than music. This relatively high number
also shows the advanced state and subsequent usage of BB Internet. Another application with tremendous
potential is IP telephony. Market share of this technology has increased enormously and 7.3% of all households
were using IP telephony at the end of 2003. 11.1% of all businesses used IP Telephony and 42.7% are planning
to introduce it in the near future. 569
Total Internet content on “.jp” domains has reached 13 609 GB in 2003 which is a 45-fold increase since
February 1998. The total number of files reached 291.73 million - a 15fold increase in the six years. 570
MIC conducts “Census of Information Flow” to evaluate in a quantitative way the volume of varied information
flow that makes up the information environment. In the last 10 years (fiscal 1992 to fiscal 2002), the average
growth rate was 28.4% for information supplied, 24.4% for information transmitted, 10.2% for selectable
information, 8.7% for consumable information, and 17.8% for information consumed. 571 Figure 87 shows which
“for-fee” services are most accessed by users. Software, Music, video and games are the prime forms of content
which Japanese pay for.
568 MIC (2004), p. 43.
569 MIC (2004), p. 9.
570 MIC (2004), p. 46. More info on usage can be found from p. 46-7.
571 Id.

Figure 87: For-Fee Content
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Another interesting technological development relates to Radio Frequency Identification (RFID) which will
extent the reach of the Internet beyond PCs and mobile phones. In the not too distant future washing machines,
lamps and many other brick-and-mortar devices can be accessed and controlled via the Internet.
Figure 88: Introduction of Systems and Services the Use Ubiquitous Tools
Figure 88 shows three key areas with innovative services/applications/devices (IC dards, RFID tags and other
new communication devices) which Japanse firms are working/experimenting with. Though usage of those
devices today is still low, connecting brick-and-mortar, non-communications devices to the Internet could be
attractive and interesting to many users.
With respect to the Internet usage by companies, the MIC report gives some valuable information on the
important “human factor”. 572 MIC states that “The importance of developing and maintaining well-informed
human resources to address the growing corporate competition arising from the creation of new services, and
deal with the threats of unauthorized access and virus infections, is increasing.” The White Paper contains an
572 MIC (2004), p. 48; 62-63.

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informative section on the issue “security” and has some surveys what companies and individuals are doing in
this respect. 573
Regarding individuals, at the end of 2003, there were 77.30 million users accessing the Internet primarily from
home, work and school, which translates into a 60% penetration rate. 574 Apart from this steadily increasing
number of subscribers, the amount which is spent on information and communication services within household
expenses also increased 0.3% to 3.9% from the previous year. Internet connection charges increased 33.2% from
2002 to 2003. 575 However, in exchange transmission speeds allow for multi-media and bandwidth intensive
services.
Figure 89 illustrates that in 2002 13.4% of the (dial-up and BB) Internet users spent more than one hour on the
Internet. In 2003, the number of users which spend more than one hour on the Internet increased to 15.2%.
Given the overall strong increase in BB Internet users, Figure 8 shows that users invest their valuable
“resources” time and attention increasingly in (BB) Internet. In addition, because transmission speeds are
steadily increasing the time is invested more useful to the end user.
Figure 89: Time spent on the Internet576
Figure 90 shows where this time investment is coming from: sleeping, watching TV, and leisure activities.
According to this survey, there is, however, no big difference between BB and non-BB users in terms of
interaction with other people. In particular, the survey indicates that BB users even have more contact with
family members and friends.
Figure 90: BB Internet and Usage Patterns577
573 MIC (2004), p. 31-35.
574 MIC (2004), Section 2 of the White Paper gives valuable information on the change in Lifestyles resulting from Network use. p. 12-19.
575 MIC (2004), p. 49.
576 MIC (2004), p. 13.

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People only use BB services if they feel comfortable and secure with it. In this respect, Figure 91 shows the
biggest concerns to individual end users. In particular, fraud and unscrupulous business methods (62.7%),
improper use of personal information (59.7%), improper access to personal information (58.2%) and infection of
computer virus (37.5%) show that “security” is a serious issue and needs to be addressed. Complexity of
services and devices is also a concern to almost 50% of individual users.
Figure 91: Individual's Concerns relating to the use of Ubiquitous Network Services
Regarding companies, Figure 92 shows that the BB usage gap between small and large companies is getting
smaller and smaller. The percentage of corporate Internet usage (companies with more than 100 full-time
employees) reached 97.5%. Currently, less than 10% of the companies are using BB for tele-working. However,
of those companies 30.9% are reporting “excellent” and 66.1% some improvement.
Figure 92: Use of BB by large and small companies578
What are the benefits that Japanese companies lead to sign up for BB services? Figure 93 shows that the biggest
benefits of BB is its increase in the pace of the business (83.6%), reduces business costs (45.1%), and promotion
of a paperless office (27.8%). 579
577 MIC (2004), p. 14.
578 MIC (2004), p. 21.
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Figure 93: Benefits From Use of Advanced ITC Network Environments in In-House and B-to-B Operations580
In contrast to the benefits, Figure 13 shows the problems discouraging the use of information and
communications Networks. In particular, difficulties relate to establishing security measures (66.3%), concerns
over viruses (62.9%) and employee awareness (43.4%). In addition, the graph shows what companies undertake
to address the important issue of educating people in using computers. 581
580 MIC (2004), p. 21.
581 MIC (2004), p. 48.
Figure 94: Problems Discouraging The Use of Information and Communication
Networks/ Types of IT Training for Employees by Corporations.

8.29.3 Broadband policy
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2001 is in Japan considered the broadband kick-off year582 . Late in 2000, an 8 Mb ADSL service was introduced
by Yahoo BB! at a rate of less than 15€ per month, and this created a boom in the demand for ADSL. 100 Mb
optical fibre network access was introduced in March 2001 at rates below 25€ per month and 3G services were
introduced later the same year. 2001 was also the year the e-Japan plan was announced, with the target to create
the most advanced broadband network environment by 2005. In addition to investments in broadband networks,
the programme also aimed to stimulate demand through facilitation of e-commerce and digitization of the public
administration. The budget allocated for the first phase of the programme was almost 1 bn. € in 2001 and more
than 10 bill. € in 2002583 .
The remedies used to facilitate development of broadband infrastructures included:
• Opening of utility facilities such as poles, ducts and conduits
• Facilitation of high-speed Internet access from apartment complexes
• Opening of unused optical fibres to private use
• Usual regulatory measures such as unbundling, asymmetric regulation, frequency allocation, etc.
The Ministry emphasised that the private sector had to be the driving force, with the government limited to
establishing the right framework for the private sector and to the non-private sectors (e-government, R&D and
overcoming the digital divide). 584 In spite of this, the central government, actually, supports roll-out of
broadband facilities by offering attractive financing schemes, tax incentives and guarantee of liabilities.
Public policies aiming to increase computer awareness are also undertaken by the Japanese Government. For
instance, almost all schools have been connected to the Internet. 56.8% of the schools are connected via high
speed (400 kbs) and 29.2 % of all classrooms had LAN connections. 58% of the schools have their own website.
Importantly, 87.6% of the teachers knew how to operate computers and 52.8% of teachers were able to use
computers to conduct their classes. In addition to this, local governments engage in cooperative ventures in
order to offer broadband to its citizens. One example is in Hyogo, where the Awaji local council has
commissioned an ISP provider to install ADSL in the town and provide access to it citizens at a monthly rate of
16.5$ 585 .
The success in infrastructure roll-out has not yet been matched in content production. Hence, the continuation of
e-Japan (U-Japan), which aims to provide ubiquitous access to broadband services, but with more focus on the
development of applications than in the previous programme. While the contribution from the e-Japan
programme to the broadband success is far from clear586 , the speed of the growth in penetration compared to
other countries could indicate a positive impact.
8.29.4 Conclusion
Japan has the most advanced BB infrastructure in the world, and access pricing is lowest in all OECD countries.
The advanced state of the network also means that services can be bandwidth intensive, which, in turn is
attractive to end users. Those are certainly two factors which have an impact on demand and subscriber
numbers.
Another important factor relate to the end users themselves. Surveys show that Japanese increasingly spend
more time in front of the PC. Their prime concerns relate to security and improper use of and access to personal
information. Companies voice similar security concerns and mention lack of skills as one of the main reasons as
a deterrent to ICT usage.
582
Teruyasu Murakami: ‘Establishing the Ubiquitous Network Environment in Japan’, NRI Papers no. 66, Nomura Research Institute, July
2003.
583
Sabine Ehlers: ‘IT policy in Japan – from hard to soft’, ITPC, Nov. 5 2003.
584
Commerce and Information Policy Bureau of Ministry of Economy, Trade and Industry: ‘Promotion of the IT Revolution and Electronic
Government’.
585
ITU: ‘Promoting Broadband: the Case of Japan’, Geneva, April 2003, pp. 32-33.
586
Teruyasu Murakami: Op. cit.

8.30 Non-EU country studies: South Korea
8.30.1 Introduction
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Korea is geographically somewhat larger than Portugal or Hungary. It has a higher population density than all
European countries except Malta, about the same as the Netherlands, twice as high as the U.K., and 25 times
higher than Sweden. About 80 percent of its population lives in urban areas, about 70 percent in its seven largest
cities, and almost 50 percent in large high-rise apartment complexes.
Since the early 1960s, when its GDP per capita at less than 100 $ per capita was comparable with the poorer
countries of Africa and Asia, South Korea has achieved an incredible record of growth and integration into the
high-tech modern world economy. In nominal terms, the GDP per capita for year 2004 was about 13,000 US$ 587 ,
and purchasing power adjusted GDP per capita about 19,200 US$, putting it in the same low-middle income
group as e.g. Spain and Hungary. 588 In 2004, agriculture represented about 3 percent of the GDP, industrial
production about 40 percent and services about 56 percent. Adjusted for purchase power parity, the annual
growth of GDP 5.9 percent over the 1980-2003 period. This success was achieved by a system of close
government/business ties, including directed credit, import restrictions, active promotion of specific industries
through five-year plans, which have systematically pushed the economy towards high-value added industries,
and strong labour effort supported by cultural factors. Historically, the government has promoted the import of
raw materials and technology at the expense of consumer goods and encouraged savings and investment over
consumption. The Korean economic system has been characterised by large and extremely diversified family
conglomerates called chaebols. The “big five” chaebols are the Hyundai, Samsung, LG, Daewoo, and SK
groups.
The Asian financial crisis of 1997-98 exposed some weaknesses in its development model. The problems
included massive foreign borrowing and an undisciplined financial sector; growth plunged to a negative 6.6% in
1998. South Korea, however, recovered quickly, helped by rapid growth in ICT exports, including
semiconductor memory chips, TFT-LCD displays, and mobile phones.
In 2003 the National Assembly approved legislation reducing the six-day workweek to five days. The salary
levels in the ICT industry were the third lowest in OECD countries, after Hungary and Czech Republic in 2002.
Corrected for purchasing power, however, the Korean ICT workers earned similar salaries than workers in the
U.S., Japan, and Ireland. For engineers, the income levels were relatively low when compared with global
levels. In the large Korea cities the living costs are high, with Seoul being as expensive a city to live in as San
Francisco. Only a relatively small fraction of total labour force, about 6 percent, worked in ICT industries in
2002. The discrepancy between the high percentage of ICT of total GDP and low percentage of labour force is
explained by the fact that Korea focuses on high-value added and export-oriented ICT manufacturing, where
labour inputs are low.
Korea ranks in the top four in science, mathematics, problem solving, and reading skills among 15-year old
students, putting it second after Finland among the OECD countries. 589 However, according to IMD (2003) and
WEF (2003) surveys, Korea’s mathematics and science education level is one of the lowest among OECD
countries. In particular, Korea's education and training level in IT is in the mid to low percentiles. The social
interest in science and technology are below the OECD mean, and considerably lower than in Singapore, India,
China, and Finland. On the other hand, South Korea has the largest share of engineering degree holders among
total university graduates in the world. About 41 percent of degree holders with BAs, MAs and PhDs majored in
science and engineering, compared to 29.2 in Japan and 18 percent in the U.S. 590 In addition, about 400,000
Koreans studied abroad in 2004.
The Korean educational culture is based on Confucian values where education is perceived as a main source of
social advancement, and parents are held socially responsible for guaranteeing that their children succeed well at
school. This means, in practice, that Korean children often study very long hours, frequently complementing the
basic schooling with various forms of private teaching. Comparing the educational achievements in the 15-year
group between the two leading countries Korea and Finland shows, however, that Finnish students achieve the
same or better results with considerably less hours of study.
587
The Korean won exchange rate was about 1,04 KRW per $ and 1,40 KRW per € on 3 January 2005. In mid-2005, the exchange rate is
close to 1,01 won/$. For historical data, this report uses exchange rates of 1,30 and 1,20 per US$, depending of the year.
588
OECD 2005, Purchasing Power Parities and Real Expenditures: 2002 Results.
589
OECD: Learning for Tomorrow’s World: First Results from PISA 2003. Available at http://www.pisa.oecd.org.
590 th
Park Chung-a: Korea ranked 34 for quality of life: KITA report shows Seoul World’s No. 1 IT Power. The Korea Times, 30 September
2005.

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Import substitution, increased knowledge-intensity, and cultural values that promote hard work and human
capital development have been important factors in the development of the ICT sector in Korea. Foreign
Investment Zones and incentives for research and development have also been important, making, for example,
Nokia and Philips major investors in Korea. Korean ICT exports have been growing rapidly during recent years.
In 2004, the ICT exports were a main source of growth in Korea and ICT exports were still expected to continue
strong, at an average rate of 17.8 percent during the 2003-8 period. 591 Due to the rapid depreciation of the U.S.
dollar, fast price declines, and the fact that Korean export prices strongly depend on the U.S. dollar, export
growth in 2005 may, however, remain close to zero.
The U.S. has been the main customer of Korean ICT products, although China is rapidly becoming the largest
importer. This can be seen in Table 47, which shows the five largest import destinations of Korean ICT
products.
Rank 1998 1999 2000 2001 2002 2003
1 U.S. (29%) U.S. (28%) U.S. (29%) U.S. (31%) U.S. (27%) U.S.(20.4%)
2 Japan (10%) Malaysia (8%) Japan (9%) Japan (10%) Japan (10%) China(15.6%)
3 Malaysia (8%) Hong Kong (8%) Taiwan (8%) Hong Kong (7%) Hong Kong (8%) Hong Kong (11.2%)
4 Singapore (8%) Japan (7%) Hong Kong (7%) Singapore (7%) China (7%) Japan(8.5%)
5 Hong Kong (7%) Taiwan (7%) Singapore (7%) Taiwan (7%) Taiwan (7%) Taiwan(5.7%)
Total 62% 58% 60% 61% 59% 61%
Table 47: Top five export destinations of Korean ICT products (source: KISDI)
The legal system in South Korea combines elements of continental European civil law systems, Anglo-American
law, and Chinese classical thought. South Korea ranks 47 th in the 2004 Corruption Perceptions Index produced
by Transparency International, worse than Hungary, Italy, Lithuania, but before Greece and Czech Republic.
8.30.2 The broadband market
The Republic of Korea, also known as South Korea, has since the year 2000 been the global leader in broadband
use. Korean broadband connections have on average 4 megabits per second, and 50 megabits per second
connections are widely available. Most European broadband connections would not be counted as broadband
connections in Korea, where the official definition for high-speed Internet connection requires more than 1
Mbps connections. South Korea has now more WiFi hot spots than the U.S. Three licenses for the new mobile
Internet, WiBro, were granted in January 2005, although, one of the licensees, Hanaro Telecom, gave up its
WiBro license in April 2005, just before it was to pay its first license fee.
Korea had about 12 million broadband subscribers in March 2005. It had about 10 percent of the global xDSL
subscriptions, the second largest subscriber count after China. In December 2004, Korea had 31.58 million
people who had used the Internet during the previous month, or 70 percent of the over-6 year population 592 593 .
Yet, on the World Economic Forum’s Network Readiness Index, it ranked only 24 th , just after United Arab
Emirates and before Estonia.
8.30.2.1 ICT production
The diffusion of broadband in Korea is closely related to Information Society policies that have actively
promoted the ICT industry. Korean policymakers have used the domestic market to improve the global
competitiveness of the industry, as part of their development policies, combining export-led industrial policy
with policies for local capability development. Korean manufacturers are now the leading producers in DRAM
and flash memories. Korean LCD displays account for about 45 percent of global market. According to recent
591
KISDI 2004: IT Industry Outlook of Korea 2004.
592
Survey on the Computer and Internet Usage. Ministry of Information and Communication, National Internet Development Agency of
Korea, February 2005.
593
The number is somewhat smaller if the OECD definition of broadband penetration is used. Since December 2004, the Korean Internet
statistics count as Internet users also mobile phone users who access Internet only through their phones (about 280,000 persons).

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market estimates, Korean plasma display panel (PDP) manufacturers produced about 50 percent of the world
output in 2004. Korean firms also dominated the organic light-emitting diodes (OLED) display market, with
Samsung SDI having a 40 percent global market share. Since 1996, Korea has been the leading manufacturer of
cathode-ray tubes, now with about 57 percent global market share. 594
Korean firms are also leading producers in broadband subscriber equipment and have rapidly gained market
share in mobile phones. Domestic production of IT equipment grew between 1999 and 2003 from US$ 70
billion to US$ 120 billion. The software market has increased annually 31.4 percent over the 1998 to 2003
period, to 15.4 billion US$. Software exports grew at an average annual rate of 41.9 percent, from US$ 52
million to US$ 304 million in the same period, but stagnated in 2003. Computer service markets grew at an
average annual rate of 28.1 percent, and the digital contents production at 46.4 percent annual rate in the 1998-
2003 period. 595
The most rapid growth was in communications equipment, where the compound average annual growth rate was
32.3 percent over the 1996 to 2002 period. Korea is now in this area about twice as large an exporter than Japan
and probably reaching the size of Germany. In electronic components, Korea exported 20.4 bn US$ in 2002,
compared to Germany’s 14.7 bn, U.K.’s 12.0 US$ bn and Japan’s 39.9 bn. 596 Korea had the second largest ICT
goods export/import ratio in 2002; at the same level as Japan (1.7), after Finland (1.9), and higher than Ireland
(1.5). As of 2003, mobile handsets accounted for 67.3% of all communications equipment exports, and the
figure is expected to rise to 79% by 2008. The production of communications equipment is expected to rise at an
average annual rate of 16.7 percent and exports by 23.5 percent through 2008. 597
percent of total trade
40
35
30
25
20
15
10
5
0
Ireland
Korea
Japan
Finland
1996 1997 1998 1999 2000 2001 2002
Figure 95: Trade of ICT goods as a share of total trade, 1996-2002 (data from OECD).
Since year 2000, Korea has been the country with the highest rate of broadband access in the world. According
to OECD, Korea’s broadband access rate at the end of year 2004 was 24.9 per 100 persons, ahead of the runnerup
Netherlands’s 19 per 100. According to the Ministry of Information and Communication, in March 2005
there were about 12 million broadband Internet subscribers in total. In December 2004, 72.2 percent of Korean
households had a wired Internet access at home. Males are more frequent users, at 76 percent of over-6 year
population. 65 percent of females use the Internet, or 46 percent of all Internet users. The female usage rate,
however, has been growing faster than male usage rate. The highest usage rate was in the 6-19 year age group
with 96.2 percent, but the fastest growth was in the age group of people in their 40’s and 50’s. Almost all
students used the Internet (98.1 percent) and the next highest usage rates were in the professionals/managers
594 Digital Chosun 2004: Korea oversteps Japan’s lead in display panels market. 8 December 2004.
595 NCA 2004, Broadband IT Korea Informatization White Paper.
596 OECD 2004, Information Technology Outlook 2004.
597 KISDI 2004: IT Industry Outlook of Korea 2004.

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demographic group (95.5 percent). The highest annual increase was seen in the sales and services workers
group, where the usage increased 14.2 percent to 65.8 percent between December 2003 and December 2004.
Internet users (millions)
45
40
35
30
25
20
15
10
5
0
Dec-
94
8.30.2.2 Pricing
Dec-
95
Internet Users
Internet Penetration Rate
Dec-
96
Dec-
97
Dec-
98
Oct-
99
Mar-
00
Aug-
00
Dec-
00
Mar-
01
Figure 96: Internet users in Korea (source: KRNIC and NIDA).
Broadband access prices have been low since their launch in 1998, typically around 25-30 US$ including
modem rental. The low subscriber prices reflect mainly heavy competition. Broadband service providers
competed by investing in their own facilities and generated large losses during the first years, hoping that larger
market shares and customer bases would later allow them to become profitable. The low subscriber prices of
Korea also reflect some government pressure to promote rapid diffusion of broadband. Although prices have not
been regulated, the Ministry of Communications and Information has indicated to the operators that it would be
good if the prices would be low. When facilities-based competing service providers entered the Internet access
market, their low flat-fee pricing rapidly attracted existing dial-up Internet customers. Given the level of average
income, the subscription prices, however, have been higher than the EU average. Koreans apparently have been
willing to pay more for their broadband services than most Europeans.
0.00%
United Kingdom
Belgium
Germany
Denmark
Sw eden
Austria
Netherlands
France
Luxembourg
Finland
Ireland
Spain
5.00% 10.00% 15.00% 20.00% 25.00%
Lithuania
Portugal
Italy
Cyprus
Malta
Estonia
Croatia
Slovenia
Hungary
Poland
Japan
Korea (Rep.)
median EU: 3.5 %
Figure 97: Broadband subscription cost as percentage of average monthly income, 2003 (data from OECD).
Jun-
01
Sep-
01
Dec-
01
Jun-
02
Dec-
02
Jun-
03
Dec-
03
Jun-
04
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Internet penetration rate

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The picture, however, changes radically when the connection speed is taken into account. The average
connection speed in Korea is now 4 megabits per second, and the subscription to 20-40 megabit per second
service costs about 50 US$ per month. In comparison with EU countries, Koreans have often ten times higher
bit rate per €.
Poland
Estonia
Hungary
Croatia
Lithuania
Spain
Malta
Finland
Cyprus
Portugal
Denmark
Ireland
Luxembo
France
Slovenia
Sweden
Italy
Austria
United
Germany
Netherla
Belgium
Korea
Japan
0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50%
Figure 98: Broadband subscription cost per 100 bit per second, as percentage of
monthly income, 2003 (data from OECD).
The drop of the US dollar has increased the prices when measured in dollar terms, to above 32 US$ monthly
fees including equipment rental. In January 2005, KT xDSL/BWLL service was about 25 €, including terminal
rental and taxes, LAN access about 23 €, and satellite about 26 € per month. For customers that were willing to
wait 15 days for the installation, the one-time installation fee of about 21 € was waived. Satellite service
subscribers had to pay for the installation of their equipment separately. Thrunet’s broadband cable modem
service was about 33 €, and a low-speed 1-1.5 Mbps connection was available for 25 €, including equipment
rental and taxes. Thrunet also provided ADSL connections to customers it could not reach using its cable
network, at about 25 € per month. In addition, Thrunet had a reduced cost service for customers who were
willing to receive advertisements.
8.30.2.3 Supply
The incumbent operator Korea Telecom (KT) was established in December 1981, and the government has
gradually reduced its ownership interest in KT since 1993. Upon the repeal of the Korea Telecom Act as of
October 1, 1997, KT became a partially government-owned company regulated by the Korean Commercial
Code and changed its name from Korea Telecom to Korea Telecom Corporation (and later KT corporation). The
government sold its last shares in KT in 2002.
In its initial stage, KT focused on supplying telephone facilities to the general public. The company expanded
from about 4.5 million telephone lines in 1982 to about 20 million lines in 1993, increasing Korea’s household
telephone penetration from 21% to 90%. This created a strong domestic demand for telecom equipment. In the
early 1990s Korea was still catching up the leading countries, with 38 telephone lines per 100 inhabitants in
1993, compared to Japan’s and the UK’s 47, Germany’s 46, and France’s and the US’ 53. Mobile phone
penetration was about one percent, less than a quarter of the US mobile phone penetration of 4.4 per hundred
inhabitants in that same year. 598
598 Jeong, K-H. & J.L.King (1997): Korea’s National Information Infrastructure: Vision and Issues. In B. Kahin & E. Wilson (eds.) National
Information Infrastructure Initiatives: Vision and Policy Design. The MIT Press, Cambridge, MA, 1997, p. 122.

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Partly because of pressure from the US, Korea started to liberalise its telecom sector during the 1990s. It signed
the WTO agreement on basic telecommunication services that became effective in November 1997, which
committed the country to liberalising its telecommunication sector. The dial-up Internet service market had been
opened through negotiations with the US already in 1989, and the 1994 Uruguay Round had eased regulations
for entry and pricing conditions from registration to notification and abolished foreign ownership limitations on
domestic value-added service providers. 599
Korea first opened international long distance service, with the entry of Dacom in December 1991. When the
data communication market was opened for value added network services in the early 1990s, Dacom was
allowed to enter the voice market and to start to compete with KT. In January 1996, the domestic long distance
service became a duopoly when Dacom entered the market. The last monopoly market, local telecom services,
opened for competition in April 1999 with the entry of Hanaro. In 2001, local telephone services were provided
by 33 facility-based carriers, value added telecommunications services by 4,890 carriers, and special
telecommunications services by over 78 carriers. Foreign investment had largely been liberalised.
Although KT has given some of its market to its competitors, it is still the dominant service provider in fixedline
communication networks. The KT market share in year 2001 in the different market segments can be seen in
Table 48.
Service
Year competition
was introduced
KT’s market share, 2001
Local service 1999 96.9 %
Domestic long distance 1996 85.5 %
International long distance 1991 67.1 %
Table 48: Telecom liberalisation in Korea (source: ITU 600 ).
The Ministry of Information and Communication (MIC) and other government entities have extensive authority
to regulate KT. The MIC has responsibility for approving rates for local service and interconnection services
provided by KT. From January 1998 KT was allowed to set its own rates for domestic long-distance service,
international long-distance service and other services without approval from the MIC.
The entry of Hanaro became a critical turning point in the development of broadband in Korea. Hanaro was
created in June 1997, when MIC licensed a second local telephone operator. With government encouragement,
Korea’s chaebols, including LG Group and SK Group, jointly formed Hanaro and provided it with strong
economic backing. Hanaro was originally supposed to increase competition in the local phone services. Its
launch, however, occurred exactly at the time of the Asian currency crisis, when the Korean economy contracted
rapidly. It also became clear that Hanaro would have a very difficult time in competing with KT, as there was no
number portability and KT was able to charge large reconnection costs from customers who switched to Hanaro
and who subsequently wanted to switch back to KT. Realising its difficult position, Hanaro decided to focus on
the provision of Internet connection.
Hanaro focused on ADSL, for which it originally purchased equipment from Alcatel. The idea was to lay out
fibre to access large apartment blocks and then use ADSL within the building to provide broadband service for
the end customers. The strategy also relied on the expected rapid decline of ASDL equipment costs. 601 Hanaro
also collaborated with the cable network operator Powercomm 602 to provide cable modem broadband access to
those households that it could not economically reach using its own network. Powercomm was eager to sell
access to its hybrid fibre cable network, as it was legally barred from engaging in retail services, with its
business operations limited to wholesales to fixed-line telecom providers and regional cable television operators.
To increase the coverage of its services, Hanaro also used unbundled local copper network from KT.
599
Lee, Nae-Chan, Broadband Internet Service: Korea’s Experience. KISDI, February 2002.
600
Kelly, T., V. Gray & M. Minges (2003) Broadband Korea: Internet Case Study. ITU, 2003, p.5.
601
The purchasing price of ADSL modems fell from about 600 US$ in 1999 to less than 100 US$ in 2002. For cost breakdown, see footnote
621.
602
In 2002, Powercomm, established in January 2000, had 75,170 km of fibre-optic cable lines across the nation and other intercity
networks. Its clients included LG Telecom, Thrunet, Hanaro, SK Telecom and Dacom. It was owned mainly by Korea Electric Power
Corporation. After privatisation and Hanro’s unsuccessful attempt buy it, Powercomm became part of the LG Group in February 2003.
Powercomm now has 95,000 km of optical backbone cable and a 57,000 km hybrid fibre-cable (HFC) network.

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Hanaro was able to roll out broadband services extremely rapidly partly because the Korean construction
regulations require that large apartment buildings have a central telecommunications room. In Korea, the wiring
within the buildings is owned and controlled by the building owners. In this sense, Korea has no “local-loop
bottleneck,” and regulators have not had to create complex rules for accessing the local loop. After getting
access to the local decision-maker who controlled the building’s telecommunications room, it was a relatively
easy task for Hanaro to drop fibre to the room and provide services for all the households in the building.
Hanaro first focused on large apartment complexes, with more than 300 households, and later targeted smaller
complexes with 200 households.
The incumbent KT was a late bloomer in the high-speed Internet market, which was opened by the cable
network operator Thrunet in July 1998. KT had a slow start partly because it believed that future broadband
services would be based on ISDN according to earlier national Information Society visions. KT was, for
example, heavily involved in the government Broadband Integrated Services Digital Network (BISDN) project
that was originally planned to run from 1992 to 2015. It had also launched pilot tests with ADSL in 1997 and
decided that, due to the high equipment costs, ADSL could not be a viable broadband technology. According to
KT’s calculations, it needed at least half a million subscribers who would pay 50 to 60 US$ per month to break
even. 603 When KT realised that Hanaro and Thrunet were about to carve a slice of the emerging broadband
market, it reacted however rapidly. It was ranked first in the domestic industry already in June 2000, a year after
launching its commercial services. Its high-speed Internet service subscribers exceeded 4 million in March 2002
and 5 million in December 2002, making KT the largest broadband access provider in the world.
Millions
7
6
5
4
3
2
1
0
KT Hanaro Telecom Thrunet Onse Telecom Dacom Dreamline
Figure 99: Broadband service providers by subscribers, July 2004 (source: MIC).
In short, the Korean broadband and telecommunications market has been characterised by fierce competition
since the end of the 1990s. This has also meant that service providers have had difficulties in making profit. For
example, in 2001, only KT and one of the mobile operators made profit. Hanaro, the second largest broadband
provider, has never made a net profit. To some extent this was because it invested very heavily in new facilities
until the year 2000, in an attempt to gain market share. After that it has rapidly decreased its annual capital
expenditures, which in 2003 were less than one-fifth of the expenditure in year 2000. After heavy cost-cutting,
Hanaro was able to post nominal operating profit in 2002 and 2003, although its profit after capital depreciation
and interests remained strongly negative. Thrunet, the third largest service provider, has never been able to make
operating profit. Thrunet sought court protection in March 2003 and was bought by Hanaro in an auction in
December 2004 for perhaps up to 430 US$ per Thrunet customer, a price that analysts have claimed to be
difficult to justify simply by revenue generation.
The economic difficulties of broadband access providers have also led to other changes in ownership. Hanaro is
now controlled by a consortium led by American International Group and Newbridge Capital, which invested
about 1.1 billion US$ in the company in November 2003. Analysts see a possible merger of Hanaro and the
603 DTI Overseas mission to South Korea. Brunel University, 2002, p.16.

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leading mobile operator SK Telecom looming on the horizon. Dacom, in turn, is now part of the LG Group,
which also controls Powercomm. The telecom units of LG, the second largest chaebol in Korea, are currently
struggling along, with Dacom’s sales stagnant for the last five years, and Korea’s smallest mobile operator LG
Telecom carrying a debt-equity ratio of 300 percent at the end of 2004 and most probably making considerable
losses when mobile number portability will be fully established in 2005. Analysts therefore expect mergers and
acquisitions.
xDSL Cable LAN Satellite Total
Market
Share
KT 5,230,342 - 353,880 4,836 5,589,058 50.0%
Hanaro Telecom 1,093,261 1,290,150 342,152 - 2,725,563 24.4%
Thrunet - 1,287,502 5,862 - 1,293,364 11.6%
Onse Telecom - 419,293 3,769 - 423,062 3.8%
Dreamline 56,178 89,546 3,874 - 149,598 1.3%
Dacom - 135,884 65,820 - 201,704 1.8%
Value-added
3,362 605,791 9,950 - 619,103 5.5%
operators
Resellers 52,812 - 124,235 - 177,047 1.6%
Total 6,435,955 3,828,166 909,542 4,836 11,178,499 100%
Market Share 57.6% 34.2% 8.1% 0.1% 100% -
Table 49: Broadband subscribers by service provider and access technology in Korea, Dec. 2003 (source MIC).
Korean broadband analysts have suggested that Thrunet’s subscriber numbers may have been about 30 percent
inflated before the auction in December 2004, and that the subscriber numbers could be closer to 1 million in the
end of 2004. Thrunet, on the other hand, has claimed that it has not included non-paying subscribers in its
subscriber numbers. KT was estimated to have about 6 million subscribers and Hanaro about 2.8 million
subscribers in December 2004.
8.30.2.4 Demand
In December 2004, Korea had 31.58 million people who had used the Internet during the previous month, or 70
percent of the over-6 year population. In June 2004, computer users averaged 14.6 hours per week for using
computer and more than half of the users spent more than 10 hours using computer. 604 The most popular use was
to access the Internet (82 percent), followed by games (41.5 percent) and information and data management (30
percent). The most common motives for using the Internet were “curiosity/fun” (31.5 percent), followed by
“work” (15.7 percent), “homework” (14.4 percent), and “searching for information” (13.2 percent).
80
70
60
50
40
30
20
10
0
Figure 100: Reasons for using the Internet, December 2004 (source: NIDA).
604
Survey on the Computer and Internet Usage. Ministry of Information and Communication, National Internet Development Agency of
Korea, September 2004.

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Electronic commerce and purchasing are widely spread. B2B commerce grew 32.8% from 2002 to 2003,
reaching 170 bn US$, and there were 260 B2B e-market sites in 2003. Consumer Internet purchasing grew 17%
from 2002 to 2003, reaching 5.8 bn US$. 605 Over 45 percent of Internet users aged 12 years and older had
experience of Internet shopping in June 2004, and 19 percent have paid for Internet content. 606
Korean Internet users are already quite experienced, with average Internet experience of almost four and half
years. They access the Internet most often from home (90%), followed by office (30%), public PC rooms (22%)
and school (16%). The gender and age distribution of Internet users is shown in Table 50.
Age group total male female Gap(%)
Total 68.2 74.4 62.0 12.4
6-19 95.5 95.6 95.4 0.2
20’s 95.0 96.2 93.7 2.5
30’s 86.4 89.8 82.9 6.9
40’s 58.3 67.6 48.6 19.0
50’s 27.6 39.0 16.2 22.8
60 and older 7.3 12.2 3.8 8.4
Table 50: Gender gap and Internet users in different age groups, June 2004 (source NDIA).
8.30.2.5 Technologies and infrastructures
The most popular access mode was xDSL, with 86 percent of households using it, followed by cable modems
(13.5 percent), dial-up (4.2 percent) and ISDN (1.5 percent). 607 According to the NIDA June survey, the most
common access technology in Korea is xDSL, with 84 percent of Korean households using it to access the
Internet, followed by cable modems at 11.6 percent. Service provider statistics give higher rates for cable, close
to 33 percent of all broadband subscribers at the end of 2003. 608 The detailed subscriber numbers by technology
at the end of 2003 can be seen in Table 51. 609
Leased
Line
CATV xDSL ISDN Dial-Up
P
C
L
BWLL/
WLL
Satellite
Internet
Metro-
Ethernet
Wireless-
LAN
85,958 4,023,488 6,877,118 77,095 259,058 - 2,462 5,915 2,320 145,233
Table 51: Internet subscribers, Dec. 2003 (source: KRNIC).
The cable operator Thrunet provided the first broadband service in Korea in July 1998. Initially, the number of
residential cable modem subscribers exceeded ADSL subscribers, with the latter taking over in 2000. The main
reason for this was Hanaro’s successful use of ADSL to provide services to large apartment complexes. Hanaro
also has provided cable access, and at present it has about 1.5 million cable modem broadband subscribers and
about 1 million ADSL subscribers. 610 In the early phases of broadband rollout in Korea, KT also used LAN
605 NCA, 2004 Broadband IT Korea: Informatization White Paper, p. 32.
606 NIDA survey, referenced in footnote 604.
607 Survey on the Computer and Internet Usage. Ministry of Information and Communication, National Internet Development Agency of
Korea (NIDA), February 2005.
608 The reason for this discrepancy is at present unknown.
609 The KRNIC numbers for December 2003 are systematically higher than the numbers reported by MIC. The reason for this discrepancy is
at present unknown.
610 In December 2004, Hanaro reported 961,513 residential ADSL subscribers and 1,438,649 residential cable modem subscribers. At the
same time, it had 18,363 corporate ADSL subscribers and 1,143 corporate cable modem subscribers. In addition, Hanaro had 272,900
VDSL, 20,187 broadband WLL, and 36,179 Wireless LAN subscribers. Cable modem subscribers were, therefore, 52 percent of the
total.

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Ethernet to address the shortage of ADSL equipment and to respond to Hanaro’s competition. The rapid growth
of both ADSL and cable modem subscribers can be seen in Figure 101. The figure also shows that the growth
rates are now slowing down.
Millions
8
7
6
5
4
3
2
1
0
xDSL
CATV
Wireless-LAN
Leased Line
ISDN
BWLL/WLL
Satellite Internet
Metro-Ethernet
1997.3
1997.6
1997.9
1997.12
1998.3
1998.6
1998.9
1998.12
1999.3
1999.6
1999.9
1999.12
2000.3
2000.6
2000.9
2000.12
2001.3
2001.6
2001.9
2001.12
2002.3
2002.6
2002.9
2002.12
2003.3
2003.6
2003.9
2003.12
Figure 101: Internet subscribers in Korea, 1996-2003 (source: KRNIC).
Although the subscriber growth is slowing down, the speed of connections continues to grow. Hanaro launched
the first commercial VDSL service in 2002, with 20 Mbps downstream and 6 Mbps upstream. In February 2003,
KT launched a trial VDSL service at 50 Mbps.
The competition to deploy Korean mobile Internet, called WiBro, began in November 2004, as Hanaro Telecom,
KT and the largest mobile operator SK Telecom applied for the three business licenses. The licenses were
granted in January 2005, and the commercial service is expected to be launched in April 2006. The fees for the
seven-year licenses were expected to be set somewhere between 117 bn won to 128.5 bn won depending on the
specific schemes presented to the government. In March 2005, KT and SK Telecom each paid US$ 116.5
million license fees, but Hanaro pulled out.
WiBro (Wireless Broadband), formerly known as 2.3GHz portable Internet, is part of the IEEE 802.16 family of
wireless Internet specifications. In tests, WiBro has provided up to 3 Mbps connection to devices travelling at up
to 60 kilometres per hour. Theoretical downstream speed is 18 Mbps and upstream 6 Mbps. WiBro is related to
but different from the WiMax system that has been developed to send a higher-bandwidth signal of several tens
of megabits per second to fixed receivers over a distance of several tens of kilometres. The Korean portable
Internet was originally to be based on a national standard, but is now based on technologies that are planned to
be compatible with international standards. In November 2004, after negotiations with LG Electronics, Intel
announced that it will secure compatibility with WiMAX and WiBro to avoid global market fragmentation.
According to the Korea Information Strategy Development Institute (KISDI), the WiBro service is forecast to
attract as many as 9.3 million subscribers by 2011. Analysts estimate that WiBro services via cell phones are
unlikely to be possible in 2006 but at least SK Telecom has announced that it will have dual-band CDMA 2000
1x and WiBro handsets available at the time of the commercial launch. Though voice service is technically
possible using WiBro, the carriers have stated that they will provide only data services.
As was noted above, the plans for developing broadband are closely connected with industrial policy in Korea.
The rollout of services and infrastructures are linked with products and technologies where Korea sees potential
for rapid growth and opportunity for global competitiveness. A central piece in the current Korean Information
Society Strategy is the broadband convergent network (BcN), which will be used for video, data, and voice, and

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which will seamlessly combine wired and wireless access. 611 The expected schedule and subscriber numbers for
BcN are shown in Table 52. Early applications will include high-quality voice-over-IP and video-telephony. The
network is also expected to support interactive digital media broadcasting (DMB) for portable devices and, in its
final stage, full broadband multimedia with guaranteed service quality.
Example services
Wired
subscribers
Wireless
subscribers
Total (millions)
Early phase
2004-'05
Building phase
'06-'07
Completion phase
'08-2010
Convergence videophone; Portable Internet; HD multimedia with
High-quality VoIP Interactive DMB
QoS
50~100Mbps 1.2 3.5 6
100Mbps 0.3 1 4
Subtotal 1.5 4.5 10
50Mbps 0.5 3.5 9.5
100Mbps - - 0.5
Subtotal 0.5 3.5 10
2 8 20
Table 52: Plan for BcN schedule and subcriber numbers.
DMB has recently had high visibility in the Korean Information Society policy. TU Media, the affiliate of the
leading mobile operator SK Telecom, launched free DMB pilot services in January 2005. The commercial
launch was in May. DMB enables people to receive video, high-quality audio and data through handheld devices
like handsets or in-car terminals. Video channels will feature news (YTN), music (M-Net of CJ Media), drama
(SBS and MBC), sports, and games while audio channels include various kinds of music programs, English and
Chinese conversation, and audio books. TU Media is planning to increase the number of channels from 20 to
about 40, also adding data broadcasts from next year. The satellite-based DMB now also includes a disaster
warning system, which will be used to broadcast information both to subscribers and non-subscribers. The
subscription price is 20,000 won (15 € or 20 US$) and the monthly subscription fee 13,000 won (9.6 € or 13
US$). TU Media has waived the subscription fee and the monthly fee during the first month of the launch. There
are now about 10 different DMB receiver models available for the consumers, including phones from Samsung
and LG Electronics. In December 2004, World Digital Audio Broadcasting (DAB) Forum decided to propose
Korea’s terrestrial DMB technology as a European standard to the European Telecommunication Standard
Institute (ETSI). The ministry said that the adoption of the Korean terrestrial DMB technology as a European
standard would enable Korea to secure core technologies of next-generation digital broadcasting, which will
help Korea to take up favourable position in pre-empting the market.
8.30.2.6 Operator strategies
Broadband subscriber prices in Korea have been among the lowest in the world since the introduction of the
services. Early on, the subscription fees dropped to about 25 US$. In 2002, monthly subscription fee, including
modem rental, was about 25 US$ for residential ADSL and 32 US$ for business ADSL. Cable modem
subscriptions had similar prices. As was noted above, the subscriber prices are now somewhat higher in dollar
terms, and about 25 to 30 €, including equipment rental and taxes. At these prices, Korean subscribers get on
average 4 Mbps connections.
An important reason for the low subscriber prices has been very strong facilities-based competition, created by
heavy investments in competing networks, but also exceptionally easy access to the customers and their local
network. the local loop in Korean networks has been unbundled and open for competition by default (see above
under “supply”). KTs competitors have also effectively used the possibilities to combine existing facilities. In
particular, regional cable TV networks have been available for Hanaro and Thrunet as an alternative access
channel to customer households. Cable TV operators, which have had exclusive licenses in their regions, have
not themselves provided data communication services. This has left the market to Thrunet, Hanaro and other
broadband providers. Cable TV operators simply share revenues with broadband providers, without competing
with them. In effect, also the cable network, therefore, has been unbundled in Korea.
611 MIC 2004, IT 8-3-9 Strategy: The Road to $20,000 GDP per capita.

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The dominant operator KT therefore has been unable to drag its feet. Instead, it has actively marketed its
broadband services, for three reasons. First, it had to respond to competitors on the market, as it could not slow
them down using its control over local loop access. Second, for historical reasons, KT was not the dominant
player in leased line data communication market, where Dacom had monopoly until the end of the 1980s. In
other countries, many incumbent telecom operators have found it difficult to cannibalise their leased line market,
where subscription prices have been high. Third, the rapid diffusion of mobile phones in Korea meant that fixed
line subscriber growth ground to halt in 1998, and in 1999 mobile phone penetration exceeded fixed line
penetration. The growth in fixed line market was therefore mainly seen in data communications services, where
the average revenue per user was up to seven times higher than in basic voice services. Given this competitive
setting, the rapid rollout of ADSL broadband services was clearly an attractive choice for KT, as it could
effectively leverage its existing copper-based network to provide services to this rapidly growing market. Heavy
competition has therefore led to low broadband subscriber prices.
An important reason for the low subscriber prices has also been the political preference for low prices. Although
there is no formal price control for broadband subscriber prices, the strong role of MIC and its capability to
direct investment funding and negotiate the conditions for competition means that service providers take also the
information society development policies into account. KT published its “KT Future Strategies 2010” in August
2004. CEO Yong-Kyung Lee stated that “in consideration of our close connection with the government's policy,
KT’s new industrial growth engines will be aligned with the country’s IT 8-3-9 policy, and this is an expression
of our willingness to play a leading role in implementing this beneficial policy.” KT aims to invest about 1 bn
US$ annually until 2010 to develop five new growth engines, i.e. next-generation mobile communications,
including WiBro and 4G, home networking, media, IT services, and digital contents.
KT seeks to combine its wireless local area network (WiFi) in areas where WiBro services might be blocked.
KT has about 15,000 WiFi access points in Korea, which enable people to connect to the Internet at a maximum
speed of 11Mbps. It has also started to upgrade its WiFi services, offering now a speed of up to 54 Mbps with an
average throughput of 25 Mbps. SK Telecom, in turn, tries to mix WiBro with digital multimedia broadcasting
(DMB). Whereas KT will complement WiBro with fixed WiFi, SK Telecom could perhaps try and use its
WCDMA 3G network to complement WiBro. SK Telecom and Hanaro also made a collaboration agreement just
before submitting their WiBro license applications in December 2004. Under the agreement, Hanaro and SK
Telecom will share their base stations and access networks for WiBro nationwide, excluding Seoul and six
provincial cities. As noted above, Hanaro, however, gave up its WiBro licence in April. Also the WCDMA
subscriber numbers have remained very low, which seems to slow down investments in the 3G WCDMA
infrastructure.
Hanaro, in turn, agreed to share 451 base stations with KRT net, a company that exclusively holds and operates
base stations in military facilities and remote rural areas. After its merger with Thrunet, Hanaro will have about
4 million households as customers. In principle, it could try to roll out innovative new broadband architectures
and services. In theory it could, for example, combine VDSL or cable modems with wireless home networks,
WiBro, and WiMax to provide ubiquitous voice and multimedia data access to its customers. Hanaro could then
become a local phone service company, as originally planned—this time, however, by providing voice-over-IP.
8.30.2.7 Applications
Government sponsored Internet centres provide broadband access in Korea. Between 2000 and 2003, the local
government constructed 5,477 access centres and post office 2,786 access centres. In addition, there are about
24,000 Internet-Cafés, or “PC Bangs,” in Korea.
In the Korean broadband development, the economic downturn of 1997-98 played an important role. The
economic crisis occurred at a time when the global Internet boom was about to arrive its peak. A large number
of recently unemployed people looked for new ways to earn their income. The emerging availability of low-cost
leased-line access to the Internet produced a large number of entrepreneurs who started to provide Internet
access in “PC rooms.” The first PC rooms or “PC Bangs” emerged in 1998, and their number skyrocketed to
22,549 in 2001. 612 To set up a PC bang, a new entrepreneur had to buy or lease PCs and some chairs and tables,
and connect the room to the Internet using a broadband link. The high-speed connection enabled e-mail,
chatting, music downloading, participation in on-line communities, and most-important, multiplayer online
games.
PC Bangs became very popular for four reasons. First, they were attractive business propositions to people who
were looking for income and work. They required relatively low investments, and as soon as the network was
612 NCA 2004: White Paper Internet Korea, p. 31.

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operating, they produced a steady revenue stream. This rapidly increased the supply of broadband access in
Korea. Second, PC Bangs used hourly rates in the range of 1 US$ and less, which made them attractive and
possible for young people, who actively experimented with new services and shared knowledge about them.
Third, the rapidly growing PC bang user group provided the critical mass of Korean-speaking broadband users.
This made business models based on content creation attractive. Finally, the fast national broadband backbone
enabled the users in different PC rooms to be connected at high-speeds. This produced the killer-application in
the content business: making multiplayer on-line games possible within Korea. The boom in PC Bangs was also
reflected in the growth of Internet service providers. Between 1998 and 2002 the number of ISPs grew almost
five-fold. Since the second-half of 2002, the ISP sector, however, as started to consolidate.
120
100
80
60
40
20
0
millions of USD ( 1 USD ~ 1,200 KRW)
1998.1
1998.4
1,200
1,000
800
600
400
200
0
Games
Digital imaging
Animation
Web information contents
e-Learning
Digital music
Electronic publishing
Figure 102: Digital contents market in Korea, 2003
(source: Korea Institute of Multimedia Contents and Software).
1998.7
1998.10
1999.1
1999.4
Number of KRNIC member ISPs
1999.7
1999.10
2000.1
2000.4
2000.7
2000.10
2001.1
2001.4
2001.7
2001.10
2002.1
2002.4
2002.7
2002.10
2003.1
2003.4
Digital character
Figure 103: Internet service providers in Korea (source: KRNIC).
2003.7
2003.10
2003.12
2004.3

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Korea has been the leading country in the development and use of multiplayer on-line games. The gaming
phenomenon has, indeed, become a key driver in broadband diffusion. The leading game players are national
heroes, and both fixed line and mobile operators spend huge sums to recruit top players. KTF, the KT mobile
affiliate and the second largest mobile operator, has been reported to pay 7 trillion won for two leading players.
It has often been stated that the Korean interest in games has a cultural basis. An alternative explanation could
be that the rapid expansion of on-line games was simply generated by the availability of broadband
infrastructure. The Korean PC Bangs were connected at high speed to the Korean broadband backbone, allowing
interconnections with low latency and short delays between the users of PC Bangs, as well as interactive
graphics in games. This infrastructure was necessary for the development of massively distributed multiplayer
role-games. If a similar technical architecture would have been available in other countries, it is possible that the
popular “Korean interest in games” explanation for the rapid diffusion of broadband in Korea would lose some
of its credibility. One factor in the success of multiplayer computer games in Korea has also been the fact that
Korea has restricted Japanese imports. Instead of specialised game consoles, Koreans have therefore focused on
PC-based games.
The online game market is expected to be growing in Korea during the next years, with the fastest growth in
mobile games. The game revenues in PC Bangs are expected to saturate, as households now have their own
broadband connections. The growth of the Korean game market is shown in Table 53. Korean online game
producers have been extremely successful domestically, and they are now exporting software and game concepts
to China, Taiwan and Southeast Asia. In 2003, Korean online games accounted for about 7 percent of the global
online gaming market.
Market 2000 2001 2002 2003 2004 2005 2006 2007
annual
growth rate
Online-game 1,628 2,985 4,656 7,042 9,330 11,168 12,406 13,145 28.0%
Mobile-game 17 497 727 1,352 2,474 4,125 6,422 9,491 63.5%
PC-game 1,323 1,810 902 1,275 1,276 1,277 1,278 1,278 -5.6%
Arcade-game 5,844 3,528 4,142 3,984 3,894 3,830 3,782 3,745 1.0%
Console
HW 18 29 1,012 1,015 1,512 1,649 1,947 2,238 106.3%
SW 72 117 898 943 1,009 1,435 1,700 1,973 60.1%
Total 90 146 1,910 1,958 2,521 3,084 3,647 4,211 75.1%
Subtotal 8,902 8,966 12,337 15,611 19,495 23,484 27,535 31,870 23.5%
Online Internet
café
Computer-game
room
13,343 19,832 19,441 22,763 23,873 24,446 24,731 24,870 3.8%
8,634 5,969 6,570 5,928 5,703 5,543 5,422 5,329 -1.9%
Total 30,879 34,767 38,348 44,301 49,072 53,473 57,688 62,069 10.1%
Table 53: Korean game market forecast
(source: Korean Entertainment System Industry Association, Dec. 2003).
The sales of digital music industry in Korea was about 154 million US$ in 2003, with mobile ringtones
representing about 70 percent of this market. Most of the music downloads occurred through file-sharing
systems that did not charge for the content. The online movie market was about 70 million US$ in 2003. There
were over 300 online movie websites. The sales ratio for adult movies and domestic feature movies was about
6:4 in 2002 and 3:7 in 2003. This change was at least partly caused by government regulations concerning adultoriented
websites. The availability of broadband connections has also made Internet broadcasts possible. In this
area, entertainment content is the market leader, with 28 % in 2003, followed by educational content, at 14 %.
The distribution of Internet broadcasts by content type is shown in Table 54.

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No. of Internet Broadcasts %
Education/Study 66 14.3
Vocational education 29 6.3
School 44 9.5
Sports 14 3.0
Animation 6 1.3
Entertainment 14 3.0
Movies 21 4.5
Music 60 13.0
Games 4 0.9
Other amusements 11 2.4
Public institutions 12 2.6
Companies/Organizations 10 2.2
Society/Culture/Welfare 30 6.5
Regional
information
information/Living
50 10.8
Current issues/Economy/Management 22 4.8
Arts 5 1.1
Religion 18 3.9
Teens 11 2.4
Hobby/Leisure 26 5.6
News 4 0.9
Health/Medicine 5 1.1
Total 462 100
Table 54: Internet broadcasts in Korea, Dec. 2003 (source: NCA / IT Public Webcasting).

8.30.3 Broadband policy
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Korean policymakers have been very active in promoting information technologies, based on the vision that the
future of Korea depends on its capability to transform itself into a knowledge-based society and economy.
Information and communication technologies are viewed as the path towards higher economic growth, better
incomes, and global competitiveness. A purely economic view of development, however, does not well describe
the Korean policies. The Korean visions, in particular, have perceived information and communication
technologies as a key to social transformation. This strong developmental emphasis contrasts the Korean visions,
for example, with the U.S. visions, where ICTs are more often described as technologies that improve economic
efficiency and individual choice. The strong societal dimension also brings the Korean Information Society
strategies relatively close to the European and in particular the Nordic models. A major difference, however, is
the existence of strong links and detailed roadmaps for industrial development and information society policies,
as well as the strong coordinating role of public policymakers. Such close links would be difficult in the
European Union.
Key government policy makers include the Ministry of Information and Communication (MIC) and the National
Computerization Agency (NCA). The Framework Act on Informatisation Promotion of 1995 created the
Informatisation Promotion Committee in 1996, which is led by the Prime Minister. The Presidential Committee
on Government and Innovation Decentralisation (PCGID), in turn, acts as an advisory body to the office of the
president, with a specific aim at public sector reform and e-Government. The institutional framework of the
Korean informatisation policy is shown in Figure 104.
Figure 104: Korean framework for national informatization (source: NCA).
The MIC has developed the Korean Information Society both by gradually deregulating it and by putting
pressure on the large chaebols to open up for competition. Deregulation and increasing competition has not
occurred at random, though. Koreans have been quite successful in opening their industries after the domestic
industry has been strong enough for global competition. In particular, in the 1990s Korea actively developed
domestic standards and intellectual property that gave it simultaneously relatively protected domestic markets
and time to develop a competitive advantage. Recently, Korea has focused on international technology
standards.
The Korean Information Society policies have also centered on skills development, industrial development, and
the reduction of digital divides. To overcome the current and future shortage in IT skills, the government has
invested 33.5 billion won in support of education in the information and communication area, the establishment
of a technical high school specialising in software development, and basic research in related subjects.
Furthermore, the government has provided support for the development of a University Information and

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Communication Research Center, and Information and Communication University Overseas Scholarship
Program for ASIC design and JAVA training. The government has also sponsored information and
communication re-training courses for the unemployed with high academic backgrounds from traditional
industries. This will assist such qualified unemployed to find jobs in the IT sector or to start new IT businesses.
In addition, government support has been provided to IT professional education organisations, cyber universities
involved in the field of information and communications, the invitation and training of foreign IT specialists and
experts. To further develop human resources in the IT field, the government has provided computer literacy
training and education aimed at elementary and middle schools, housewives, the military, and the disabled. 613
A major initiative in this area has been the three-year 10 Million People IT Education project, which was
launched in mid-2000. Some 3.6 million people received basic Internet and computer training in this program in
2000, including over one million residents in local communities, about 300,000 housewives, and 23 thousand
prison inmates. In total, almost 14 million people received training during the three years. The program was
continued with the 2 nd National IT learning program. A new four-year IT Education Program for 5 million
underprivileged started in the beginning of 2005.
The government will invest approximately 430 billion won in expanding the involvement of regular educational
organisations in information and communication education, as well as cooperation with overseas schools and
universities. The government also plans to sponsor the retraining of industrial workers, bridge the digital gap
among the popultion, and develop a highly skilled workforce for the IT field. The government will expand its
investments in discovering gifted IT talents in their early stages and nurturing them to contribute to the world
economy.
The Korean Digital Divide Act was established in 2001 and revised in 2002. It generated the five-year master
plan for closing the digital divide, annual action plans, the “Digital Divide Closing Committee,” and launched
the Korean Agency for Digital Opportunity and Promotion (KADO). The spending for the master plans is about
1.9 bn US$, with about 300 million US$ in 2004. The 2004 annual action plan consisted of constructing highspeed
information network in rural areas, supporting assistive technologies for disabled people, the construction
of 80 Internet access centres, recycling of PCs and Digital TVs to disabled and non-profit organisations, and
providing IT education. KADO also developed content for disabled and the elderly, and engaged in international
projects that aimed at closing the digital divide. Korean policies also included 30 to 50 % discounts in
telecommunication service charges to low-income and disabled users.
The failed attempt by Hanaro to enter local telephony services had shown that competition in the local loop was
difficult without number portability. As a result, the government announced detailed plan to implement number
portability in fixed telecommunication services in January 2001 and for the mobile market in January 2002. The
Telecom Business Act of Korea mandated a new obligation in December 2000 to the facilities-based service
providers (KT, Hanaro and Thrunet) to provide their unbundled elements to competitors. Furthermore, the
government finalised the details of the obligation and a pricing scheme in December 2001, so that the
unbundling obligation also works in practice. 614
As the Information Society is perceived to be a systemic transformation in the Korean society and economy,
broadband policies are also very tightly connected with industrial and R&D policies. In 2000, the government
designated 174 core strategic technologies for technology development projects in order to gain a technological
competitive edge in the world market, including the next-generation Internet, optical communications, digital
broadcasting, wireless communications, and computer software. In addition, the government has improved the
appraisal system for the selection of research subjects, and has helped to establish effective research
management methods for the efficient use of R&D funding and maximising the benefits of R&D.
An important factor in the Korean broadband development has been the Informatisation Promotion Fund. This
fund has rotated license auction fees and telecom taxes back to telecom infrastructure development. In contrast
to most other countries where 3G license fees were not earmarked, Korea has been able to provide low interest
loans for communications infrastructure development in less-advantaged regions, as well as funding for
Information Society–related R&D. The actual amount of the fund for 2004 was 1.2 bn US$, with 740 million
US$ earmarked for R&D. 615
The role of FDI in Korea has been relatively minor, although about 13,600 companies made investments in
Korea in 2003. After the financial crisis in 1997, the government initiated tax reduction measures for high-tech
613 http://www.kado.or.kr
614 Local loop unbundling has been in effect since 2002, based on LRIC (long-run incremental cost) charging. A fully unbundled leased line
is charged 9,200 won per month and a shared-line ASDL service 6,100 won a month. See, Ure, J. 2003: Competition in the local loop:
unbundling or unbungling? Info, 5(5), pp. 38-46.
615 MIC, Investment Opportunities in Broadband IT Korea, p. 16.

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businesses, businesses in foreign investment zones and service businesses (exemption from or reduced national
taxes for 10 years, local taxes for 15 years) to cope with the recession. In 2003, LG Philips LCD and Nokia
TMC were the largest foreign companies in Korea, the former with about 5 bn US$ and the latter with about 2.6
bn US$ revenues. Indirectly, the rapid growth of the ICT sector has, however, legitimised domestic investments
in the ICT infrastructure and skills.
Rent reduction policies are applied in industrial complexes for foreign companies, 25 national industrial
complexes, and Foreign Investment Zones, with 100 % exemption for high-tech businesses and 75 % reduction
for general manufacturing industries. In the Foreign Investment Zones, companies that are more than 30 %
owned by foreign investors and have more than 10 regular full-time workers who have a master’s degree or
higher with more than 3 years of R&D experience, can get free land leases, exemption for traffic increase taxes
and exemptions or reductions of national and regional taxes. Research and Development programs and related
investments can get low-interest loans, government matching funds and cash grants.
Hostile takeovers by foreign companies have been allowed since May 1998. Currently, there are no ceilings on
foreign ownership of special and value-added telecommunication service providers. The ceiling on single-person
ownership on facilities-based service providers has been abolished except for Korea Telecom. Foreign aggregate
ownership of facilities-based service provider is allowed up to 49%. Acquisition by a non-telecom company has
also been allowed. There is no foreign ownership ceiling on IT equipment and software businesses.
8.30.4 Conclusion
Korea’s leading position in the global broadband diffusion has produced several studies that have tried to
explain the factors that underlie the development of Internet and broadband in Korea. The U.K. DTI study 616
proposed that six success factors underlie the rapid expansion of broadband in Korea: 1) geography and
demographics, 2) government leadership, 3) facilities-based competition, 4) the PC bang phenomenon, 5)
pricing, and 6) the emergence of clear user benefits. The ITU Korean Broadband study 617 , in turn, points out that
Korea has a very high literacy rate and very high school enrolment rates. ITU also highlights the role of the
domestic Korean IT equipment industry, which successfully reduced the cost of ADSL equipment.
A number of academic studies have also focused on the factors that underlie broadband diffusion in Korea. Lee,
O’Keefe and Yun 618 proposed that the matching of demand and supply was the most important factor, produced
by fierce infrastructure competition, online gaming, and social and cultural factors such as housing patterns,
social pressure to keep up with the neighbours, and tight social networks. They also noted that the economic
crisis of 1997 and the deregulation of telecom industry played an important role both by in increasing the
government efforts to move Korea to the knowledge-based economy and by providing entrepreneurial
opportunities for unemployed people. Lee and Chan-Olmsted 619 , in turn tried to compare the U.S. and Korean
broadband diffusion patterns using a modified Porterian diamond model of national competitive advantage.
They found that, in particular, active government policies have probably created more predictable roadmaps for
the evolution of broadband and related technologies in Korea than in the U.S., where uncertainties concerning
the future have perhaps slowed down broadband-related investments. Park and Yoong 620 , in turn, argued that
market and technological factors were the key drivers. They also noted that consistent and strong government
policies that promoted competition, developed the information infrastructure and created demand were
important; as well as socio-cultural factors such as PC Bangs, housing patterns, and cultural homogeneity.
Although some broadband diffusion factors in Korea are now taken more or less for granted—such as the
importance of housing structure—one needs to be careful in interpreting and extrapolating them. As almost 80
percent of Koreans live in densely populated urban areas, cost effective deployment of broadband infrastructure
has been exceptionally easy in Korea. According to the DTI report, construction costs accounted for only 14 %
of cost per ADSL subscriber in Korea in 2002. 621 About 95 percent of the population live within 4 kilometres of
KT’s local exchanges, which made it possible for KT to use its existing copper wiring to provide ADSL. Almost
half of the population lives in large apartment complexes with up to 600 dwellings per building. Building
616
DTI Overseas mission to South Korea. Brunel University, 2002.
617
ITU 2003: Broadband Korea: Internet Case Study, ITU, March 2003.
618
Lee, H., O’Keefe, R.M. & K. Yun (2003): The growth of broadband and electronic commerce in South Korea: contributing factors. The
Information Society, 19. pp. 81-93.
619
Lee, C. & S.M. Chan-Olmsted (2004): Competitive advantage of broadband Internet: a comparative study between South Korea and the
United States. Telecommunications Policy, 28(9/10), pp. 649-677.
620
Park, S. & S-H Yoon (2005): Separating early-adopters from the majority: the case of broadband Internet access in Korea. Technological
Forecasting and Social Change, In press.
621
KT reported costs of about USD 360 per ADSL subscriber in 2000 and USD 273 in 2002. Construction work represented 14 percent,
backbone transmission 24 percent, gigabit switch router 20 percent, and equipment 42 percent.

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regulations set up in the 1970s have required that these apartment complexes have a single communications
room in the basement, from which all the apartments can be accessed using the in-house wiring.
This, however, does not mean that high urban density or large apartment complexes would be drivers for
broadband diffusion. More accurately, they are contextual factors that have influenced decision-making in
specific historical moments of time. In fact, the associated driver has been related to a specific configuration of
competitive power in Korea in 1999. The ownership structure of in-building wiring and unbundled cable
networks in effect removed the local loop bottleneck. Unregulated Internet access service markets and ADSL
made it possible for new entrants to use this opportunity to rapidly roll out Internet access services. Although,
economically speaking, ADSL was “impossible” in the conventional business sense, the widely publicised “new
economy” model where large economic losses were justified by future profit opportunities, made it possible to
bypass traditional profit models. At the same time, the rapid expansion of Internet content and the fixed pricing
of broadband services made the new services attractive for a large customer base. The dominant operator
realised that its traditional profit models were eroding, and it responded aggressively, trying to pre-empt the new
entrants.
This logic cannot be repeated in other countries. New technologies and technical architectures have become
possible, and the cost structures have changed radically during the last seven years. For example, the traditional
local loop bottleneck has only limited importance today, both because alternative channels have become
available and because local loop unbundling is now to a large extent implemented in many countries. After the
Internet boom and crash, many investors are also more conservative, and require profit and effective
management of economic risks.
Economic actors have been the main drivers of the broadband diffusion in Korea. The government, however,
has also been very active in promoting information society in Korea. The Korean Information Infrastructure
(KII) projects were launched in 1995. The KII project consisted of a high-speed government funded network,
the New Korea Network – Government (NKN-G), and the commercial New Korea Network – Public (NKN-P).
The NKN-G provided high-speed connections for government agencies and universities, whereas the NKN-P
was supposed to become the basic infrastructure for broadband multimedia information services for private
firms and homes.
Competition has also been very heavy in Korea. The new entrants Hanaro and Thrunet were able to use
Powercomm’s hybrid fibre-cable network to get access to customers. As the in-building wiring is owned by the
building owners in Korea, the dominant player KT could easily be bypassed by connecting the building telecom
room into the competing networks. The copper-based network was unbundled only in 2002. The relatively slow
unbundling has not been a major factor in Korea, as the cable TV networks have also been effectively
unbundled and as the building owners have controlled the in-building wiring.
As the PC Bangs grew in popularity, they provided a very efficient marketing channel for the new broadband
services. Because a large majority of broadband users were accessible to PC Bangs, there was little need to
invest in general consumer marketing and advertising. For the customers, PC Bangs gave the opportunity to try
out and learn broadband services without committing to monthly subscriber fees and expensive equipment
purchases. PC Bangs also provided a critical mass of potential customers that were necessary for the success of
content providers. For example, about 80 % of the revenues of the leading online game provider NCsoft came
from PC Bangs when it launched its first products. The large broadband user group that PC Bangs created
further became a key factor in generating demand for home broadband services.
Broadband subscriber fees have been low since the introduction of the service. This was encouraged by the
Korean government policy that viewed broadband as a key to social and economic development. Korean
policymakers therefore wanted to avoid a situation where only high-income families would have access to the
service.
The government and service providers have also highlighted the potential educational benefits of broadband
access. In particular, the Korean government has been active in supplying high-quality educational content
through the web. The educational potential of the broadband Internet has created both legitimacy and pressure
on the parents to get broadband access to their children. These pressures have probably increased when children
became familiar with the possibilities of broadband through PC Bangs. Children who had learned to play
network games and use other content in PC Bangs could easily push their parents to get broadband access by
borrowing the popular policy rhetoric of broadband as the key to educational success. To some extent,
educational services on broadband have also replaced traditional after-school classes, allowing children to
participate in additional schooling and do their homework at home. In this sense, the various interests of the
government, service providers, equipment manufacturers, parents, and their children have been well-aligned in
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It has also been argued that the culturally homogeneous Korean society has increased diffusion of broadband
services. Socio-cultural homogeneity probably has been important in the sense that when new applications and
technologies become interesting and relevant for early users, they often are interesting also for the rest of the
society. 622 Korean society, however, is also a Confucian society, where hierarchy is important. This combination
has meant that the citizens, although being part of a homogeneous culture, also compete against each other in an
attempt to climb the social ladder. This competitiveness has been effectively used by the Korean government,
who early on started to certify buildings according to their broadband connection speed. New apartment
complexes are often marketed by broadband access speed and their broadband certification is often visibly
marked on the building walls.
The table in the annex gives an overview of the main factors that studies have highlighted in their explanations
of the rapid advance of broadband in Korea.
622 This has been argued to create similar fast diffusion patterns in Korea and Finland, for example. For a more detailed analysis of the links
between social structure and technology diffusion, see: Tuomi, I. Networks of Innovation, Oxford, Oxford University Press, 2002.

8.30.5 Annex: Broadband diffusion factors in various studies.
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8.31 Non-EU country studies: Canada
8.31.1 Introduction
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Canada is the second biggest country in the world with a size of almost ten million sq km having around 31
million inhabitants (or three inhabitants per sq km). Canada was included primarily because of its leading
position in the global Broadband race. Size of the country was not among the reasons why Canada was chosen
because only a very small (and profitable to serve) geographical area is connected to the Internet via broadband.
The Canada case study focuses on a few selected parameters: likely “killer broadband services”, price for access,
and the level of competition. Moreover, the case study highlights some of the most important initiatives
undertaken by the federal and provincial governments.
In 2003, the Canadian Communication Regulator CRTC has published a very useful and comprehensive
report. 623 Much information in this case study has been taken from this source. 624
8.31.2 The broadband market
On a global scale, Canada is in the leading tier in terms of BB penetration. For instance, in 2003 there were more
high-speed Internet households (28%) than there were households with dial-up subscriptions (24%). According
to the OECD, broadband penetration rate stood at 14.8% in December 2003 with only one country (South
Korea) doing better
The communications sector overall is playing an increasingly important role in the Canadian economy. In 1998,
the contribution of the telecommunications industry to the economy was 1.9%. Five years later this share
increased to 2.7%. Capital expenditure of the communications sector accounts for 3.5% of total-economy-wide
capital expenditure in 2002. 625 The Internet access market is the fastest growing market in the converged
communication market with a revenue growth of 24% last year. Revenues for (dial-up and broadband) access
accounted for $2.6 billion in 2002 in a 32 billion CDN Dollar market. Of the $ 2.6 billion, roughly $ 2 billion
accounted for the residential BB and $ 600 million for businesses access. In 2002, there were 6.5 million
residential (or 51% of all households) with Internet access subscriptions. 626
As for market players, incumbent telecom carriers are – for example – Bell Canada, Aliant, Telus. Competitiors
are cable operators (e.g. Rogers and Shaw) and other alternative infrastructure providers (e.g. Allstream and
Call-Net). There are also competitors without an own network – for instance resellers (e.g. Primus) and
independent ISPs (e.g. AOL Canada). 627 In terms of revenues, by far the most powerful players are the
incumbent telecom carriers. Of the overall $ 32 billion CDN $ communications market the large regional
incumbents account for $ 24 billion in revenues. 628 Competitors account for 8 bn or roughly 25% of the overall
market (cable companies account for 3 bn and other alternative infrastructures for $ 3.6 bn).
8.31.2.1 Supply
The costs for connecting rural areas are considerably higher than for connecting urban areas. Moreover, demand
in rural areas is lower than in urban areas. However, 13 million people or half of the total population lives in an
area of 33 000 sq km. 629 Costs for connecting those 33 000 sq km are very low (compared to connecting the
other 99,97% of the country). In this respect, only 28% of all Canadian communities, corresponding to 80% of
the total population 630 , have broadband access. 631 Canada thus faces a difficult challenge to maintain its leading
position in broadband penetration rates in the years ahead. Costs for connecting the other 72% of the
communities and 99,97% of the land mass are much higher than connecting 0.03 % and the most profitable 28%
623
Report to the Governor in Council: Status of Competition in Canadian Telecommunications Markets report, available at
http://www.crtc.gc.ca/eng/publications/reports/PolicyMonitoring/2003/gic2003.pdf ; CRTC (2003)(last visited: 22. September 2004)
624
In particular, section 4.4 on Internet services provide valueable data. CRTC (2003) p. 49-61.
625
CRTC (2003) at p. 8.
626
CRTC (2003) p. 49.
627
CRTC (2003) at p. 51 and Annex 4. For more info on the competitive landscape and market shares in particular see below.
628
CRTC (2003) at p. 12.
629
http://www12.statcan.ca/english/census01/products/standard/popdwell/Table-CMA-N.cfm?T=2&SR=126&S=3&O=A (last visited: 4.
August 2004).
630
CRTC (2003), p. 58.
631
http://broadband.gc.ca/pub/faqs/faqscomplete.html#whatsnsi (last visited: 4. August 2004).

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of the communities. Figure 105 shows coverage of mobile phones. 632 This graph was included to give an
impression of network dimensions in a business with a 20 year history of liberalization and competition. 633
Figure 105: National Mobile Coverage in Canada
Of course, there are differences between BB and mobile phone networks. However, whether the BB map looks
much more “colourful” in 20 years remains to be seen. Satellite is one obvious technology which could help
bringing BB to people in rural areas. In 2003, Canada launched a Satellite program to connect regions which
cannot be served economically with wireline access. 634 Canada has also a very useful site dedicated to
infrastructure issues. 635
The degree of infrastructure competition influences broadband access and usage. 636 Canada is in a very good
position in this respect because there is fierce competition between cable and xDSL technologies with a roughly
equal market share in terms of access lines. 637 Hence, in some Canadian cities there is no dominant access
technology (or company for that matter), but rather there is a good degree of competition ensuring balanced
market prices.
The retail Internet access market accounts for roughly 2.6 billion $. The incumbent telephone companies
accounted for 41% of the retail Internet access revenues in 2002 while the cable companies had 35% and all
632 CRTC (2003) p. 71.
633 In 1984 a duopoly was formed and in 1995 two additonal licenses have been issued.
634 http://www.ic.gc.ca/cmb/welcomeic.nsf/0/85256a5d006b972085256db8004f7cb2?OpenDocument (last visited 28. Sept.)
635 http://www.infrastructure.gc.ca/index_e.shtml ((last visited 28. September)
636 Pricing of the content service is different and also plays an important role (e.g. VOD services are in competition with offline video
retailers and companies such as Netflix which deliver physical DVDs to customers at reasonable prices).
637 OECD (2004) Benchmarking Broadband Prices in the OECD,
http://www.oecd.org/document/31/0,2340,en_2649_34225_32248351_1_1_1_1,00.html (last visited: 4. August 2004).

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other competitors together had 23%. 638 Table 55 shows the development over the past five years: The incumbent
telephone companies’ market share in the important retail business increased considerably from 1998-2002. In
the residential Internet access market (including dial-up) the telecom incumbent increased its market share from
36.1% to 41.2% in the five year period and the cable incumbent from 14% in 1998 to 35.5% in 2002. Those
gains came at the expense of competitors which market share has steeply declined from 49.9% to 23.3%. 639
Retail Internet Access
1998 2002
ILEC 141.7 (36.1 %) 1045.4 (41.2 %)
Cable 54.9 (14.0 %) 899.4 (35.5 %)
Competitors 196.1 (49.9 %) 591.9 (23.3 %)
Total 392.7 2536.8
Table 55: Retail Internet access
Specifically with respect to BB, incumbents market share increased from 80% (DSL) to 91% and remained at
virtually 100% in the case of cable. 640 Altogether, Canada is in a good position with respect to infrastructure
competition. Though smaller competitors are loosing to incumbents the situation is better than in many other
countries because cable infrastructure is a viable option for many people living in urban areas.
Closely related to infrastructure competition, pricing for BB access services is an important factor with regard to
penetration rates. CRTC conducted a survey and asked consumers about their choice of local, long-distance, and
Internet service providers. With regard to the latter, they regarded “price” as the most important followed by
“quality of service” and convenience. 641 In terms of BB pricing, Canada is also doing very well in a global
context. Table 56 gives an overview over BB pricing offers from October 2003. A 1 MB ADSL of the
incumbent Bell Canada cost 27 US$ while cable operator Rogers charges 34 US$ (in addition to installation
costs of 61$). Apart from low prices, Canada stands out in that 11MB broadband FWA are available at low
prices (23 US$). However, those services are not widely available. 642
8.31.2.2 Demand
This section gives an overview over recent developments in Canada relating to the supply of services/content
expected to boost demand for broadband, in particular addressing some legal and pricing aspects of VOIP
(Voice-Over-IP telephony) and VOD (Video-On-Demand). Both services are not only expected to have an
overall positive effect on broadband access and usage rate, but also promise to bring more competition to the
application layer (e.g. Skype is in competition with incumbent telecom carriers).
As in many countries around the globe, in Canada telecom and cable operators have been offering “triple play
services” (Internet, telecommunication and broadcasting services). 643 Moreover, (global) Internet-based
companies such as Skype and Apple's iTunes are new entrants and offer their services in competition with
incumbents. In Canada VOIP is being offered by a variety of companies. In addition to the incumbent Bell
Canada, Sprint, Vonage and Primus are now offering local phone services using (partly) IP technology. This
638 CRTC (2003), p. 53.
639 Annual CRTC report, at p. 53.
640 CRTC (2003), p. 57.
641 CRTC (2003) p. 120.
642 OECD (2004): Benchmarking Broadband Prices in the OECD, p. 20. http://www.oecd.org/dataoecd/58/17/32143101.pdf
643 http://www.cedmagazine.com/ced/2001/0901/09e.htm (last visited 20. September 2004).

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increases competition in the local phone market which has been traditionally been dominated by the incumbents
Bell Canada and Telus. 644 Vonage and Primus rely on VOIP only. 645
Company Access type Payment plan Speed (Kbps) Monthly
charge ($)
Incumbent
Download
Limit
Install.
charge ($)
Bell Canada ADSL DSL Basic 128/64 23 2 GB 19
Bell Canada ADSL High Speed 1024/320 27 Unlimited 0
Bell Canada ADSL High Speed Ultra 3072/640 46 Unlimited 19
Telus ADSL High Speed Internet 1500/512 27 0
Telus ADSL Enhanced high Speed 2500/640 34 0
Independent ISP access using incumbent local loops
DSL.ca ADSL 1.2 MB Home User 1200 31 Unlimited 0
Alternative infrastructure
Rogers CATV Hi-Speed Internet Lite 128/64 23 Unlimited 61
Rogers CATV Hi-Speed Internet 1500/192 34 Unlimited 61
Gulf Islands FWA GI Lite 11 MB 23 1 GB 0
PriS FWA Option B 2500/2500 22 1-6 GB 190
Table 56: Broadband prices in Canada October 2003
The price difference between VOIP and traditional PSTN communication services is one of the decisive criteria
for people to use a service. 646 If pricing of VOIP is sufficiently low to offset minor quality losses and
conveniance, VOIP might very well be a killer application triggering people to sign up for Broadband access. In
this respect, Primus offers its service for around 16 CAN$ and charges 140 $ for hardware. Vonage has a
monthly fee of 20$, a one time installation fee of 40$ but gives hardware away for free. Apart from those
charges, costs for Broadband Internet access are to be added. In comparison, Bell Canada is charging 25 $ line
rental and Sprint around 30$. Value added services (e.g. Voicemail, caller ID) are provided by all operators. 647
Exact subscriber numbers for VOIP are difficult to gather. Recent figures speak of 15 000 paying subscribers in
Canada. 648 It has been reported that by June 2004 a mere 23% of Canadians knew about VOIP. 649 However,
Analysys Research forecasts global VOIP penetration to be about 17% (or 11.7 million) of all Broadband
enabled households. The consumer and small business segments are estimated to be worth around 5.7 bill US$
644
Canada's Phone Giants Face Internet Threat By BERNARD SIMON; Published: May 5, 2004
http://www.nytimes.com/2004/05/05/business/worldbusiness/05canada.html?ex=1399089600&en=13703900736eb8c9&ei=5007&partn
er=USERLAND
645
http://www.canoe.ca/NewsStand/OttawaSun/Business/2004/05/12/455822.html (last visited 20. September).
646
CRTC (2003) p. 120.
647
http://www.canoe.ca/NewsStand/OttawaSun/Business/2004/05/12/455822.html (last visited 20. September).
648
http://www.canada.com/national/nationalpost/financialpost/story.html?id=d492a4dd-ffcf-44f5-9f4e-6fc5e0781e73 New tech threat to
telcos Internet telephones: BCE, Telus wary of consumer shift to upstarts' systems; Kevin Restivo Financial Post Saturday, September
18, 2004
649
http://andyabramson.blogs.com/voipwatch/2004/06/67_of_canadiens.html (last visited 20. September 2004).

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in 2008 (which is a mere 2.5% of the US telecom revenues of 2003). In the medium and large business
segment, Analysys Research indicates annual growth rates of 50% until 2008. 650
As for some legal aspects of VOIP, currently around the globe National Regulatory Agencies are discussing
whether telecom regulation should also be applied to Internet phone companies. In Canada, the NRA (CRTC)
took the preliminary view that Internet phone companies should be regulated in the same way as traditional
telecom operators because both types of operators offer similar functionality. CRTC takes the preliminary view
that technological neutrality requires VOIP operators to be subject to the existing regulatory framework. The
public consultation process is still undergoing so the position of the CRTC is not final. 651
A second killer application is expected to be Video-On-Demand (VOD) and online distribution of entertainment
content (e.g. iTunes). In this respect, the Internet allows for a distribution of digital entertainment content over
Broadband infrastructure. Costs have been considerable but are falling steadily. 652 With respect to VOD
offerings, incumbent telecom carrier Bell Canada is the largest operator of Digital TV (ExpressVu) but it does
not offer the service over its Broadband network. 653 Telus has applied in 2003 for a VOD license but does not
mention the service on its website (as of September 2004). 654 Currently, VOD over ADSL is only offered by a
few companies in Canada. For instance, SaskTel in the province Saskatchewan has launched VOD in October
2003. It has been reported that SaskTel has 14 000 subscribers in May 2004. Moreover, Aliant in Eastern
Canada is offering its TV on PC service. 655
As for legal aspects of VOD, in June 2004, the incumbent Canadian telecom carrier Bell applied for a license to
deliver cable over its DSL lines .While CRTC allowed phone companies SaskTel and Manitoba Telecom
Services to offer cable-style television services, CRTC noted that the dominant position of Bell in the phone
segment requires special attention. 656 No firm decision has been made yet.
Normally, obtaining a license to deliver VOD services in Canada is not a problem. However, legal obstacles for
the delivery of the VOD service exist in relation to contractual obligations imposed on the distributor by the
copyright holders fearing piracy and P2P networks. In this context, the Canadian Copyright Board stated its
opinion that downloading via P2P networks is fair use and therefor legal under Canadian copyright laws. In the
same decision, the Board stated that uploading is illegal and it imposed heavy levies (25$) on portable music
devices such as the iPod. 657 In addition, a Canadian federal judge ruled that filesharing is legal under Canadian
copyright laws. 658 The decision is being appealed by the Canadian Recording Industry Association (CRIA). The
basic principle is the same for music and movies. It remains to be seen what impact those decisions have on the
willingness of copyright holders to use the Internet to distribute their content on-Demand to Canadians and
therefore become a competitor to KaZaa in the market for on-Demand delivery of entertainment content.
8.31.3 Broadband policy 659
As for facilitation measures, CRTC has set up an Interconnection Steering Committee (CISC) which provides a
forum for interested parties with the help of CRTC staff to resolve local competition implementation issues of a
technological, operational or administrative nature. In addition, CRTC offers to mediate in case of conflicts.
Crucially, this saves time for formal proceedings. 660 One can also classify the setting up of the National BB Task
Force (NBTF) as a facilitation measure by the government of Canada. The Task Force provides advice as to how
BB can be extended to all Canadians. In 2001, the Task Force published a report and suggested therein two
alternative models which aim at increasing rural BB penetration rates in Canada. 661 The infrastructure support
model aims at providing incentives to stimulate supply of BB transport to eligible communities. There is direct
funding for both – infrastructure and access – for certain communities. The second model is the community
aggregator model which aims at stimulating demand for BB capabilities within currently unserved communites
by directly supporting a local “demand aggregator” (often a government institution).
650
http://www.analysys.com/default_acl.asp?Mode=article&iLeftArticle=1570&m=&n= (last visited 21. September 2004).
651
http://www.crtc.gc.ca/PartVII/eng/2004/8663/c12_200402892.htm (last visited 20. September 2004).
652
A good overview over costs of delivering a VOD service can be found on http://www.pointtopic.com/content/bmm/profiles/video+on+demand.htm&comp_id=783
(last visited 20. September 2004)
653
http://www.hollywoodreporter.com/thr/pwc/talking_display.jsp?vnu_content_id=1000617813 (last visited 20. September 2004).
654
http://about.telus.com/publicpolicy/broadcast_vodla.html (last visited September 20).
655
http://www.point-topic.com/content/bmm/profiles/video+on+demand.htm&comp_id=783 (last visited 20. September 2004)
656
http://www.friends.ca/News/Friends_News/archives/articles06090407.asp (last visited 20. September 2004).
657
http://www.cb-cda.gc.ca/new-e.html (last visited 21. September).
658
http://news.com.com/2100-1027-5182641.html (last visited 21. September).
659
Section 5 of the CRTC (2003) report contains a detailed list of public measures aimed at improving deployment of BB networks in
Canada. CRTC (2003), p. 94-110.
660
CRTC (2003) at p. 7.
661
National Broadband Task Force, The New National Dream: Networking the Nation for Braodband Access, June 2001.

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As for regulation, the most important decisions regarding competition in the communications market are to be
found in Annex 3of the Candian CRCT report of 2003. For instance, incumbents are subject to regulation in the
market for local telephon access. 662
As for broadband infrastructure, Canada adopts a very pro-active role. At federal level, one of the key initial
steps was the establishment of the National Broadband Task Force (NBTF) in early 2001. In their final report
the estimate costs for connecting all communitees to be between 2.8 and 4.6 billion within a three-year time
frame. The biggest cost factors are transport between communities (1.3 – 1.9 billion) and last mile access (0.9 –
2 billion). Two important federal initiatives that are currently being implemented are the Broadband for Rural
and Northern Development Pilot (BRAND) Program and the National Satellite Initiative. Both aim at connecting
unserved areas and unconnected communities. 663
Reagrding the BRAND program, not-for-profit organizations in remote communities can apply for funding for
the making of a business plan. If the business plan has been submitted and accepted further funds are given to
the community. After the first round (setting up a business plan) 2.4 million $ have been given to 89 projects. In
the second round, 65 proposal received additional 1.8 million $. 664 In total 105 million $ have been allocated to
this project by the federal government.
The Community Access Program (CAP) aims to establish free Internet access points in schools, hospitals and
other public centers. Moreover, Schoolnet deserves attention as it is a program which aims not to connect
schools, but to address the “human factor” and the people who are supposed to use BB and computers. In
particular, Schoolnet focuses on providing teachers and students with skills to use computers. Another federal
BB project is the establishment of the Canarie research network. 665 There is also an initiative (“Broadband
Marketplace”) where Communities can find help to develop and/or implement their broadband business plans
and can post requests for proposals for broadband services. 666
There are also a number of programs at provincial level. All of them fall either in the aggregator or infrastructure
support model. 667 Alberta Supernet will link 4700 government offices, schools and health facilities in 422
communities across the province which corresponds to connecting around 80% of its population. Importantly,
there are two areas – the Base and the Extended – Area which are to be connected seamlessly. The Base area
consists of 27 larger communities and Bell West is investing 102 million $ in the roll out. Once this roll-out is
done Bell West will own the Base Area network. The smaller 395 communities are in the Extended area. The
government is investing up to 193 million $ in the project and the government of Alberta will own this
infrastructure. AxiaSuperNet Ltd. Manages the whole network for a period of 10 years. The contract can be
renewed after this period. In the Extended area, ISPs will also be able to connect to AlbertaSupetNet.
AlbertaSupetNet connects schools, but not individual. In the Base Area bandwidth leasing for ISPs will not be
possible.
Saskatchewan's CommunityNet can be classified as a infrastructure support model. The government has
committed over 70.9 million $ to the construction of a broadband network which will link 1500 educational
institutions, health care facilities and other public institutions in 366 communities. 668 Two public sector
organizations owned by the province, SaskTel and the Saskatchewan Communications Network are providing
infrastructure and services. Importantly, SaskTel is able to expand its network to businesses and residential areas
in smaller communities with links to CommunityNet. In 2003, 74% of the population was reached in
Saskatchewan. The goal is to reach 95% of the population.
Yet another provincial program - the Villages branches du Quebec – falls in the second demand aggregator
model. The program aims to use its existing RISQ network in connection with – previously unconnected – local
and regional facilities. The main idea is to aggregate demand and use public institutions as demand iniators
allowing small businesses and residentials to “add their own demand”. The budget for the project is 75 million
$. The funding program resembles the BRAND program but specifically targets educational and municipal
institutions. Programs are equally being implemented in Manitoba, Ontario, British Columbia, News Brunswick,
Prince Edward Island, Noca Scotia, Newfoundland and Labrador. Figure 2 shows various projects aimed at
deploying BB in Canadas remote areas. 669
662
CRTC (2003) at p. 7.
663
http://broadband.gc.ca/pub/program/index.html (last visited 4. August 2004).
664
CRTC (2003), p. 96-97.
665
Http://www.canarie.ca (last visited 4. August 2004).
666
http://www.sourcecan.com/E/sb2410.cfm? (last visited 4. August 2004).
667
For a comprehensive overview over provincial initiatives see CRTC (2003) p. 98-107.
668
More info can be found on http://www.communitynet.ca. (lasdt visited 20 September 2004.)
669 CRTC (2003) p. 110.

8.31.4 Conclusion
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Table 57: Overview Canadian programmes to accelerate broadband deployment
Currently, Canada is a global leader in terms of BB penetration. However, 72% of the communities are not
connected with around 20% of the Canadian population living there. Given the fact that the vast majority of
communities are not connected yet, the countries size will make their digital inclusion more difficult. Satellite
technology and bundling of demand is currently coordinated and fostered in order to lower costs for BB
connection in rural areas. There are various initiatives which target deployment of BB in rural areas. Generally,
one can distinguish between infrastructure and demand aggregation measures. Canada is implementing – at
federal, provincial, territorial and municipal level – both types. In addition, there are measures in place which
aim to increase computer skills of teachers and students stimulating demand in the long run.
As for the market developments and competition in particular, from 1998 - 2002 incumbent telecom and cable
carrier have considerably gained market share in the broadband Internet access market. New entrants and
smaller competitors have lost considerably.

8.32 Non-EU country studies: Iceland
8.32.1 Introduction
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Iceland has a PPP-adjusted GDP per capita of 29 700 $ in 2003; the EU 15 average is 27 300 $ and the OECD
average is 26 300 $. 670 According to the new OECD GDP comparisons based on PPP, Iceland is a middle income
country and ranks 10 th in this statistic with a score of 111. 671 Rural population in Iceland accounts only for 7.4%
where the OECD average is at 22.9%. 672
As for resources, Iceland has a very useful freely accessible database which has been used in this report. In
particular, statistics relating to ICT have been taken from this database (respectively report). 673 The report
contains a informative list of tables describing ICT use in Iceland. 674
8.32.2 The broadband market
Iceland is in the leading tier when it comes to BB uptake rates. According to the OECD, only South Korea and
Canada have a higher BB uptake rate. This leading position is one of the main reasons why Iceland was chosen.
Figure 106: Use of internet
81% of the Icelandic people use the Internet. For instance, 74% use it to read newspapers and magazines.
Statistics Iceland reports that it is more common to find xDSL services in households with children (57-63%)
than were there are no children (46-54%). 675 Age plays a major role in use of the Internet but gender – at least in
Iceland – does not. Figure 1 shows that roughly the same percentage of Icelandic men and women use the
Internet. Figure 3 shows that Iceland has a higher user number than other Scandinavian countries (which, in
turn, use the Internet more than most other nations). 676 In 2004, 74% use the Internet at least every workday.
670
http://www.oecd.org/dataoecd/48/5/34244925.xls
671
http://www.oecd.org/document/15/0,2340,en_2649_201185_34256911_1_1_1_1,00.html
672
OECD (2004) The Development of Broadband Access in Rural and Remote Areas; p. 71. (OECD 2004). Available at
http://www.oecd.org/dataoecd/38/40/31718094.pdf.
673
http://www.hagstofa.is/template_lb_frameset_en.asp?PageID=325&intPXCatID=246&ifrmsrc=/temp_en/ferdamal/upplysingataekni.asp.
A.pdf version is available at:
http://www.hagstofa.is/template_db_frameset_en.asp?PageID=1236&ifrmsrc=/uploads/files/hag_040701.pdf&Redirect=False
Hagtidindi (2004), Statistical Series Information Technology, July 2004.
674
Hagtidindi (2004), p. 23-44.
675 Hagtidindi (2004), p. 6.
676 Hagtidindi (2004), p. 14.

Figure 107: Use of internet
Figure 108: Use of the Internet
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Statistics Iceland has a very interesting survey on how skilled Icelandics are when using computers. 677 (Figure
109) Except the most complex task (writing a computer program), there is not much difference between men and
women in terms of computer use in Iceland. This is important since the female population represents roughly
half of the Icelandic Internet population.
677 Hagtidindi (2004), p. 11.

Figure 109: Computer skill
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Figure 110 shows that there is hardly any alternative infrastructure in place: xDSL, ISDN and dial-up primarily
offered by the incumbent account for more than 90% of all connections. In 2004, 54% of all households are
connected via xDSL services. 678
Figure 110: Available connections
Hence, it seems that – in the case of Iceland – infrastructure competition is not essential for achieving such a
high uptake and penetration rate.
678 Hagtidindi (2004), p. 4.

Company Access
type
Incumbent
Payment plan Speed (Kbps) Monthly
charge ($)
Siminn ADSL ADSL 256 256/128 40
Siminn ADSL ADSL 256 256/128 61
Siminn ADSL ADSL 1500 1536/256 51
Siminn ADSL ADSL 2000 2048/512 87
Siminn ADSL ADSL 2000 2048/512 108
Independent ISP access using incumbent local loops
Og Vodafone ADSL ADSL II 512/256 40
Og Vodafone ADSL ADSL II 512/256 60
Og Vodafone ADSL ADSL IV 1024/512 40
Og Vodafone ADSL ADSL IV 1024/512 60
Table 58: Broadband prices in Iceland October 2003
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Download
Limit
Unl. Dom.
(100 MB Int)
Unl. Dom.
(1 GB Int)
Unl. Dom.
(100 MB Int)
Unl. Dom.
(100 MB Int)
Unl. Dom.
(1 GB Int)
Unl. Dom.
(100 MB Int)
Unl. Dom.
(1 GB Int)
Unl. Dom.
(100 MB Int)
Unl. Dom.
(1 GB Int)
Installation
charge ($)
Iceland Statistics made a survey in 2002 why people do not have Internet access at home. Only 1% cite access
costs as too high while 38% that “access is undesirable” and 19% have access somewhere else. 679 This seems to
indicate that new services need to be developed respectively the benefits of existing services shown rather than
lowering prices.
8.32.3 Broadband policy
The Icelandic Government is very active. 680 Measures regarding the content and infrastructure level include the
following:
One facilitation measure in relation to the information society (and implicitly to the crucial provision of public
BB services) is the setting up of a special management team which focuses on the establishment of egovernment
and which assists and encourages between 2004 and 2007 public institutions in their e-government
efforts. 681 Other committees with similar tasks are being formed in relation to technical aspects of electronic case
procedures, on the preservation of electronic data and on registering metadata for public information.
A comprehensive E-Government portal is being established. One important goal of this portal is
userfriendliness: a citizen should not need to know in advance which organisation provides the service he
needs. 682 Educational institutions specifically support and introduce distributed learning by offering courses on
the Internet. There is also an Educational Gateway. 683
Moreover, digital materials are increasingly used in classes. In this respect, Hvar.is is a portal which provides
Icelandic people (checked by their IP addresses) free access to more than 8000 scientific journals (e.g.
ScienceDirect) and 350 000 pieces of literature. 684 Parallel to this content related initiatives, teachers are to be
educated in using digital resources.
679 http://www.hagstofa.is/template_lb_frameset_en.asp?PageID=325&intPXCatID=246&ifrmsrc=/temp_en/ferdamal/upplysingataekni.asp
680 A summary of the national Information Society Policies can be found on http://eng.forsaetisraduneyti.is/information-society/nr/1248
681 Resources to Serve Everyone Policy of the Government of Iceland on the Information Society 2004-2007, p. 11. Icelandic Prime
Ministry (2004) . Available at: http://eng.forsaetisraduneyti.is/information-society//nr/1327
682 Icelandic Prime Ministry (2004), p. 12.
683 Icelandic Prime Ministry (2004), p. 22. http://www.menntagatt.is/
684 http://www.hvar.is/english/index.html
64
64
64
64
64
0
0
0
0

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The health care high speed network is expected to be fully operational in 2006. Electronic patient registers are
introduced, electronic transactions between State Social Security Institutions and health care workers are
expected to be implemented by 2005. 685 In addition, medical institutions are being connected via high-speed
networks. 686 This network is intended to be a channel for electronic communications within the health sector. It
is a closed system where access is restricted and as to ensure data security. The cornerstone of the network is a
name server which determines access rights. However, as this network builds on existing telecommunications
infrastructure it is more a virtual, software based rather than a real, hardware based network.
LangTec aims to preserve the Iceland language and culture in an increasingly converging world. The project is
publicly funded and co-operates with other similar Scandinavian project. 687
A high speed network connecting Icelandic Universities and Research Institutions with each other and with
other research institutions abroad is being rolled out. All compulsory schools and the leading cultural institutions
under municipal control should have high-speed connections by 2005. 688
8.32.4 Conclusion
Iceland is one of the leading countries in terms of broadband uptake. Factors which explain this leading position
are a very low number of people living in rural areas (only 7.4%), a high GDP per capita and general openness
towards new technologies. Interestingly, there is no infrastructure competition in Iceland – yet only 1% cite
prices as the main reason for not having BB Internet at home. Hence – in the case of Iceland – lack of
competition does not have a major impact on the broadband uptake rates.
685
Icelandic Prime Ministry (2004), p. 24.
686
Icelandic Prime Ministry (2004), p. 18.
687
http://www.tungutaekni.is/english.html
688
FS-net is a fast data transport network linking all the upper secondary schools and lifelong education centres in Iceland.
http://www.fsnet.is/

9. How to achieve broadband for all
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This chapter tries to analyse the results of the previous country studies. It looks at factors affecting broadband
development first from a classical theoretical framework, which is composed of the supply/demand -
infrastructure/content matrix. However, when drawing on the elements which were identified in the country
studies, it then uses a framework composed of four categories, i.e. country configuration, legacy situation,
competition, and public policy, where the key criterion is the susceptibility of the factors affecting broadband to
be themselves influenced by broadband policy. This approach allows identifying those areas where government
action can really make a difference. Finally, at the end of the chapter we have a quick look at some potential
inhibitors of broadband development.
Whilst this chapter thus focuses on what governments can do to help broadband spread, the following chapter
will look at one key aspect which private operators could improve: useability.
9.1 Introduction
The concept of “Broadband For All” refers to a situation in which broadband is not only available to every
citizen, but is actually used by all of them. In that respect it is a more demanding concept than the traditional
universal service obligation in telephony, which merely stipulates the availability, at certain conditions, of a
given service. The usage of information and communication technologies via broadband infrastructures by all
citizens is a policy objective because it is considered to be a key component of transforming Europe into a
knowledge-based society, thus enhancing economic growth and increasing employment.
For broadband there is no “universal service” obligation for companies to provide this service to all potential
customers requesting it to do so at a given price; nor is there a corresponding financing mechanism in place.
Therefore, operators will provide broadband only where it is profitable by itself or when specific government
incentives have made it profitable. In turn, consumers will demand broadband only where they see a benefit
which exceeds the prices which the operator is charging in order to make it profitable. Hence, on the market is a
classical case of supply and demand. However, on a second level, supply and demand are affected by a very
complex interaction between economic, technological and political/cultural factors. Technological aspects
include development of new transmission technologies and development of new types of services that can be
transmitted via a broadband infrastructure. Economic factors include market conditions such as the overall
market size and the level of competition. Cultural/political factors include regulation and other types of policy
intervention as well as differences in lifestyles or openness to new technologies.
There are several ways of classifying these factors for analytical purposes. One is to distinguish simply between
factors affecting supply and factors affecting demand, which factors are of course interrelated. The demand
depends on how and on what conditions broadband services are supplied. High quality services offered at low
cost generate more demand than poor services offered at high costs. On the other hand, a certain level of demand
is necessary to stimulate investments enabling supply of broadband services. Another obvious way of classifying
factors affecting the broadband market is to distinguish between content and infrastructure. High penetration of
broadband networks is only a means for the overall purpose of enabling communication and two-way
interaction. Yet broadband development is normally measured by the number of connections, and not by the
content delivered via the broadband infrastructure. Development of content and infrastructure may stimulate
each other, but the factors influencing content and infrastructure may not be the same.
9.1.1 Supply of content
Broadband enables distribution of new services that either did not exist or were only available off-line. Current
examples are online music platforms, Video on Demand (VoD), Voice over IP (VoIP) and web-based software
applications; for instance, Internet Protocol TV (IPTV) launched its new services in France (MaLigne tv) and
Spain (Imagenio). Future applications are expected to be video-conferencing, broadcast multi-casting and
increasingly interactive content. An important driver is the ability to develop new converging services
combining features from services used to be distributed through separate delivery channels. There is however a
number of economic and political challenges related to this. For instance, VoIP is threatening to cannibalise

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revenues of established (incumbent and new entrants) telecom operators and the availability of (audio)-visual
content is considerably affected by intellectual property protection in form of law and technology 689 .
Development of new business models and pricing schemes are key drivers for both generation and demand for
content. One of the factors behind the success of the Internet has been a charging mechanism where the end-user
pays distance independent price and where most content is free. On the other hand this model has had clear
limitations with regard to content generation, as it seems difficult for users to accept payment for certain types of
content.
Supply of content is difficult to quantify and compare. In theory the supply of content is the same from
everywhere, as one will be able to access the same content once the infrastructure is in place. But different
languages and preferences towards locally produced content imply that users may experience national
differences. Relevant measures for supply of content, which can be used for international comparisons, include
the number of digital broadcasting channels available, number of Internet hosts etc, but these numbers will never
tell the full story and can only be used as indicators.
9.1.2 Supply of infrastructure
The infrastructure aspects relate to the broadband network itself. The development of supply depends on
existing network facilities as well as the level of investments. Network operators are mostly commercially
oriented companies that assess their investment opportunities according to the return of investments. The
viability of investments in broadband depends on the level of total costs compared to expected revenues.
The most successful access technologies for broadband have so far been ADSL and cable modems. Cable
modems offer generally higher bandwidth and are cheaper than ADSL services, but cable networks are not as
widespread as telecom networks. Cable modems are only offered to a certain segment of users mainly in urban
areas. Wireless connections such as 3G and FWA have so far a limited penetration. 3G services have today
some success in Japan and South Korea and are expected to take off in other countries as well. However the
bandwidth offered is limited and can hardly be a full substitute for a wired broadband connection. FWA is more
expensive and is mainly used by business users, but may be an attractive solution in rural areas not served by
ADSL or cable. Finally WLAN technologies may be used for providing broadband access in public spaces or in
neighbourhoods.
In addition to telecom and cable-TV networks other types of infrastructures provided by municipalities or power
companies may be used as a basis for provision of broadband services. Local community associations may also
be a driving force in provision of broadband e.g. through existing cable networks or by use of WLAN. Some of
the largest of these networks are established in co-operation with the municipalities. This has been the case in
e.g. Germany and in Denmark. Unlike network investments made by telecom or cable operators, these initiatives
are customer driven. Pooling of demand by group of customers can be a very effective tool to decrease prices by
benefiting from economies of scale. Rather than approaching the network operator individually, communities
considerably strengthen the bargaining power of the customers. Incidentally, such initiatives also stimulate
demand 690 .
The extent to which these technologies can be applied by use of existing network structures affect the total cost
of investments needed for supply of broadband services. The development of broadband facilities depends on
the total cost of investment and on the revenues that these facilities can be expected to generate. Expected
revenues depend on demand: the number of customers and the prices that can be charged for delivery of
broadband services. In addition to this, the market structure – first of all, the level of competition – plays a key
role in driving supply.
Infrastructure supply is also helped by standardisation. Increased industry-wide commodisation of network
elements and modularisation of infrastructure allow easy third party interoperability. In other words, the more
industry standards emerge, the more third parties investments can complement the investments by the network
operator itself. This is of particular relevance in relation to the high level of debts of many network operators.
689 See section on “Inhibitors”
690 see section on “Public policy”, sub-section on “Facilitation”

9.1.3 Demand for content and infrastructure services
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As the demand for broadband infrastructure is driven by the demand for content, the drivers for services and
infrastructure are highly interrelated although the indicators for the level of demand are different. The most
important economic factor is income compared to the price for a broadband connection. Another socio-cultural
factor can be termed the e-readiness of the society, a combination of skills, availability of terminal equipments
and openness to new technologies.
As a general rule, households with broadband connections are using the Internet longer than those with a dial-up
connection. For example, in Finland people who acquired broadband connection in 2003 increased their weekly
Internet use by 4 hours. There are basically four reasons for that. Firstly, households which use or intend to use
the Internet a lot are more likely to acquire broadband connections – in other words, broadband households are a
self-selecting group. Secondly, the demand for services already accessible under dial-up increases because they
become more comfortable – web pages appear faster, e-mail messages take less time to download. Thirdly, since
broadband is usually priced at a flat-rate fee, the marginal connection price of consuming additional services is
zero, which means that demand is economically unlimited (of course, it remains physically and socially limited,
since it is impossible to spend 24 hours a day directed to the Internet terminal). Finally, households with
broadband access can consumer certain services which are not available over dial-up access 691 . For example,
Voice over IP requires always-on connection. Some of the most important services actually require “broadband”
in a stricter definition than the 256 kbps definition used for most statistics – video-on-demand needs bandwidth
of at least 1 Mbps.
Although households dominate demand in the most advanced countries, the use of broadband in businesses is
important in the less advanced economies. Business applications may also stimulate demand from households.
Therefore, the structure of the economy is important for overall demand. An economy dominated by
informational activities must be expected to generate more demand for broadband services than an economy
based on agricultural production.
691 For a detailed discussion see chapter on Broadband Applications and User Needs

9.2 Factors influencing broadband development
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However, for analysing potential policies based on the country studies, it would appear to be more useful to
classify the factors impacting on broadband development according to how much they are subject to influence
by policy makers. Therefore, we have grouped them into four large groups, which we call the configuration of
the country, the legacy situation, competition and policies, going from those factors least susceptible o change to
those most susceptible to change. Strictly speaking, the competitive situation is not a set of factors in itself, but
the result of a combination of the legacy situation and policies, but we have given it its own chapter before the
chapter on policies, because understanding policies requires understanding the nature of broadband competition.
Interestingly, the country configuration is mostly composed of factors affecting demand, while the legacy
situation is mostly contains factors affecting supply; public policies affect both, but with demand as the ultimate
objective.
9.2.1 Country configuration
The first group of factors belong to what we would call the configuration of the country in question. This is a set
of fundamental characteristics such as population density, income etc. which usually affects pretty much every
development in that country. They are therefore not specific to broadband roll-out, but influence it nevertheless
heavily. Importantly, since they are fundamental characteristics, they can not be changed by any broadband
policy, but must be taken as given. True, they can change over time – for example population density can
increase, or the country can become richer – but this will take long periods, and will not happen for a specific
purpose, and certainly not for such a narrow purpose as broadband roll-out.
Let’s start with the most obvious factor: income, i.e. GDP per capita. Clearly, income levels have strong
influence on broadband development. The more income households have at their disposal, the more they are
able to purchase broadband services, if they so desire. This ripples through to businesses: although for
businesses in countries with low income broadband may be affordable, it is not profitable for them if their
customers do not have access, too. The same is true for content development: only where the potential customers
have sufficient income will content be developed.
However, the relationship between income and broadband roll-out is not necessarily linear. As one can see from
the country studies, the richest country, the US, is not at the top of broadband, while countries such as Iceland or
especially South Korea, which are less wealthy than the US, perform much better than their income would
suggest. This is despite the fact that for example in South Korea, the most successful broadband country,
customers spend a much larger share of their income on broadband communication than in any other country.
Among the EU countries with broadband development not corresponding to their income levels the most
striking ones are perhaps Estonia in a positive sense and Ireland in a negative sense. Absolute income levels
clearly have a significant influence, but do not determine the outcome.
Closely connected to income levels is income distribution. What is decisive for broadband roll-out is the number
of customers with the necessary purchasing power. For any given average per capita income, this number can
vary. Interestingly, the best income distribution for broadband depends, at least in the short term, on the income
level. In a rich country, a fairly equal income distribution will lead to a large number of potential customers,
because few will be too poor to afford broadband. This is for example the situation in the Netherlands. In a poor
country, on the contrary, an equal distribution of income will ensure that nobody can afford it. Paradoxically,
there only an unequal distribution of income ensures that at least some people have the necessary purchasing
power.
A second factor within the country configuration is the population density. Korea and Japan provide good
examples on how high population densities can facilitate broadband development as fibre roll-out to major
building blocks can be done at fairly low costs per subscriber As a rule of thumb, the higher the population
density, the easier broadband roll-out is, since a larger part of the network can be shared between several users,
which means both that infrastructure costs are lower and that due to the decreasing marginal cost of capacity – a
cable with 2x capacity is cheaper than 2 cables with x capacity each – network costs are lower, too. In addition,
the closer the trunk is to the individual customer, the more intelligent network architecture can increase capacity
by allocating it flexibly.

Figure 111: Europe's population density. 692
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However, the headline population density figure can be misleading. For example, a country like Spain has a low
population density, but a large part of the population lives in very high-density areas such as apartment blocks.
The extreme case of this situation is Canada, which has an extremely low population density, but a very high
concentration of its population. Therefore, as long as broadband penetration is fairly low, Canada’s headline
broadband penetration figure will resemble that of a densely-populated country, but will be in danger of falling
behind later, when the focus shifts to the second half of the population, which is not living in the same 0.03% of
the territory as the first half. On the other hand, a country like Belgium has a very high population density, but
urban sprawl has spread out a much larger share of the population in single-family houses in the suburbs.
Another aspect is the demography of a country. Traditionally, technologies have been taken up more quickly by
children and young adults than by their parents. This certainly held true for the Internet take-off in the 1990s.
Since then, older population groups have made much more rapid progress than anticipated; nevertheless, they
still lag behind their descendants, and will probably continue to do so. Therefore, countries which have a
younger than average population (among our country studies that concerns the US, Canada, Iceland and Ireland)
have an advantage when it comes to broadband take-up.
A somewhat more speculative factor for the take-up of home-based communications technologies is the climate.
The uptake of the Internet within Europe and within the US was certainly very strongly correlated with the
climatic conditions; in both cases the northern areas with severe winters outperformed the southern ones in athome
connections, while this was not the case for the parallel spreading of mobile telephony. For broadband, the
692 Source: http://www.iiasa.ac.at/Research/ERD/DB/mapdb/map_9.htm

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same correlation seems to hold for the moment, with the Nordic countries and the rainy central countries
(Netherlands, Belgium) outperforming the countries further south.
Another factor of undoubted importance but of nebulous nature are the cultural characteristics of a country.
Countries which are open to foreign influences (Belgium, Netherlands), embracing new technologies (South
Korea, Japan), or do not put much weight on hierarchy (Iceland, Denmark) are in a better situation when it
comes to broadband take-up than their opposite numbers. Equally, the time spent at home is due not only to
climate, but also to cultural traditions.
Finally, a factor which was a key in the development of the Internet which seems to be slowly losing importance
is the knowledge of the English language. Since a large part of the Internet content is in English, the countries
where English was widely spoken or at least understood had an advantage. This advantage has diminished as the
total available content grew, despite the fact that English remains dominant, because the content in various other
languages has reached a critical mass sufficient to attract consumers unable to understand English. It remains to
be seen whether this advantage will temporarily re-emerge when it comes to pure broadband content (i.e. content
that is usable only with a broadband connection, such as video-on-demand – see somewhere else).
The ideal country configuration is therefore a rich country with a fairly equally income distribution, a high
population density where a relatively young population is concentrated in urban areas rather than suburbs, bad
weather and widespread knowledge of English – in other words, the Netherlands.
9.2.2 Legacy situation
The second group of factors belong to what we would call the legacy situation. This is a set of characteristics of
the telecommunications networks such as fixed-line density or network ownership, which is mostly the result of
historical developments. They are specific to network development, and can in theory be changed by broadband
policy, although this might be difficult and time-consuming, or politically delicate.
The first factor in this group is the extension and the configuration of the telephone network. This a key
determinant for the ability to roll out DSL broadband connections quickly, since DSL requires the presence of a
phone line. Therefore, where phone lines already exist, it is sufficient to upgrade the switches to install DSL,
while otherwise a line must be established first, which is much more expensive. Also, widespread availability of
fixed lines means that consumers had a chance to experience dial-up Internet, resulting in a higher probability
that they demand broadband than if the Internet was new to them.
In this respect there is a clear difference within Europe between the old and the new member states. Whereas in
the former pretty much every household had a telephone line, this service was only available to a minority in the
new member states. Despite some catch-up by the newcomers in the 1990s, the gap remains and their growth in
fixed lines has come to a standstill or even gone into reverse in the last couple of years, with the notable
exception of Poland. In some of the old member states the number of fixed line subscriptions is decreasing
rapidly, in particular in Finland and Austria, as fixed telephony is substituted by mobile telephony, but the
resulting similarity in lines per population can be misleading: Austria now has a slightly lower number of main
telephone lines per population than Slovenia, but the deactivated lines are still there and could be reactivated for
DSL at any time – the share of customers which could be reached by DSL with simple upgrading of the switch
is still much higher in Austria than in Slovenia.
Regarding the technical configuration of the networks, there is a gap between the old and new member states
concerning digitalisation. For example, Finland completed the digitalisation of its fixed line network in 1996,
while Slovakia had digitalised only 86% at the end of 2003. However, this gap is progressively closing.
Regarding average length of the local loop, which is important for the bandwidth which DSL can provide, the
differences are more country-specific. For example, in Italy more than 80% of twisted pair connections are less
than 2 kilometres in length, giving it a structural advantage over countries with a higher share of longer local
loops.
The second factor in this group is the existence of a cable network. The presence of a cable network enables
infrastructure-based competition 693 between DSL and cable, which are currently the two main broadband
technologies. Whether or not a country has an extended cable TV network depends on historic circumstances,
and the coverage varies enormously from country to country. Belgium and the Netherlands are as good as
completely covered by cable, while Italy has no cable network to speak of. In most countries cable networks do
exist, but are limited to the cities and densely populated suburban and exurban areas; they rarely cover the rural
or remote areas.
693 see section on “Competition”

Greece
Ireland
Norw ay
Italy
France
AVERAGE
Austria
Spain
UK
Germany
Finland
Portugal
Iceland
Denmark
Sw eden
Netherlands
Luxembourg
Belgium
4%
4%
10%
20%
26%
29%
31%
32%
31%
31%
40%
45%
Figure 112: Population coverage by cable and DSL in EU 15
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100%
100%
A key factor for the impact of the cable network on competition is its ownership. In some countries, the
telephone network and the cable network belong to the same owner, either for historical reasons (Germany) or
because they were recently merged (Portugal). Germany is a special case, because it has a very complicated
ownership structure of the various levels of the cable network, and because the ownership has been partially
separated from the telephone incumbent recently. In other countries, such as the UK, the cable networks are run
by completely different owners from the telephone network. In many cases, however, there exists a mixture
where the telephone incumbent owns one of several cable operators.
Other elements of the legacy situation are less centered on the networks themselves, but rather focus on the
potential customers. For example, the number of existing computers per capita clearly has an influence on
broadband development, because their owners face lower connection costs, as they already own the terminal. It
can also be used as a proxy for the ICT skills of the population, since computer owners typically have at least
basic ICT skills, whilst people without computers are likely to lack these skills. More generally, education levels
influence broadband demand, too, because better educated populations tend to have more varied interests and
therefore have more to gain from the vast array of specialist offers on the Internet.
The ideal legacy situation is therefore a country with a completely digitised, widely available telephone network
which is in competition with a widely available cable network under different ownership, high level of computer
ownership and of general education – in other words, the Netherlands. No wonder the Netherlands have the
highest broadband penetration in the EU and now also the fastest growth in the OECD (although South Korea is
still has the highest penetration rate).
50%
61%
60%
66%
74%
75%
Cable modem
DSL
83%
84%
85%
82%
86%
87%
87%
90%
91%
91%
92%
95%
95%
0% 20% 40% 60% 80% 100%
Source: IDATE, Development of broadband access in Europe", Third survey, 30 June 2004
99%

8
7
6
5
4
3
2
1
0
Source : OECD
9.2.3 Competition
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OECD Broadband penetration (per 100 inhabitants) net increase 2003-2004, by country
OECD net increase
Netherlands
Switzerland
Norway
Luxembourg
Denmark
Finland
United Kingdom
France
Japan
Australia
Iceland
Italy
Belgium
Sweden
Portugal
United States
Spain
Germany
Canada
Austria
Ireland
New Zealand
Hungary
Poland
Czech Republic
Slovak Republic
Korea
Mexico
Turkey
Greece
Figure 113: Increase in broadband subscriptions 2003-2004
For actual penetration rates see introduction to chapter on country studies
One of the most crucial factors influencing the spread of broadband is competition. The existence of several
suppliers on the market has several consequences. Firstly, it tends to lower the price. Although it is also possible
to lower the price to the consumer by government intervention, for example by tax breaks or direct subsidies 694 ,
price decreases by competition have the advantage that they represent improved efficiency rather, and do not
cost the government anything. Lower prices, in turn, increase demand, and the price elasticity for broadband is
clearly high – rapid price decreases like in France over the last eighteen months have led to equally rapid
increases in uptake.
Secondly, competition typically improves marketing. Where a single supplier is on the market, especially if it is
a long-established and well-known company, marketing tends to be neglected, while new entrants must heavily
invest in marketing to make potential customers aware of their presence. As a consequence, the product that
both incumbents and new entrants are selling is much more promoted than before. A third effect of competition
is the faster introduction of new products and services. This can be in terms of technical characteristics, such as
higher bandwidth, or in new services, such as ringtone downloading, or even in new packaging of existing
products. For example, in France the introduction of a very simple pricing model by Freebox contributed to the
DSL boom by creating unprecedented price transparency.
Competition would ideally require completely independent suppliers, which would mean independent networks.
Usually this is referred to as infrastructure-based competition, and in practice this means competition between
the telephone network and the cable network. However, in principle there could also be competition between
several networks of the same technology. Whilst this is unlikely to happen, at least for the last mile, for cable or
telephone lines, it is quite conceivable that such competition will exist for some of the new technologies, either
dynamically, or statically, or both. Dynamically would mean the race between several operators to install, say, a
WiMax network before the other, while statically would refer to several WiMax networks operating in parallel
on the same market.
Whether it makes sense to have several networks or not on any given market comes back to the question of the
so-called natural monopoly. If the investment costs account for a large share of the overall cost, and if they
according to forecasts it will take a long time to amortise these costs, it is uneconomical to invest in several
networks. In those cases it might be a better solution to create competition on a single infrastructure network, in
694 See section “Public policy”, sub-section “Direct intervention”

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so far as possible. Note, however, that the “natural” monopoly is not natural at all: it depends on investment
costs and forecast revenues. New technologies or price decreases in existing technologies can transform a
natural monopoly into a natural competitive market. In particular, fixed wireless or WiMax technology may
allow for competing broadband networks in rural areas where the telephone network currently would seem a
natural monopoly.
Competition on a single infrastructure is a complex concept, both in theory and in practice, especially if the
infrastructure is owned by one of the competing service providers. In theory, the key issue is the impact of
introducing competition on the incentives for building alternative infrastructures: it has been argued that if
operators expect that they will have to grant competitors access to their networks, they will be less inclined to
invest in new infrastructure. That is the reason why the EU unbundling requirement applies only to the longestablished
telephone networks; however, in Denmark it applies as well to optical networks. A secondary issue
is that by sharing an infrastructure operators will gain insight into competitor’s cost structures, thus facilitating
tacit collusion.
In practice, competition only takes place on a single infrastructure for the last mile. In the EU, this so-called
unbundling of the local loop is part of the common regulatory framework, and is applied by the National
Regulatory Authorities (NRA) in each member state. Usually, this has been a very conflictive process. New
entrants tend to complain that the incumbent is delaying every step on the way and that they are overcharged for
their use of the network, while incumbents moan that interconnection prices do not allow them to earn a decent
return, thus preventing them from investing into network improvements. Faced with a number of complex
technical and economical arguments, the NRAs have a certain margin of interpretation. By using this margin of
manoeuvre constructively, they can enhance broadband development significantly. For example, the French
NRA is widely considered to have triggered the DSL boom in France by tough pro-competitive measures, which
resulted in the above-mentioned price decreases. Outside the EU, new entrants have been offered access to
existing telecom facilities such as ducts and dark fibres on very favourable terms in Japan, and this is often
mentioned as one of the key factors behind the very rapid development in penetration of broadband.
Figure 114: Number of unbundled lines in France

9.2.4 Public policy
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Public policy includes the factors which are by definition changeable, because subject to political choices.
Therefore, public policy may be an important factor for stimulation of both demand and supply of broadband
services. Most governments are well aware of the importance of the development of broadband communication
for economic growth, employment rates and social welfare in general. They recognize that any information
society fundamentally requires a sophisticated and reliable broadband infrastructure as the transmission link
enabling citizens to access an ever growing repertoire of e-services and e-goods. Most countries have therefore
defined policies for the promotion of the information society. Policy initiatives vary from country to country, but
within Europe they have been coordinated, where the EU has launched the eEurope programme, which was a
part of the Lisbon strategy aiming at improving growth and employment in Europe (eEurope - An Information
Society for all 2002) and is now followed up by the i2010 initiative. Therefore it is not surprising to note that the
strategies of most EU member states in our country studies are remarkably similar. As part of these initiatives,
all member states were supposed to present national broadband strategies by the end of 2004, but six of the new
member states have so far failed to do so695 .
Variation is bigger on a worldwide scale. Some countries have focused on manufacturing of ICT equipment
(South Korea), while others have put more emphasis on the application of ICT technologies (Iceland). They also
differ in their prioritisation and intensity of governmental support. Some countries provide financial support for
projects stimulating use or production of ICT (Sweden), while others focus on creation of a competitive
environment e.g. through liberalization of the telecom sector (the UK), and the remedies therefore range from
direct subsidies, access (price) regulation and tax incentives to other less far reaching facilitation measures such
as increasing transparency in the market place. Even so, most programmes can be said to consist of a mix of
telecom regulation, e-government, education, industrial and competition policy.
To have a closer look at the various policy options, we have classified them into three groups: facilitation,
regulation or intervention.
9.2.4.1 Facilitation
Facilitation measures are the mildest, cheapest and least controversial form of market interference. Facilitation
measures lack the formal features of regulations (decisions and orders) and do not have legal consequences for
third parties. In most cases, regulators or other governmental bodies merely act as market observers without any
regulatory powers. The objective of facilitation is to ensure a good environment at the market for broadband
services without direct intervention in the market.
One particular type of this kind of industrial policy is ‘guideposting’, where a public institution takes the lead in
creation of a common vision on future developments. Many national plans for the information society, e.g. the e-
Japan plan, play this role, as did the eEurope initiative. Regulatory bodies may also play an active role in
increase of market transparency inter alia by providing information on prices, on availability of products and on
consumer rights. In relation to broadband access points, NRAs can offer price comparisons, product
descriptions, geographical availability and the like. In many cases operators are required by law to provide this
information anyway. As long as sensitive information is not included, increased market transparency can be
tremendously effective in improving the competitive situation and thereby stimulate investments in broadband
facilities.
Demand aggregation is another facilitation measure. By grouping demand of various institutions, such as the
local hospital, the local school and the local library, sufficient demand can be created to entice an operator to
serve an area previously considered unprofitable. In Ireland, the concept has been extended to a website
enabling potential individual users to register their interest in subscribing to a broadband service with only
aggregate data being passed to service providers. Interestingly, in the UK the private operator BT has equally set
up a website where people living in rural areas can express their interest in broadband services.
The non-jurisdictional settlement of disputes between companies would also fall in the facilitation category. For
example in Canada the regulator has set up a forum for interested parties, with the help of its staff, to resolve
local competition implementation issues of a technological, operational or administrative nature; it also offers to
mediate in case of conflicts. These are facilitation measures because the competence to make a binding
settlement depends on the willingness of the companies to abide with decisions taken by the authority. This is
different from traditional regulation where companies are subject to the decisions regardless of their consent.
695
SEC(2005) 717/2, Commission Staff Working Paper: Extended Impact Assessment of “i2010 – A European Information Society for
growth and employment”, COM(2005) 229

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The lack of formality and possibility to bind third parties distinguish facilitation from regulation. For instance,
when a NRA decides to provide an information service which allows users to search for broadband access
services by typing in their postal code, the NRA does not adopt a decision or order. Facilitation measures serve a
very important function: They provide market information at no costs to the individual. Indeed, it is very costeffective
if a NRA uses the information provided to it by communication companies to increase market
transparency - one of the core assumptions of perfect competition. Even more importantly, they do not impose
economic costs on operators. There may be compliance costs – providing data -, but operators will not be
obliged to take decisions which are not economically optimal.
9.2.4.2 Regulation
Regulation is a direct form of market interference. Formally, regulation is characterized by its legal form and by
its legal consequences. Generally, though the nomenclature differs from country to country, a distinction can be
made between "decisions" binding only parties in current proceedings, and "rules" which generally bind third
parties, provided the subject fulfils the conditions set out in the rule.
In almost every country, regulation has been redesigned in order to promote competition in the telecom sector.
Regulatory measures include obligations on interconnection and local loop unbundling696 as well as other
measures supporting new entrants in their competition with the incumbent operators. Competition is often seen
as the most important objective for regulation, since more competition usually means lower prices and therefore
higher demand, without incurring the cost of subsidies or tax breaks. However, regulation also addresses
consumer protection, universal service and innovation. Regulation of content deals with a number of new
problems created by digitalisation and convergence of services. These include IPR, consumer protection with
regard to e-commerce and e-payment etc.
An important aspect of regulation is the way it is implemented by the NRA. Rules and decisions must be
transparent, fair and free from political interventions in order to attract new market players. Therefore the
competence and the independence of the regulator is an important parameter. The drafting of regulations and
their implementation are highly controversial, since they typically have an economic cost for at least some of the
companies – indeed, if companies would behave by themselves as required by regulation, there would be no
need for it. In addition, they are by necessity fairly detailed, for example on interconnection pricing. For these
reasons, they have given rise to numerous disputes and will most likely continue to do so. Within the EU, the
implementation of the current regulatory framework is subject to an annual detailed report697 .
9.2.4.3 Direct Intervention
Direct market intervention is a strong form of governmental market interference. Essentially, direct intervention
means that public authorities are either providing the services themselves or pay for it to be provided. While in
all cases it will alter the market outcome – this is its purpose – it may or may not affect competition. For
example, a public call for tenders to provide broadband to remote areas in exchange for subsidies will affect the
outcome, because the village will have broadband access, but if properly done it will not advantage one operator
unfairly over another. Public funding has the same objective as pro-competitive regulation, i.e. to increase
demand by lowering the price to the end user.
Many government plans including i2010 and e-Japan stress that it is important that it is the private sector which
takes the lead. The reality is however, that there are numerous examples of public funding of infrastructure
projects providing broadband. As seen in the country studies, some governments have provided funding for
provision of broadband services in certain disadvantaged areas (e.g. Sweden, Canada) or intend to do so
(Poland, Slovenia etc.), and virtually all governments intervene to provide broadband for schools, hospitals,
libraries and research networks. However, depending on the country it may be regional authorities rather than
the central government who take the lead (e.g. in the US).
One problem of government funding to encourage the spread of broadband is the identification of groups of
citizens which need this subsidy. The example of the Internet shows that many of the groups which were
supposed to need special help managed perfectly without: first women were less online than men, then they
caught up; old people went online much slower than young people, but then recovered a lot of that gap by
themselves. In general terms, the adoption of successful new technologies follows an s-curve: the early adopters
are followed by the bulk of the population, which in turn is followed by the latecomers. However, at the end,
some parts of the population will remain who need special assistance to acquire the new technology. Often, it is
impossible to predict which group this will be exactly. This creates a dilemma for policymakers regarding
696 see sub-section on competition
697 The latest report is the 10 th annual implementation report of 2 December 2004, COM(2004) 759 final

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broadband: if they start financial subsidies too early, it will boost their ranking in international comparison,
because the bulk of the population will take up broadband more quickly, but for any given amount of subsidies,
the long term penetration rate will remain lower, because the available funding will not reach those parts of the
population which would really need it.
As mentioned above, governments therefore often concentrate their funding for broadband development on rural
and remote areas, assuming that the population living there will be the group not getting broadband otherwise,
while they suppose that other areas, in particular city areas, will be connected by market forces alone. However,
some examples of successful government action, such as the ability to provide tax-free broadband connections
to employees in Denmark, are not so precisely targeted. As expected, this has encouraged early take-up by the
bulk of the population, but it is unlikely that it will help the neediest groups to acquire broadband. In general, tax
exemptions as a form of government funding are more difficult to target, because they depend on estimates of
who will take advantage of the offer, as opposed to direct funding, where the government can exactly define the
beneficiaries.
Support to content development is most often given through the development of public sector activities such as
e-government, e-health, e-education and e-democracy. E-government initiatives can be seen as a sort of direct
intervention in content production as the public produces its own content, which can stimulate demand for both
content and infrastructure. Production of public content can also contribute to the upgrade of user competences
and thus stimulate private content production. If the public sector out-sources parts of the content production,
this will help creation of a private industry for content production
A related kind of support is financing of educational content; this is done for instance in South Korea. Finally,
the public authorities can also support development by upgrading competences and readiness for new
technologies through extensive training programmes. Training and education is important both for demand and
supply, as both users and producers of broadband services can benefit from this. Since governments usually
have a responsibility for education anyway, this is often not considered as a specific support measure. However,
for example South Korea’s ICT training for housewives, the military and disabled people (in addition to the
more traditional elementary and middle schools) clearly went beyond standard education policy.
9.2.4.4 Public policy: conclusion
Public policies pretty much everywhere focus on the take-up of the available services – in other words, they
foster demand. This makes a lot of sense, since the reasoning behind broadband strategies is that they allow the
knowledge-based society to develop by connecting all citizens. Supply in itself or to limited but profitable target
groups is therefore not in the public interest, but only supply which is widely taken up. Strategies to foster
demand usually have two elements. Firstly, they attempt to lower the price to the consumer. This can be done by
encouraging competition, via regulation and facilitation, or by financial support, via direct subsidies or tax
breaks. Secondly, they attempt to increase the attractiveness of broadband, by content creation in public services
such as e-government, e-health, e-democracy, and by training for ICT skills, which enables consumers to use
their connection better. Regulation, by encouraging competition and therefore marketing and new services, can
also contribute to increase attractiveness.
Facilitation Regulation Intervention
Lower prices Market transparency
Demand
Competition: prices Tax breaks
Increase
attractiveness
Foster investment
Websites indicating potential
demand
Competition: marketing, new services
Consumer protection
Supply
Unbundling Subsidies
Table 59: Public policy tools
e-gov, e-health… ICT
training
On the supply side, public policy can lower investment costs for new entrants through local loop unbundling
requirements, while demand registration via websites reduces the risk involved in any roll-out decision. And
where the prices required to make investment profitable for companies are too high for demand to be effective,
e.g. in remote areas, subsidies and tax breaks can drive a wedge between the price to the operator, which
remains profitable, and the price to the consumer, which becomes affordable. However, such financial support is
limited by the availability of funding. How much funding is made available depends on the political choices of
each country: on how much it thinks is necessary, given its configuration and legacy situation, and on how much
of a priority is accorded to broadband development.

9.3 Inhibitors
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Despite all the advantages of broadband, there are also some problems which broadband users have to
overcome. The first relates to intellectual property. Currently, a large part of the network traffic is peer-to-peer
file sharing, some of which concerns collaborative working and other legitimate uses, but most of which is
downloading music, and, increasingly, movies over the Internet. For example, in Sweden up to 85%of a typical
ISP’s capacity was recently estimated to be used for peer-to-peer file sharing 698 . As the intellectual property
holders are getting ever more aggressive in pursuing unauthorised downloading, this may reduce the
attractiveness of broadband. At least the music industry has, after much resistance, recognised the potential of
the Internet as a legitimate channel of distribution and set up its own offers, while the movie industry is not yet
that advanced. In theory, paid music downloading should mean that peer-to-peer could continue its growth, but
while respecting copyright. However, in practice the digital rights management systems tend to be very
restrictive and are likely to reduce consumption unnecessarily. In any case, the payments to copyright holder
will naturally reduce demand by increasing the cost of downloading.
A second problem is security. The always-on character of broadband connections makes end-user machines
visible to the Internet. According to some estimates, most spam mail is now sent by broadband-connected
consumer machines that have been converted to mail generators and gateways using security holes. Automated
scanning tools enable systematic search of vulnerabilities in broadband-connected end-user machines, and
several viruses have been created that do this without human intervention. As the number of broadband users
grows, there is no guarantee that their computer security competences would quickly improve. If end users
realise that machines in their homes are used to send spam and viruses across the world, they may start to view
broadband connections as harmful and dangerous. The psychological effect of finding out that one’s personal
computer has been maliciously converted into unknown and perhaps illegal uses, and that outsiders have gained
perhaps complete access to files in the machine, is probably quite damaging. Potential users may delay their
decisions to acquire broadband connections and existing users may unplug the network when not in use,
effectively giving up the always-on benefit.
A related issue is that one important new use of broadband is the regular downloading of security patches for
operating systems and application software. In the theoretical point where broadband is mainly used to
download security updates that are needed because the connection is broadband (i.e. the end-user machine is
continuously connected to the net), the benefits of broadband could relatively easily become negative.
698 Hadenius, P. (2004) Relieving peer-to-peer pressure. Technology Review, 25 February 2004

9.4 Conclusion
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Broadband development, as seen in the country studies in the previous chapter, is very uneven. Some countries
are already advanced and continue to grows fast (e.g. the Netherlands), other have barely started (Greece), yet
others are fairly advanced but are experiencing a sharp slow-down in growth (South Korea). These differences
can be explained by many factors, ranging from GDP per capita to broadband strategies. We have separated
those factors which cannot directly be influenced by governments (e. g. population density, demographics) from
those which can only be influenced in the long run (e.g. educating people to use broadband services) and those
which can easily be influenced (e.g. setting of interconnection and access regulations by the NRA, funding for
connecting remote areas). Once the most effective levers of government action are identified, the main issue is
how best to use these levers.
Given the variety of country configurations and legacy situations in the countries we have looked at, it was not
surprising to find that public policies have equalled varied enormously, even within the EU, where a certain
coordination exists. Clearly, a rich inner city with multiple networks needs a different approach from a rural area
with not even generalised telephone coverage. Countries which have many inner cities therefore have other
needs from countries which have many remote areas. Public broadband policy needs to be tailor-made for each
country.
If there is any common lesson, it is that strong competition is the foundation upon which complementary public
measures can build. Ensuring the right regulation for competition, is therefore the first step, which can then be
followed by facilitation measures, both to intensify competition and to facilitate demand, and by direct
intervention, where this is necessary. However, as always the key question is “where is this necessary”, for
which there is unfortunately no single universally-valid answer.

10. Broadband Applications and User Needs
10.1 Introduction
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The intention of the country studies was to identify socioeconomic factors that have an impact on supply and
demand, to describe their country specific extension and to recommend measures that appear helpful to
accomplish a BB4All System.
However, one group of socioeconomic factors - also important for demand – is not taken in account within the
country studies. These factors concern end user criteria, particularly the adaptation of broadband applications to
end user needs in terms of useability and usefulness. To describe the extent to which these criteria are fulfilled
within any European country would be far beyond the scope of the project: There would be no end to describe
country specific extensions of shortcomings with regard to usefulness and usability.
On that basis it appears reasonable to provide a cross sectional chapter on end user criteria that complements the
country studies and is focussed on the following questions:
• Why should end users benefit from broadband applications? Without convincing answers to that
question a necessary condition for sufficient demand is missing (see section 10.2).
• To what extent are broadband applications already available or may be expected in the future?
Answers to that question might help persons in charge to find out which type of broadband applications
will probably cause demand and should therefore be offered (see section 10.3).
• What reasons might threaten usability and usefulness of broadband applications (see section
10.4)?
• What measures are appropriate to avoid or eliminate obstacles to a BB4All system from end
users perspectives (see section 10.5)?
10.2 Reasons why end users should benefit from broadband
applications
There are various reasons why high bandwidth can be beneficial for end users.
10.2.1 High bandwidth as factor of efficiency and convenience of internet applications 699 .
At present, many internet applications (see section 10.3) exist that may be used effectively on the basis of dialup
connections, but may be used with much more efficiency and convenience if broadband access connections
are available. Here at least three reasons are known why users benefit from an increase of bandwidth as in case
of DSL.
• High download / upload capacity: Most current broadband end-user traffic is now generated by sharing
music and video files among the users. Peer-to-peer systems would typically be unfeasible without enduser
broadband access.
• Fast response time: Currently, information search is one of the most important uses of the Internet. In
this function the users typically click through several pages and converge towards the information they
are searching. Fast response time makes it possible for the user to quickly see if the associations he is
following actually lead to the required information. Fast response time, therefore, considerably adds
value to the Internet.
• Always-on: The immediate availability of internet content and communication capabilities are
considered to be important benefits of broadband access. The always-on characteristic of current
broadband connections depends, however, also on pricing; broadband access typically has flat
connection fees, and there is no need to switch the connection off when it is not used. The rapid
diffusion of broadband in Korea, for example, is to a large extent explained by the fact that for average
usage time narrowband dial-up costs would exceed broadband subscription costs. Always-on, therefore,
699 Illka Tuomi. Application szenarios for BREAD, IRC-IPTS Working Paper, IPTS, July 2004

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depends on both the connection boot-up time, which is a technical characteristic, and pricing that makes
always-on economically attractive and possible for the user.
As broadband can transmit more bits the three benefits above particularly arise in cases
• when providers supply rich multimedia content that improves the user experience and also
• when end-users themselves want to provide bit-intensive content such as digital images, audio and
video files.
10.2.2 High bandwidth as necessary prerequisite for effective use of applications:
Increasingly applications exist or may be expected in the future that depend on high bandwidth as a necessary
prerequisite for their effective use. That is the case when rich multimedia content is involved and
• delays of response times cannot be tolerated, e.g. real life video communication and online gaming or
• applications depend on jitter-free visual representation of temporal sequences without distortion e.g.
when one is watching sport events, performances or animal behaviour.
10.3 Extent to which broadband applications are already available or
may be expected in future
This topic needs attention because, as was already stated above (see 10.1), knowing present and potential future
broadband applications might help to find out which type of broadband applications will probably cause demand
and should therefore be developed and offered.
Basically one can benefit from both narrowband and broadband applications in all areas of private, business and
societal life. Thus goal attainment may be supported by applications (see EU project PROFIT700 ) in areas of
• Communications/Messaging
• Leisure/Entertainment
• Collaboration /Teleworking
• e-Government
• Safety/Location based
• Live independently/Health
• Financial security/Financial services
• Data across the web/Information services
• Quality of life/monitoring
Benefitting from the above applications is possible, at least partially, on the basis of narrowband dial-up access.
Therefore the questions arises - as emphasised in the headline of this section - : Which types of presently
available or future applications will benefit most from broadband access?
10.3.1 Available applications benefiting from broadband access because of high efficiency
and convenience
As was claimed above (see 10.2) many Internet applications are available which may be used effectively on the
basis of dial-up connections, but which nonetheless may be used with much more efficiency and convenience if
broadband access connections are available. Evidence for this is obtained by statistical results concerning the
use of broadband access with European and non European states. One illustration of this is contained in an
American study 701 . The emphasis of the study was to find out whether Internet use by Home Broadband Users
differs from Dial-Up Users. The results are based on Telephone interviews with 507 Broadband users and 1391
Dial-Up users. Broadband users, also called high-speed users - were defined as users who either had cable
modems or digital subscriber line (DSL) service.
700
P1302, PROFIT: Potential pRofit Opportunities in the Future ambient InTelligence world -Strategic business models for the new
economy- , March 2004
701
Pew Internet & American Life Project (2002). The Broadband Difference: How online Americans` behaviour changes with high-speed
Internet connections at home. http://www.pewinternet.org/pdfs/PIP_Broadband_Report.pdf

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From the study it is evident that broadband users are using more frequently and extensively a variety of
applications that are also used on the basis of dial-up narrowband access. Thus “the average Internet user with
high-speed home access does 7 things online on a typical day, such as getting news, health care information,
taking an online course, listening to music, or downloading files (see Figure 115). By contrast, a dial-up user
does about 3 things online during a typical day online. The high-speed connection permits broadband users to
perform multiple Internet tasks more easily in a given online session or at different times of the day.”
Figure 115 An Average Day for Broadband Users 702
Additionally “Broadband Internet users are much more likely than dial-up users to be online during a typical
day. Fully 82% of broadband Internet surfers are online on any given day, compared to 58% of dial-up users.
702 Source: Home Broadband Users, Pew Internet & American Life Project February 2002 Survey, Internet users, n=507; margin of error is
±4%. Dial-Up Users, August-September 2001 Survey, n=1391; margin of error is ±3%.

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They spend more time online than dial-up users (95 minutes on average for high-speed users during any given
day, compared to 83 minutes for dial-up).”
As mentioned above, the study reported is related to patterns of network use in the U.S.
Anyway it appears that the results obtained basically are also valid for various European countries in which
similar though less extensive studies 703,704,705 are performed with outcomes comparable to those obtained by the
U.S. study.
An application that particularly appears to be a driver of broadband networks 706 is Voice over Internet Protocol
(VoIP). VoIP “is a common term that refers to the different protocols that are used to transport real-time voice
and the necessary signaling by means of Internet Protocol (IP).” 707 In another word, it allows the user to place a
call over IP networks.
Broadband access enables through always-on access prices and near flat fees for volume consumption a
attractive use of VoIP. Arthur D. Little forecasts, that “Voice over IP is proliferating fast and is expected to be
one of the most widely used applications on the Internet by 2010, resulting in a penetration of over 70 percent of
Broadband households in mature Broadband markets.” 708 AT&T expect to have 1 million customers by the end
of 2005. 709
10.3.2 Available applications benefiting from high bandwidth as necessary prerequisite for
their effective use
As is evident from the above study, most present broadband adopters use high-speed connections to perform
typical internet activities faster710 . There are only some results concerning applications that include real
broadband contents, i.e. contents that are to be transmitted in real time to allow their successful use. Typical
examples of such broadband content applications are interactive video, streaming, video telephony, video- and
multipoint-conferencing, entertainment including online games, and additionally, e-health, e-commerce, elearning,
telecommuting and remote office applications, provided that the latter applications include the retrieval
and transmission particularly of video and still images. However these applications can not claim to meet a high
market demand at present.
Instead it is not clear whether the provision of higher bandwidth (particularly beyond DSL) in the sense of a
BB4All system provision will meet a market demand that justifies necessary investments. As is stated in a study
of Sage Research711 “Most people seem to believe that the potential for significant markets exists – but up to
now, little hard data existed that identified the size or the source of the opportunity”. On that background a
survey of U.S. households was conducted by Sage Research in December 2001 “to quantify interest in, and
willingness to pay for, Internet-delivered services”. For that “600 telephone interviews were conducted with
consumers in the U.S. Participants were qualified to ensure representation of U.S. households.” The variety of
broadband services taken into account was classified according the following Categories712 :
• Entertainment includes simulation games, kids’ activity site, TV show simulations, music libraries,
online gambling, TV shows on demand, movies on demand, concerts, and cultural events.
• Communications includes videoconferencing, unified messaging for personal purposes, and
international long distance/telephone.
703 Office of the e-Envoy (2001). “UK online: the broadband future.” [Online]. Available: http://www.eenvoy.gov.uk/assetRoot/04/00/08/25/04000825.pdf
[17.3.04].
704 Ziff Davis Publishing Holdings Inc. Reproduction (2002). “The Survey.” [Online]. Available:
http://www.pcmag.com/print_article/0,1761,a=21056,00.asp [17.3.04].
705 Carrière, R, Rose, J., Sirois, L., Turcotte, N. and Zabbal, C. (2000). “Broadband changes everything.” [Online]. Available:
http://www.mckinsey.de/_downloads/knowmatters/telecommunications/broadband_changes.pdf [17.3.04].
706 Wayne Fonteix – AT&T (2004). Voice over Internet Protocol: Picking up the Pace. http://ipu.msu.edu/IPU-Online/documents/Voip04-
Fonteix.pdf
707 Rappoport, P.N., Taylor, L.D., and Kridel, D.J. & Alleman, J. (2004) Estimating the Demand for Voice over IP Services.
http://userpage.fu-berlin.de/~jmueller/itsnew/abstracts/Abstracts/alleman8.pdf
708 Arthur D. Little (2005). Global Broadband Report. http://www.flarion.com/viewpoint/reports/ADLittleBroadbandUpdate2005.pdf
709 Wayne Fonteix – AT&T (2004). Voice over Internet Protocol: Picking up the Pace. http://ipu.msu.edu/IPU-Online/documents/Voip04-
Fonteix.pdf
710 Pew Internet & American Life Project (2002). The Broadband Difference: How online Americans` behaviour changes with high-speed
Internet connections at home. http://www.pewinternet.org/pdfs/PIP_Broadband_Report.pdf
711 Sage Research, Inc. (2002). “Customers at the Gate: Mounting Demand for Broadband-enabled Services.” [Online]. Available:
http://newsroom.cisco.com/dlls/tln/pdf/bband_final.pdf
712 Sage Research, Inc. (2002). “Customers at the Gate: Mounting Demand for Broadband-enabled Services.” [Online]. Available:
http://newsroom.cisco.com/dlls/tln/pdf/bband_final.pdf

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• Education includes language education, music education, cooking education, continuing education, and
multimedia encyclopaedias.
• Medical/health includes video monitoring of a child’s day care, video monitoring of an older relative’s
care facility, and home health monitoring.
• Hobbies includes interior decorating services, multimedia sports fan service, multimedia cooking
lovers’ service, multimedia fitness enthusiasts’ service, and access to religious services/resources.
• Personal/professional services includes online clothes shopping service, counseling/psychiatric
services, legal advice, marriage/parenting advice, home/auto care advice, multimedia travel planning,
investment advice, online dating service, and online photo editing/printing/storage service.
• Telework/work includes access to an employer’s network and unified messaging for work purposes.
From the many results obtained by the study only the most important findings are reported. As it appears from
Figure 116 most of the service categories are of interest for a rather high portion of the U.S. population.
However, according to the authors one has to be cautious when interpreting the results, because what people say
may not agree with what people do. In particular, to rely on the results obtained implies a couple of risks e.g.
various discrepancies between expected and supplied broadband services. Anyway, the study is a useful step on
the way to answer the question whether it is reasonable to provide a faster technology and broadband
applications.
Figure 116: User Interests in Broadband Applications

10.3.3 Potential future applications benefiting from high bandwidth 713
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“Many scenarios for future information environments have been developed where broadband access is
important. 714 It seems that the scenarios have not particularly focused on the requirements for broadband
architectures. BREAD will therefore need to further develop existing scenarios. Some preliminary starting
points for the scenarios can, however, be described. These basically cover the well-known prototype visions of
the future broadband, again from the end-user point of view. In addition, we will need scenarios for business
use, etc.
Virtual Hollywood
Many early discussions on broadband perceived it as a broadcast medium that will deliver hundreds of television
channels to the end users, and provide new entertainment services. This application model can be implemented
in several alternative ways, basically by making trade-offs between storage and transmission capacity. The
essential characteristic of this model is that the bit stream is heavily asymmetric. Virtual Hollywood, therefore,
relies on storage network architectures. 715
Peer-to-peer grid
Peer-to-peer applications put the content either at the edge of the network, or on distributed servers. A full peerto-peer
architecture, without dedicated servers, would create high-bandwidth connections among end-users.
Theoretically, this would lead to an exponential growth of the required backbone capacity. If, for example, the
end users would be given broadband capacity and they actually would use it, the current internet architecture
would collapse. A practical experiment, in fact, is currently going on, as spam mailers and virus developers have
started to use distributed broadband capability to test the limits of the current architecture.
Proximal work
Also paradoxically known as “remote work” and “telework”. When people work in knowledge and informationintensive
tasks at the location where they are, instead of moving to remote work locations, information needs to
move where the people are. The potential benefits of broadband-enabled working are well known. From the
organisational point of view, telework can be important for cost savings—a factor that has been driving the rapid
growth of call-centres—but it can also provide access to skills and local knowledge that can not be concentrated
in any specific geographical point. Whereas transaction information can easily be transmitted using narrow-band
connections, information intensive work (such as call centres) and knowledge intensive collaboration (e.g.,
product development, marketing, etc.) require higher transmission capacity. As firms are starting to understand
how distributed collaboration and computer-supported location independent work needs to be organised and
managed, broadband technologies will be widely used for this purpose. This application model will require highspeed
symmetric transmission (global video meetings) and fast and secure access to corporate networks (VPN).
Different architecture models could be built if the model would be based on smart or stupid terminals (local
storage may, for example, create security problems that are easier to solve with VPN/SAN architectures).
Ambient intelligence
The ambient intelligence scenarios lead to architectures where personalised information and communication is
available independent of location, and where local information systems can be used to create adaptive and
context-sensitive user environments. The scenarios imply that the infrastructure includes extensive sensor
networks, interacting intelligent agents, and services can be accessed independent of location. Potentially, this
application scenario would mean that the use of applications is likewise completely independent of the place of
use and configured using local resources and knowledge.
Sensor networks
Although sensors typically generate only few data, potentially the number of data generation points can become
very large in the future. In particular, the movement of goods and cars will generate a constant stream of sensor
data, and the constructed infrastructures will be monitored with potentially vast number of sensors. 716
713 This section is extracted from a paper written by Illka Tuomi in the context of the BREAD project (Literaturhinweis)
714 Illka Tuomi. Application szenarios for BREAD, IRC-IPTS Working Paper, IPTS, July 2004
715 See the IBM System Journal special issue on storage network architectures and their expected evolution at
http://www.research.ibm.com/journal/sj42-2.html.
716 See, for example, the Californian CITRIS project that aims to develop societal-scale information systems, such as massively networked
disaster recovery, environment management, and smart traffic systems: http://www.citris.berkeley.edu/about_citris/

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10.4 Reasons that threaten usability and usefulness of broadband
applications
Even if all of the above present and potential future applications would be available to all end users this would
not ensure their acceptance, use and sufficient demand. For that some other prerequisites have to be met, among
them usability and usefulness as two substantial factors.
The concept of usability: There are various definitions of usability. One definition adopted by many experts is
the one supplied by ISO. According to ISO9241/11 (1992) 717 usability is defined as the "extent to which a
product can be used by specified users to achieve specified goals with effectiveness, efficiency and satisfaction
in a specified context of use". The ISO usability components are defined as follows:
• Effectiveness: "The accuracy and completeness with which specified users can achieve specified goals
in particular environments".
• Efficiency: "The resources expended in relation to the accuracy and completeness of goals achieved."
• Satisfaction: "The comfort and acceptability of the work system to its users and other people affected
by its use".
There are other definitions, e.g. by ETSI718 or Nielsen719 . The ETSI definition mainly adopts the ISO720 definition
but excludes monetary costs as aspect of efficiency. It additionally emphasizes the flexibility of a system, i.e. the
degree of maintaining usability when user category, task, or environment are varied. Other definitions (e.g.
Nielsen721 ) include dimensions as learnability or memorability of system features as main components of
usability. However, apart from some differences in present definitions of usability all experts apparently would
consider a system usable that can be used with success, ease, and fun. This can be regarded the core intension of
the various definitions of usability. Finally, it is to be stressed that although the concept of usability is not
defined homogeneously its practical value is doubtless: The existing concepts help to focus the attention to
attributes of use that are relevant from the user´s perspective and have an effect on their acceptance of
applications of Information and Communications Technology.
Problems of usability
They result when basic components of user interfaces as
• input devices
• output devices,
• organisation of the man-machine dialog and
• orientation and support tools
are not adapted to goals of user groups or to the context of use. Usability deficits particularly result when the
above user interface components are not adapted to sensorimotor skills, perceptual skills, information-processing
skills and previous knowledge.
Below some mayor usability problems of present applications are illustrated:
• Problems of wording
• Problems of orientation
• Problems of functionalities
• Problems of miniaturisation of input- and output devices in case of mobile applications,
• Problems of adaptation to different user groups
• Problems resulting from increasing complexity,
717
ISO/FDIS 9241-11, "Ergonomic requirements for office work with visual display terminals (VDTs)- Part 11: Guidance on usability",
1992
718
ETSI DTR/HF 3001, “Guide for usability evaluations of telecommunications systems and services”, 1993
719
J. Nielsen, "Usability engineering", Academic Press (AP Professional), 1993
720
ISO/FDIS 9241-11, "Ergonomic requirements for office work with visual display terminals (VDTs)- Part 11: Guidance on usability",
1992
721
J. Nielsen, "Usability engineering", Academic Press (AP Professional), 1993

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Problems of wording
Usability of broadband applications heavily depends on appropriate wording and icons that are selected to
convey the meaning of menu options, feedback information and instructions how to use an application. However
it is evident from many usability evaluations that ambiguous wording causes severe problems of understanding,
thus causing usability shortcomings.
Problems of orientation
Usability depends on orientation of what one may expect from a platform or application and where one may find
it. Orientation tools such as sitemaps, introductions, menus or search engines are supplied quite often, however
not always realized in an appropriate way. Here are some illustrations of this type of problem:
• In many cases available orientation tools do not provide sufficient information in advance what
capacities and performance are supplied and which ones are beyond of the scope of a platform.
• In case of search engines numerous answers are supplied that require an unacceptable patience and time
to identify useful links. This still is true, despite the fact that meanwhile sophisticated search algorithms
are being implemented (e.g. by using Bool´s logic)
• When using an option e.g. to book a theatre ticket, one needs to know in advance what requirements are
to be met to take advantage of a service, e.g. whether on needs a user-ID, a password or a PIN-code.
Such orientation functions are usually not available.
• Often information on the last actions performed is important to complete a task. Accordingly in many
cases orientation tools called “history” are supplied, however they lack usability.
Problems of functionalities
Usability is impaired by inappropriate functionalities. An illustration of this problem is an electronic form that
requires to be filled in completely anew if the user made a small spelling mistake when writing a word. Here a
function is needed that would allow to correct a letter without opening a new blank electronic form.
Problems of miniaturization
It is obvious that there is a growing trend to enable access to applications by mobiles that originally were
developed for stationary or desktop terminals. However the mobile use of such applications normally is not
possible by the same means and tools that proved of value in case of stationary terminals.
Particularly the following problems are not solved satisfactorily:
• Both input- and output devices suffer from miniaturization.
• Well proved dialog structures and orientation tools may not be applied in case of mobile applications
because of the miniaturisation of displays
Problems of adaptation to different user groups
One severe usability problem results from the fact that applications and the corresponding user interfaces are not
adapted to user groups, their previous knowledge and competencies. This is especially true with regard to people
with special needs.
Problems resulting from increasing complexity
With increasing variety of applications, input and output devices and contexts of use, a complexity arises that
implies strain for the user. This results from the fact that new applications quite often require to learn new rules
how to use them. This could be avoided by creating generic user interfaces. This idea is based on the assumption
that user interfaces may be organized in an application independent, thus generic way. This appears possible to a
certain extent with regard to input- and output modalities as well as the visual and spatial organisation of menu
structures, feedback and orientation tools. However generic approaches are only partially or inadequately
realised by now.
At the end of this section the topic of a lack of usefulness needs to be mentioned. Even if an application is usable
this does not necessarily imply its usefulness. An application is supposed to be useful, if it assists a user to
accomplish those goals satisfactorily by which the service use is motivated. If for instance a user knows how to
use a search engine, but the search engine does not contain the information which the user is looking for the
search engine actually is not useful. Thus applications might not be useful because they do not supply the
particular information units needed or the media (text, stills, moving images, sound...) that are necessary to
fulfill the needs of end users successfully.

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10.5 Measures to ensure usability and usefulness as prerequisites of
demand for broadband applications
Increasingly measures and methods are developed and used to ensure usability and usefulness of ICT devices
and applications. They are subsumed under the term Usability Engineering, an approach that is performed as a
part of the product and service development process. The related term “user (or human)-centred design”
emphasizes the continuous involvement of users during all phases of the development process. No matter which
term is used, most human factors experts agree on the many activities necessary to establish usefulness and
usability of ICT devices and applications. One proposal to arrange the activities is contained in ISO/DIS
13407722 and depicted in Figure 117. According to ISO user centred design implies to
• understand and specify the context of use.
• specify the user requirements and organisational requirements.
• produce design solutions and
• evaluate designs against requirements.
Figure 117: Human - Centred Design Activities (see ISO/DIS 13407)
Thus in the framework of the user centred design approach the context of use should be described in terms of
• the characteristics of the intended users: habits, skills, knowledge, physical attributes,
• features of the tasks performed by the users in the domain considered: task goals, task frequency etc,
• characteristics of the environment of use, such as hardware, software, materials to be used or attributes
of physical environment.
The specification of user and organisational requirements encompasses statements on
• financial restrictions,
• relevant statutory or legislative requests,
• demands for co-operation and communication between users and other relevant parties,
• requirements for the well-being of the users that are relevant, for instance, to their safety, health and
motivation.
Methods used for specifying the context of use and the user-/organisational requirements encompass
brainstorming, group discussions, observations, focus groups, interviews, document analysis, task analysis etc.
722 ISO/DIS 13407, "Human-centred design processes for interactive systems", 1997

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On the basis of the requirements analysis design solutions are produced, which can be tested by means of
simulations, models, or mock-ups.
The evaluation process aims at assessing whether user and organisational objectives have been met and at
developing proposals for improvement. For usability evaluation various methods can be considered. In user tests
mainly performance (objective) and attitude (subjective) measures are obtained. This can be accomplished by
using techniques such as thinking aloud, questionnaires, interviews and audio and video recording. Expert
evaluations are appropriate when the task is to test whether the design of products and services corresponds to
relevant Human Factors findings, standards or features known from “best practice” solutions. Methods used here
are known as cognitive walkthrough, as heuristic evaluation, and also as checklist approach. Which methods are
the most appropriate under the given circumstances depends on cost/benefit considerations or on anticipated
consequences resulting from missing usability faults.
Altogether the human-centred design process is a multi-disciplinary approach involving programmers, system
analysts, application domain specialists, user interface designers, human factors and ergonomics experts,
managers, purchasers and last but not least end users.