Tuesday, February 14, 2006

The first city on gaz…

More than half of the 7.1 million Dutch households has a broadband connection. The score was 55 percent beginning of 2005. By now it should be over 60 percent. In all comparative statistics about penetration, the Netherlands scores highest in Europe.

Some 60 percent of the broadband connections are ADSL connections. The speed of these connections are rising at a rapid speed. For example in 2003 the KPN ADSL download speed was 384 Kb/s. Beginning of 2005 this was 1120Kbs and beginning 2006 this was 3000 Kb/s. Also the speed of cable internet connections is on the rise.

In the meantime we see a lot of streaming video and audio coming on. Also other effects can be seen. There is speculation that revenues from ad commercials moves from newspapers to the web; also television revenues are dropping.

But there is a worrying aspect to this broadband rise. It is the famous effect of: The first city on gaz is the last on electricity. It is the effect we saw in France. The videotex Minitel was an absolute success, but it took years before France caught up with internet. The same effect might apply to the Netherlands now. The vast penetration of cable and ADSL connections might slow down the spread of real broadband by fibre connections.

When that is going to happen there is a problem. The ADSL and cable operators will not have the money to invest in a new fibre infrastructure, because it will require a huge investment, while there will be competition of services on the fibre from the beginning. UPC has been faced with this problem already in Nuenen, where it offered a triple play subscription in competition with a local operator.

On the other hand it can be argued that once one has tasted the download speed and just had a glimpse of the new services such as music, movies and television, one would demand a fibre connection.


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