To address Finland’s broadband needs, the Ministry of Transport and Communications as early as 2004 set up a national broadband strategy (NBS) which focused on rolling out broadband while promoting competition between networks. In February 2005 - with regional availability of broadband at about 96% (largely due to efforts by municipalities and regional councils) - the government revised the NBS objectives to focus on the type of connection, the creation of content, and the development of wireless connections. The NBS envisaged that all subscribers would be able to access at least 1Mb/s by the end of 2009, with the most common service offering being at least 8Mb/s.This has proved under-ambitious, since much of Finland is now blessed with some of the fastest broadband in Europe. DSL is commonly available at up to 20Mb/s, while the major cablecos have significantly upgraded their networks using DOSCIS 3.0 technology to provide services at up to 100Mb/s: during 2008 TeliaSonera upgraded its entire bidirectional cable network, Elisa’s network provides 100Mb/s to some 250,000 households, while Welho provides a similar service across Greater Helsinki, and plans to increase data rates to 200Mb/s in coming years.
As developments have moved on so quickly, a further revision of the NBS was adopted in December 2008. The new national Broadband Action Plan has concentrated on funding broadband networks in remote areas, acknowledging that the State had thus far made little significant investment in public telecom infrastructure. The plan was also a response to the announcements by several telcos that they intended to cut back services in their fixed telecom network across wide areas of the country to concentrate on the more profitable urban zones. Technically, gaps in the national network have been filled by Digita’s @450 network, which makes use of the frequency band released by the discontinued NMT 450 services. Nevertheless, although customers can have wireless connections in lieu of fixed-line services, which can meet current basic communication needs, these are inadequate in the medium to long term.
The Broadband Action Plan is truly ambitious, even within Europe where there is a growing consensus among governments and regulators that with FttH as the accepted end-game for national broadband networks it is better for policy makers to flow with the stream rather than be borne down by it, as disadvantaged late-comers. Finland aims to deliver 100Mb/s fiber-based broadband for all citizens by 2015, a significant improvement on the minimum 1Mb/s envisaged in 2004. The government has committed itself to fund up to a third of the investment needed where areas where there is little commercial incentive. It is estimated that the cost to provision these areas would reach some 200 million Euro, of which the government could pay a maximum of 67 million Euro with the remainder to come from operators, municipalities and financial support from the EU.
The government has adopted a pragmatic approach to finance its share of the burden. The State’s contribution would come from auctioning frequencies in the 2.5 - 2.69 GHz band (scheduled for November 2009), with any shortfall (i.e. if the auction revenue fell below an estimated 73.6 million Euro) being met by compensatory payments collected from telcos based on the number of their broadband subscriptions. The regulator estimated that telcos would contribute 0.2% of net sales based on total combined net revenue of 4.475 billion Euro in 2007, and 0.1% of net sales based on estimated revenue for 2010. Given that revenues collected as compensatory payment would be used to upgrade the telecoms networks, these would in turn flow back to telcos which had upgraded their networks.
An important consideration for the fiber network is that at least 99% of residences and businesses will be within two kilometers of the network. This can be either the fixed-line fiber network, or one based on LTE (a note on LTE in Finland: the country is one of Europe’s leaders in this sector as well. In April 2009 the regulator allocated additional frequencies in the 1.8GHz band to TeliaSonera, Elisa and DNA to enable them to build mobile networks based on LTE, the first country in Europe to allow the use of such low frequencies for this technology). In other words, Finland is provisioning most urban areas with FttH while guaranteeing fiber in the ‘middle mile’, from the backbone network to within a reasonable distance of most rural households. It is then up to householders to pay for the last mile connection. To ease this cost burden, the government has proposed amending the Income Tax Act so that the domestic help credit in the 2009 budget is extended to cover the installation and maintenance of telecoms services and equipment.
As for costing fiber, the regulator estimated that most homes even in non-built up could be served for between 2,000 Euro and 3,000 Euro each, with some of the more remote areas costing upwards of 10,000 Euro each. These are roughly the same costs to provision houses with electricity.
The government’s vision for its citizens is as equally pragmatic and forward-thinking as its approach to delivering these services. It does not dwell on whether the average household now needs 100Mb/s connections, but rather looks forward to the economic stimulus provided by numerous entrepreneurs who will be able to develop and provide new services on a network able to handle them. The existence of these services will in turn stimulate further demand for high-speed connections.
For more information, see separate reports by Budde.com.
Tags: FttH, Fiber to the Farm, FttF
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