As part of an ongoing study commissioned by the FTTH Council Europe on demand stimulation policies, we are examining take-up rates in relation to a variety of other indicators with the aim to understand which aspects of a specific country, or market, seem to drive higher adoption of FTTH/B services. The factors examined included socioeconomic factors (e.g. income levels, poverty rates, etc.), digital supply factors (e.g. broadband prices, speeds, etc.), and digital demand factors (e.g. digital literacy, broadband usage levels, etc.).
In the following section, we look at the first main insights from this research, whose final results will be soon made available to the general public to contribute to the discussion around the take-up challenge.
Main drivers behind the adoption of fibre
A snapshot of take-up, coverage and penetration rates
The top 5 European countries with the highest take-up are Finland, Lithuania, Spain, Sweden and Portugal, whereas the bottom 5 countries with the lowest take-up are Greece, Austria, Italy, Belgium and Croatia.
Coverage in take-up have an interdependent relationship. While some countries manage to advance both coverage and take-up at significant speed, others struggle when it comes to the take-up. The analysis reports a strong positive correlation between the speed of deployment and the speed of take-up. Most countries follow the same pattern: the fastest FTTH/B is deployed the faster is the take-up.
Fixed broadband subscription price analysis
If we examine fixed broadband prices and focus on FTTH/B “range” prices (100-200 Mbps) we observe a strong negative correlation with take-up. When we compare FTTH/B range prices and xDSL range prices (30-100Mbps) we also see a negative correlation when that price gap is high. In other words, the higher the price differential between copper prices and fibre prices, the lower the take-up. The price differential between 100-200 Mbps fixed broadband (FTTH/B range) and mobile broadband (4G) seems to negatively drive take-up : the more FBB is expensive in relation to MBB, the lower the take-up.
Mobile broadband competition
Mobile broadband does not seem to compete significantly with the adoption of fibre. In fact, the analysis demonstrates that high levels of mobile broadband subscription among subscribers do not seem to drive lower levels of FTTH/B take-up.
Digital literacy
While digital education and training are critical to Europe’s long-term success in the Digital Economy, there does not seem to be a correlation between digital literacy and FTTH/B take-up. Different indicators were tested, but none of them resulted in a clear relationship. Among possible explanations for this, we identified several possible reasons, including the fact that FTTH/B benefits span over multiple in-home activities, many of which do not require digital skills.
Conclusions
After this first phase of the study, the key positive drivers for adoption seem to be:
- a virtuous circle of take-up and coverage where the speed of one drives the other, although the causality cannot be directly established yet
- Comparatively low FTTH/B prices
An important negative driver for adoption is low Mobile Broadband prices compared to Fixed Broadband prices
On the contrary, demographic factors like GDP per capita or digital literacy do not seem to be driving factors. This is likely because differentials between European countries on these factors have converged over time and other factors drive adoption more significantly.
Now that the big picture around the drivers to boost the adoption of fibre is clearer, it is the right time to move the discussion to what measures should be undertaken to stimulate the take-up. The next phase of the ongoing study will focus on these very considerations and a deep dive of selected 8 countries in the EU, with the objective of contributing to the discussion with fact-based information and concrete recomendations for policy makers and the industry. The analysis will identify the market specific elements that could explain the take-up trends, and the demand-side policy initiatives in the selected countries and how they have impacted take-up. This will help shape the recommendations on effective policy measures to drive take-up.
Stay tuned for more insights from the FTTH Council Europe as the final results of the study will soon be published!