eiu government broadband index 2011 exec summary

Full speed aheadThe government broadband index Q1 2011Abridged Executive Summary

www.eiu.com

Full speed aheadThe government broadband index Q1 2011

© The Economist Intelligence Unit Limited 20111

Executive summary

The growing perception that broadband is vital to economic prosperity has seen it become a crucial policy issue for governments worldwide. Although the private

sector has usually led the rollout of basic broadband networks in the more densely populated parts of developed countries, commercial operators have seen little incentive to make costly investments in rural areas. Often, it is the resulting ‘digital divide’ that has motivated the public sector to become involved in the broadband market, typically announcing targets of making 1–5Mbps services universally available. Yet governments are also keen to facilitate greater rollout of so-called next-generation networks (NGNs) that can provide broadband speeds of between 40Mbps and 100Mbps, and sometimes higher.

Such influences have spawned a variety of government approaches to broadband development, from heavy state control and direct funding of networks to extremely limited intervention through regulatory measures. But in all cases, the role of the government is a critical driver of broadband activity. The arrow graphic below provides some contrasting examples of initiatives announced in different parts of the world.

Beyond these initiatives, governments in developing countries are also becoming involved in broadband, although many are initially focused on addressing regulation and market competition, along with backbone infrastructure and international capacity issues, before producing detailed targets or plans for ultra-fast broadband coverage. In addition, wireless networks are playing an increasingly important role in countries where basic fixed-line infrastructure is poor or simply not available.



Strong government intervention

Limited government intervention

Government control: AustraliaAustralian authorities have taken control of the national incumbent's existing fixednetwork and plan to fund, develop and operate a national fibre-to-the-home (FTTH)

network, providing wholesale services on an open-access basis. The cost to the taxpayeris expected to be around A$27bn (US$21bn, at 2009 exchange rates).

Government stimulus: ChinaThe government is providing a US$22bn stimulus package for broadband development, whiletrying to attract private investment in fibre-based broadband networks. The stimulus will bemade available over the next three years to local operators and manufacturers through both

direct funding and tax incentives.

Government partnership: FranceIn areas of France where rollout is not commercially viable, the government plans todirect €2bn (US$2.8bn) into public-private partnerships to assist with the rollout ofshared and open-access networks promoting maximum competition at both network

and retail service levels.

Government facilitation: SwitzerlandIn the Swiss market, the government conducts regular roundtable meetings withall key industry players to ensure that regulation and investment conditions are

conducive to NGN development by commercial operators, municipalities and utilities.


© The Economist Intelligence Unit Limited 2011�

The bubble chart below compares a small selection of countries with clearly defined goals (a complete version is available in the full report), showing target speeds

and coverage goals against public-funding commitments per household covered.

Quantitative findings

Speed, coverage and public-funding comparison(per covered household)

Source: Economist Intelligence Unit.Note. Bubble size is determined by the level of the public-funding commitment.

0 20 40 1008060

Coverage target (% households covered)

Spee

d t

arg

et (

Mb

ps)

0

1

10

100

1,000

10,000

Australia

South Korea

Brazil

USA

UK

South-east Asia leadsOverall, the developed South-east Asian countries (Japan, South Korea and Singapore) are at the forefront of the move towards near-ubiquitous high-speed broadband. All three countries have official targets of providing 1Gbps services to more than 90% of households within the next two to five years. Singapore, however, has been more reliant on government intervention and funding than either Japan or South Korea, both of which have focused on encouraging private-sector companies to roll out networks.



Europe’s ambitions varyLargely under European Union guidelines, governments throughout Europe are mainly relying on competitive market forces in commercial areas, directing government funding towards regional and rural areas the private sector would struggle to serve profitably. As a result, target speeds generally range from 20Mbps to 50Mbps for between 75% and 90% of households, while government-funding commitments are relatively low. Many European countries are also looking to local municipalities and utilities for the development of broadband infrastructure.

Other countries show increased levels of interventionIn other countries, a higher level of public funding per household covered generally corresponds to greater government intervention. This is the case in Australia, Malaysia, New Zealand and Greece, where governments have taken ownership or control of the development of a national NGN network to varying degrees. In North America, the focus is largely on reducing the digital divide, with both Canada and the US funding network rollout in rural and regional areas.



The government broadband index (gBBi)

Country Rank Score

South Korea 1 4.4

Japan 2 4.�

Singapore � 4.2

Sweden 4= 4.1

Finland 4= 4.1

Estonia 5 4.0

France 6 �.9

Spain 7 �.7

Denmark 8 �.6

Australia 9 �.4

New Zealand 10= �.0

USA 10= �.0

Italy 11 2.9

UK 12 2.7

Germany 1� 2.6

Greece 14 2.4

The Economist Intelligence Unit’s gBBI (government broadband index) is the first-ever broadband index to assess countries on the basis of government planning, as opposed to current broadband capability.

Using a methodology developed in-house, the index scores countries that have clearly stated objectives on a scale of 0-5, where 5 is the best. The methodology considers each plan’s target speed, universal speed, rollout timeframe, cost

and regulatory provisions in order to produce the final score.

Countries topping our index are the ones deemed to have the most ambitious speed, coverage and rollout targets, the most appropriate regulations for realising targets and fostering a competitive broadband market, and where public-funding commitments are putting the least amount of pressure on public-sector finances.

The Full ReportFull speed ahead : The government broadband index Q1 2011 is available to purchase at www.store.eiu.com

While every effort has been taken to verify the accuracy of this information, The Economist Intelligence Unit Ltd. cannot accept any responsibility or liability for reliance by any person on this report or any of the information, opinions or conclusions set out in this report.

Cover image - © Photosani/Shutterstock

LONDON26 Red Lion SquareLondon WC1R 4HQUnited KingdomTel: (44.20) 7576 8000Fax: (44.20) 7576 8500E-mail: [email protected]

NEW YORK750 Third Avenue5th FloorNew York, NY 10017United StatesTel: (1.212) 554 0600Fax: (1.212) 586 1181/2E-mail: [email protected]

HONG KONG6001, Central Plaza18 Harbour RoadWanchai Hong KongTel: (852) 2585 3888Fax: (852) 2802 7638E-mail: [email protected]

GENEVABoulevard des Tranchées 161206 GenevaSwitzerlandTel: (41) 22 566 2470Fax: (41) 22 346 93 47E-mail: [email protected]

eiu government broadband index 2011 exec summary

Technology