Eastern Europe Set for Broadband Surge
But it won't be plain sailing, according to the findings of the Europe Telecom Insider report, "Government Initiatives Will Boost Broadband Growth in Central & Eastern Europe." Governments and operators in CEE markets continue to face huge challenges in bringing broadband to the masses: Income levels are low; there is a lack of existing fixed infrastructure; and populations in rural areas are widely dispersed, and less IT literate that their urban compatriots.
But the low penetration level means there's huge potential for growth. The report's author, Sylwia Boguszewska, estimates that total broadband (fixed and mobile) penetration in CEE was just 10 percent at the end of 2009, compared to an average of 28 percent in Western Europe.
Pyramid anticipates that new government measures and higher PC penetration will help boost broadband service take-up in CEE by a compound annual rate of 20 percent in the period from 2009 to 2014, compared with just 13 percent in Western Europe. In the same period, the number of PCs in CEE will grow at a CAGR of 13 percent, compared with just 5 percent in Western Europe.
"As a result, we forecast that PC penetration in Central and Eastern Europe will come to 51 percent of the population by 2014, up from 12 percent in 2004," notes Boguszewska.
According to the report, those CEE countries that have now joined the European Union will have a greater opportunity to catch up with western markets if they take advantage of EU funds. This includes financing from the European Economic Recovery Plan, which aims to help expand broadband networks to rural areas in poorer countries.
One relative EU newcomer is Bulgaria, which has an extremely undeveloped broadband market, with a penetration rate of just 15 percent at the end of 2009. The country's economy has suffered during the recent global crisis, but is expected to recover this year with GDP growth forecast at 1 percent in 2010 and 3.4 percent in 2011.
This general economic upturn will prompt more ICT investment by the government and private sector, believes Boguszewska. But while DSL is currently the dominant broadband technology accounting for 12 percent of all fixed access lines in 2009, Bulgaria is viewed as an extremely fertile market for new broadband access technologies such as WiMax, because of the low level of existing fixed infrastructure.
Boguszewska believes WiMax connections will more than triple up to 2014, accounting for about 11 percent of all access lines by that year, compared with 3 percent in 2009. By 2014, DSL is expected to account for 29 percent of all lines, and cable for 11 percent.
Overall, Pyramid expects broadband penetration in Bulgaria to rise to 38 percent in 2014, with EU funds expected to help the country's expansion. The EU has committed to support Bulgarian broadband deployments with €29 million (US$40 million) in 2009 and €32 million ($43.8 million) in 2010, while the country will also have access to the €1 billion ($1.37 billion) EU pot that has been earmarked for less developed EU countries.
— Anne Morris, freelance editor, special to Light Reading