LONDON -- Ovum, the analyst and consulting company, predicts that revenues from pan-European bandwidth sales will increase at up to 70% per year until 2003, but the rate of growth will slow down to less than 20% thereafter. Although Europe has led the world in the development of cross-border broadband networks, the slowdown in growth is causing providers of capacity, and their investors, to radically re-think their plans.

From 2003, today's volume-driven purchases will be superseded by an on-demand market, where carriers will buy bandwidth in smaller increments, more tailored to end-user demand, and at lower fixed cost to them. The days of capacity overbuy are rapidly coming to an end as carriers seek to control their costs, leading to a step change in the way that bandwidth is provisioned and purchased in Europe.

"To be a successful regional broadband provider, you need lowest-cost network, data centres, and broadband local access", says Sue Uglow, research director at Ovum. "But most of today's pan-European players are in a hopeless position to achieve this kind of coverage. High debt, high fixed costs, and the failure of local loop unbundling are all contributing to the melt-down."

http://www.ovum.com