Expanding market for rapid broadband access casts doubt on EUR multi-bn cost claims

Date: 06/11/03

Making rural communities part of the internet revolution could be far less expensive than was originally estimated, as Peter Chapman reports

THE bill for connecting local communities to the information superhighway could be far cheaper than the EU thought when it gave the go-ahead for billions of euro in regional funding, according to the Organization for Economic Cooperation and Development.

Big ex-monopoly telecoms firms pleaded for the money to bring the internet to rural backwaters, claiming they were too cash-strapped to make the investments.

Without the aid, they argued that whole swathes of the EU would be denied access to fast "broadband" internet access - one of the goals of the Union's so-called eEurope action plan.

The EU caved in to pressure from industry and government leaders, including French President Jacques Chirac.

The European Commission decreed that broadband projects should be at the head of the queue for a special €10 billion-war chest devoted to IT projects in the structural funds budget for 2000-2006.

But European Voice has learned that the Paris-based OECD offers a far different scenario from the pessimistic forecasts of industry, in a report due to be discussed at a behind-the-scenes meeting of diplomats from its member countries next month.

Its findings, based on data from across the 30-country club, portray a vibrant emerging EU market for rapid internet access, including growing numbers of cooperatives of residents pooling their money to pay for state-of-the-art wireless technology.

Far from being the only way to spread the internet to the Union's furthest outposts, the EU funds could merely be helping the biggest telecom operators to strengthen their tight grip on the market.

An OECD official said: "Private companies are already doing this [investment] so governments need to be very careful to make sure the money is used effectively and in a completely neutral way.

"It's a very dynamic area and the costs two years ago were massively greater than today. As long as they can then be connected to the "backbone", then it is going to be a lot cheaper than people think."

The backbone is the long-distance data networks of fibre optics carrying internet traffic, laid by telecom operators and companies such as WorldCom or Sprint.

When the former-monopoly telecom operators pushed for the regional funding, the idea was to use the cash to roll out digital subscriber loop (DSL) services.

These work by enabling vast amounts of data to be squeezed through the old copper-wires that typically link customers' homes and local telephone exchanges. Rolling out DSL to rural areas is relatively costly because there are too few people to make the investment worthwhile. However, the OECD says new wireless internet service providers or wisps are linking to the internet using cheaper off-the-shelf wireless technology.

For example, some satellite equipment can link computer users within a radius of up to 35 kilometres via dishes placed on any piece of available high ground, such as a wheat sylo or water towers. No licences are needed. A UK network, called The Cloud, is even linking people to the internet via thousands of village pubs. Interactive games machines in the bars are already connected to a fast data network, so the extra cost of letting locals hop a ride on the internet is very low.

A new report by the Organisation for Economic Co-operation and Development (OECD) claims that making rural communities part of the internet revolution could be far less expensive than was originally estimated. The report is due to be discussed by diplomats from OECD countries in December 2003.