OECD : OECD Publishes New Report: ‘The Development of Broadband Access in Rural and Remote Areas’
Global 08 June 2004
 
‘Governments should promote competition instead of subsidies to boost the growth of high-speed Internet access or broadband in rural and remote areas’, this is the crux of a new report published on 25 May 2004 by the Organisation for Economic Co-operation and Development (OECD), which comprises the 28 most industrialized and economically developed countries in the world. Called ‘The Development of Broadband Access in Rural and Remote Areas’, the report reviews the availability of broadband services in each OECD country, and based on this evidence produces a number of recommendations to policy makers. It follows on a growing body of work produced by the OECD analyzing the uptake of broadband services, and providing input into ICT (information and communication technology) policy decision-making in order to foster its development (for example, see also [ilink=http://www.ictdevagenda.org/frame.php?dir=07&sd=10&sid=1&id=505]OECD: Policy Paper on Broadband Internet Services for Economic and Social Development[endilink]). The report was prepared by Dr. Sam Paltridge of the OECD's Directorate for Science, Technology and Industry.

‘The number of broadband subscribers in OECD countries is expected to reach 100 million by mid-2004,’ concludes the report ‘up from 82 million subscribers at the end of 2003, 56 million at end 2002, and just 3 million at the end of 1999…That is one of fastest take-ups of any new communication service experienced in the OECD. It took, for example, less than half the time for broadband to grow from 3 million to 80 million subscribers than it took for mobile cellular services to achieve the same result’. The report focuses on benchmarking digital subscriber line (DSL) and cable modem expansion and availability across OECD countries, as well as the emergence of broadband wireless as a platform to provide low-cost high-performance access networks in rural and remote areas.

One of the key findings is that ‘falling equipment costs are helping many new Wireless Internet Service Providers (WISPs) to enter the market and deliver broadband to remote areas previously considered too expensive to reach via digital subscriber line (DSL) or cable modems. The arrival of these start-up companies and the low prices they charge are in turn causing established telecoms operators to speed up their scheduled broadband roll-out and introduce wireless technology themselves so as not to lose potential customers’.

Main Conclusions

The main conclusions of the report are:

  • There is a rapidly increasing amount of new private sector entry occurring in the provision of broadband access in rural areas. The prices on offer are in some cases lower than those available in urban areas, using DSL and cable modems, and performance sometimes superior. Moreover, in a number of countries, demand is proving to be robust in rural areas and sufficient to attract innovative and low-cost service providers.

  • The market is generating innovative broadband services in rural areas and responding to increasing demand in those areas.

  • Broadband access prices in rural areas are sometimes lower than in urban areas and offer services with higher levels of capacity.

  • Competition in the provision of broadband access is emerging in rural areas, and governments should take this into account before embarking on programmes to subsidise infrastructure.

  • Demand for broadband access, as reflected in take-up rates for services in rural areas, is often higher than the national average. In some rural Norwegian municipalities, for example, the take-up of broadband matches that in Oslo.

Policy Perspectives

‘As the development of broadband access builds momentum, policy makers are increasingly turning their attention to the availability of these services in rural and remote areas,’ outlines the report’s introduction. It then that the dynamics of the broadband market defy the precepts of traditional communications policy: ‘In rural areas the results are sometimes surprising and counter-intuitive. Indeed, the early experience indicates that some of the traditional paradigms for thinking about communications policy are being stood on their head. One such paradigm that is being challenged is that rural areas are unlikely to attract new entrants because they are high cost areas to serve and characterised by insufficient demand. Another is that if rural areas receive service, the prices charged will need to be higher than urban areas and the levels of service lower. More generally, it is common to read that such networks will need to be subsidised and that the lower availability of rural broadband is a sign of “market failure”. All these precepts are, in fact, proving to be contestable’.

‘The implications for policy makers further strengthen the direction OECD governments have taken in relying on principles such as open and competitive markets, regulatory safeguards where dominance exists, technological neutrality, and so forth. While there may be a place for government funding under some circumstances, the market should be given time to work’.

‘The main message for OECD policy makers is to give the market time to develop broadband access. This is not a signal for inaction. Facilitating competition is the most obvious way to assist the market to develop apace. It is readily apparent that DSL availability is occurring much faster than expected in a number of countries. In Belgium, DSL is available to 98% of the population. This availability rate was a competitive response from Belgacom to meet the threat of cable television networks which are almost universally available in that country’.

Resources:

The full report can be downloaded from the OECD website at the link below