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Eastern Europe: the Next Broadband Boom?

April 7, 2011 - 2 Comments

By Howard Baldwin, Contributing Columnist

If your image of Eastern Europe leans toward Yugos and Soviet farm collectives, it’s sadly outdated. It’s entirely possible that, with new government programs stimulating Internet connectivity and new EU regulations benefiting less-developed members, Eastern Europe may be on the verge of its own broadband boom.

Eastern Europe already has a strong foundation from a broadband standpoint. When Jet-Stream, a Dutch content-delivery consulting firm, posted the results of tests on broadband speeds last year, the results were more than a little surprising.

Download speeds in Latvia 18.86 Mbps, exceeded that of Japan, at 17.52 Mbps. Of the top 24 countries, half were in Eastern Europe (the other half was split among Scandinavia, Europe, and Asia). Of those 12, nine have joined the EU.

But now, the EU’s new telecommunications regulatory framework, with an adoption deadline scheduled for May 2011, has the potential to provide even more benefit to Eastern Europe. The new regulations have been designed to ensure fair competition and more consistency of regulation on the telecoms markets.

According to a 2010 report from Pyramid Research, a global telecom research firm, Eastern European countries have the most to gain from this new regulatory framework, for a variety of reasons.

Government support. Like the U.S., the EU has budgeted economic stimulus funds and allocated portions to telecom infrastructure spending. According to the Pyramid report, “A great deal of EU funding will be spent on rural areas. Effective partnerships between municipalities and operators will benefit both sides and will contribute to higher Internet penetration rates.”

Regulatory alignment. Because the regulatory structures of the Eastern European countries are still evolving from their days as part of the Soviet bloc, Pyramid postulates that it will be easier for the newest EU members to align their internal regulatory frameworks to the EU dictates.

Higher growth potential. In addition, because Internet connectivity is currently low, the region has the potential for greater organic growth.

The Pyramid report further suggests that, in conjunction with government funding, Eastern European telecommunications service providers will also be doing their part to increase uptake. The report noted:

“Broadband uptake depends heavily on access to PCs. Operator-provided bundling is one of the driving forces behind rising PC penetration. Propelled by increasing bundling of broadband service with notebooks, PC uptake across Europe is rising. Central Eastern European operators have learned a lesson from their Western European counterparts and offer attractive computer subsidies.”

Even the U.S. federal government is extending a helping hand to Eastern Europe.

The U.S. Agency for International Development (USAID) is working with CDC Development Solutions to assess ICT capabilities in six Southeast European countries, with an eye toward making the region more competitive. The effort is two-pronged: creating a regional ICT cluster and improving ICT training among workers in the region.

With government and telecommunications companies working together, Eastern Europe already has the potential to create a broadband foundation for serving its entrepreneurs. Networking creativity and start-up entrepreneurs already exist: Skype, the VoIP-based communication technology, was developed by three Estonian software developers. Five years after its launch, Skype was ranked the largest provider of cross-border voice communications in the world.

As we have previously mentioned on the Connected Life Exchange, with several examples of national economic policy initiatives around the world, a significant amount of telecom infrastructure investment is being applied as a progressive stimulus for socioeconomic advancement. Where in the world will the next broadband boom occur? It could happen anywhere.

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  1. It will be interesting to see how the broadband situation in eastern europe develops as my experience has been of a difference between east and west europe.

    • @CiscoFX, based upon the info that Howard detailed in this assessment, it would appear they already have a good foundation in Eastern Europe -- and they're heading in the right direction with additional momentum.