On October 22, 2015 the European Commission released three studies on broadband. In particular, the one that relates to performance shows that there is still a significant gap between theoretical speeds and the actual speeds customers get. This justifies the closer monitoring that the EC will undertake with the upcoming Connected Continent rules. Despite the pressure this might put on ISPs, increased transparency could create more demand for fiber, because customers may be more likely to adopt fiber broadband products where theoretical and actual speeds are closely matched.
Consumers might be encouraged to take up faster connections if they know what they will get
The studies on broadband released by the EC on October 22, 2015 paint a picture that is only partially rosy. Consumers have enjoyed a prolonged fall in broadband pricing (approximately 12% between 2012 and 2015) even as the availability of next-generation fixed and mobile technologies (particularly 4G LTE) has increased. However, the actual broadband speeds that consumers receive in practice often fail to meet the promises of telcos’ advertising.
In other words, a gap remains between the “up to” speeds marketed by ISPs and what customers actually get. Customers on average receive speeds approximately 78% of those advertised, although the figure drops considerably when we look at DSL only (65%). Cable and FTTx are much better at keeping their promise (90% and 85% respectively). These results are similar to last year’s iteration of the study, showing that little has been done to bring advertised speeds closer to actual ones.
The gap between promise and reality justifies the EC’s desire to require greater transparency from ISPs, which will face rules on the advertising of broadband speeds as part of the Connected Continent package, set to come into force during the first half of 2016. It also shows that, although new technologies allow copper lines to deliver increasingly high speeds, thereby extending the life of the legacy copper networks, cable and fiber networks remain the most reliable way to deliver superfast broadband, with better matching of theoretical and actual speeds.
ISPs could have something to gain from being more transparent and open about the speeds they can actually deliver to their customers. Those customers who demand fast broadband but do not like that a theoretical speed of 20Mbps could in practice turn out to be much lower than that could be encouraged to purchase fiber-based products that deliver what they promise. Driving demand for high-speed broadband at the retail level could create a stronger case for investment in fiber.
Broadband Performance Monitoring Schemes, TE009-001022 (November 2013)
Luca Schiavoni, Senior Analyst, Regulation