The Future Looks Broadband

The Internet sector is teeming with enthusiasm these days: By 2010, the number of broadband Internet connections is expected to grow to about 17 million. That's healthy growth, given that last year only 4.2 million households accessed the Internet by way of broadband.

Those using the faster connections are also expected to spend more time doing their high-speed surfing. While broadband customers average 40 minutes a day online now, in five years that amount is expected to triple.

These growth estimates are the results presented on Tuesday of a study on broadband connections carried out by the Internet provider T-Online and the Bertelsmann media group.

Germany just average

Despite the rosy expectations for the future, Germany is still stuck in midfield in international broadband comparisons. The country needs to catch up when it comes to the broadband penetration.

According to the Internet sector association Bitkom, out of 100 German households, only 12 use a broadband connection, compared with 26 in Denmark, 26 in the US and 27 in Japan.

The speed in which broadband connections are spreading in Germany is also slower than it is among the country's neighbors. While other large European countries had broadband growth rates in the second quarter of 2004 of between 10 and 15 percent, Germany trailed with a rate of only one percent. That could be changing, according to Bitkom, thanks to a new advertising campaign to spread the broadband gospel that appears to be working since demand is starting to pick up.

Limited broadband use

Broadband could have a greater presence in Germany, according to the country's telecommunications giant Deutsche Telekom. Some nine of our ten telephone connections are suited for broadband, or DSL, use.

"German is doing quite well in terms of infrastructure, the weak points are the actual broadband usage and applications," said Brigitte Preissl, an IT and telecommunications expert at the German Institute for Economic Research.

One reason for that is the success of broadband's predecessor, ISDN. According to Preissl, many people use the Internet primarily for e-mail or other simpler applications, for which ISDN speeds are more than sufficient.

"The additional benefit that one would get with broadband is therefore somewhat limited," she said.

In countries like South Korea or the United States, uses such as online video gaming or the downloading and transfer of images are much more widespread. For these kinds of applications, a broadband connection is almost a necessity.

Not much competition

Another problem in Germany is the lack of competition among access providers. Virtually all users are forced to get their broadband connection through the telephone line. Access through cable television lines, although widespread in other countries, is almost non-existent in Germany. Additionally, Deutsche Telekom has a near monopoly on broadband access, with some 90 percent of the market.

"More competition between cable and DSL providers would certainly help make broadband more attractive," Preissl said.

Economic advantages

Besides making quick downloads and video playback possible for home users, broadband technology also carries benefits for the larger economy. Experts questioned for the current T-Online/Bertelsmann broadband study expect that broadband access that improve a company's competitiveness and productivity. Over the next five years, they expect a productivity rise of 13.5 percent.

"Our investigations have shown that an ISDN connection is often sufficient for smaller businesses," Preissl said. "But larger companies in particular often need the higher transfer capacity and speed that broadband offers."

For example, if a new product is introduced through multimedia channels or partner firms work together online in developing a project, fast Internet connections are needed.

But newer applications, such as fast developing Internet telephony and mobile broadband applications, are bringing the need for broadband to the everyday users and could give the sector another important boost.