Europeans Going Online, But Passing on Broadband

Among the reasons for the sluggish adoption: the lack of competition across, low customer demand and, of course, the high price of the technology. Jupiter MMXI said it costs more than 200 Euros for a connection and an additional 50 Euros for a monthly subscription across Europe.

As a result of the gradual uptake of broadband, Jupiter MMXI predicts only 14 percent of European households will be using broadband by 2005. By that time, 32 percent of online households worldwide will be accessing the Internet from a broadband connection.

The challenge for suppliers is to create value in the broadband proposition.

"The high prices currently being charged for broadband access means that the majority of consumers are discouraged from the technology," said Steffan Engdegard, author of the Jupiter MMXI report. "To attract these people, companies need to improve their marketing message to ensure that Europeans understand the added value of broadband."

European consumers are aware of the improved Internet connection that broadband provides, but don't seem to be aware of its full potential. For example, consumers would have access to an unlimited choice of films on demand, improved music download quality, the ability to play games over the Internet with hundreds of people, software rental, e-books and e-learning.

A consumer survey conducted across seven markets in Europe by Jupiter MMXI found the main reason consumers said they would install a broadband connection is to keep the telephone line free while surfing the Net. One-third wanted it for faster Internet access and 29 percent to download software quickly.

Jupiter MMXI also predicts that the Nordic regions, which has the highest Internet penetration in Europe, will adopt broadband the fastest. Thirty percent of the households in Sweden, Finland, Norway and Denmark will be using broadband by 2005. Germany and Britain are expected to develop more slowly; Germany will have 17 percent, and Britain will have 15 percent of households with a broadband connection at the end of 2005. France, Italy and Spain are expected to have about 10 percent of households accessing broadband by then.

While broadband adoption may be slow in Europe the same cannot be said for Internet adoption. According to eMarketer's eEurope Report, 108 million Europeans will be active internet users by year-end 2001, a 54 percent increase from the 70 million online recorded in 2000. The report also projects 255 million Europeans will actively be online by 2004.

"The European online community reflects a moderate slowdown in the global economy from the past few high-growth years," said Nevin Cohen, eMarketer senior analyst. "However, if the U.S. faces a more serious-than-expected recession this year, Internet penetration in Europe is likely to proceed much more slowly, particularly in large portions of the region with nascent market economies."

European e-commerce will generate $69 billion by 2001, an increase of 103 percent from the $34 billion recorded last year. That figure is expected to rise to $980 billion by 2004.

"This rapid expansion of e-commerce activity depends on increased investment in information technology, steadily increasing internet access, and public policies to make e-business more secure and appealing," Cohen said.

Given the growing ubiquity of wireless phones in Europe, eMarketer also estimates that by 2003, Europe will account for the highest number of worldwide wireless Web users.