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4G Weekly Digest September 2, 2009 - Volume 5, Issue 2

Special Country Focus: Broadband in Spain
By Basharat Ashai, Market Analyst, APAC & MEA
Contact the author at basharat@maravedis-bwa.com

Spain ranks 9th worldwide in terms of the number of broadband subscribers by country, according to stats released by the Organization For Economic Co-operation and Development. Mobile broadband is not included in these statistics, since the OECD is still in discussions with member countries to develop a common methodology for tracking mobile broadband subscribers.

Figure 1: Total broadband subscribers by countryas of December 2008
(Source: OECD)

Broadband penetration in Spain at the end of 2008 stood at 20 lines per 100 inhabitants. At the end of 2008 there were 7.2 million xDSL lines and 1.8 million cable lines in the country. Just as in recent years, the prevailing broadband service technology in 2008 was still xDSL, followed by cable. Cable broadband in Spain is predominantly centered around the major Spanish cities and towns. In order to be cost-effective, Spanish cable broadband players offer larger bandwidth than ADSL broadband, and allow customers to bundle TV, telephone and broadband packages together. Other technologies, still a minority in broadband access in general, accounted for less than 90,000 connections at the end of 2008 – made up mainly of LMDS, WiMAX and Wi-Fi access.

Figure 2: Broadband Access Market Share by Technology in Spain as of Dec 2008
(Source: CMT)

The fixed WiMAX market has been slow to take off in Spain. WiMAX broadband is used in regions without easy access to landlines or cable broadband services. The main operators providing fixed WiMAX services include Iberbanda (bought by Telefónica in 2006) and Euskaltel (regional Basque operator). Iberbanda offers wireless broadband services in Andalusia, Catalonia, Navarra, and Castilla y Leon. Iberbanda’s WiMAX network covers more than 45% of the country’s landmass. The operator expects to reach 100,000 fixed WiMAX customers by the end of 2010, having already surpassed 50,000 mark at the end of Dec 2008.

Euskaltel provides fixed WiMAX services in rural areas in the North of Spain. It received an LMDS license in 1999, which was subsequently approved by the authorities for providing the fixed WiMAX services in 2004. It is a nationwide license but Euskaltel provides fixed WiMAX services in Basque region only. Both Iberbanda and Euskaltel have chosen Alvarion as their equipment vendor for fixed WiMAX. Iberbanda has had a long-term partnership with Alvarion, and in May 2009 again selected the vendor to expand its WiMAX network coverage in Catalonia. Most of Euskaltel and Iberbanda customers use subsidized WiMAX payed for by regional governments in order to extend broadband to rural and mountain areas.

There is no commercial mobile WiMAX deployment in Spain. However, some operators have aggressive plans to launch mobile WiMAX. Neo-Sky for one is planning to do so in the first half of 2010. The operator expects to deploy 1500 base stations by the end of 2011, and by the end of 2014, reach one million mobile WiMAX subscribers. The CAPEX for the first two years of network deployment will be around 200 million Euros.
Neo-Sky is planning to deploy mobile WiMAX mainly in urban areas of Spain. The operator plans to receive approval from the Spanish telecom regulator to provide mobile WiMAX services in the 3.5GHz band before the end of 2009. The roadmap for rolling out mobile WiMAX is aligned with the availability of laptops with embedded mobile WiMAX chipsets.

Iberbanda has also started to test mobile WiMAX in Spain – it has deployed a trial WiMAX 802.16-e (Rev-e) network in partnership with Alcatel-Lucent. At the end of December 2008 the operator revealed it was refocusing its WiMAX R&D efforts on enhanced wireless DSL services, including usage for mobile internet devices alongside domestic home computer use.

Spain has less broadband subscribers than other Europeon countries like France, Italy and Germany (see Figure 1). However, broadband technology in Spain is changing and developing on an ongoing basis. The most notable increase in the mobile telephony sector came through mobile broadband networks. The mobile broadband in Spain could be something of a catalyst for change in the Spanish broadband market. High-speed connections through data cards grew by 82% to reach 1.2 million dedicated connections at the end of last year. The major mobile broadband providers in Spain include Vodafone, Orange, Movistar and others.

The majority of Spanish mobile operators have made significant investments into rolling out their 3G technology networks in recent years. An example of this was the 25,000 UMTS base stations made active in 2008, representing 33% of the total number of stations deployed throughout Spain. The main consequence of this increase in 3G stations was the increase in the number of people covered by this technology. The 3G coverage has reached 90% of the population as a result of the investment in the rollout of 3G mobile networks in Spain.

The signs are positive for 4G LTE as well in Europe. The European Union has decided to make an investment of nearly 18 million euros in research to boost LTE/4G mobile networks. The funding will be used for research on LTE Advanced. In countries like Finland, Germany, Norway, Sweden, and the UK, LTE trials are ongoing. By September 2009 the Europeon Union should provide more details as to how the money will be used and what projects will be funded.

The Europeon Union estimates it will invest more than US$987 million into research on future networks, half of which will be allocated to wireless technologies. Nonetheleaa, challenges remain for the proliferation of technologies like LTE in European countries. The major hurdle has been the lack of available frequency spectrum. The 790 MHz to 862 MHz band, also known as the digital dividend band, is considered the primary LTE band in Europe, but the spectrum is some years away from being released. France has issued its plan for the spectrum, as have Finnish and Swedish governments who have already decided to make the band available for mobile applications.

The spectrum in the 2.6 GHz band is also coming up for grabs throughout Europe and as such is likely to be the first band for LTE deployments. To date, Norway and Sweden have auctioned spectrum while the Netherlands, Germany, Austria, Spain and the UK have auctions planned. Even though some countries have allocated the spectrum, there is still a long road ahead in order to launch commercial LTE services. The government of Spain plans to begin allocating the 2.6 GHz band through an auction or tender process by the end of 2009, as it strives to increase access to next-generation mobile Internet services.