The telecommunications sector became fully liberalised in the summer of 1996 and it is regulated by the IT-og Telestyrelsen (ITST); the National IT and Telecoms Agency, an independent government body. Their policy is to move towards a more lightly regulated telecommunications environment.

 

The government has taken a low intervention approach to the development of the broadband market through the use of initiatives and public funding. It has insisted that development of ICT must take place primarily on market terms, and should be based on private initiatives.

 

The incumbent telecommunications operator in the Danish market, TDC Tele Danmark, is a fully privatised company and the sole operator with SMP (Significant Market Power) in the fixed telecommunications market.

 

Denmark has more international bandwidth per inhabitant than any other nation in the world. According to the International Telecommunications Union (ITU), Denmark had around 35Mbps of bandwidth per inhabitant in 2004. The Netherlands had the second most at around 20Mbps and the UK was fourth with around 13Mbps per inhabitant.

 

With regard to ICT usage, the latest available figures show that in 2004, 79% of households had a PC, while 69% of all households had access to the internet. These are the third highest penetration levels in Europe for both PC and internet penetration of households. Iceland has Europe's highest levels of PC penetration, at 86% of households, and internet penetration, at 81% of households. The high levels of ICT penetration provide a good basis for high broadband penetration. (fig.1)

 

 

At the end of June 2005, broadband lines were calculated at around 1.2 million. This represents growth of around 160,000 connections, or 16.1% over the first half of 2005. (fig.2)

 

 

 

 

The market growth compares favourably with the 15.2% growth reported across the OECD and the 16% growth Worldwide for the same period; indicating that Denmark is still some way from market saturation. (fig.6)

 

 

 

 

 

Figures published by Point Topic place Denmark as the nation with the second highest penetration per population in Europe and in fourth position in the world, with 21 broadband connections per 100 inhabitants in June 2005.Korea boasted the World's highest broadband penetration level, with 26 connections per 100 people, and Hong Kong had the second highest with 23 connections per 100 people. In Europe, The Netherlands had the highest broadband penetration level, with 22 broadband connections per 100 people. (fig.3)

 

 

 

In comparison with OECD countries, Denmark is far ahead of the average broadband penetration level of 11.8% of the population. (fig.4)

 

 

 

 

In terms of broadband penetration of households, Denmark had a penetration level of 46% in June 2005. Whilst impressive, this is still significantly lower than South Korea which boasted a household penetration level of 81% at that time. (fig.5)

 

 

 

 

In terms of the business market, there are around 100,000 businesses in Denmark; with small and medium sized enterprises (SMEs) accounting for over 98% of them. Latest figures in 2004 show that 97% of all enterprises with 10 or more full time employees had internet access. The figures also show that 80% of all enterprises with 10 or more full time employees used a broadband connection. This makes Denmark the most advanced nation for ICT penetration within businesses in Europe. (fig.7)

 

 

 

As regards broadband coverage, the regulator, ITST, have stated that 98% of all households were able to access broadband services at speeds of 512kbps and above in June 2005, while 95% of all households could access broadband services at speeds of 2Mbps and above. Cable broadband, at speeds of up to 4Mbps, was available to 60% of households in June 2005. (fig.8)

 

 

 

The dominant technology in the Danish broadband market in June 2005 was DSL; accounting for around 64% of all broadband connections. Cable connections accounted for around 33% of connections, while fibre (FTTx) accounted for around 5% of connections. (fig.9)

 

 

 

Although mainly a DSL operator, the incumbent, TDC, also owns cable infrastructure. This is an unusual feature for a liberalised market, and leaves Denmark as one of only three Western European markets in which the incumbent has its own cable infrastructure; the other two being Norway and Portugal.

 

TDC's main competitor, TeliaSonera, is the second largest broadband provider in the market. The majority of its lines are provided by cable subsidiary Telia Stofa. TeliaSonera has experienced difficulties in the Danish DSL market, after incurring losses due to its late entry into the market. As a result it has scaled down its operations, withdrawing from the residential DSL market in order to concentrate on delivering services to higher value niche markets such as symmetrical and high-speed business services.

 

In terms of wireless broadband, Denmark is one of the few Western European countries that have a national FWA offering. This is provided by Sonofon but has failed to establish a sizeable customer base. High subscription costs have made it very difficult to compete with ADSL and cable services in the residential market. The low number of subscriptions gained by current FWA operators and the fact that Tele2 has handed back its FWA license, suggest that FWA is unlikely to become a mass market technology.

 

A further interesting use of wireless has been demonstrated by Arrownet, a small cable player that has been using FWA to increase its footprint around its cabled areas. Most of its users are provided with access via a cable TV network that is backhauled to a MAN (Metropolitan Area Network) using fixed wireless. Arrownet also uses the fixed wireless equipment to offer FWA to households in the area that are not connected to the cable networks.

 

With regards to higher speed infrastructure, the Danish Government has acknowledged that the demand for faster broadband connections in Denmark is on the increase and as a result it is keen to see an increase in the number of FTTx networks that are being deployed throughout the country. It has however stated that increased rollout is expected to be market driven and no public funds are planned to be used. Regional initiatives, as outlined in ITST's 'Mapping of Broadband Access Services in Denmark' report, aimed at furthering the reach of broadband, and more specifically FTTx, in rural areas of Denmark include:

 

 

 

As a result of the rising demand for higher speed connections, Danish utility companies have been quick, compared to their European counterparts, to commit themselves to exploring the opportunity to provide broadband services. In August 2004, Nesa began rolling out its 'True Broadband' FTTH service across the Zealand region, via its Nesa Fibernet subsidiary. Other utility companies are also in the process of deploying broadband networks with plans in place to deploy FTTx networks passing around 500,000 households by the end of 2007 and at some point in the future to 1.2 million households. This could see FTTx become a mass market technology in the future.

                                        

The future expansion of these FTTx networks may not run as planned, however, as a ruling by the Danish Energy Authority has stated that energy companies cannot use public funding to build new broadband networks. Under this ruling, energy companies will only be able to deploy FTTx networks at the same time and in the same ditch as electricity cables. This will prevent energy companies from rolling out networks to profitable areas only.

 

As well as the range of technologies, there is also competition in the market from local loop unbundling (LLU). Denmark was one of the first countries in Europe to introduce LLU; making it available during 1998. Despite the early introduction, LLU has a smaller share of the Danish DSL market than in many other Western European countries. Analysys Research calculated that 111,594 local loops were unbundled by the end of June 2005. This represents 15.2% of the DSL market. (fig.10)

 

 

 

 

As a result of early LLU liberalisation and a broad range of technologies, Denmark has a higher number of broadband operators than most Western European countries. Despite this, market share figures show that the incumbent, TDC, maintains a very high share of the wholesale market, when compared to other advanced Western European markets such as Sweden and The Netherlands. TDC's DSL and cable connections accounted for 70.7% of all connections in June 2005, compared to the 46.1% and 43.3% shares of the respective incumbents in Sweden and The Netherlands. TDC's share of the retail market is also fairly high at 56.3%. The Swedish and Dutch incumbents had 37.3% and 31.9% shares of their respective markets. This indicates a lack of competition in the Danish broadband market, especially in the residential sector. (fig.11)

 

 

 

The largest alternative DSL operator is Cybercity, which was one of the first operators to enter the LLU market. In an attempt to gain market share it introduced a number of innovative services to the market, including paid-for content and also offered higher speed services before its competitors. Having failed to gain a large share of the residential market it has, like TeliaSonera, begun concentrating more on the business market. Cybercity is also involved with some of the Danish utility companies, providing them with broadband telephony and VoD services for their municipal fibre networks. Continuing its trend of offering higher speed services before its competitors, Cybercity has announced its intention to provide ADSL2+ and VDSL services offering download speeds of up to 25Mbps towards the end of 2005.

 

While other operators have attempted to compete with the incumbent via product differentiation by building their own infrastructure, the only significant player to compete on pricing has been Tele2. It has done this by reselling TDC's bitstream ADSL wholesale offering.

 

In terms of service bundling, triple-play offerings started to appear in the market during the second half of 2004, mainly over the municipal network of the energy companies. In order to insure itself against these threats, TDC announced that it would double the speed of all its residential DSL services from a maximum 2Mbps to 4Mbps by the end of 2005 and also launched an IPTV service in May 2005 as part of a triple-play service, consolidating its 40% share of the cable TV market.

 

Another interesting feature of the telecommunications market is the resale of fixed telephony subscriptions. Mobile operators and resellers are able to remove TDC from the customer relationship by reselling their fixed telephony and combining it with the customer's mobile subscription, creating a single bill for all telephony expenditure. These fixed-mobile bundles could also be combined with DSL access, combining the entire telecommunications spend.

 

In terms of pricing; basic 'first generation' broadband packages cost around EUR45-55 per month; which is more expensive than many other Western European markets. Similar services in the UK and France cost around EUR25-30 per month, while in The Netherlands, a country with similar penetration levels and GDP per capita to Denmark, a similar service costs around EUR20-30 per month. These high costs are the result of low competition in the residential retail sector.

 

Similarly, 'Second generation' broadband services with speeds of around 8Mbps are also particularly expensive; costing around EUR135 per month. This is considerably higher than in France and the UK, where similar services cost around EUR30-40 per month. A similar service in The Netherlands costs around EUR60-80 per month. These high costs are largely due to the low availability of these higher speed services, although as more ADSL2+ services are launched, these costs are likely to fall.

 

In conclusion, the early introduction of LLU, and the liberal approach taken towards it, has created a high number of operators in the Danish broadband market; resulting in a wide range of niche services being available. However, the high retail share of the incumbent shows that this has failed to create a competitive market, especially in the residential sector. Markets where the competition has developed through the reselling of the incumbent's wholesale offerings, rather than markets where the regulator has encouraged infrastructure competition through LLU, may therefore end up being the most competitive.

 

Nevertheless, the level of broadband penetration in Denmark is one of the highest in the world. High levels of basic ICT penetration and high GDP per capita have stimulated demand for broadband, however, the high cost has resulted in there being few 'second generation' services in the market. With operators beginning to launch ADSL2+ services, and municipal fibre networks being deployed, the cost of high speed services is likely to fall somewhat and as a result, greater penetration of these services is likely.

 

Despite having one of the highest levels of broadband penetration of households in Europe, the broadband market has yet to achieve tele-density levels (Analysys Research calculated that there were 82.6 lines per 100 people in 2004). It is therefore expected that the broadband market will achieve further growth; stimulated by higher speed broadband services and by the triple-play services that are being launched in the market.

 

In 2005, with high ICT penetration, broadband penetration and mobile take-up, the telecommunications market in Denmark is highly advanced. There are a number of operators, providing services over a range of technologies.

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Broadband

Denmark

FTTx

LLU

Country report

Market

Europe

 

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