Broadband penetration and pricing in Finland rank relatively well on a global scale

International comparative studies have shown that broadband penetration in households is at a high level in Finland. Furthermore, fixed broadband subscriptions in Finland are more affordable than the EU average. This data is provided in the statistics and surveys by the European Commission.

Finland is one of the leading EU countries in broadband penetration

On a global scale, the number of broadband connections in Finland is relatively high. In 2015, as many as 90% of households had a broadband connection. Only the Netherlands, Luxembourg, Norway and the United Kingdom were ahead of Finland in this respect. In average, 80% of households in the EU have a broadband connection. In fixed broadband subscriptions only, Finland is below the EU average. Roughly 59% of Finnish households had a fixed broadband connection whereas the EU average was almost 72%. But then again, Sweden also ranks below the EU average in this comparison.

Finland's result is explained by the extensive and fast mobile networks that supplement fixed broadband networks as well as affordable subscription prices. When examining the coverage of mobile broadband, Finland is clearly in the lead compared to other EU countries. In 2014, there were 138 mobile broadband subscriptions per 100 Finnish inhabitants whereas the EU average was 72 subscriptions per 100 inhabitants. In Sweden, the number of mobile subscriptions was 113 and in Estonia 114 per 100 inhabitants. According to a consumer survey ordered by FICORA in spring 2015, 28% of Finnish households used mobile broadband as their only internet connection. It may be assumed that such use is considerably more common in Finland than in average in Europe.

When looking at fixed broadband usage more closely, the use of fast connections, in particular, is more common in Finland than in the rest of the EU. In 2014, one in five fixed broadband connections in Finland were at least 100 Mbit/s connections, whereas the EU average was 9%. In Sweden the use of fast connections is even more common than in Finland as one third of all fixed broadband connections were at least 100 Mbit/s connections. In Estonia, only 5% of all fixed broadband connections were fast connections. The number of 100 Mbit/s connections in Finland has been growing significantly and at the end of June 2015 as many as 23% of all fixed broadband subscriptions were at least 100 Mbit/s connections.

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Figure: Share of 100 Mbit/s connections out of all broadband subscriptions

When comparing broadband connections by technique in the Nordic countries and the Baltic countries, certain significant differences arise between the countries. In Sweden, Latvia and Lithuania, the majority of subscriptions are based on fibre optic technology. In Denmark, Estonia, Iceland and Finland, metallic wire connections are still more common. In Norway, the numbers of fibre optic, metallic wire and cable modem connections are the same.

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Figure: Fixed broadband subscriptions by technique in the Nordic countries and Baltic countries at the end of June 2015.

Pricing of fixed broadband subscriptions in Finland is relatively low on a global scale

The European Commission orders annually a study on the prices of broadband subscriptions within the EU (Broadband internet access cost (BIAC)). One of the key findings of the study is the reduction in broadband prices in Europe. The prices of fast, over 30 Mbit/s connections in particular, have decreased significantly. There are material differences in broadband prices between member states but even in the most expensive countries the prices have developed in a more affordable direction for consumers in recent years.

When comparing the prices in Finland to those in other countries, it is clear that broadband subscriptions are almost always more affordable in Finland than in the EU in average. Furthermore, the Finnish prices, especially the prices of fast broadband subscriptions, have decreased in recent years which follows the general trend in the EU.

The study points out that in Finland, the impact of different kinds of offers on consumer prices is greater than in other EU countries, and actual consumer prices are usually lower than list prices. According to the study, EU citizens spend on average 1.31% of their income on a fixed broadband subscription (12–30 Mbit/s). In Finland, the corresponding percentage is only 0.84% which is the second lowest in the EU. Only Lithuanians spend a smaller portion of their income on broadband. The calculations in the study have been made using the 2013 average net income adjusted by purchasing power parities which for Finland is EUR 23,015 per year. The monthly sum spent on fixed network broadband services is about EUR 25 per month.

The EU-wide study comparing prices supports the observation made in Finland that the prices of broadband subscriptions are decreasing. Based on the information on revenues and subscription volumes collected by FICORA from operators, the average monthly price that consumers pay for a fixed broadband subscription has decreased from EUR 33 in 2009 to EUR 20 in five years. However, when examining the price trend, it must be noted that it is increasingly common to bundle a broadband subscription with an IPTV subscription. This way, the costs of the broadband subscription may partly be paid through the TV subscription which does not show in the monthly consumer price for broadband subscriptions.

The study examines the prices of different bundled subscriptions in detail but in Finland, they are still less significant than in the rest of Europe. In the EU as a whole, broadband only constitutes one third of all price information but in Finland, almost 60% of collected price information covers broadband subscriptions only, i.e. so called standalone prices. With regard to packages of broadband and TV subscriptions, the prices in Finland are also lower than the EU average in all speed categories.

Compared to the rest of the world, Europeans pay less for broadband than consumers in the United States and Canada, but in Japan and South Korea broadband subscriptions are more affordable than in Europe. Differences in prices of fast, at least 100 Mbit/s connections, in particular, are significant between the countries.

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Figure: Lowest price of a fixed broadband subscription in Finland and Sweden, as well as the median price in EU countries

The European Commission orders annually a study on the prices of broadband subscriptions within the EU (Broadband internet access cost (BIAC)). The latest price comparison data is collected in February 2015. Ordering the study is part of the EU's Digital Agenda and charting the progress on its implementation. Besides 28 EU member states, the study covers 10 other countries, including Japan, South Korea, Norway and the United States.

The purpose of the study is to analyse how much residential customers pay for fixed broadband services. The European Commission has collected the data for the study on the operators' websites. Besides monthly fees, the prices include additional costs such as initial set-up charges and rental price for equipment. In the study, the prices are expressed in EUR and adjusted by purchasing power parities.

Besides the mere broadband subscription (standalone), pricing information has been collected about different service packages (doublepay/triplepay) which are broadband subscriptions bundled with fixed telephony or television subscriptions. Different speed categories have also been taken into consideration. A general observation made on the basis of the price comparison is that fast connections become more common first in price lists and broadband offers, and only later in actual utilisation rates.

Key words: Internet, Broadband, Mobile broadband, Prices, Subscription, Articles

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