Sweden set to build alternative broadband net
By Joanne Taaffe
04 October 1999
The Swedish government is set to create a new broadband network, costing up to 60 billion
kroner ($7.3 billion) in an attempt to give its citizens ubiquitous access to broadband
services.
The government's likely decision against relying on former state operator Telia illustrates the
dilemma facing governments that want to drive broadband development once a national
carrier has been privatized. "The government doesn't want to interfere with Telia. It's an
independent company and, according to EC [rulings], the government is not supposed to
control [it]," said Arne Granholm, secretary of the Infrastructure Committee, which advised
the government on the new scheme.
The IT Infrastructure Committee was set up in July 1998 to advise how the Swedish state
could provide national broadband coverage in conjunction with private industry. It
submitted its final report to the Minister of Industry in June. The report comes out in favor of
some form of private sector funding and sets out a number of options, including subsidizing
network operators that build out to unprofitable regions.
It is unclear, however, how the government will put suggestions to rely on private industry
into practice. Granholm said the committee is in favor of "market forces, but politicians are
not sure if the committee did not have too great a reliance on market forces." The
government is likely to set aside funding in its spring 2000 budget, with money for network
construction available in 2001.
The plan has raised some eyebrows, because it eschews using Telia's network, which does
not yet provide universal broadband access.
"We don't know why they don't use Telia's network. It's for all of Sweden and for other
operators. Those that have done the investigation haven't [caught on to the fact] that we
have a network," said Runi Nilsson, senior manager of Telia Network in Stockholm. "They
said there is no backbone between big communities, but we have an optic fiber backbone,"
added Nilsson.
But the Committee doubted Telia's will and ability to provide capacity and cost-based access
to its lines. And Granholm believes that Telia does not want service providers to install
equipment on its lines. The report pointed out that: "The need for broadband services and
other new and expanded services calls for networks with greater capacity than the
present-day infrastructure is capable of offering. There are commercial and institutional
impediments which restrain competition and network utilization."
Nonetheless, the government hopes that private industry will share part of the cost of
building out both the fiber backbone, which will stretch to 10,000 kilometers, and the regional
fiber networks, which could run for 290,000 kilometers. Though total costs are likely to be
between SKr55 billion and SKr60 billion without equipment, investment from private
companies could cut government investment to SKr12 billion, said Granholm.
The government is unlikely to guarantee access to broadband services under law, but hopes
are that Swedish citizens will have access to speeds of 5 megabits per second within the next
few years.
General backing
With the understandable exception of Telia, backing for the initiative has come from most
sectors of Swedish society, including service providers, which want access to a low-cost
network across which they can compete with each other.
"There's support even from operators, because they all realize they don't want to take the
risk of investment. There needs to be an open structure to all service providers on an equal
footing ... The political power is in favor of society support for infrastructure," said Anders
Comstedt, chief executive of AB Stokab, a company that operates metropolitan area
networks in Stockholm. "We can't roll out fiber to know that next year we'll lose the business
[to the competition]. Churn will kill us."
Welcome move
Users welcomed the move too. "We want free competition on the service side, [and] you
can't get that unless you have infrastructure everyone can get access to. Telia doesn't like
this," said Gustav Richert, head of the Swedish Industry Association. "We have seen too
much of dominant operators having access to networks," he added.
Telia counters that it has already started making itself look more competitive by opening up
access to its local copper loop. "Broadband for me is the local access network," said Nilsson,
adding that Telia in "three to four months will offer local loop unbundling to all actors in the
Swedish market."
The regulator is not involved in the final decision on the shape or funding of the network.
But Anne-Marie Engvall, head of the licensing and surveillance department at the Swedish
Regulatory Authority, stressed "the importance placed on the market" in the report, and
noted that there are a number of approaches the government could take, particularly
subsidizing network operators which build out to unprofitable regions.
Sweden is addressing a problem that countries such as the United States, Finland, Norway,
the former Soviet Union and, later, less developed countries will face. One third of its
population lives in sparsely populated rural areas, which are unprofitable for network
operators to serve with broadband services. The Swedish government is concerned that
without high-speed Internet access to enable business and provide healthcare and
education, families and businesses will bleed out of the rural areas and into the cities.
Universal access
"It's about universal access," said Torbjorn Yngwe, consultant in strategy, Ohrlings
PricewaterhouseCoopers, Stockholm. "The government is trying to build IT centers. It's
trying to keep all of Sweden in the future information society."
Sweden is the first European country to address in earnest how to ensure universal access
to broadband services. "Most countries aren't as advanced as Sweden," said Tim Kelly of
the International Telecommunication Union.
In the United States, where there have been calls to recognize broadband as a universal
service, little has been done at a national level. According to 60% of 412 rural telecoms
companies replying to a National Telephone Cooperative Association (NTCA) survey,
published last month, "universal service support will be essential to fully deploy broadband
to rural areas."
But although the 1996 Telecommunications Act foresaw "advanced telecommunications
services" falling under the Universal Service umbrella, the FCC has not formulated any rules
relating to broadband services.
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