Hungary Urged to Incent Investments in High-Speed Broadband

BUDAPEST, HUNGARY - The telecom industry, governments and regulators need to move decisively to fiber to support future economic growth, states Arthur D. Little (ADL) in its new report, “National Fiber Strategies: National Economic Imperative or Just Another Private Industry Task?”

According to recent ADL studies, there are clear socio-economic benefits of high speed broadband infrastructure:

1. For every percentage point increase in broadband (BB) penetration the economic effect on GDP growth is around 0.1 precent of GDP


2. For every 1,000 additional broadband users 80 jobs are created


3. Upgrading broadband speeds for households leads to improved income of up to $322

Very high broadband also drives diversification of economies, as small and medium businesses are among the first to benefit from new services. These benefits however do not come cheap, as the investment needed for further rollout is vast.

“The challenge of how to attain the economic benefits of the latest fiber infrastructure while managing the considerable investment required is still unclear in many markets,” says Dr. Karim Taga, global leader of ADL’s TIME practice. “Hungary is struggling to manage this challenge and is losing momentum. Despite having been a pioneer with broadband deployment in the region, today it only accounts for 22 percent FTTH homes passed. It is lagging behind CEE (Central and Eastern European) countries, which have successfully deployed nationwide fiber strategies, e.g. Lithuania (100 percent), Bulgaria (53 percent) and Slovakia (43 percent). Hence Hungary’s very high broadband strategy urgently requires re-consideration.”

Hybrid Approach to Fiber Strategy Recommended
In a global survey, ADL has identified five national fiber models that governments around the globe have been following to reap the benefits from fiber. ADL concluded that the most promising fiber strategies involve a hybrid approach, a combination of free market competition, government coordination and geographically-targeted public investment open to competitive bid. “Governments need to rethink their infrastructure strategies to catch up with global best practice examples,” adds Taga. “Hence public policy must enable an investment friendly environment to secure Hungary’s future competitiveness by an accelerated roll-out of a nationwide very high broadband infrastructure. When done right, Hungary has the chance to become a role model in the EU with regards to digital agenda goals.”