By Constantinos Psillides
THE FACT that Cyprus is lagging in areas where other EU countries are advancing rapidly is hardly newsworthy. So it comes as absolutely nobody’s surprise that Cypriots pay too much on their internet connection, at the same time putting up with slower speeds than their EU counterparts.
According to data from the EU Digital Agenda Scoreboard, Cypriots pay an average of €91 for fast and ultra-fast internet connections (this applies to speeds of 30Mbps to 100Mbps) and an average of €60 for lower speeds.
This is the second highest in the EU, with Malta claiming the first place when it comes to over 30Mbps (€102) and Hungary (€72) for internet speed lower than 30Mbps.
An industry insider, who wishes to remain anonymous, explained to the Sunday Mail why this was the case. “Operational costs for providers is the number one reason for high prices. First of all, Cyprus is a limited market. There are roughly 210,000-220,000 subscriptions on the island at present. This does not allow for a large market or competition. Thus, providers have to cover their operational costs by charging their very limited client pool more. They have to purchase the same equipment large EU providers do, in order to be operational,” he said.
In comparison, Germany has about 28 million subscriptions while the UK has approximately 22 million.
The insider went on to say that besides the limited market, being in the farthest reaches of the EU was also an issue. “Providers need access to central hubs to provide their clients with internet access, hubs which are located mainly in Germany, the UK and France. Service providers operating in these countries don’t have to pay much for access, unlike us or Malta.”
A third contributing factor, according to the insider, is electricity charges. “These systems need power to run. Electricity charges in Cyprus are almost double what the rest of the EU is paying, so that’s also added to the operational cost and passed along to the consumer.”
Cyprus is also lagging behind in speed provided. In Croatia, Cyprus, Greece and Italy, fast broadband is still rare, representing less than 5 per cent of all subscriptions. When it comes to Cyprus, up until six months ago the 100Mbps penetration was close to zero.
The insider explained that low speeds could be mainly attributed to low market demand. “At the moment, the vast majority of households would be perfectly satisfied with a 10Mbps-12Mpbs connection. Most people believe that this sufficient for their needs and don’t go over that, considering the market prices,” he said, adding that providers in Cyprus include access to digital TV in their bundles, which is not always the case in the EU. “Allowing for digital TV takes some off a chunk of the allowed speed. Providers in the EU separate the TV package so their subscribers have to pay more to either stream programmes online or get access to digital TV.”
A reason for settling with comparatively low internet speeds is that streaming media presence on the island is almost non-existent. Companies like Netflix, Hulu or HBO GO are not available in Cyprus, streaming from which would require a high-speed connection.
Another factor, according to the insider is an effect called “bottlenecking” that mostly plagues DSL connections. “CyTA sets up a central point for servicing a number of subscribers in various points around the island, called DSLAMS. During peak hours servicing time climbs significantly higher due traffic. Additionally, the further you are from the DSLAM the more your speed is affected.”
It should be noted that according to the data provided by Digital Agenda Scoreboard, DSL connections in the EU deliver –on average- only 64 per cent of the advertised speed. Poland providers are the most “honest” ones since they deliver up to 90 per cent of what their ads promise.
DSL technology, according to the Scoreboard, is the one preferred by incumbent providers in the EU while new entrants gravitate towards cable.
Currently, Cablenet is the only company that provides customers with a 100Mbps connection. Cablenet is one of four providers operating on the island now, along with MTN, Primetel and the semi-state CyTA.
CyTA, boasting a 68 per cent market share, is the island’s largest provider. It currently offers internet speeds up to 32Mbps.
What sets Cablenet apart is that the company doesn’t use CyTA’s network to operate. Cablenet utilises cable technology, which allows for much faster internet speeds. CyTA –along with Primetel and MTN that operate off CyTA’s already established network- utilises digital subscriber line (DSL) technology. Establishing a cable network though has its drawbacks, since Cablenet coverage is mainly limited to urban areas whereas CyTA covers the whole island.
According to the Digital Agenda statistics, Cyprus is one of the only four countries in the EU that has complete coverage.
CyTA is at the moment migrating from an asymmetric subscriber line (ADSL) to a very-high-bit-rate subscriber line (VDSL) which allows for ultra-fast internet, up to a possible of 100Mbps.
The insider told the Sunday Mail that while CyTA was not considering cable technology, they were planning to jump to optical fibre. “Fiber to the home/building will be the next step for CyTA but it’s going to be an extremely hard one. First of all, CyTA will have to change their whole network while at the same time maintaining their service. It’s a daunting task and one that could very much cost CyTA over €100 million.”