By EDWARD HARROFF
SYSTEMSThe country that has brought us the zip and BlueTooth is now trying a simpler approach to delivering broadband access to millions of households across Sweden and into other European markets.
Bredbandsbolaget, also known as B2, was established in the summer of 1998 to fill a gap in the supply of Internet services to private individuals and households. The initial B2-business concept was to provide Swedish households with access to broadband communication that copes with both present and future forms of media and communications at the lowest possible fixed price. B2 grew out of an information-technology consultancy group, Framtidsfabriken, which still owns more than 10% of the B2 group.
In this short space of time, Bredbandsbolaget has established itself as the leading local-access challenger to the former Swedish telecommunications monopoly, Telia. B2 has furthered the debate about how Sweden should retain and consolidate its position as one of the world's leading countries in the field of information technology and telecommunications. The B2 chairman of the board, Jonas Birgersson, has created a distinctive image for himself as one of the country's leading debaters in the field. He is one of Sweden's wealthiest 28-year-old businessmen.
"In 1996, I was working on the development of Telia's Internet portal. Some of us could see the need for massive broadband access, but management argued against it," explains Birgersson. "They said it was a choice of DSL or modems and that they were expensive. But we had a simpler approach-use Ethernet instead, then you only need a switch." Birgersson has maintained his early convictions that simplicity is required in the fast-moving business-to-consumer broadband services market and that DSL and modem approaches that called for more than two base components were just too complex.
According to a 1999 Traficia report, "City Fiber in Europe," which surveys eight cities, including Stockholm, at least 20 pan-European telecommunications operators are actively competing to link into key metro networks. "The city-based fiber network is analogous to an urban railway system on which a number of competing rail operators are licensed to run trains," says Nicola Ainsworth, Phillips Group, London. "Stokab is providing the dark-fiber infrastructure over which many other carriers provide different services to cater to different categories of customer. In 1998, B2 was one of the early adopters to start broadband trails on Stokab's network using Ethernet and Category 6 wiring." Theoretically, each cable can carry 1,000 Mbits/sec-Gigabit Ethernet.
"Currently, Bredbandsbolaget charges only $25 per month for a 10-Mbit/sec each-way service-about half the cost of a similar broadband service based on cable-modems," claims Birgersson. "It will be able to carry video-on-demand, phone calls, e-mail, and other multimedia content. You build a simpler infrastructure; reduce complexity and you reduce the price."
B2's broadband services proved attractive last year, and more than 100,000 connections were installed. This year, B2's rollout plans call for more than one million new contracts, which would represent 25% of all Swedish apartments.
B2 has recruited some impressive marketing partners to achieve this rapid growth. B2 and Skanska have announced their first joint project involving installation of the broadband network in Sundbyberg, a Stockholm suburb, for SEK 75 million ($8.4 million). The customer is Fastighets AB Firvaltaren, a public housing company, which is offering B2's broadband services to its 10,000 tenants.
Another big Swedish deal is with HSB, the largest Swedish organization of tenant-owned housing, via a B2 unique broadband services contract. Serving 350,000 households, HSB will be the first housing organization to implement low-cost broadband connections to its apartment buildings. HSB provides local-loop access services to tenant-owned housing, including construction work and administration. In Sweden, every 10th residential apartment was built by HSB.
B2 is using its Swedish asset base to attract investment partners to pursue international expansion. This year, NTL, a leading pan-European broadband communications company, agreed to take a 25% stake in Bredbandsbolaget through a capital increase. These incremental funds (an amount not disclosed) will be used to continue B2's international fiber-to-the-home expansion. "We are delighted to welcome NTL as a new investor," says Birgersson.
B2 has also worked on partnering locally with startup groups active in the e-commerce/Internet-service-provider market. Currently, B2 has local presence in Norway, Denmark, Belgium, the Netherlands, Luxembourg, and Italy. Local partners include FastWeb (Italy), MetroWeb (Italy), Continuum Group (Belgium), and Skanska (Sweden).
On the technology side, Cisco Systems is Bredbandsbolaget's preferred partner for network components and design. Framfab, the Swedish systems integrator and developer of B2's broadband customer interface, will assist in the development of a localized version of B2's broadband portal for the new markets. Peter Ekelund, head of strategy and co-founder of Bredbandsbolaget, says, "Our next-generation technology-along with our success in the Swedish market-gives us a unique first-mover advantage when it comes to expanding throughout Europe. The Benelux region is an example of natural extension of our service region, given the telecommunications and demographic characteristics of Europe."
Edward Harroff writes on telecommunications issues from Bellevue, Switzerland.