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Spain's Basque Country Achieves Its Broadband Dreams

Spain's Basque country leads in European rural broadband access as a direct result of an innovative government program.

The four hundred-odd residents of Arreita, a pretty mountainous area near Bilbao in the Basque country, Spain, enjoy a benefit perhaps few European communities as minuscule as Arrieta's do. All of them have access to commercial broadband connectivity that not only improves the efficiency of mundane activities like daily government administration, but also provides residents with the ability to indulge in a few more interesting pursuits like online shopping and learning English.

But even as Arreita's residents may be the smallest community in Europe with top-class broadband connectivity, they can't claim they are the only ones in the Basque Country. Thanks to the Basque Government's policy that wanted to expose the Basque Society to the digital era, almost all its over 2.1 million residents will have access to basic broadband connectivity by the end of this year. By then, the second and the final phase of the two-year long project, called Konekta Zaitez@Banda Zabala (or KZ@Banda Zabala), will have extended broadband infrastructure throughout the Basque region covering 7254 square kilometres.

When completed, KZ@Banda Zabala will be the first broadband project in rural Europe to offer broadband connectivity to match services now generally available only in larger cities. "There are several similar projects brewing throughout Europe, but most of them are pilot deployments, due to the absence of a network for providing commercial availability of the same way as they do in the cities," says Naiara Goia, from ITELAZPI, S.A., the government-owned telecom company that has been entrusted with responsibility implementing the project.

Indeed KZ@@Banda Zabala, born in 2004, is easily one of Europe's most interesting digital inclusion projects. It is a part of the Basque Country in the Information Society Plan, (PESI in its Spanish acronym), an initiative started in 1999 with the objective of fostering a cultural change in the Basque Society through the use of ICT technologies. The goal of the plan is to fundamentally improve the quality of life and take advantage of the benefits that the information society brings for the economic development. As part of this, KZ@Banda Zabala is to guarantee that all rural areas of the country get access to broadband services, especially those that might be excluded due to the lack of commercial interest.

According to Goia, the main driver of this project was the concern of Basque Government to develop the rural areas and to bridge the digital divide that was widening in the region. A study conducted by the Basque government in early 2004 to analyze the coverage of the private broadband networks in the rural areas, including future plans of private operators to extend coverage, revealed a definite lack of commercially interest to offer broadband services. Basque Country has a total population of just 4 percent of Spain's population. Altogether, the study found that 102 municipalities in the country would likely be excluded from the broadband roll out by the private sector. These municipalities make up about half of the territory of the country but are home to only about 3 percent of the total population.

Therefore to take matters in its own hands, the Basque Government designed KZ@Banda Zabala based on "the open network and neutral technology guidelines formulated by the European Commission for public intervention." It has just two strategic objectives: to extend the broadband network to all villages and economic areas of Euskadi (the Basque Country), and to guarantee that the broadband services are provided to the users of these areas with quality levels and prices similar to urban areas. And since, such objectives are would be difficult to realise through private enterprise, the Basque Cabinet of Ministers chose the publicly held ITELAZPI, S.A. to carry out the task.

Innovative Business Model
"Low population was the primarily reason why broadband services by private operators were eluding the Basque region," says Goia. "Typically, projects like these require high investments but low population and lack of density that provide limited business development, make such areas unattractive for deployment of broadband infrastructure by private operators."

Still KZ@Banda Zabala is not a pure government venture. "The most interesting feature of the project," says Goia is its "Public Private Partnership (PPP) approach." Although ITELAZPI has been given the crucial responsibility of funding the project (with the help of the Basque Government) as well as providing the necessary infrastructure -- the communications network, land space, and the customer premise equipment (CPE) -- the operational maintenance of the project was handed over to a private telecom company, Euskaltel, the leading cable TV service provider in the Basque region.

In a win-win business model, ITELAZPI has provided the investment needed to create the infrastructure while the operator (Euskaltel) provides the services of running base stations at the customer premises, data management and transfer service between base stations and the network, and covers all expenses associated with the base stations. For all these services, it charges the end users/customers and of course pays ITELAZPI a fee for the use of this infrastructure. The public ownership of the broadband network -- through ITELAZPI -- thus guarantees that the rural areas do not depend on the commercial interest for actual deployments. At the same time, the fact that a private operator is allowed to charge the end users/customers for broadband services delivered on the infrastructure ensures that the private operator can also make a profit.

The actual deployment consists of a wireless network that uses a radio-based backhaul and a point-to-point pre-WIMAX access network capable of also providing voice services. Base stations and repeater stations are managed by ITELAZPI and serve as access points for end users. To connect, users generally require an exterior antenna and a wireless modem that connects to their computer or network.

Life-Changing Impact
KZ@Banda Zabala was designed in two phases with a total project outlay of 6.5 million Euros. According to Goia, much of this outlay is funded jointly by ITELAZPI and the Basque Government but there is also co-financing by European Union, through its structural funds, DOCUP PAIS VASCO. The first phase was completed end of 2005, which saw deployment in 102 municipalities. Currently, according to ITELAZPI, 97 percent of phase two has been implemented and, on completion by this year end, the network would be expanded to 177 population centers.

So, how has this project changed the life of Basques? For one thing, "It is very important to have quality Internet access for schools located in rural areas," says Goia, "so thanks to this project many schools have access to broadband. It is also aiding small and medium sized companies to extend their businesses and compete and deal better with companies and customers." Moreover, small town city halls have started participating at Basque Public Administration e-administration programs. And the project also has encouraged economic development, enabled a number of companies to locate in the region and to start up their businesses there. But perhaps even more important for the region's prosperity, the Basque country is now starting to draw more tourists. "There are more rural hotels now, which through their broadband connections, are attracting tourist from larger cities," says Goia.

As far as Goia is concerned, KZ@Banda Zabala has proved that geography and private-sector profitability need not be a barrier limiting Internet broadband access. The proof is in the pudding as they say and the residents of Arrieta find little need to go into the city these days.