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Executive Summary Report

Case 375

Co-ordination of local demand for broadband to a Danish peripheral island - the case of Ærø (Denmark)

This project demonstrates how a small remote community and commercial providers installed ADSL despite the high price balancing the benefits of connectivity against the high social cost of exclusion.

Timing of case
The project was initiated in 1998 and successfully completed in 2001 

Geographic setting
Ærø is a small island in the southern part of Denmark. Ærø is connected by ferry to the islands Fyn and Als. Administratively, the island of Ærø consists of two small municipalities with a total of 7300 inhapitants. the number og inhabitants has been slowly decreasing during the last 100 years. 

Type and use of ICT
The island of Aeroe upgraded to ADSL, thus getting internet at the same price, same speed and quality as in the rest of the country. 

Main contributors
The local business office was the leading driving force behind the project 

Main beneficiaries
The entire island of Ærø is now ADSL enabled, so ultimately all residents of the island benefit from the upgrading if they wish. However, upgrading to ADSL is mainly a big advantage for small businesses in need of fast transferral of data, and as such it facilitates the possibility of teleworking. 

With 95% coverage almost every business and household in Denmark has the possibility to access an ADSL connection. However, Ærø as a small island with not-so-frequent ferry connections was not satisfied with belonging to the 5% of the country not covered by ADSL lines. 

The project aimed at identifying the Islands' potential marked demands for ADSL in order to find a solution that would make a commercial supplier interested in the area 

Resources (apart from ICT)
Funding was provided from EU and the Danish government, and the project relied heavily on local resources, especially the local business office. 

The project consisted of three parts: Identifying the local demands, negotating with the telecommunications provider, TDC and investigating alternative solutions (i.e a sattelite connection) 

By convincing TDC that Ærø should be looked upon as one region alltogether, and not as three separate market segments with separate needs and consequently separate agreements, and by offering that the islands' two mulicipalities would place their orders at TDC it was possible to make TDC interested in upgrading Ærø to ADSL. 

Lessons and conclusions
Ærø, as a minor, peripheral part of Denmark, did not offer a satisfactory market volume to a commercial based upgrading to the actual technology, ADSL. To offer a regional solution the company had to go across internal organisation structures as well as established product specifications.

The funding from the national agency for enterprise and housing (together with local funding) was a necessary precondition for making the actual research and documentation of potential market and possible technical solutions.

In the process TDC has gained almost total monopoly on the island in regard ADSL. This is a potential risk – but so far no negative consequences have been seen.

The municipalities possibly pay an over price for their telecommunication solutions. It can be regarded as an indirect price for getting better connections for businesses and citizens in the region. 

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