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Netherlands: Transport and communications

September 22, 2006
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(EIU Viewswire Via Thomson Dialog NewsEdge) COUNTRY BACKGROUND

FROM THE ECONOMIST INTELLIGENCE UNIT

Several programmes aim to tackle congestion problems

While the quality of the existing transport and telecommunications network is excellent, the road and rail density per 1,000 inhabitants is low (respectively 7.4km and 180 m), and bottlenecks and congestion are a serious source of concern. A wide range of road, rail, harbour and airport schemes are in progress or at the planning stage. The government plans to spend a total of 37bn on infrastructure investments during the period to 2010. The Ministry of Transport and Public Works wants to introduce a larger role for the private sector in public transport.



Roads

Surfaced roads totalled 113,419 km in 1996 (2,207 km of which was motorway), and the road network has since been expanded slowly, to 134,218 km of surfaced roads by 2005. However, because of environmental concerns, various measures to discourage the use of private cars have also been introduced, inter alia, higher taxes on petrol. In addition, the Netherlands has been running trials of road pricing systems, which it had been expected would lead to the introduction of a pricing system by January 2006. The plan was to apply the scheme to goods vehicles initially, but to extend it to cover private cars at a later stage. To offset the cost to motorists the government at the time promised to reduce road-vehicle licence taxes if the scheme were introduced. However, the last government decided to put the project on hold, since budget constraints have forced a rethink of many of the measures in the previous National Transport Plan.

Some schemes to ease congestion were, however, included in the 2003 budget (announced in September 2002), in which the ministry promised to devote special attention over the next four years to a number of policy areas, including improving traffic flow, railway maintenance and safety improvements. To this end the ministry made available 420m for road improvements and anti-congestion measures, 300m for effective and regular railway maintenance, and 100m for safety measures. Anti-congestion measures will include road-widening schemes, the use of reversible rush-hour traffic lanes and the construction of new link roads. However, budget limitations also meant that these had to be offset by lower spending on other projects. The government decided to shelve investments in the Hanze Line (see below) for five years and to freeze the funds for the Delft railway tunnel for the time being. It also limited funding for city and regional transport running costs, and abolished a number of small subsidies.

Railways

Passenger capacityaround 320m passengers travelled over the 2,806km rail network in 2003is being extended with a view to doubling it by 2010. Works include the establishment of fast train services linking the major population centres in the Netherlands, as well as high-speed train links between Amsterdam and other major European cities. In anticipation of a high-speed rail link to Germany, the construction of a faster rail link between Amsterdam and the Utrecht rail hub was started in 1998. The government began public consultations on the proposed high-speed link to Germany in late 2000. Moreover, in July 2000 an agreement was reached between The Hague and Rotterdam on the construction of a fast rail connection (RandstadRail) between the two cities. In February 2001 the government also selected the winning bid from among four consortia tendering to build a high-speed rail link to the Belgian border. However, budget restrictions forced the government to shelve plans to build a rapid rail link between Lelystad and Zwolle (the so-called Hanze Line) for five years. This was part of a joint scheme, in conjunction with a number of local and regional authorities, to complete a rapid rail link (the ZZ Link) between Amsterdam and Groningen, in the north of the country. The Municipality of Amsterdam is currently developing the North/South Line, a new metro line that will connect the residential area in the north of the city to the office locations in the southern part of the city. Construction began in January 2003 and is due to be completed by 2011.

Goods traffic by rail has lost ground in recent years, as freight has switched to the road. In a bid to reverse this trend, the government is constructing a 5bn-freight train trackthe Betuwe freight railwaylinking Rotterdam harbour with the industrial Ruhr area in Germany. The link is expected to be operational from January 2008.

Civil aviation

In 2004 Schiphol, the country's main airport at Amsterdam, ranked fourth in Europe in terms of both passenger and freight transport, after London, Paris and Frankfurt. Schiphol has benefited in recent years from the performance of low-cost airlines, which are strongly represented at Schiphol. In most other countries, low-cost carriers tend to use the smaller satellite airports rather than the major hubs. Following the government's decision at the end of 1999 to refrain from the construction of a new airport on an artificial island in the North Sea, Schiphol airport was allowed to expand further at its existing location, within strict new environmental limits. Schiphol started using a fifth runway in February 2003, and was subject to a new set of rules limiting sound and air pollution around the airport. In June 2005 the lower house of parliament approved a government plan to dispose of part of the states 75% shareholding in Schiphol airport, although the details of the asset sale have yet to be finalised.

Shipping

On January 1st 2003 the Dutch seagoing merchant fleet consisted of 619vessels. The size of the fleet has expanded fairly rapidly in recent years, following a decline before 1996 that had lasted 12 years. The fall was reversed as a result of tax incentives aimed at deterring Dutch shipping companies from registering their vessels in countries with less stringent shipping regulations. Rotterdam, which in 2005 handled 370m tonnes of cargo (75% of shipment through Dutch ports), is one of the world's largest ports, and to enable its expansion and improve its competitiveness, a scheme of land reclamation is currently under way. Plans to expand the port, which include the construction of a compensatory wildlife and recreation area of 750 ha, also involve improvements in rail and road transport links to and from the port, as well as increases in freight handling capacity.

Navigable inland waterways total 5,046 km, of which 3,745 km are canals. The commercial inland waterway fleet had 4,772 vessels in operation on January 1st 2003 with a total capacity of 5.57m grt. In 2003 around 60% of the freight on waterways involved international traffic, reflecting the importance of the Netherlands in the movement and transshipment of European cargoes.

Telecommunications

The Netherlands has a US$9.6bn telecommunications market (2002) equivalent to 2.3% of GDP. Full liberalisation of the telecoms sector, which occurred on July 1st 1997, removed the monopoly of the privatised national telecoms enterprise, KPN/PTT Telecom. The first companies to break the monopoly in fixed-link telephony were the cable television company, CasTel, Telfort (Nederlandse Spoorwegen/British Telecom) and Enertel (a grouping of ten energy and cable companies). An independent authority supervising competition in post and telecoms (OPTA) has also been created.

Competition has increased significantly after 1998 as a number of telecommunications companies, including WorldCom, KPNQwest, Viatel and Global Crossing, built pan-European fixed-line networks. However, an oversupply of network capacity in Europe caused severe price pressures for wireline services in the Netherlands and neighbouring countries, and many of these companies had to file for bankruptcy in 2002. For example, KPNQwest, a joint venture of KPN and Qwest Communications (US), which built a 25,000-km fibre-optic network across Europe, filed for bankruptcy in June 2002 and was eventually liquidated. KPN bought up the network assets of KPNQwest in the Netherlands, Belgium and the UK.

Amid the troubles plaguing the wireline telecoms market, the fastest-growing market in the Netherlands is that for mobile phones. The Dutch mobile market is the sixth-largest in western Europe, with five network operators competing for a population of 16.2m. KPN's competitors include Versatel, a joint venture between Telfort and Libertel, which is majority-owned by Vodafone of the UK. In January 2001 Dutchtone, a company created by France Telecom and two Dutch banks, ABN-Amro and Rabobank, entered the market. With the arrival of Ben, the joint company of the Belgian operator Belgacom and Tele Danmark, the Netherlands has become one of Europe's most competitive mobile-phone markets. A government auction of five third-generation (3G) universal mobile telecommunications system (UMTS) licences was held in July 2000. Libertel and KPN each offered 712m for the two most attractive UMTS licences, while Dutchtone, Ben and Telfort successfully bid for the other three. Competition for mobile customers has been fairly robust; price reductions for SMS (short message service) by Telfort in June 2004 led the other major operators to follow suit and cut prices sharply.

Internet

The Dutch Internet infrastructure is supported by a wide variety of Internet service providers (ISPs), an attentive government and significant bandwidth capacity. The advanced process of telecom liberalisation and local-loop unbundling has boosted the number of ISPs. The Amsterdam Internet Exchange is a major European hub for Internet traffic, and Internet use is widespread. Around 83% of Dutch businesses had Internet access in 2003, according to the Central Bureau for Statistics. The value of the Internet-based Dutch business to business market was estimated at around 3bn in 2000. Growth in the market is likely to be in part the result of the adoption of wireless broadband Internet access technologies such as WiFi. In the first quarter of 2005 the Netherlands had the highest proportion of households with Internet access in the EU (78%) and the highest proportion of households with broadband access in the EU (54%) The largest ISP in the Netherlands is Wanadoo, followed by Chello. KPN controls half of the asymmetric digital subscriber line (ADSL) market through its subsidiaries, such as Planet Internet and Het Net. However, smaller ISPs have been increasing their market share.

In order to meet the government's objective of Internet access for all, the use of the Internet is to be stimulated by educating small-sized firms in this area. Schools, libraries and governmental organisations have to provide access to the Internet, and the government has actively promoted Internet use through propaganda campaigns. Their efforts are paying off, as about 62% of the population are Internet users, one of the highest percentages in the world.

Copyright 2006 Economist Intelligence Unit


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