Business Wire


Internet household penetration in central and eastern Europe (CEE) will grow quickly over the next five years, from just over 5% now to 21% in 2005, according to a new Yankee Group Report, "Promises, Promises: Internet Will Flower in Eastern Europe, but Only in Patches." However, penetration will continue to lag well behind western European levels, and within the CEE region there will be very wide variations in takeup.

"There is no doubting the enthusiasm for the Internet in eastern Europe," says the Report's author, Graham Finnie. "Eastern Europeans are generally well-educated and technically literate." But, says Finnie, there are formidable barriers to the kind of mass-market takeup seen in the West. In particular, low household incomes, slow regulatory reform of telecommunications, and income disparities mean that the Internet is still too expensive for most households.

The Report finds that the five "first wave" countries that have been accepted as candidate members of the EU (the Czech Republic, Estonia, Hungary, Poland, and Slovenia) offer the most fertile ground for entrepreneurs. Other countries in the region, especially Bulgaria and Romania, lag far behind, though penetration is now climbing. Finnie notes that there are also wide disparities within countries. "There's a world of difference between major cities like Budapest, Prague, and Warsaw, and the rural hinterland," he says.

BtoC e-commerce also remains largely embryonic; barriers here include low incomes, lack of trust in the Internet, and lack of fulfillment mechanisms such as credit cards.

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