Broadband access revenues across the top five Western European countries will increase from less than €13.1bn to in excess of €18.5bn by 2010, new research has predicted.
The five countries targeted in the Understanding & Solutions report include the UK, Germany, France, Italy and Spain.
“We’re looking at a 45pc increase in just four years,” said Cesar Bachelet, a consultant and telecoms specialist with Understanding & Solutions, “but we’ll see subscriber numbers increase at a greater rate over the same period, from 55 million last year to 83 million by 2010, and that’s due to the increasingly high levels of competition within the marketplace.”
He said that as a result of this intense competition, broadband access is now fast becoming a commodity and broadband service providers are using value-added services to differentiate their products. These include security software, home networking, VoIP, online gaming and music and content services.
Faced with commoditisation, broadband service providers (BSPs) are increasingly focusing on these services and average revenue per user (ARPU) has increased 25pc between 2004 and 2005, driven primarily by voice and online content.
These value-added services are also going a long way towards reducing customer churn. Once customers start using these services, the effort required to up sticks and move to another supplier can be greater than the perceived benefits of switching.
“We’re seeing a freeze on monthly subscription costs and BSPs are commonly upgrading access speeds without increasing monthly charges,” said Bachelet.
“In some markets, notably the UK, access is even being offered free as part of a bundled offering. In particular, April 2006 saw the launch of the ‘Free Broadband Forever’ proposition from The Carphone Warehouse, giving free broadband access to any customer signing up to its top fixed voice and line rental package. This move was rapidly followed by mobile operator Orange and satellite TV operator BSkyB.
“Convergence in the marketplace is really turning things up a notch,” added Bachelet. “We’re seeing the big hitters moving into each other’s core business.
“Telcos are entering the video market by launching IPTV services; cable operators who don’t yet have bi-directional networks are upgrading their infrastructures to offer broadband and voice; and ISPs are entering the voice market through VoIP, with many launching IPTV offerings alongside.”
And quad-play is also on the rise, as key players seek to add mobile to their triple-play proposition. Although the US has led the move so far, their European counterparts aren’t far behind as regulatory restrictions on bundling are slowly being lifted in most markets.
Future demand for bandwidth-hungry services like high-definition television (HDTV) is building a case for very high-speed internet (VHSI) access.
Understanding & Solutions anticipates that household penetration of VHSI access (download speeds in excess of 25Mbps) in developed economies will range from 10pc in Western Europe to 50pc in Japan by 2010.
Whereas first-generation DSL offers a maximum download speed of 8Mbps, newer implementations, such as ADSL2+, offer maximum download speeds of up to 24Mbps, whilst current fibre deployments can handle maximum download speeds of 100Mbps.
This is ample to meet anticipated user needs in the future, such as simultaneous multiple HDTV (high-definition TV) streams and VoIP, as well as HSI at speeds of 10-15Mbps.
Over the coming years, significantly higher growth rates in the uptake of broadband lines will be seen in emerging markets such as Latin America, Asia-Pacific and Eastern Europe.
Understanding & Solutions predicts that by 2010, China will emerge as the world’s largest broadband nation, with a total of 120 million lines, more than all of Western Europe combined.
By John Kennedy