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November 3, 2009
A couple of weeks ago, we published our Q3 2009 Western Europe Fixed Communications Forecast. Looking at fixed access broadband Internet penetration, the country rankings haven’t changed much. With just 21% in 2009, Italy still lags most of the region, mostly due to the absence of viable alternatives to DSL offerings and a relatively low PC penetration level; Switzerland, the Netherlands, Germany and most Scandinavian countries, on the other hand, are seeing penetration rates of up to 40% (see Exhibit 1).
Exhibit 1: Projected fixed broadband Internet penetration in select WE markets, 2009
Source: Pyramid Research Q3 2009 Western Europe Fixed Communications Forecast
As for the pricing of broadband Internet, one might assume that in less penetrated countries, competition in the broadband arena would be low and offerings more expensive, thus making ARPU figures higher. Following this reasoning, in countries with higher penetration, broadband ARPU might be lower. Although this rational applies to some countries, such as France, in many cases it doesn’t account for other market-specific factors that might create the opposite scenario.
For example, you might expect Italians to pay more for broadband Internet access, assuming that the low fixed broadband access penetration is due to low market competitiveness. However, we see a different trend: Broadband Internet ARPU will be about $23 in Italy in 2009 — $9 below the Western European average (see Exhibit 2). Why is this? Although there is a lack of competitiveness in the Italian fixed broadband access market, due to the absence of cable operators, it seems as if mobile broadband (and around 1m families used only a mobile network to access the Internet in mid 2009) is putting enough pressure on fixed broadband access providers to keep the service price relatively low. Secondly, the Italian market has been characterized by low fixed broadband tariffs since the late 1990s and early 2000 when regulatory policies were enacted to protect potential new entrants into the broadband market.
Exhibit 2: Projected broadband Internet ARPU for select WE countries, 2009
Interestingly, Germany, which does have high penetration levels, has one of the highest broadband ARPU figures in Western Europe. This is partly due to new technologies providing higher speeds, thus driving up the market’s ARPU. For example, German cable operators have recently started offering speeds of 100Mbps via DOCSIS 3.0 upgrade. However, charges for local loop unbundling are still relatively high, even though they were lowered by the regulator this March. Germany’s broadband market as a whole is competitive, since cable operators provide strong competition to Deutsche Telecom’s DSL offering, however, the DSL subsegment has yet to see the competitive levels of other Western European markets. This situation results in high DSL ARPU, which drives the entire broadband market ARPU through the roof.
— Stela Bokun, Analyst
Related resources:
Western Europe Fixed Operator Market Share Forecasts
Forecasts published quarterly
Our Fixed Operator Market Share Forecast products provide a complete picture of wireline voice and data communications in each of 10 Western Europe markets. The Excel output includes five years of historical data and five years of market projections for metrics such as fixed lines, voice telephony, VoIP, circuit-switched lines, ARPM, narrowband, broadband, Internet accounts, fiber, DSL, cable and revenue — most of them broken down for the mobile operators in the respective markets. We believe our Fixed Operator Market Share Forecasts are superior because they capture granular data gathered through extensive field research and use a thorough methodology consistently applied to all markets.
Western Europe Fixed Communications Forecasts
Forecasts published quarterly
Our Fixed Communications Forecast products provide a complete picture of wireline voice and data communications in each of 10 Western Europe markets. The Excel output includes five years of historical data and five years of market projections for metrics such as demographics and economic trends, penetration of broadband and narrowband lines, Internet users, business users, voice telephony lines, VoIP, PCs, IPTV and revenue. We believe our Fixed Communications Forecasts are superior because they capture granular data gathered through extensive field research and use a thorough methodology consistently applied to all markets.
Communications Markets in Italy
Country Intelligence Report published May 2009
The Italian telecom and pay-TV market generated $50bn in service revenue in 2008, the fourth largest in Western Europe. Fixed access market revenue, which accounted for 38.5% of total telecom revenue in 2008, is under growing pressure from the fast decline of circuit-switched lines. PSTN lines, while declining at a high rate, were still the leading fixed platform in 2008. In 2014, with 15.7m lines, DSL will take over the leading position. This Country Intelligence Report analyzes Italy’s communications, media and technology industries, including key trends, regulatory pressures and the competitive landscape, making it an excellent complement to our Forecast products.
Communications Markets in Germany
Country Intelligence Report published March 2009
Germany’s communications market is the largest in Europe, generating revenue of US$66.6bn in 2008. Its biggest growth opportunities are broadband, VoIP and mobile data. We forecast a decline in circuit-switched voice and in mobile voice revenue. We expect the intense competition in the mobile sector to continue, and IPTV adoption to accelerate from 2008 onward as the main providers focus on their triple-play offerings. This Country Intelligence Report analyzes Germany’s communications, media and technology industries, including key trends, regulatory pressures and the competitive landscape, making it an excellent complement to our Forecast products.
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