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Viewing report
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Europe Lags in Broadband and Digital TV, but It's an Innovator in Telephone Service Packaging
Yankee Group, The, Sep 2004, Pages: 14
The first consolidated report on global consumer spending on communications and TV reveal some important differences between Europe and other world regions, such as:
- Spending on phone calls from fixed phones will fall more sharply in Western Europe than in any other region. It will halve between 2003 and 2008, but fall less sharply in North America, and actually continue to rise strongly in some important emerging economies, such as Brazil and China.
- Broadband penetration in Europe is lagging in some major economic competitors, notably the United States and Japan, although a few countries, including Belgium and Switzerland, are tracking the global leaders.
- Penetration of digital TV in Europe is also lagging well behind that in other developed countries, although one or two European countries, notably the United Kingdom, are keeping up with the international leaders.
Overall global consumer spending on switched access, broadband and digital TV will top $400 billion this year, of which EMEA spending will account for 30%. Global spending will continue to grow steadily through the next 5 years, reaching $475 billion in 2008, with EMEA spending broadly tracking the global figure. At 4.2%, per annum growth will outpace growth in GDP by more than 1% per annum, although growth in revenue per household will be lower at 2.5%.
Consumer broadband revenue will race ahead by almost 30% per annum, growing from around $17 billion in 2002 to around $80 billion in 2008. However, in EMEA, spending will rise by almost 40% per annum, reflecting the very rapid spread of broadband in the region. There also will be a strong improvement in revenue from subscription TV, up by nearly 9% per annum through 2008 globally, with EMEA slightly outpacing the global mean at around 10%. But revenue from switched access will see a continuation in the longterm decline that began in 2000 to 2001, and here the position in EMEA is particularly adverse. While switched access revenue will fall by 0.3% a year globally, in EMEA, revenue will fall by more than 3% per year, reflecting the relative maturity of European markets as well as strong competitive pressures in the region.
For service providers and vendors, this forecast highlights a range of challenges that must be addressed if they are to prosper during the next 5 years. Specific challenges include:
- Creating more complex broadband product sets: Broadband ARPU is declining in most countries, but even more in Europe than elsewhere, where strong revenue growth is driven by new connections and a fight among providers for market share. As the market saturates, service providers face the prospect of flattening revenue unless they can identify other chargeable services.
- Identifying the right channels for content: Broadband and digital TV markets are converging, and mobile entertainment adds a further element to the competitive mix. Meanwhile, offline media sources such as DVDs are not about to disappear.
- Positioning voice services in the product mix: Increasingly, telephony will be sold alongside one or both of the other elements in the triple-play, as well as other related services. Europe is seeing a more rapid transition to flat-rate service propositions than any other region, and transitioning to VoIP will be a key priority for both traditional and competitive telcos.
All financial statistics in this report are in U.S. dollars. Because of the fluctuating value of the dollar against other currencies, the relative importance of different regions in the global picture is continually distorted.
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