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UK and West European Broadband Faces Difficult 2009

Posted: 12th Jan, 2009 By: MarkJ
Analysys Mason has published a new Fixed Telecoms: market sizings and forecasts 2008–2014 report that predicts a troubled 2009 for UK and West European broadband ISPs as the economic crisis deeps and market saturation takes its toll. It also predicts that more homes may even give up fixed line services for good as income levels dwindle.

Broadband service revenue is slowing to low single-digit growth, and yet the sector faces the need to invest to differentiate itself from an increasingly mobile Internet (Mobile Broadband), funding will be harder to justify. New services may stabilise the average revenue per line, but this is unlikely to grow:

“Rapidly saturating broadband means we are entering a new phase for fixed telecoms,” argues lead author and principal analyst Rupert Wood. “The structural problems it faces are only exacerbated by the current economic downturn. There aren’t many bright spots,” says Wood. “But having said that, paradoxically, more wireless services mean some very good network and wholesale service opportunities for fixed operators.

Ultimately, though, fixed operators need to adapt to their gradually changing role in the converged telecoms value chain, and focus their growth plans on monetising those non-substitutable areas of their assets: core and metro networks, IT and managed service provision. So as convergence kicks in, we should be hearing less of separate fixed-line operators, and more of integrated fixed-line operations.
”

The report forecasts a compound annual growth rate (CAGR) of –5.8% for the retail fixed/broadband sector as a whole between 2008 and 2014, compared with –3.3% for 2007–2008. In the traditional voice sector the report forecasts that retail revenue will decline by more than 50% over the period.

Investing in a new generation of super fast broadband networks is certainly one way to go, although UK ISPs and suppliers will need to mindful of the threat posed by the ever developing Mobile Broadband market. Presently Mobile Broadband lacks the infrastructure and flexibility to keep pace with land-line services, yet the current speed of mobile development could threaten that.
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