The speeds are getting faster, but take-up is getting slower. A new report shows that broadband providers have work to do. Julian Clover reports.
There is so often talk of a digital divide that separates those people with and without the latest technologies. Not being able to afford a particular service is one matter, but there remains the possibility of people not actually wanting to subscribe, however tempting the proposition on offer.
In its study of Western European Broadband Markets published this week, Munich-based consultancy Solon observes that 11 out of 15 Western European markets now have broadband penetrations above 50% and that a decline in new customers additions can mow be seen.
At 82% Denmark has the highest broadband penetration, followed by the Netherlands (75.4%) and Switzerland (73.8%). The UK is on 61.3% and Germany 51.2%.
Broadband speeds may be progressively rising – and the introduction of EuroDOCSIS technology will see them climb further – but the actual price to the consumer is falling. According to Solon, double play pricing has fallen below €30 in eight out of 15 countries studied. This is good news for consumers, but it also has a detrimental effect on the payback times for operators.
In Germany a DSL local loop unbundler will only enter the black some 42 months after the customer signs on the dotted line and in eight other countries there is no return after 24 months.
While there are an increasing amount of attractions that are offering themselves over the broadband network, the technology they rely on but don’t actually own, is becoming a commodity or even a free commodity. We all know there are varying degrees of free, but surely the number of people that take broadband as a standalone product are diminishing by the day. Solon recognizes this as an issue and says the deteriorating economics are fuelling industry consolidation leaving just three or four players per market.
The secret, according to Solon, is in the infrastructure. Cable benefits from having its own last mile infrastructure and can achieve a payback on new customers within 25 months. Their speeds will benefit from EuroDOCSIS, but the lack of new build on many cable networks has allowed the telco-delivered DSL technology to play catch up in some areas. Remember Virgin Media’s line that its churn would be halved if only people stopped moving out of its coverage area.
In Austria and the Netherlands, where cable was once the broadband leader, DSL has now taken over. LAN and FTTH technologies have also emerged as a broadband contender.
