Report shows difficulties in 2009 for West European and UK broadband

A new report that is predicting problems for broadband ISPs in both Western European and UK due to the saturation of the market and deepening economic crisis has been issued by Analysys Mason called “Fixed Telecoms: market sizing forecast 2008-2014”.

The report has also suggested that as level of income drop more homes will possible drop their fixed line services.

The justification for increased funding will become much as revenue for broadband services fall to a growth in the lower single-digit area, even though for most companies in this sector the need for them to appear different from others in an ever expanding mobile broadband internet will make the need to invest even more important. The average revenue per line could be stabilised by new services but even this would be unlikely to help growth.

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:

Rupert Wood, the lead author and principal analyst at Analysys Mason said “Rapidly saturating broadband means we are entering a new phase for fixed telecoms. The structural problems it faces are only exacerbated by the current economic downturn. There aren’t many bright spots. But having said that, paradoxically, more wireless services means 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.”

Between 2008 and 2014 the retail fixed/broadband sector on the whole was forecasted to see a compound annual growth (CAGR) of -5.8 percent, which compares with the 2007-2008 figure of -3.3 percent. Over the period a drop of over 50 percent of retail revenue from the traditional voice sector was also forecast by the report.

The warning issued to suppliers and ISPs in the UK is to be wary of the constantly evolving Mobile Broadband market and the threat it poses, although put investment into the next generation of superfast broadband network is definitely a good move to make.