Research Notes

What creates competition on the broadband market

– is it the number of market players, or how the mobile world is developing?

When you look at today’s broadband markets around the world, there is no doubt that competition is tough and that the bandwidth speed customers are being offered is growing more quickly than the customers’ needs. At the same time mobile broadband prices are plummeting. For many companies in this business, what is currently happening on the mobile broadband market can best be described as a bloody war.

On the one side of the front line are the traditional DSL providers that can be divided into two types of companies; those that own the original fixed line copper infrastructure and those that are paying to rent space on that infrastructure and then producing their own DSL products for distribution via the copper networks.

On the other side of the front line are the cable TV providers that are using their own cable TV networks and Docic 3 to deliver broadband and fixed line telephony in addition to their television offerings. The cable TV providers have been very successful in many countries in upgrading their TV customers to triple play products and are generally seeing very low churn among their customers.

On one of the flanks a number of countries additionally have various fibre to the home market players that are trying to build new infrastructure in order to offer customers very high-speed synchronous broadband connections and triple play solutions.

On the opposite flank are the mobile operators, that are offering increasingly faster products at increasingly lower prices with their mobile broadband via 3G technologies like HSDPA and LTE. Today it is a fact that the bandwidth that mobile operators are currently able to offer their customers in many countries is actually faster than most of their customers need and are using.

In our new report Successful Strategies for the Mobile Broadband Market we have examined these developments and identified the victims. Who is suffering the most and who will die first? We have reached the conclusion that the competition on the mobile broadband market will have an enormous impact on all Telco industry market players that are marketing and selling broadband. In practice we are seeing the following trends:

1.    Companies that purchase access to the raw copper and deliver their own DSL will experience that the price they are paying to rent the copper, will in some countries be more expensive than the cost of a low speed mobile broadband connection. This is already the case in Denmark and Sweden.

2.    Telcos selling DSL on their own copper networks are extending the life span of their copper by using technologies like VDSL, ADSL2 and ADSL2+, and are additionally retaining some of their customers by offering IPTV in addition to their existing broadband packages.
3.    Companies offering broadband connections via fibre are having difficulty attracting enough customers to justify the infrastructure investments they have made over the years. Many of these market players have no option but to include an extraordinarily large infrastructure depreciation in their accounts.

4.    Cable TV providers are successfully selling triple play packages to their customers and are seeing that their customers are not as price sensitive as many other broadband segments on the market. In practice the cable TV providers are most often stealing customers from the traditional DSL providers.

5.    The battle over the mobile broadband market is so tough that prices are decreasing faster than can be justified by the customer growth. In practice the mobile broadband market players are functioning as “price rabbits”  on the broadband market.

At Strand Consult we have reached the conclusion that the development of the mobile broadband area will have enormous consequences for all companies that produce, market and sell broadband, and the trend of decreasing prices for mobile broadband will spread across all the other broadband markets.

In our new report Successful Strategies for the Mobile Broadband Market we have described these market developments and looked at how the mobile broadband market will develop in the future. We have analysed the strategic consequences of that development and how it will influence the many other types of broadband market players.
You can learn more about Successful Strategies for the Mobile Broadband Market by clicking here below, and we will send you more information about this unique report – information that will help you understand how the development of the mobile broadband market will influence your business.

More information:

Successful Strategies for the Mobile Broadband Market

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