Alternative operators need to consider other broadcasting techniques in order to provide TV services in areas where unbundling is not economically viable.
Audiovisual services are becoming a key feature in broadband packages in most European countries. The market trend towards multi-play bundling continues unabated, and operators are including TV services in an increasing number of broadband packages throughout Western Europe. As a result, DSL operators that do not provide TV services are likely to find it difficult to compete. Conversely, ISPs that do provide TV services will find it easier to retain customers, and may increase ARPU. Cable operators provide TV to all of their subscribers via cable networks that were deployed for this sole purpose. To compete, DSL operators need to find a way to offer such services to the largest possible fraction of their customer bases.
DSL incumbent operators are restricted by the throughput limitation of copper loops when attempting to extend their TV service coverage. Some have overcome this by complementing their DSL footprint with other broadcasting techniques, such as satellite or terrestrial TV. For example, Orange offers a satellite service in areas of France where the DSL network does not allow for the provision of TV services. Use of other broadcasting techniques also gives operators the opportunity to balance the workloads for different services between DSL and alternative technologies in order to make the most efficient use of them. BT does this in the UK: it delivers essential but low-value content (such as Freeview TV) via terrestrial broadcasting, and pay-TV content via IPTV over DSL.
Alternative DSL operators face a more difficult issue because they base the provision of TV services on local-loop unbundling. They need to match incumbent operators’ TV service coverage to compete effectively, but unbundling is not economically viable in some areas. To expand their coverage into such areas, they may need to consider alternative broadcasting techniques.
- IP multicasting over bitstream is a technique that is emerging in Europe that allows altnets to provide TV services in non-unbundled areas. A regulatory decision can impose on the incumbent the requirement to implement this technique – for example, AGCOM required Telecom Italia to add the multicast feature in its bitstream offer in Italy.1 Other regulators in Europe have considered or are considering this option, and may be influenced by developments in the Italian market.
- Wholesaling TV services could allow operators to provide TV services to a large proportion of their end users. This approach has been adopted in the Netherlands, where cable operators are obligated to resell their analogue TV services to DSL operators.
When considering the provision of TV services, operators and regulators need to explore several options and assess them using a cost–benefit approach that considers the strengths, opportunities and goals of the player, the competitive landscape, the technologies that are (or are likely to become) available and the regulatory framework. Analysys Mason can assist players in understanding and assessing these options.
1 Telecom Italia has yet to implement the multicasting feature.
