- Spend on core fixed telecoms services will fall to under 1% of GDP in Western Europe by 2011
- decline in spend in many countries will be over 20% between now and 2011
- voice will fall to 50% of fixed-line spend by 2011, but Internet spend will also be in decline by that date
- IPTV will create additional spend, but this will not be enough to stem decline in overall spend on wireline services.
Growth in TV and video services delivered over broadband will not be enough to halt the swift decline in the value of Western European fixed telecoms services in the coming years, according to Western European Fixed Telecoms: market sizings and forecasts 2001–11, a new forecast report published by Analysys, the global advisers on telecoms, IT and media.
The forecasts indicate that end-user spend on fixed telecoms services is set to decline to under three quarters of a percent of GDP by 2011, half of its value in 2001. The report shows that the rate of decline in fixed service spend will vary by country, but also that in several spend will fall by over 20% over the next six years.
“We are currently seeing the rapid creation of a competitive structure in communications, in which large multi-service, multi-network players compete against one another and out of which single-service players are being squeezed,” says Rupert Wood, main author of the report, “The level of cross-ownership and partnerships between companies involved in fixed, mobile, cable and broadcast will be a major factor in how fast fixed service spend declines because integrated players will be able to manage and encourage changes in spend.”
The report predicts that spend on voice will fall to represent just over 50% of fixed service spend by 2011. VoIP is not only accelerating the decline in the value of wireline voice, the report argues, but it also serves to increase the proportion of household communications budgets spent on mobile.
“Historically, fixed line usage has been related to price, but mobile usage tends to take off when it is affordable, whatever the premium over fixed,” argues Rupert Wood. “Cheaper VoIP makes more and more mobile affordable.”
Broadband take-up continues to exceed operator expectations – Analysys expects average household penetration to reach 60% by 2011 – but a combination of price erosion and saturation will halt real growth in basic access before the end of the decade, leaving operators looking for new ways to generate revenues from fixed networks.
“TV and video services over broadband represent the greatest hope for maintaining spend levels, but in most European countries fixed operators would have to grow impossibly high ARPUs on TV and video in order to compensate for the scale of losses in voice and Internet,” says Wood.
Western European Fixed Telecoms: market sizings and forecasts 2001–11 analyses the key factors that are driving the fixed market in Western Europe, with a particular focus on the status of broadband and the potential impact of VoIP. Sizings and forecasts are presented for Western Europe as a whole, as well as for sixteen countries: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the UK.
