Head of the radio technologies & spectrum practice, IDATE
Expectations and forecasts of the future orientations of the mobile broadband market
Through the analysis of global leading telcos LTE pricing strategies, our team of IDATE analysts have identified four main trends happening in Q1 2013: Multi-device connectivity strategies, Emergence of new high-speed data services, A greater and manageable quality of service resulting in new price plans and the apparition of LTE Advanced, a faster and less costly band for operators.
Multi Device Strategies
Introduced by Verizon Wireless through its shared dataplans, not only is it very successful but also represents a huge opportunity to leverage its LTE network in the long term with two growth opportunities:
- Data consumption growth introduced by the incentive of using “big screen” devices such as tablets, laptops and connected TV’s for HD video watching. The more devices there are, the more data will be consumed and it will make more subscribers to upgrade to larger data cap plans
- Multi-platform approach supporting the new ‘content everywhere’ trend and allowing services ubiquity: a Netflix subscriber can watch the beginning of a video on his mobile and finish it on his tablet or laptop, starting where he left off, with a unique account.
LTE major runners strategic positionning
High-Speed data services
LTE allows developing new services that require a large data bandwidth and that could not exist with 3G: some already existed with fixed broadband (HD VoD, cloud services) and some are dedicated to mobile usages (Rich Communications Suite and car black box among the latter). Moreover telcos are starting to propose LTE services so as to counter OTT (over the top) services.
These services are either free or available through additional monthly subscription. Moreover, the Evolved Multimedia Broadcast Multicast Service will allow new video services without the need of a specific frequency layer.
A greater and manageable quality of service
Quality of service is the most important LTE innovation as it can be managed from end to end on a mobile network. Classes of priority can be created and managed allowing Swisscom to segment their offer not by data usage but by bandwidth, which stresses the need of consistent quality over the totality of the network. For example when 100 Mbps are advertised clients are less prone to accept irregularities.
Korean operators expect to launch LTE-Advanced by mid-2013, this is the new generation of LTE. Its spectral efficiency is four to five times greater than 3G where LTE is only 3 times greater. This implies that the cost per MB will fall for operators and will orient strategies towards higher or ultimately unlimited data caps and rate plans differentiated trough quality of service.
LTE Revenue Forecast (by Region, in million EUR)
Source : Digiworld by IDATE
Head of Mobile & Spectrum Practice at IDATE
Head of the radio technologies & spectrum practice, IDATE
State of the art of satellite broadband
The scope is put on the satellite ultra broadband with our analysts attending the upcoming Satellite 2013 summit in Washington, USA.
Three to five times more expensive than ADSL offers in the early 2000s, broadband satellite services have long required a sizeable investment from rural residential users interested in this type of access, with some even preferring to opt for “unlimited PSTN”. Prices have come down since then and, even though satellite access is still more expensive than ADSL, the gap has shrunk substantially. At year-end 2012, there were 1.2 million subscribers in North America, 200 000 in Asia Pacific (IPStar service), and roughly 150 000 in Europe.
Drop in the price of broadband satellite terminals
Parallel to the decrease in the price of subscriptions, the price of satellite terminals has also dropped, thanks to technical improvements which have helped bring down production costs, and to the economies of scale generated by the tens of thousands of terminals sold by manufacturers. Current prices vary between 250 and 350 EUR and could drop to 200 EUR by 2015.
Evolution of broadband satellite reception terminal prices (EUR)
Source: Digiworld by IDATE
Industry preparing for ultra-fast broadband via satellite
As part of its ARTES programme, the ESA (European Space Agency) has plans to develop a very high-speed satellite called the Terabit/s Satellite. Based on a very broad platform, the Terabit/s spacecraft will make it possible to achieve speeds of around 200 Mbps with dishes measuring 40 cm in diameter, through the use of the Q and V frequency bands.
French space agency CNES also has similar plans. The THDSat project is currently in R&D phase and could supply French households and SMEs with access at 20-100 Mbps starting in 2016. The THDSat initiative would involve satellite constructors EADS Astrium and Thales Alenia Space, and possibly service provider Eutelsat, among others.
Impacts for satellite broadband
Satellite is clearly a viable alternative technology for reducing all t ypes of digital divide. Its development is nevertheless being stunted by the steady progress being made in terrestrial technologies and the need to increase data rates.
Although latest satellites allow access speeds of up to 20 Mbps, they are behind their earthbound rivals as the data rates supplied by FTTx or LTE are closer to 50-100 Mbps. It is only by being able to rival its terrestrial counterparts that satellite can become a credible alternative, which is why projects like the THDSat and the Terabit/s Satellite are now on the table.
Co-Head of Satellite Practice at IDATE
Roland Montagne, Head of Telecom Business Unit at IDATE gives his first impressions about mobile world congress 2013.
Video only available in French.
During Mobile World Congress 2013 which took place in Barcelona from 25th to 28th of February, Arcep's team (French postal and telecommunications regulatory authority) had the chance to interview Roland Montagne, Telecom business unit Director. The interview goes through his opinion on the different main themes of the Congress: mobile and FTTx network convergence, multiplication of devices' uses and data explosion that comes with through 4G especially through video, networks virtualization thanks to IP protocol and last but not least the telcos moves to segment their offer and capture the value created by these new uses.
Head of the radio technologies & spectrum practice, IDATE
Deployments stepping up: 916 million subscribers expected in 2017
IDATE provides regular analyses of the main trends shaping the world’s mobile markets: networks, devices and services. Our Mobile team have teamed up to publish the new edition of its special White Paper: “LTE 2013 - Markets & Trends” to coincide with the Mobile World Congress in Barcelona (25-28 February 2013).
LTE is gaining momentum: IDATE predicts that, by 2017, there will be a total of 916 million LTE subscriptions.
• We expect that, by the end of 2013, a significant portion of LTE devices will support both FDD and TDD duplex modes. TD-LTE deployments in India, China and many other countries in the Asia-Pacific, Latin American, and Middle East regions and, to a lesser extent, Europe will fuel this growth.
• We anticipate that more than 80% of LTE devices will also support 3G and, in most cases, 2G in 2014.
• A limited number of LTE devices will support Mobile WiMAX in order to facilitate smooth transition for operators switching to TD-LTE.
LTE subscription by country
LTE subscription by operator
> Download the White paper - LTE 2013: Markets & Trends
Director of Studies, Telecoms Business Unit, IDATE
Inventory of FTTH/B in Europe
Europe (EU-35) reported a solid 15% increase in the number of FTTH/B subscribers during second half 2012. FTTH/B coverage continues to progress fast in Europe with a growth of 12% in the period. There were nearly 7.3 million FTTH/B subscribers in the EU-35 at mid-2012, and 33.8 million homes passed.
During 2012, several countries showed a real dynamism both in terms of coverage and take up rates. Turkey is leading the Top 5 dynamic countries in terms of percentage of new subscribers in the total FTTH/B subscribers' basis, along with Ukraine, Spain, Bulgaria and Russia. The positioning of Spain -only Western European country present in the list- should be noted as the country has entered the European ranking only a few months ago and is facing an important economic downturn. The success of FTTH/B is therefore reinforced in such a tricky context.
Elsewhere in Europe, pioneering Scandinavian countries, sometimes already considered as mature, are still leading the European market. In Denmark, FTTH/B market growth is now higher than the mobile market growth. In Finland, FTTH/B connections are more and more considered as a utility and therefore often included in the apartment monthly rental. In Sweden, new services are benefiting from a large FTTH/B coverage and an important take up rate: customers used to subscribe to a FTTH/B connection to be able to reach e-governance services provided by national entities and they are now turning to other services such as Video On Demand… finally, FTTH/B is a driver for video entertainment!
On the other hand, Italy, which was also a pioneer in FTTH/B rollouts, is beginning to lag behind. Some projects involving several players have been announced but none of them has entered into operation. The strategy unveiled by the incumbent doesn't put a strong accent on FTTH/B. The increase in terms of subscribers during 2012 is one of the lowest in Europe (10%), but the potential is still large (12.7% take up rate at end 2012, far from the EU35 average of 21.6%).
In terms of players involved in FTTH/B projects, there was no upheaval in 2012. Alternative carriers are still leading the way, representing half of the total homes passed in EU35 at end 2012 (nearly 71% considering EU39).
The number of local authorities launching FTTH/B rollout projects on their territory is increasing a little bit more rapidly than other kind of players but they still represent only some 11.6% of homes passed in EU35. However, we have noted some interesting projects in Europe held by those players, such as in the UK where rural cooperatives have succeeded in motivating citizens to be financially and/or "physically" involved in rollouts (e.g. the B4RN / Broadband For the Rural North project).
Then, of course, incumbents are main players in all European countries now; they represent 38.4% of HP in EU35 at end 2012. The quite recent involvement of Turk Telekom in Turkey has largely participated in the dynamism of the country which was clearly dominated by the competitor Turckell/Superonline until then. The competition between those telcos will probably enhance the take up rate which is still lower than the European average at end 2012 (18.7% vs 25.8%).
In the UK, the situation is totally different. The incumbent BT has decided to deploy FTTC on the national scale. FTTH (mostly referred as FTTP in the UK) will now only be deployed "on demand". BT has been really aggressive in the past year and has now reached the same level of coverage than its main competitor, the cableco VirginMedia (13 million homes passed with FTTC+VDSL). A part from local projects, we do not see a very bright future for FTTH/B in the country.
Number of FTTH/B subscribers per country in Europe
(countries with more than 200 K subscribers)
Source: IDATE for FTTH Council Europe
Source: IDATE for FTTH Council Europe
A few months ago, we didn't note important changes in the leading countries. Russia and Ukraine are the main markets, both in terms of subscribers and homes passed. This is mostly due to the demographic context in those countries, as well as the rhythm for rollout. In Russia, several players are present on the national scale (Beeline, MTS, ERTelecom, Rostelecom), enhancing competition and driving tariffs down. Moreover, end users are migrating more rapidly because previous access solutions (copper networks) were not efficient enough.
Then Sweden is still a leading FTTH/B market. E-governance is a real success there and citizens are now very confident in their FTTH/B connections to now pay for new kind of services such as Video on Demand. Other TV services (linear TV) are most of the time included in the apartment monthly rental but customers are now ready to subscribe to new kind of services that they can reach whenever they want. In Sweden, the take up rate reaches 48.4% at end 2012, largely higher than European average.
Regarding the technology deployed, Ethernet is still players’ first choice across the EU-39, and represented 78% of all FTTH/B rollouts at end 2012.
As concerns network architecture, the gap between FTTH and FTTB has increased during last semester 2012 and now FTTB architecture represents 70% of rollouts at end 2012 (compared to 62% six months earlier). Players are favouring an FTTB configuration as it allows them to avoid the issues that come with installing fibre on private property, and especially MDUs – i.e. having to negotiate with each property owner.
Director of Studies, Telecoms Business Unit, IDATE
Florence Le Borgne-Bachschmidt
Head of the TV & Digital Content Practice
More than 1.5 billion TV households worldwide in 2017
The TV market is a sector on the precipice of unprecedented upheaval. IDATE publishes every six months an observatory of the traditional TV market and our study reveals the chief forces driving the industry’s growth and transformation – exploring key market trends and supplying volume and revenue forecasts up to 2017.
According to IDATE, the number of TV households worldwide will reach 1.544 billion in 2017 (+9.1% in 5 years).
• Cable will the remain the chief access channel (554.0 million households in 2017) but will gradually lose ground to satellite and IPTV which will account for 32.1% and 8.6% of TV households, respectively, at the end of 2017.
• Despite the development of hybrid TV solutions, terrestrial TV will continue its decline and drop down to number three spot by 2017, with a roughly 23% share of the global market.
• The development of hybrid solutions that combine live programming on broadcast networks (terrestrial and DTH) and OTT video services over the open Web is a key variable in the future development of the various TV access modes.
IDATE's take on current industry moves
"The current acquisition of Virgin Media by Liberty Global underlines the strategy of internationalisation in the Pay-TV Market. More globally, the United States continue to set the trends and consolidate their leadership in this market," says Florence Le Borgne-Bachschmidt, head of the TV & Digital Content Practice at IDATE. She insists: "Pay-TV is nearing saturation in the world’s more developed TV markets. The emergence of new OTT video services on televisions and other connected devices increases the threat of cord-cutting. For a great many pay-TV providers in the West, emerging markets therefore represent vital sources of future growth."
Spotlight on the breakdown of Pay-TV: TV access and premium pay-services
In some of cable TV’s traditional strongholds, access services still account for the bulk of pay-TV subscriptions with e.g. 57.1% of pay-TV households in Japan & 74.6% of pay-TV households in Germany.
In France, the development of multi-play services including access to a basic IPTV package tends to increase the share of households subscribing to an access only service.
In contrast, in the United Kingdom or Italy, this type of offer tends to be disappearing, which is in the UK visible by stopping to sell the Virgin Media M package.
Florence Le Borgne-Bachschmidt, Head of the TV & Digital Content Practice
More information on our regulary published World TV Observatory available here
About Florence Le Borgne: She joined IDATE in July 1998 and is now head of our TV & Digital content Practice. Florence’s prime area of focus is the development of digital media technologies (terrestrial, cable and satellite TV, digital cinema, video and TV on the web) and specifically the economic, strategic and micro-economic aspects of these sectors. Her analyses also cover media company strategies in general. Before coming to IDATE, Florence worked as the Head of Research in the Nord-Pas-de-Calais Regional Development Agency's Economic Observation department, where she devoted herself primarily to issues relating to the Information Society, the development of telework and the mastery of key technologies. Florence is a graduate of the Lille school of management EDHEC (Ecole of Hautes Etudes Commerciales).
Head of "Video Distribution" Practice
Cordcutting: Is Europe ready?
Cord-cutting, which describes the phenomenon of traditional television services' customer drain, is at the heart of the new competence in the audiovisual landscape. IDATE recently published an in-depth market report dealing with this topic and it proposes a complete benchmark of new video offers in the United States and analyses the best practices. The study provides also conclusions on potential impacts of this phenomenon in Europe.
The phenomenon of cord-cutting can be regarded in a broader perspective of evolution in access to television and video services. This threat to the established MVPDs1 is in fact symptomatic of a broader set of upheavals in the television industry. Various factors contribute to these changes: the economic crisis, which fuels tensions surrounding the primary income of the established players (advertising and subscription); an underlying trend of on-demand video consumption and changing usage habits that threaten to shatter lucrative TV packaging schemes; the entry of Internet players who master these new usage habits and are a step ahead when it comes to user interfaces, a key element in the future.
The traditional television players – channels and distributors – are thus facing a scissor effect. TV channels are seeking alternative growth models that include enhanced B2B with distributors and entry into the online market to serve as a springboard for advertising growth. For their part, distributors are seeing Internet players encroach onto their networks, while rights holders and TV channels continually weigh the benefits of partnering with them. The instability is constant. For Jacques Bajon, report’s project manager: “The key issue at stake is this process of disintermediation, and the TV industry's inability to team up only reinforces the trend.”
In the United States, players' strategies are thus primarily defensive:
• Rights holders and TV channels still hesitate between choosing traditional distributors and the new ones (i.e. Internet-based);
• Distributors are attempting to retain their subscribers with multi-screen offerings and by focusing on the Internet access growth engine (itself a vehicle for disintermediation!) and – in a new trend – by working together.
Europe, with a subscription TV market that still has its growth drivers, may think that it is preserved from the tension across the pond, but its dependency on the US industry is twofold. Europe lags behind in many ways in terms of content and technology. It is dependent on US audiovisual products, and the entrants in the Internet market that master technology and interfaces come from the United States.
What is the solution? Risky changes.
• Rights holders must make the release windows and network-centric agreements model suppler to make content available. In Europe, the production industry must structure itself without further delay. In Europe, and to a lesser extent in the United States, TV channels fund audiovisual production and thus play a video library management role that must be strengthened, as in the film industry.
• TV packagers must do away with their lucrative but ossifying model of packaging channels and instead offer consumers what they want.
• Distributors must distribute, whether over managed networks or the Internet, and they should be paid for this service (and not the contrary, which is currently the case for wireline operators).
OTT video services will continue to grow and influence the TV access market because this is what users are demanding: flexibility and richness of content offerings, prices (a monthly subscription to Netflix equals the purchase price of a DVD), "anywhere, any terminal" usage habits – unlike operators' segmented offerings, and user-friendliness (these new entrants usually offer much more accomplished consumption interfaces).
Jacques BAJON, Head of "Video Distribution" Practice
More information on our website about the in-depth market report dealing with this topic
About Jacques: He joined lDATE in November 2000, working as a Director of Studies. His assignments primarily involve strategic and sector-specific examination of the television/video and its distribution modes, from broadcast to telecoms/IP. He more specifically addresses digital delivery ecosystems and linked services. Jacques’s previous experience includes freelance analyst for the Eurostaf / Les Echos group, carrying out market research and analysis of media and telecommunications industry companies, in addition to gaining experience in market analysis working for Ericsson. Jacques holds a post-graduate research degree (DEA) in International Economics (Université Paris X Nanterre) , a Master in Strategic Management of Innovation (Toulouse Graduate School of Management), and followed a training session in Investments in Telecom Networks from Télécom ParisTech.
Head of Consumer Electronics & Digital Entertainment Practice at IDATE
In 2013, hardware & games will represent 60 billion EUR in revenues, against 53bn EUR in 2012
Despite the profound changes that are going through it, the global market for hardware & video games will grow up from 2013 to attain 79 billion Euro in 2016. This study follows the development of key indicators for the sector over five years and makes an appraisal of the key markets: Home consoles - Handheld consoles - Offline games - Online games - Mobile phone games.
Following the recent announcements at the CES 2013 can we believe in a recovery of the hardware market in short or mid-term?
In 2012, the home consoles market segment (hardware and software sales) could generate 37% of total video game revenues. Given the regular growth of the online games and mobile platform games market segments, the home console segment is expected to shrink in the coming years. Let us recall that the latter accounted for nearly 60% of total market revenues in 2004. In spite of the arrival of a new generation of consoles, resulting in double-digit growth over several years, the home console segment will account for a "mere" 41.1% of the total global market by 2016.
Three factors are bringing about a shift in the home consoles market segment:
1. The arrival of Nintendo's Wii U, its first new generation console – pending the likely release of competing devices by Microsoft in 2013 and Sony Computer Entertainment in 2014 – is without a doubt the most pivotal event as the year approaches its end. Like its big brother, the Wii U will deliver a new gaming experience to the fickle and much sought-after consumers, be they experienced or casual gamers. This machine introduces pioneering features, and there is no doubt game designers will put them to use and conjure up new gameplay. Nintendo's machine should prove to be a winner. Yet it is still too early to know whether the Wii U console will enjoy the same degree of success as the Wii.
2. Competitors Sony and Microsoft will be paying particular attention to the Wii U's sales figures, given how off-guard they were caught by the Wii's success.
They now realise that their health will be determined by the level of innovation they bring to the gaming experience. The question remains as to which part of the console they will focus their innovation efforts on. 4K resolution could be an option, although this would require that gamers replace their TV sets, and 4K home cinemas are still quite pricy. The most likely path would be to beef up their machines' ubiquitous and multiscreen functionality, and rethink the interaction peripherals with an emphasis on voice recognition and motion sensing. As for infrastructures for delivering services, they have no choice but to invest in the cloud as done by Sony Computer Entertainment, which acquired Gaikai for USD 380 million in mid-2012.
3. According to IDATE, revenues from digital sales via home consoles will reach EUR 2.9 billion in 2012. These include video games, video and music. This represents one fifth of all turnover generated by the sale of content for platforms. By 2016, IDATE reckons that income from the digital sale of content via home consoles will account for 60% of income generated by these platforms.
Project Manager Laurent Michaud
Laurent Michaud is the Head of Consumer Electronics & Digital Entertainment Practice. Laurent acts as project manager for market reports on the rise of Smart Home, Game, Music and Electronics. He adresses technological, industrial and strategic issues through a point of view of innovation. He provides his clients with expert technical-economic analysis of strategic issues relating to consumer electronics and entertainment.
> More information available at: www.idate.org