IoT : The Internet of Things
Connected objects were everywhere and IoT is now becoming the Internet of everything.
Connected cars attracted a lot of attention with connected vehicles on most of equipment manufacturers’ and MNOs’ booths.
Renault’s CEO made a keynote where he presented the timetable for assisted driving. According to Mr. Carlos Ghosn, despite their numerous initiatives and some acquisition rumours, Internet giants are not rivals to car manufacturers but allies, as they consider electric cars and they help car makers to promote electric cars.
Ford had even its own booth presenting the electric vehicles (both passenger and entreprise cars) with dedicated solutions. In the meantime, Vodafone presented a Porsche Panamera model equipped with its new Telematics solution since the Cobra acquisition.
Smart is also getting traction in the IoT space. In the “innovation city” hall (space dedicated to the connected objects), through the AT&T offering (Digital life) where the home could control through the smartphone and even through the connected car (equipped with an AT&T SIM card). When approaching the home, the car can trigger the opening of gate by itself for instance (pre-programmed distance).
While 5G is already in the tracks, very low throughput network technologies are also under the spotlights. After the recent release of its 100 MEUR fundraising campaign among telecom operators, Sigfox was also on everyone’s lips at the MWC. Among the main new shareholders, Telefonica confirmed its strategic investment and its willingness to integrate the technology into its portfolio to address additional verticals and applications.
The GMA (Global M2M Association) also announced a strategic collaboration with Gemalto and Ericsson to provide a Multi-Domestic Service based on a single SIM (using the eUICC technology) helping global enterprises (chiefly from the automotive and consumer electronics segments) capitalize on the growth of connected devices.
Growing market but still key challenges though
During his keynote, if AT&T Wireless CEO predicted that the smart phone will be the remote control of everything in the next few years, he also pointed out the key challenges to address in order to make the IoT market grow significantly:
• Privacy concerns
• Effortless (ease of use)
Data about devices and their users is generated in real-time, often by default and without the user being aware or having choice (especially for free apps). There is a need for a different approach to giving users transparency, choice and control over their data and privacy.
Generally user has a single choice : accept or not using the service, there should be gradual approach (like sharing some id attributes but not all of them).
Privacy could be a competitive stick for service providers, as users are becoming more aware of privacy.
Facebook in emerging countries
• Airtel: “Operators and Facebook are like the beauty and the beast, but the beast (facebook) is becoming more human nowadays”. Airtel was reluctant to introduce Facebook because of VoIP threat. Is looking at it like the “boiling milk”.
• Millicom, Telenor: have seen ARPU rise thanks to facebook launching, very promising for them.
• Wikipedia has the same approach of “Wikipedia zero”, dealing with operator to provide data access for free.
More informations about IDATE's expertise and events :
Nouveau cycle de conférences de prospective numérique sur les enjeux de l’Internet, de la télévision et des télécoms à 2025
A l’occasion de la sortie de la nouvelle édition de son DigiWorld Yearbook, l’IDATE présente son nouveau cycle de conférences de prospective numérique sur les enjeux de l’Internet, de la télévision et des télécoms à 2025 !
A partir des analyses des experts de l’IDATE, les débats seront animés par Marjorie Paillon, Journaliste, Tech 24, Philippe Escande, Rédacteur en Chef, Le Monde et Gilles Babinet, avec les contributions exceptionnelles de :
Published in COMMUNICATIONS & STRATEGIES No. 92, 4th Quarter 2013
Joint Interview between Gilles FONTAINE, IDATE and Eli NOAM, Columbia Business School
Summary of this issue: "Video cord-cutting" refers to the process of switching from traditional cable, IPTV, or a satellite video subscription to video services accessed through a broadband connection, so called over-the-top (OTT) video. The impact of cord cutting will probably differ among countries, depending on the level of roll-out of digital cable, fibre optic networks, and/or IPTV, on the tariffs of legacy video services, on the quality of broadband access and on national players’ strategies.
Regulation will play a key role in this new environment, as a strict enforcement of net neutrality could prevent network operators from leveraging their access to customer base to market their own video services.
Joint interview with
Gilles FONTAINE, IDATE,
Eli NOAM, Columbia Business School
New York, USA
C&S: How would you define cord-cutting, from a US or European perspective?
Gilles FONTAINE: Cord-cutting, in Europe, is seen mainly as a USA phenomenon, where consumers would trade-off their pay-TV subscription for over-the-top Internet services. The last years, in Europe, have rather seen the rise of powerful cable and IMPTV operators competing in the pay-TV market with legacy satellite packager.
Eli NOAM: Cord-cutting is the dropping, by consumers, of expensive cable TV subscriptions in favor of online access to TV programs and on-demand films. Drawbacks for consumers are less certain quality (bandwidth), less availability of live programming such as sports, and absence of some channels. Advantages are cost-saving, no need to pay for undesired channels, better search, less advertising, greater choice, more control. In a broader sense, cord-cutting is a transition of TV from a broadcast/cable push model to an individualized pull model. So this is not just about switching to yet another delivery platform. That's the easy part. It is much more fundamental. Looking ahead, one change will be that by going online, TV will move from a slow-moving, highly standardized technology controlled by broadcasters and consumer electronic firms to a system where multiple technical approaches compete with each other and propel video delivery into an internet-rate of change and innovation. And that's just the technology. Equally important changes will take place on the content level, and in the structure of the media industry, in the advertising and business models, and in the policy.
Do you see any evidence that cord-cutting is really happening?
Gilles FONTAINE: Cord-cutting, in Europe, is not happening, or is not happening yet. Several reasons account for this: on the one hand competition is intense in Europe between networks, and is driving Internet access and television prices down, therefore limiting the incentive to "cut the cord". On the other hand, Internet services are far from having the same level of offer as US ones, even if catch-up television is increasingly available throughout Europe. Also, the video-on-demand market is very fragmented, with still limited catalogues and interfaces that could be improved and subscription video on demand is nascent, and mostly pushed by US-bases players, even if some European players have launched first services. Finally, the penetration of connected TVs and connected set-top-boxes is probably also lower in Europe than in the USA.
Eli NOAM: In the short run, there is less cord-cutting than media reports and hype suggest. For a variety of reasons, almost all participants in the media industry have an interest in dramatizing the issue. Broadcasters are making investments in ‘second screen' distribution, partly to be prepared for change, and need to justify them. ISPs are expanding bandwidth to position themselves as providers of mass entertainment options. Telecom companies, similarly, need to upgrade their networks. New providers of bypass service to broadcast and cable, such as Aereo in the US, create buzz to their market-disruptive activities. Media cloud providers such as Amazon or Netflix present new options. And even cable TV operators, who are the ones negatively affected, have an interest in presenting the problem as a crisis, at least to policy makers, in order to gain regulatory relief.
The reality is more modest, at least in the short term, but not insignificant. According to a credible analyst, Craig Moffett, The "pay TV sector" – cable, DBS, and IPTV – lost 316,000 subscribers in a 12 month period mid-2012- mid-2013. Since IPTV has gained subscribers, cable losses must have been larger. That is a loss of about 0.3%. Another estimate for 2012 has the number at 1.08 million. In a 4-year period 2008-2011, anywhere between 3.65 and 4.75 million subscribers were lost. But that was in the midst of the Great Recession, and thus not all can be attributed to cord-cutting.
Do OTT services really challenge telcos and cablecos managed TV and video offers?
Gilles FONTAINE: Many studies seem to show that OTT services propose a better customer experience than the equivalent launched by the telcos or the cablecos. OTT services are Internet natives, customer friendly companies, with a rhythm of innovation that is difficult to compete with. Telcos and cablecos still concentrate on the "linear television model", even if they have developed their own on-demand offers, whereas OTT services specialize in on-demand services. But telcos and cablecos still benefit from a privileged access to the TV set through their TV set-top-box, a competitive advantage which is about to be undermined by low cost solutions to connect the TV set, such as Chromecast from Google.
Eli NOAM: Overall, the extent of video streaming has been quite large. In the evening hours, about two-thirds of internet traffic are video-bits. Netflix alone has added 630,000 streaming subscribers in the US in 3 months in 2013, to a total of 30 million. Thus, while the numbers of cord cutters is not huge yet, as mentioned, a steady loss of subscriptions is to be expected, and it is backed up by surveys in which cable subscribers grumble about staying with expensive subscriptions which they do not fully utilize. This is particularly true for the younger generation. 34% of the Millenials (cohorts born 1980-2000) say that they watch mainly online video and not broadcast TV. For Gen X and for Boomers the numbers drop to 20% and 10%.
With OTT available, the traditional business model of cable companies unravels. In the past, they were able to raise prices and to pass on the raises by channel providers. This becomes more difficult. Similarly, it becomes more difficult to offer only bundled channels ("prix fixe"). Similarly, the ability of channel providers to offer content to viewers directly reduces their bargaining strength considerably. If they want to keep up, they also need to develop expertise in online technology, social networking, and mobile communications.
UK cableco Virgin Media and Sweden cableco recently signed a distribution agreement with Netflix. Do you foresee any revision of the cablecos and telcos triple-play model?
Gilles FONTAINE: Building an IPTV service is not straightforward for a telco: network costs can be high to ensure a homogeneous quality of service. They also face high programming costs and the complexity of negotiating with the media world. On-demand services hardly prove to be profitable, because of the market power of Hollywood studios combined with the strong competition between telcos and cablecos, has for instance led to almost unrecoupable minimal fees to access programs. The situation can be similar for a cableco that would not have the resources to acquire exclusive, attractive content: the recent deal between Virgin Media or Com Hem and Netflix heralds a change of strategy for the smaller telcos and clablecos, which could favor to comfort their Internet access business by offering the best OTT services rather than pushing their own television packages.
Eli NOAM: Overcoming all of these challenges is possible but requires an acceleration of internal processes, major investments, and a willingness to give up some control. There are signs of change in that direction. Comcast, which has just paid $ 39 billion for NBC Universal, thus gaining vertical control from the camera lense to the eyeball, has now announced a trial of a cord-cutting offer to subscribers: if they take a Comcast broadband service (of a quality that is today an upgrade for most customers) they get at basically no additional charge HBO Go (HBO's archive of self-produced shows plus current other shows, available anywhere in the US from most devices), plus the free broadcast channels. The regular monthly price $ 70/ month, compared to a price of $ 135 for a full complement of 200 channels including HBO Go. So the viewer willing to skip regular cable channels saves a lot of money. The data cap for such a service is 300 Gigabytes. This is about 120 hours of HD viewing per month, which is adequate for single viewer but tight for a multi-device, multi-viewer household.
So this shows that cable companies are considering to embrace cord-cutting as an inevitablity. Another development in that direction is the US cable industry's considering to integrate Netflix into its operations. They are holding talks with Netflix to make Netflix an option on their set-top boxes. In such a scenario, Netflix would, in effect, become cable companies' major VOD provider and revenues would be shared. This, together with the cable MSO's own cord-cutting option, would in effect accelerate cord-cutting. However, cable companies would not be entirely bypassed. They would mitigate cord-cutting into channel cutting. Ultimately, cable companies' main asset is their transmission network. Its exploitation will undergo transformation.
TV channels also face another form of cord-cutting, as viewers may directly choose their on-demand programs. How do you see their future role, if any?
Gilles FONTAINE: TV channels, as aggregators, may lose their specific role if on-demand consumption develops significantly. However, they will evolve proposing more and more live events to continue gathering strong audiences at the same time. Moreover, there is still a need of arranging the on-demand catalogues, pushing the right content to the right viewer at the right time and on the right device. TV channels should be able to leverage their linear programming to play their aggregator role in an on-demand market. But they will need to heavily invest in IT and review their trade-off between linear and on-demand distribution.
Eli NOAM: TV channels gain and lose. They gain in bargaining power over cable and other distributors. They can deal directly with users, though more likely they will go through new types of intermediaries such as Apple and Amazon.com. In a profusion of content offerings, strong brands are a valuable way for users to search for content. And if they can identify users or user characteristics they can fine-tune and individualize advertising. The danger for channel providers is that the loss of cable MSOs hold over viewers means that they cannot share in the MSOs pricing power. Furthermore, content providers can disintermediate them by going directly to viewers. Sports leagues, for example, could deliver their events directly and cut out the networks. Most of the channels do not have major operational IT expertise, and this provides an opening for an entire industry of new service providers and video clouds.
Gilles FONTAINE's Biography
Gilles FONTAINE is IDATE's Deputy CEO and is also in charge of IDATE Business Unit dedicated to media and digital content. During its 20 years experience in the Media sector, Gilles Fontaine has become an expert of the media economics and of the impact of Internet on content. He directed numerous studies for both public and private clients, including the EC, governments and local authorities, telcos and TV channels. Recent assignments have included a participation in the future MEDIA programme ex-ante assessment, the analysis of new video internet services economics, a long term forecast project on the future of television. He has also monitored the impact of digitization and online distribution on other media, radio, press and music. Mr. Fontaine holds a degree from the highly reputed French business school, HEC (Ecole des Hautes Etudes Commerciales, 1983) and from the Institut MultiMédias (1984).
Eli NOAM's Biography
Eli NOAM has been Professor of Economics and Finance at the Columbia Business School since 1976. In 1990, after having served for three years as Commissioner with the New York State Public Service Commission, he returned to Columbia. Noam is the Director of CITI. He also served on the White House's President's IT Advisory Council. Besides the over 400 articles in economics, legal, communications, and other journals that Professor Noam has written on subjects such as communications, information, public choice, public finance, and general regulation, he has also authored, edited, and co-edited 28 books. Noam has served on the editorial boards of Columbia University Press as well as of a dozen academic journals, and on corporate and non-profit boards. He was a regular columnist on the new economy for the Financial Times online. He is a member of the Council for Foreign Relations. He received AB, AM, Ph.D. (Economics) and JD degrees, all from Harvard. He was awarded honorary doctorates from the University of Munich (2006) and the University of Marseilles (2008).
Published in COMMUNICATIONS & STRATEGIES No. 92, 4th Quarter 2013
- For more information about our activities: www.comstrat.org
COMMUNICATIONS & STRATEGIES
Senior Consultant, Mobile Devices & Platforms Expert DigiWorld by IDATE
The new iPad unveiled by Apple yesterday was much as expected. Rumors during the run-up proved fairly accurate when it came to the main features of this third version of Apple’s tablet (especially retina display and 4G) and we believe that this update is a fairly solid response to what competitors have been able to produce so far. No groundbreaking features but rather improvements aimed at strengthening Apple’s position in the market.
Below are some thoughts on what we learned yesterday. These analyses build on our ongoing research on the mobile device market – as found in last year’s report on LTE devices (which is part of our LTE Watch service). If you are interested in this topic, an in-depth analysis of mobile device manufacturers’ strategy and future mobile device innovations, can be found in our upcoming report on Next Generation Mobile Devices which is due out in Q2 2012.
- Support for LTE is not necessarily the main advantage of the iPad as is a feature aimed chiefly at users in the US. The new iPad, powered by Qualcomm multimode LTE baseband, supports both 700 MHz and 2100 MHz LTE bands which in itself limits its interest worldwide. Those two bands are and won’t be the much used by operators when deploying their LTE networks. From a European perspective for instance, the device will need to support the 800MHz, 1800MHz and 2.6GHz bands to be usable. But this is not a major issue, given the limited deployments so far in those frequency bands. What this LTE support tells us is how important Long-term evolution has become in the US as a differentiating argument in the mobile device market. It’s also impressive to see how much the US wireless market has evolved over last 4 years. Remember when the first iPhone was launched back in 2007, with no support for 3G because of those new-gen networks were still embryonic in America? Now, the US is at the forefront in deploying the latest radio access network technology, and Apple could not ignore it when targeting its domestic market. It is still unclear how far US operators have been pushing Apple to go that way, but one thing is sure: the announcement that the latest iPad supports LTE was clearly US-driven.
- Given the low rate of deployment for LTE networks outside the US (and Japan and South Korea which are the two other big LTE markets), and the increasing number of bands to be supported, supporting DC HSPA+ and HSPA+ was Apple’s only option to limit the number of different versions of the iPad and have 4G-branded iPads sold internationally. There has been a lot of debate over whether or not it was fair to use the term 4G for DC HSPA+ and HSPA+ technologies. They are indeed evolutions of 3G standards; their performance is an improvement over what we are used to and, for everyday uses, can be considered to deliver “LTE like” performance. We should also remember that even LTE is not considered by the 3GPP as a 4G technology: only LTE-Advanced and WiMAX IEE 802.16m are considered as such. In any even, from a market and network deployment perspective, supporting DC HSPA+ and HSPA+ was the best solution for the non-US market. Operators all over the world announce are upgrading their networks to this standard to able to support downlink rates of up to 42 Mbps (in dual carrier mode). The new iPad will support this maximum theoretical bitrate, while DC HSPA+ will eventually be able to sustain 84 Mbps. Plus these deployments will be in existing 3G bands, so Apple will not need to provide support for other bands.
- Apple is by no means the first device manufacturer to announce support for LTE. Samsung, HTC, LG and especially Motorola were first to launch such devices in the American, South Korean and Japanese markets. As we expected and noted in our report on LTE Devices and in our LTE Watch service insight last year, Apple has taken a more cautious approach in its release timetable, waiting for baseband solutions to be mature enough to lessen the number of wireless versions of the iPad, and enable Apple to provide a solid enough 4G experience in terms of battery life. Here, Qualcomm was the most relevant solution for Apple – providing the broadest support for RAN. As mentioned earlier, providing support for DC HSPA+ alongside LTE and CDMA2000 EV/DO was a strategic move on Apple’s part – both in terms of industrial process (reducing manufacturing and BOM costs) and marketing (being able to call it 4G worldwide).
- In terms of battery life, Apple could not afford any noticeable reduction in performance when using 4G. Of course new LTE basebands from Qualcomm (probably the MDM 9600) somehow reduced their footprint, but also forced Apple to perform some major reengineering to handle increased drain on the battery. This basically boils down to making more room for bigger batteries, without altering the form too much. The relative increase in the new device’s thickness (9.4mm as compared to 8.8mm for the iPad 2) is an indication of how challenging it was for Apple to provide support for LTE and deliver increased graphical performance required for the retina display. When we look at the specs, the new iPad battery is a 42.5 watt-hour unit, as compared to a 25 watt hour battery previously… so nearly twice the capacity as before. Impressive. It still remains to be seen how the new iPad compares to other LTE tablets. There appears to be a growing consensus around the web that the new iPhone will naturally support LTE as well. I’m not so sure, as the design constraints this involved for a smartphone are a whole other ball game. It will be much harder to make extra space for increased capacity battery. In any case, the technical challenges are big enough for me to think that, should it support LTE, the new iPhone will be rolled out in October rather than in June.
- The Retina display is probably the most obvious improvement. The previous iPad had just a standard resolution for a 9.7-inch display, but the pixel density of the new iPad really makes a difference … both with the previous model and with what the competition is offering. It is not sure how many of Apple’s display partners (LG? Samsung? Hitachi? Sharp? Panasonic?) are involved here, and if competitors will have access to this technology (it took some time for Apple’s competitors to release a smartphone with higher ppi than the iPhone 4S). What is certain is that Apple may well prevent its rivals from getting their hands on the technology by occupying the production channel. Given Apple’s unmatched capacity to order such components in very high volumes, its competitors will likely find it difficult to find enough components for their own devices.
- In all of this, there has been no mention of Amazon and its Kindle Fire… even though it is reported to be Apple’s most successful competitor in the tablet market. Apple still isn’t targeting this segment of the market overtly, even with a lower-priced iPad in its line-up. This may be a sign that, for Apple, Amazon is more a competitor for Android tablets than for the iPad which is aimed at the mid-range to high-end market.
Radio Technologies & Spectrum Practice Manager - IDATE
27 February 2012, Barcelona, Spain – IDATE provides regular analyses of the main trends shaping the world’s mobile markets: networks, devices and services. DigiWorld by IDATE have teamed up to publish the new edition of its special White Paper: “LTE 2012 - Markets & Trends” to coincide with the Mobile World Congress in Barcelona (27 February-1 March 2012).
The first commercial LTE rollouts and the main operators’ strategies are forging the trends that will shape the LTE market’s development in the years ahead:
- LTE is being implemented mainly to supply added capacity, but some operators are using it as a way to distinguish themselves from the competition
- LTE is also driving costs down for mobile operators
- LTE will dominate 4G: the LTE ecosystem is trimming the mobile WiMAX market
- The lack of LTE-compatible devices (2.6 GHz band) is currently an issue in Western Europe
- Spectrum fragmentation for LTE is slowing down roaming prospects
- The scarcity of digital dividend spectrum and the drive for sustainable business models in certain developing markets will drive a greater degree of network sharing
- Voice (VoLTE) is chiefly a long-term concern for most operators
- LTE femtocells will play a key role in LTE deployments
- LTE-Advanced will roll out sooner than expected: the first real-scale deployments due in 2013, instead of the previous target of 2015
- TD-LTE is now seen as a complement to LTE FDD in many countries
- LTE in the digital dividend can provide a substitute to the fixed network – as seen in Germany, Australia and as planned by Verizon Wireless
- LTE wholesale model developing worldwide with many implementations around the world
At the end of 2011, there were approximately 9 million LTE subscribers worldwide according to our LTE Watch Service database. More than 60% of LTE subscribers were in the US as of 31 December 2011, with Verizon Wireless accounting for close to 90% of them.
We forecast that, by the end of 2015, there will be more than 482 million LTE subscriptions worldwide. Of these, Asia-Pacific will represent 34.3%, North America 28.9% and Western Europe 17.9%.
We anticipate that mobile traffic will reach more than 127 EB in 2020, representing a 33-fold increase compared to 2010. By 2020, Asia will represent 34.3% of total mobile traffic, followed by Europe (22%) and the Americas (21.4%).
Mobile voice and data traffic 2010-2020
Source: IDATE - 2011
Radio Technologies & Spectrum Practice Manager
firstname.lastname@example.org - Tel +33 (0) 670 708 542
Head of the Internet Business Unit
IDATE has recently published its market report “Net Neutrality – Core issues and business models” which explores the technical-economic issues surrounding Net neutrality and its current status in markets around the globe. It also delivers analysis of the traffic management practices and technical measures needed to control costs. And, finally, looks at the new business models we are seeing emerge through an examination of stakeholders’ models, along with synthesis of the state of affairs in each country.
“The many debates that have taken place over Net neutrality these past several years have now been whittled down to chiefly technical-economic questions over network financing, taking into account the increase in traffic and the need for ongoing innovation in services. A host of players now make up the value chain (IP transit providers, CDNs, ISPs, service and content providers, users) all operating very different business models and all looking to capitalise on the basic rules that enabled the Web’s development”, says Vincent Bonneau, Director of the Internet Business Unit at IDATE.”But when it comes to the Internet’s overall business model the status quo does seem hard to maintain. Some longstanding rules could be called into question, especially the system of settlement-free peering now with the rise of asymmetrical traffic, along with offers of unlimited traffic that are often extended to users.”
Status of Net neutrality around the world
The degree to which Net neutrality debates have progressed – as much in terms of identified issues (ISPs’ traffic management measures, operators’ and content providers’ stated positions, etc.) as regulation (sector-specific or under general competition laws) varies a great deal from country to country. Even within each country we find disparate approaches being taken to fixed and mobile networks. The Netherlands is in fact the only country among those being examined here that has introduced specific Net neutrality legislation for mobile networks. It was joined by Chile which became the first country in the world to introduce Net neutrality into Law in July 2010.
The debate has picked up steam in Europe over the past several years, even if concrete instances of traffic management practices, notably on fixed networks, are still rare. But European regulators are not necessarily looking to introduce severe sector-specific regulation, and continue to work more on encouraging competition. In addition to intra-modal competition, regulators can also draw on the Telecoms Package for provisos concerning traffic management practices. Any identified problems are today being handled chiefly by soft laws or general competition law, as has been the case in Italy (P2P) and in Germany (mobile VoIP), with the Netherlands standing out as an exception, with Belgium due to follow suit.
An analysis of 13 countries in Europe, North America and Oceania reveals several similarities in:
• The content and services targeted by traffic management measures. Although the Net neutrality debate aims to be one of general principles, it often focuses on a few services and types of content, namely P2P file sharing and online video (UGC and catch-up TV) on fixed networks, and VoIP (or SMS over IP) and P2P on mobile networks. Discussions centre on who should finance the network (especially wireline ones), and/or on bottlenecks and, to a lesser degree, on operators’ ability to favour their own managed services over services delivered on the open Web. Access providers that are introducing traffic management measures on P2P are endeavouring mainly to alleviate bottlenecks, while those applying differentiation measures to video are working to ensure financing for their network.
• Volume-based billing and bandwidth throttling and capping. Volume-based billing is virtually ubiquitous on mobile and cable networks. AT&T and Deutsche Telekom were among the first telcos to (re)introduce this approach on their wireline networks. So the issue of network financing becomes a different one since, in addition to there being a traffic cap, customers’ will either see their charges vary according to the traffic they generate or their available bitrate diminished. Volume-based billing is applied across the board in Australia which, due to a geographical particularity – i.e. most traffic comes from the rest of the world and is routed in via costly undersea cables – cannot offer unlimited access plans. So the Net neutrality debate there is focused mainly on bottlenecks, even if network financing remains an important topic of discussion as well.
• Major local content and service providers’ often heavy use of CDN solutions. All of the Web’s major players are working to improve the availability of their content and services through traffic optimisation solutions. The Internet’s titans are installing their own infrastructure, in particular to develop their own content delivery networks. Major telcos such as France Telecom, Telefónica and AT&T are also becoming interested in content delivery networks.
• The European regulatory framework and various approaches across the EU. Aside from Norway and the Netherlands on the matter of mobile networks, all European countries are focused more on inter-modal competition for access provision than on Net neutrality, per se, as it creates a more competitive marketplace. This therefore creates a situation that makes differentiation impossible unless all operators apply it. Otherwise customers will naturally chose the operators who are not billing based on traffic or QoS. European players also have a common regulatory framework on transparency in traffic management practices with the Telecoms Package.
Vincent Bonneau is IDATE’s chief expert on fixed and mobile Internet services and software innovation. He is the head of the Internet Business Unit which tackles issues surrounding the Web and emerging technologies, and especially services, markets, usage and monetisation aspects. Vincent’s particular specialty is detecting and analysing innovations.Before coming to IDATE, Vincent worked in the software and telecom industries. He was the “Internet Software and Technologies” attache to the French Trade Commission (DREE) in San Francisco, in addition to having gained strategic operational and marketing experience working for Noos, Wanadoo and France Telecom in Paris; Mr. Bonneau is a graduate of the Ecole Polytechnical (1997) and the Ecole Nationale Superieure des Telecommunications (2002), and holds a Masters Degree in New Technologies Management from the HEC business school (2002).
Visit our website to learn more about this new study
Director Telecoms Business Unit
Munich, 15 February 2012 – Europe (EU-35) reported a solid 28% increase in the number of FTTH/B subscribers in 2011. FTTH/B coverage continues to progress fast in Europe with a yearly growth of 41%. This confirms that expanding FTTH/B coverage is still the top priority for players. There were nearly 5.1 million FTTH/B subscribers in the EU-35 at end 2011, and nearly 28 million homes passed.
“Main European economies are now on tracks for FTTH/B: France presents a 34% growth in terms of subscribers in 2011, and Spain is progressing fast being very near to enter FTTH Global Ranking2,” says Roland Montagne, Director of the Telecom Business Unit at IDATE. “2011 has been a crucial year for Germany concerning FTTH. Even is the number of subscribers is still very low, competition led by local players backed by municipalities and also large deployments of DOCSIS 3.0 has forced DT to get involved on FTTH. This engagement should be a real starting point for FTTH in the country.”
“Among CIS countries, because of its specific demographic features, Russia leads the way in terms of FTTH/B subscribers and homes passed – and the potential of the Russian market is huge, with 4.5 million FTTH/B subscribers and 12.3 million homes passed at end 2011”, comments Valérie Chaillou, lead FTTx analyst at IDATE. “Ukraine is also home of more than half a million FTTH/B subscribers, and we expect to see new players becoming involved in FTTH/B deployments in the near future.”
Current status of FTTH/B rollout projects at the end of 2011
As in previous years, IDATE has been commissioned by the FTTH Council Europe to provide an overview of the status of FTTH/B rollouts across Europe at the end of 2011. To date, the Institute has identified around 260 FTTH/B projects in the EU-35.
The first type of player to become involved in FTTH/B deployments was alternative carriers which singlehandedly account for 55% of FTTH/B homes passed in Europe. Alternative carriers have performed rollouts in France, Italy, Germany, Sweden and in Eastern Europe (Slovakia, Slovenia, Romania, and Bulgaria).
We include cable companies in this category as they are often involved in large-scale FTTB network rollouts – with examples that include Numericable in France and ER Telecom in Russia. Cablecos have the advantage of not having to negotiate building-by-building to access homes since the coaxial outlet is already installed plus, in a great many instances, the civil engineering to pull the fibre to the foot of the building has already been performed.
Another category of stakeholder is local authorities and regional power companies (which are often owned by public authorities). While this category represents only 13% of homes passed for fibre at the end of 2011, it accounts for the largest number of FTTH/B projects, most of which are small scale ones – covering only a local territory. Their involvement will probably increase in other countries such as Italy but also France, and the UK through national programs.
These players can encounter difficulties when taking on the business of operator which usually has no correlation with their core responsibilities. To help alleviate these difficulties, we are seeing some of these small-scale rollouts being grouped together to form a network – with examples that include Stedenlink in the Netherlands, Netixopen in Finland and, in the form of an ISP, Waoo in Denmark.
This allows the parties involved not only to pool their expertise but also to create a brand and to build alarge customer base (to attract TV broadcasters, for instance). The other category of player worth mentioning is incumbent carriers which account for 33% ofFTTH/B homes passed in Europe. Virtually all of Europe’s incumbent carriers are either now involved in FTTH/B rollouts, are gearing up to it or are in the planning stages. Even those who originally opted for an FTTN+VDSL solution, such as KPN, Swisscom and now BT and Deutsche Telecom, are turning their attention to FTTH – in many cases as a result of the growing competitive pressure created by cable companies’ and local authorities’ fibre initiatives.
Excluding Russia, which leads the FTTH/B market in terms of subscribers and homes/buildings passed thanks to its demographic make-up (4.5 million FTTH/B subscribers alone), Sweden is still the leading market with 644,000 FTTH/B subscribers at end of 2011. This leadership could be challenged in the near future by countries such as France, which is already home to nearly 630,000 FTTH/B subscribers. Other countries are also reporting strong growth and are now positioned in the top 10 in terms of number of homes/buildings passed. This is true for Ukraine, Romania and Portugal which ranked 3rd, 5th and 6th at end of 2011. We should also mention that Spain is progressing fast, being very near to enter FTTH Global Ranking. Indeed with nearly 171.000 FTTH/B subscribers at end 2011, Spain is presenting the highest growth in 2011 (+184%). Scandinavian countries, and notably Sweden and Norway, still lead the way in Europe in terms of penetration rate – with 39.5% and 59.7%, respectively. Nevertheless it is now in Eastern Europe where we found also high penetration rates: Czech Republic with 42.4%, Hungary with 39.6%, Turkey with 26%.But the situation across Europe as a whole is still quite disparate as countries like Italy or France are still reporting low penetration rates (13.8% and 10.6%, respectively, lower than the EU-35 average which reaches 18.4%). Regarding the technology deployed, Ethernet is still players’ first choice across the EU-39, and represented 70% of all FTTH/B rollouts at end of 2011. As concerns network architecture, FTTB still accounted for 59% of rollouts at the end of 2011. 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.
DigiWorld Institute by IDATE
Roland Montagne - Director Telecoms Business Unit - email@example.com
Jeremy GEORGE - Tel+33 (0)6 10 607 808 - firstname.lastname@example.org
Director Telecoms Business Unit
Montpellier, France – Within its on-going monitoring of the World FTTx Market, the DigiWorld Institute by IDATE publishes twice per year FTTx market’s key figures covering 70 countries and over 150 market players with forecasts up to 2016. At mid-2011, the worldwide growth rate in terms of FTTH/B subscribers remains high with more than 54% between mid-2010 and mid-2011 to reach a total of close to 67 million subscribers in mid-2011. Furthermore, the number of Homes/Buildings-passed worldwide accelerates increasingly, with an impressive rate of more than 47% between mid-2010 and mid-2011 which leads to nearly 179 million homes connected to fiber in mid-2011.
Worldwide FTTx market at end of June 2011 – FTTH/B remains the most widely used network configuration
The global FTTx market continued to grow in the first half of 2011, with a subscriber base that increased by around 15%: as of June 2011, there were more than 112.6 million FTTx subscribers around the world. This rate of growth was nonetheless well below the roughly 39% increase of the previous six months which saw a massive rise in FTTx subscriber numbers in China – a growth spurt that has since levelled off. FTTH/B remains the most widely used network configuration, accounting for over 67 million subscribers worldwide out of a total of roughly 179 million homes passed.
An analysis of the figures for the first half of 2011 reveals a certain levelling off of the global ultra-fast broadband market’s growth momentum. The strong increase in FTTx subscriber numbers during the previous six months could be attributed mainly to the Chinese market whose carriers released more information on actual penetration levels for their superfast broadband offers.
The increase in the number of homes passed is once again higher than the increase in actual subscribers, which confirms that rollouts continue to be a priority for a great many players, as they anticipate a massive uptick in demand further down the road. This is true around the globe, although situations do vary from country to country.
China has consolidated its number two spot behind Japan (if we discount the country’s FTTx + LAN subscribers). There is nevertheless a real gap in the two countries’ growth rates for December 2010 to June 2011 which stand at 14% and 5% for China and Japan, respectively. If this trend continues, it will not take long to have an impact on global rankings – and we can expect to see China overtake Japan for top spot in the not too distant future.
Russia continues to be the biggest FTTH/B market in Europe, with close to 5.2 million FTTH/B subscribers as of mid-2011. Sweden is still in the top 10 but its figures have progressed very little from six months earlier. France has been making real strides but ISPs there are still having trouble persuading broadband customers to switch to FTTH/B, and penetration rates (i.e. percentage of homes passed that actually subscribe) are still low. Meanwhile, in the rest of Europe, the countries in the East and West will soon fall behind developing nations which have much greater potential for growth.
The top 10 ranking for the biggest FTTH/B subscriber bases as of June 2011 is therefore very similar to the one for the end of 2010 – the only notable change being the fact that India has pulled ahead of Sweden.
Looking at the top players, all types of new-generation network combined, Asian carriers still head up the rankings, occupying seven of the top 10 positions in terms of FTTx subscribers.
China’s two main carriers now occupy the top two spots – ahead of Japan’s longstanding market leader, NTT – and they are expected to widen their lead in the coming months thanks to their rollout plans, and the fact that NTT’s subscriber base is not expected to grow that much further. The Asian market is especially disparate: China is experiencing a massive growth spurt while other markets are levelling off. Plus, a few carriers are even having to contend with losing their ultra-fast broadband customers to the competition – a prime example being SK Broadband in South Korea, whose subscriber numbers shrank by a whopping 14% during the first half of 2011.
Meanwhile telcos in the US, and especially AT&T, continue to enjoy steady growth and have been able to strengthen their position in the internet market with respect to cable companies which are gradually upgrading to DOCSIS 3.0.
Over in Europe, only Russia’s ER Telecom has made it into the top 10 rankings – coming in at number eight.
DigiWorld Institute by IDATE
Roland Montagne - Director Telecoms Business Unit - email@example.com
Jeremy GEORGE - Tel +33 (0)6 10 607 808 - firstname.lastname@example.org