PRINCIPAL ANALYST FTTX, BROADBAND, IDATE
Many ISPs in the US, Asia and Europe offer 1 Gb/s plans, or even faster plans (higher than 10 Gb/s). Some operators are significantly boosting their revenue stream in this way. These faster connections provide ISPs with an opportunity to charge more for high-speed access, if competition allows. In most cases, however, ARPU holds steady or even decreases if competition is especially fierce.
Some providers have introduced symmetrical bandwidth connections as part of their standard offering, whereas others have introduced this as a paid option.
A number of providers offer dedicated plans aimed at gamers, offering lower than standard latency at a premium.
Selected users are prepared to pay more for a service that allows them to move beyond set data caps, especially in the United States and in the UK. In select cases, providers are offering unlimited data options.
Up-selling and cross-selling: fixed calls
Most operators include fixed calls in their Internet access plans, some charge extra, others apply separate pricing for calls to mobiles Adding mobile services to the mix can be used to increase ARPU and cement customer loyalty. Mobile customers can be targeted with fixed line plans.
Up-selling and cross-selling: content Strategy
One approach is to stand out from the competition with premium content. Telecoms-content convergence is very much on the menu, and we are seeing a wave of mergers and acquisitions between telcos and media companies. At the same time we are seeing TV sport rights acquisition strategies. These are costly strategies, but their aim is more differentiation from the competition than profitability. Content acquisition costs are still marginal compared to network investments, and can be put down as a marketing cost for operators. Premium products are another way to upsell customers to fibre, making certain content available only to SFB subscribers.
Another approach is to stimulate bandwidth requirements with high and ultra high definition content, as image quality progresses from HD to 4K HDR and soon 8K – which is watched on people’s growing number of devices with screens. While these offers allow ISPs to differentiate themselves from their rivals, they also help stimulate the need for more bandwidth, and so eventually steer customers towards superfast, if not ultrafast access plans.
One Japanese operator has introduced a ‘B2B2x model’, targeting the vertical sector - fibre connectivity is sold to third parties, which bring their own specific added value and resell the package to their customers. In 2017 more than 40% of the operators FTTH subscribers came from this collaboration model".
Customers can be offered free fibre access, as a way of attracting them and securing their loyalty. To leverage its existing clientele to build up a fixed access customer base, one Chinese operator is offering mobile subscribers a special free fibre access deal. Connection speeds (30 Mbps, 50 Mbps, 100 Mbps or 200 Mbps) depend on the type of 4G plan the customer has.
Variable price points
The level to which pricing can be adjusted strongly depends on the degree of market competition. In the US and Switzerland, for example, it is possible to charge relatively high prices, whereas pricing is relatively low across Europe and very low in China. Another factor on which pricing depends is the operator’s position: it is relatively high for incumbents whereas challengers wanting to build market share are looking towards more aggressive pricing.
We see three possible strategies for broadband and superfast broadband pricing
Selected operators in Switzerland and the USA are offering standalone access plans costing between € 90 and € 180 a month, bringing relatively high ARPU.
One Chinese operator has introduced a ‘Speed upgrade and Tariff Reduction’ strategy. The per-Mb/s price of a 50 Mb/s plan costing less than €10 decreased by 50% between 2015 and 2016, while average speeds increased by 72%. The carrier’s revenue increased by 3.3%, thanks to a strong rise in subscriber numbers.
Outlook for 5G
5G requires multi-gigabit user/peak data rates higher than10 Gb/s and very low latency. That has consequences for CAPEX as a very high number of small cells is required for 5G. More and more operators are conducting 5G trials.
This is the impetus behind superfast fixed-mobile access trials. Certain operators are focusing on bringing wireless access speeds up to the level of their fixed networks, or even replacing fibre in the last mile of FTTH solutions with wireless.
Opportunities for fibre
There’s no wireless without wire line - if 5G is a potential rival for FTTH in some areas, it also brings opportunities for fibre networks, which need to be pulled closer to subscribers, and be made more dense (small cell backhaul + Fronthaul).
© Copyright Prysmian Group.
All rights reserved.
© Copyright Prysmian Group.
All rights reserved.