key themes from point topic tim johnson barriers to broadband workshop 1 february 2005
TRANSCRIPT
Key Themes from Point Topic
Tim Johnsonwww.point-topic.com
Barriers to Broadband Workshop1 February 2005
2 www.point-topic.com
Key themes
• Broadband stays on course– UK, Western Europe, World
• A good year for the UK• How to bridge the gaps and barriers• Triple play solutions are in demand• Winners and losers for next-generation broadband
3
Broadband stays on course
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136m broadband lines worldwide at 30 September 2004
40.6
58.7
37.1
Americas
Asia Pacific
EMEA
Source: Point Topic Q3 2004
Million lines
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Broadband lines worldwide
0
20000
40000
60000
80000
100000
120000
140000
160000
Dec-9
8
Jun-
99
Dec-9
9
Jun-
00
Dec-0
0
Jun-
01
Dec-0
1
Jun-
02
Dec-0
2
Jun-
03
Dec-0
3
Jun-
04
Dec-0
4
Th
ou
sa
nd
s o
f b
roa
db
an
d li
ne
s
DSL lines
Cable Modems etc.
Total broadband
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Broadband lines in Western Europe
0
5000
10000
15000
20000
25000
30000
35000
40000
Th
ou
san
ds o
f b
road
ban
d li
nes
DSL lines
Cable Modems etc.
Total broadband
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Broadband lines in the UK
0
1000
2000
3000
4000
5000
6000
7000
Dec-9
8
Jun-
99
Dec-9
9
Jun-
00
Dec-0
0
Jun-
01
Dec-0
1
Jun-
02
Dec-0
2
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03
Dec-0
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04
Dec-0
4
Th
ou
sa
nd
s o
f b
roa
db
an
d li
ne
s
DSL lines
Cable Modems etc.
Total broadband
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Broadband penetration levels still vary widely
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
Pen
etr
ati
on
of p
op
ula
tio
n
France
Germany
Italy
UK
Canada
USA
China
Japan
South Korea
Taiwan
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Penetration levels in major countries are converging
0.01%
0.10%
1.00%
10.00%
100.00%
Pen
etr
ati
on
of p
op
ula
tio
n
France
Germany
Italy
UK
Canada
USA
China
Japan
South Korea
Taiwan
10 www.point-topic.com
Share of broadband lines by technology Q3 2004
63.5%
28.5%
7.6% 0.4%
DSL
Cable modems
FTTx
Others
Source: Point Topic Q3 2004
11 www.point-topic.com
Share of broadband lines by technology Q2 2004
60.7%
32.0%
7.1%
0.2%
DSL
Cable modems
FTTx
Others
Source: Point Topic Q1 2004
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Broadband is growing faster than mobile did (World)
Source: Informa, Ovum, Point Topic, H1 2004
100
1,000
10,000
100,000
1,000,000
10,000,000
1990
1992
1994
1996
1998
2000
2002
2004
Th
ou
san
ds
of
co
nn
ec
tion
s w
orl
dw
ide
(lo
g s
ca
le)
Mobiles
DSL lines
Totalbroadband
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Broadband is growing faster than mobile did (UK)
Source: Informa, Ovum, Point Topic, H1 2004
10
100
1,000
10,000
100,000
1990
1992
1994
1996
1998
2000
2002
2004
Th
ou
sa
nd
s o
f c
on
ne
cti
on
s
in U
K (
log
sc
ale
)
Mobiles
DSL lines
Totalbroadband
14
A good year for the UK
15 www.point-topic.com
Top Ten broadband countries by number of lines: Q204 - Q304
0
5000
10000
15000
20000
25000
30000
35000
Th
ou
sa
nd
s o
f b
roa
db
an
d li
ne
s
in u
se
Q2 2004
Q3 2004
Source: Point Topic Q3 2004
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Top Ten broadband countries by penetration Q3 2004
0
5
10
15
20
25
Bro
ad
ba
nd
lin
es
pe
r 1
00
p
op
ula
tio
n
Q3 2004
Source: Point Topic Q3 2004, countries with at least 500,000 population
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Second Ten broadband countries
by penetration Q3 2004
0
2
4
6
8
10
12
14
Bro
ad
ba
nd
lin
es
pe
r 1
00
p
op
ula
tio
n
Q3 2004
Source: Point Topic Q3 2004, countries with at least 500,000 population
18 www.point-topic.com
The UK has been growing faster than Western Europe
10
100
1000
10000
100000
1000000
Th
ou
sa
nd
s o
f b
roa
db
an
d c
on
ne
cti
on
s
World
WesternEurope
UK
Source: Point Topic, H1 2004
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UK fourth in DSL, but gaining
DSL lines in the major European countries
0
1
2
3
4
5
6
7
Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04
Mil
lio
n l
ine
s
FranceGermanyItalyUK
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UK third in broadband, and also gaining
Broadband lines in the major European countries
0
1
2
3
4
5
6
7
Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04
Mil
lio
n l
ine
s
FranceGermanyItalyUK
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UK second in broadband penetration; first in 2005?
Broadband penetration in major European countries
0
2
4
6
8
10
12
Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04
Lin
es
pe
r 1
00
po
pu
lati
on
FranceGermanyItalyUK
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BT has the smallest share of the retail broadband market in the EU
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Sh
are
of
bro
ad
ban
d m
ark
et, J
un
e 2
004
Cable modems
LLU
Resale DSL
Incumbent DSL
Source: ECTA, Point Topic
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A tale of two telcos: DSL competition in France and UK
0
0.5
1
1.5
2
2.5
Sep-0
1
Dec-0
1
Mar
-02
Jun-0
2
Sep-0
2
Dec-0
2
Mar
-03
Jun-0
3
Sep-0
3
Dec-0
3
Mar
-04
Jun-0
4
Sep-0
4
Mill
ion
DS
L li
ne
s
France unbundled
UK unbundled
France wholesale
UK wholesale
Source: ECTA
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Bridging the gaps
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The geographical divide: an “easy” problem
• Improved technical solutions– new DSLAMs, rate adaptation etc– lower equipment costs– remote concentrators
• Changed installation policies– lower trigger levels– more “can do” approach
• Targeted investment– costs can be low compared with added value and social
benefit
26 www.point-topic.com
The social divide: a tough problem
• Multiple barriers to Internet and broadband take-up– Old people less than young people– Partly-educated people less than fully-educated people– Women less than men (but the difference is dissolving)– Poor people less than rich people
• Take-up facing a 60% ceiling?– even in Korea only 66% of people use the Internet– most major countries see similar levels– but take-up at 80% and beyond in Scandinavia
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UK broadband has been growing fast so far
Source: Informa, Ovum, Point Topic, H1 2004
10
100
1,000
10,000
100,000
1990
1992
1994
1996
1998
2000
2002
2004
Th
ou
sa
nd
s o
f c
on
ne
cti
on
s
in U
K (
log
sc
ale
)
Mobiles
DSL lines
Totalbroadband
28 www.point-topic.com
UK broadband could crash into the ceiling soon
10
100
1,000
10,000
100,000
Th
ou
sa
nd
s o
f c
on
ne
cti
on
s
in U
K (
log
sc
ale
)
Mobiles
DSL lines
TotalbroadbandCeiling?
Source: Informa, Ovum, Point Topic, H1 2004
29 www.point-topic.com
BBC ideas to spread “digital inclusion”
• “Provide a compelling reason to get a broadband connection”
• iMP Interactive Media Player– using the Internet as a PVR
• Digital literacy campaign - with others?• Radical reductions in the cost of access
– low-cost access devices– “pay as you go” subscription model
30 www.point-topic.com
The business gap: issues
• Workplace penetration is very different from firm (SME) penetration– real penetration is much lower than statistics suggest
• Progress of business-quality DSL is slow– barely 10% of business broadband lines - and falling?
• Broadband take-up by business has been static for several years– but signs of an uptick in 2004, at least in the UK
31 www.point-topic.com
Workplace-based views show much lower levels of take-up
Broadband penetration of workplaces in the UK (Sep 2004)
30%
55%
30% 30%
50%
Retail Offices Factories Warehouses Other
Source: Point Topic estimates
32 www.point-topic.com
Business-quality DSL is growing only slowly
0
100
200
300
400
500
Lin
es
ins
talle
d a
t y
ea
t e
nd
('
00
0s
)
2001 2002 2003 2004
Installed base of Symmetric DSL
Americas
Asia-Pacific
EMEA
Source: Point Topic
33 www.point-topic.com
After years of stagnation, Internet trading is growing
0
10
20
30
40
50
Micro Small Medium Large
Share of businesses trading online (UK)
2001
2002
2003
2004
Source: DTI International Benchmarking Study 2004
34
Triple-play trailblazers
35 www.point-topic.com
Trailblazer ISPs
Bundled DSL, telephone and mobile offering to retain customers and maintain revenue
USASprint
Turbo button to boost download speedsSingaporeSingTel
Voice-over-IP as part of residential triple-play bundles
FranceFree
Strong video and TV element in a triple-play bundle
ItalyFastWeb
Business-focused ISP that aims to make VPNs cheaper and simpler
NorwayCatch Communications
Security services for residential and business customers
CanadaBell Canada
Value-added offeringCountryISP
36 www.point-topic.com
Video over Broadband: pillar of strategy or bottomless pit?
• Making the business case is an uphill battle– competition, content, technology, opportunity
• Sharp upturn in trials and services 2003-2004– about 50 projects identified worldwide
• Good results where there is weak competition– disappointments where it is strong
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How much contribution is broadband video making?
0
20
40
60
80
100
120
140
160
180
Th
ou
sa
nd
s o
f s
ub
sc
rib
ers
, Q
1 2
00
4
PCCW
FastW
eb
Softb
ank
Qwest
Chungh
wa
Trans
ACT
38 www.point-topic.com
The year when VoIP erupted
• Yahoo Broadband Japan still by far the biggest– over 4m subscribers– next five have only 1m between them
• Over 1,000 other providers up and running• Increasingly led by the desire to offer triple-play
– pure-play VoIP fading, relatively– Skype and imitators settling in a (big) niche?
39 www.point-topic.com
Some major VoIP players were well established by mid-2004
0
50
100
150
200
250
300
350
Vo
IP s
ub
sc
rib
ers
('0
00
s)
Free
(Fra
nce)
FastW
eb (I
taly
)
Vonag
e (U
SA)
Cable
visi
on (USA)
B2 (S
weden
)
Source: Point Topic; figures mid-2004
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The telcos are frightened, but the barriers to VoIP are high
• Major VoIP successes depend on high local tariffs• Price-based competition is vulnerable to price cutting
by big players• Customers are not yet convinced about VoIP quality
and reliability• A disruptive technology - but regulators are only just
starting to tackle the issues, such as numbering• VoIP operators proving slow to leverage the
opportunity of interconnection
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Technology options
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Contents
• VDSL and VDSL2• ADSL2+• Symmetric DSL
43 www.point-topic.com
Original VDSL: a technology going nowhere?
• Big in Asia-Pacific• mainly distributing FTTB inside MTUs
• 2.2m lines in Korea alone - but levelling off
• large numbers in China (6m?) and Japan
• Very little public network VDSL• old projects not being extended
• few new ones identified (Belgium, Norway, Slovenia)
• “substantially all” shipments into FTTB buildouts
44 www.point-topic.com
Will VDSL2 be different?
• Standard on a fast track?• first ratification Q3 2005; base standard soon after
• driven by the US RBOCs; compromises to get agreement
• Delivering 30Mbps up to 1.8km - eventually• What RBOCs need to offer full triple play?
• two HiDef TV channels + data + VoIP
• “A major technology in N. America in 2006”– Ramen Cohen, Metalink
• Too disruptive for Europe?
45 www.point-topic.com
ADSL2+: the right technology
at the right time?• Downstream speeds enough for realistic applications• Better range than original VDSL• Easier to integrate into an ADSL world• Annex J supports business symmetry requirement
46 www.point-topic.com
Leading-edge operators moving rapidly into ADSL2+
• Sweden and Norway• 60,000 ADSL2+ ports by end-2004
• Free (France) • migrating 1m customers to ADSL2+ “FreeBox”
• 6Mbps downstream for Euro 30/month
• Wanadoo (Netherlands)• 8Mbps/1Mbps for Euro88/month
• BellSouth (USA)• will use ADSL2+ to trial a video offering
47 www.point-topic.com
Symmetric DSL: many choices, slow take-up
• SDSL– proprietary, mainly USA
• SHDSL– ITU standard, industrial strength, still a niche
• Symmetrical ADSLs– ADSL2+ Annex J could be the preferred choice
• VDSL– some business offerings in special situations?
48 www.point-topic.com
1.2m Symmetric DSL lines worldwide by end-2004
0
50
100
150
200
250
300
350
400
450
Lin
es
in
sta
lle
d a
t y
ea
r e
nd
('
00
0s
)
2001 2002 2003 2004
AmericasAsia-PacificEMEA
Source: Point Topic
49 www.point-topic.com
Signs of stronger growth in future
• Some uptick in business broadband in 2004• Arrival of ADSL2+ should make symmetric
broadband cheaper and easier• SHDSL still has technical advantages• IP VPN more recognised as the unifying platform for
business applications• IP-over-Ethernet seen as the coming technology