Broadband Business Models by qqr87989

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									    Broadband Business Models


                        ,
What do the Governement, Regulatory, Competition &
               where is the market
                                            Broadband Techonlogies


• WIMAX
• DSL
• Cable
• Fibre
• Power Line
• Satellite
• (ISDN Bundle)
• UMTS, HSPA, 4G
• Radio Access     1-Family   Many-Family   SME   Mobile     Big housing   Large

• WLAN             House      House               Backhaul   area          Enterprises
WIMAX Fixed Network
                     WIMAX Technologies Overview



Standardisation
defined

Frequency

Reachable distance


Transmission
Method

Topology




Broadband wireless
Access applicable



Channel bandwidth

Bandwidth
Endcustomer costs & demanded
                    bandwidth
                                                                                                        The last wave: Broadband!


                                                Europe’s top broadband markets
                                                           Subscriber bases at end 2005
               12 000
                                                                                                            Net adds in 2005
                                                                                                            Net adds in 2004
               10 000
                                                                                                            Net adds in 2003
                                                                                                            Total at end 2002
                8 000


                6 000


                4 000


                2 000


                   0
                        Germany




                                                                                                                                          Turkey
                                  UK




                                                                                     Belgium




                                                                                                        Russia




                                                                                                                                 Poland
                                       France


                                                   Italy




                                                                       Netherlands
                                                               Spain




                                                                                               Sweden




                                                                                                                   Switzerland
66 million broadband subscribers in Europe at the end of 2005 (of which 7.7 million in Eastern Europe), up 23 million in the
year (+4.2 million in Eastern Europe)
Average density of 8.7% but only 2.1% in Eastern Europe (1.0% at end 2004)
Growth due in part to narrowband subscriber migration. Total narrowband subscriber base estimated at 52 million at the end
of 2005 (12.2 million in Eastern Europe)
                                                                                                                                                   Broadband in Europe (15) = Broadband
                                                                                                                                                                              in the USA

                                                                                                                                 Broadband density in Europe
                                                                                             Broadband subscribers as % of the population at the end of 2005
26%

              25%

                        23%

                                      22%

                                                22%

                                                         22%

                                                                  18%

                                                                            16%

                                                                                             16%

                                                                                                       16%

                                                                                                                15%

                                                                                                                             15%

                                                                                                                                       13%

                                                                                                                                                 13%

                                                                                                                                                         12%

                                                                                                                                                                 12%

                                                                                                                                                                         11%

                                                                                                                                                                                    9%

                                                                                                                                                                                               7%

                                                                                                                                                                                                         6%

                                                                                                                                                                                                                   6%

                                                                                                                                                                                                                               5%

                                                                                                                                                                                                                                        5%

                                                                                                                                                                                                                                                         4%

                                                                                                                                                                                                                                                                  3%

                                                                                                                                                                                                                                                                           3%

                                                                                                                                                                                                                                                                                      3%

                                                                                                                                                                                                                                                                                                2%

                                                                                                                                                                                                                                                                                                         2%

                                                                                                                                                                                                                                                                                                                   2%

                                                                                                                                                                                                                                                                                                                            1%

                                                                                                                                                                                                                                                                                                                                       1%

                                                                                                                                                                                                                                                                                                                                                Ukraine 0%
              Denmark




                                                                            United Kingdom




                                                                                                                                                                                                                                                                                                         Romania
                                                                                                                                       Germany




                                                                                                                                                                                                                                        Czech Republic




                                                                                                                                                                                                                                                                                                Turkey
                                                                                                                                                                         Portugal
                                                                  Belgium
                                      Finland




                                                                                             Estonia

                                                                                                       France

                                                                                                                Luxembourg




                                                                                                                                                         Malta




                                                                                                                                                                                               Ireland




                                                                                                                                                                                                                                                         Poland




                                                                                                                                                                                                                                                                           Slovakia

                                                                                                                                                                                                                                                                                      Croatia




                                                                                                                                                                                                                                                                                                                   Greece




                                                                                                                                                                                                                                                                                                                                       Russia
Netherlands




                                                                                                                                                                 Italy




                                                                                                                                                                                                         Hungary




                                                                                                                                                                                                                                                                  Cyprus
                                                                                                                                                                                                                   Lithuania
                                                                                                                                                 Spain




                                                                                                                                                                                    Slovenia




                                                                                                                                                                                                                               Latvia




                                                                                                                                                                                                                                                                                                                            Bulgaria
                                                                                                                             Austria
                                                         Norway
                        Switzerland




                                                Sweden




    Western Europe: with an average density of 14.8%, Western Europe has caught up to the US and is closing in on Japan
   (16%).
   Leading the way are the Netherlands (which has overtaken South Korea), followed by the Scandinavian countries,
   Denmark and Switzerland.
        Lagging behind in Western Europe are Ireland, and especially Greece.
        With the exception of Estonia and Slovenia, broadband development still limited in Eastern Europe
                                                                                                      … but cable < 10% broadband access
                                                                                                                                   and …

                                             Broadband retail market share in Europe, end
                                                               of 2005


                       60%


                                                                         Bulgaria
                       50%        Roumania
                                   Romani
                                   a                                                                                                    Limited facilities-based competition overall in
                                                                                                                                       Europe
                                                     Malta     Austria                                        Portugal
                       40%                                                                                                               Cable the prime alternative to DSL
Cable operator share




                                                       Netherlands


                                                                 Hungary
                                                                               Belgium                                                   Limited FTTx development, except in Italy
                       30%                                                                                                             and Sweden
                                                          Sw edenEstoniaCzech Rep.         Denmark
                                               UK                                Spain               Pologne
                                                                                                      Polan                               In Eastern Europe, serious threat coming
                       20%
                                                                       Lituanie                       d                                from cable and developing wireless
                                                                    Sw itzerland
                                                                          Norw ay     Latvia
                                                                                                                                       alternatives
                                                                               Slovakia
                                                                                                                          Croatia
                       10%                                                         Ireland                 Luxembourg
                                                                           France        Germany
                                                                                                   Italy
                                                                                                            Greece
                       0%                                                                                                 Cyprus
                             0%      10%     20%    30%       40%        50%        60%        70%           80%         90%    100%
                                                                  Incumbent share
                                                                                     … competition based chiefly on
                                                                                                wholesale and LLU
                            Structure of Europe’s DSL markets
         UK
    France
Netherlands
   Sw eden
   Norw ay                                                                                  DSL by far the dominant technology,
  Germany                                                                                   accounting for 80% of broadband
Sw itzerland                                                                                connections at the end of 2005 (over 90% in
    Austria                                                                                 Germany and France)
      Spain                                                                                 DSL market competition first enabled by
   Denmark                                                                                  incumbents’ wholesale offers
   Hungary
                                                                                            Unbundling on the rise in Western Europe:
        Italy                                                                               number of unbundled lines doubled to over
     Ireland                                                                                9 million (of which 8.5 million used for DSL)
    Estonia                                                                                 in 2005, or 18% of DSL connections
    Belgium
                                                                                            In Eastern Europe, unbundling in the very
    Greece                                                                                  early stages (no offer or troubles
Czech Rep.                                                                                  implementing it)
   Portugal
   Slovenia
     Latvia
     Poland
    Lituania

                0%   10%   20%   30%     40%     50%      60%   70%     80%    90%   100%

                           Incumbent   Bitstream/resale   Unbundling   Other
                                                                                                                                                                                                                                                                                                                                  Who’s on top?

                                                                                                                 Europe’s top earning telcos (2005)



                                    59.6

                                                       49
                                                                        42.9

                                                                                   37.9
                      Billion EUR




                                                                                                29.9

                                                                                                                 28.5

                                                                                                                        11.9

                                                                                                                               9.6

                                                                                                                                             8.7

                                                                                                                                                   8.6
                                                                                                                                                             6.4

                                                                                                                                                                                6.3
                                                                                                                                                                                           6.2

                                                                                                                                                                                                 5.7
                                                                                                                                                                                                               5.7



                                                                                                                                                                                                                                5.5
                                                                                                                                                                                                                          5.5



                                                                                                                                                                                                                                        4.7

                                                                                                                                                                                                                                                           4.7

                                                                                                                                                                                                                                                                  4.5
                                                                                                                                                                                                                                                                                     4.4



                                                                                                                                                                                                                                                                                                             3.9

                                                                                                                                                                                                                                                                                                                            2.8

                                                                                                                                                                                                                                                                                                                                  2.6
                                                                                                                                                                                                                                                                                                       4
                                    Deutsche Telekom




                                                                                                                                                                                                                          OTE
                                                       France Télécom




                                                                                                                                                             Portugal Telecom
                                                                                                Telecom Italia




                                                                                                                                                                                           TDC




                                                                                                                                                                                                                                                                  Bouygues Telecom

                                                                                                                                                                                                                                                                                     Telekom Austria




                                                                                                                                                                                                                                                                                                                            NTL
                                                                                                                        KPN



                                                                                                                                             SFR




                                                                                                                                                                                                                                                                                                             Hutchison 3G
                                                                                                                                                                                                               Belgacom




                                                                                                                                                                                                                                                                                                                                  Vimpelcom
                                                                                                                               TeliaSonera




                                                                                                                                                                                                                                Tele2
                                                                                                                  BT




                                                                                                                                                   Telenor




                                                                                                                                                                                                                                        Cable & Wireless
                                                                                   Telefónica




                                                                                                                                                                                                                                                           Wind
                                                                                                                                                                                                 Svyazinvest




                                                                                                                                                                                                                                                                                                       MTS
                                                                                                                                                                                Swisscom
                                                                        Vodafone




Largest European market incumbents still lead the rankings.
A few new entrants have become pan-European telcos: Vodafone and Tele2 with 58% and 77%, respectively, of their
                                                   :
revenues generated outside their home market and, more recently, Hutchison’s 3G subsidiary, now operating in six
European countries.
The other leading alternative telcos operate in Europe’s largest markets, most of them in mobile services.
Broadband market increase for Top 5
                         Countries
                                                            Main Points


• Top 5 Countries in Europe 2008:
  •   Germany: ~22M; without DSL: 1,1 M
  •   UK: 17M without DSL: 3,5 M
  •   France: 16M; without DSL: 0,5 M
  •   Italy: 11M; without DSL: 0,3 M
  •   Spain: 9M; without DSL: 1,5 M


• DSL dominates (95%),
• TV-Cable not satisfactory usage; but strong increase
     Cable
• Only small perception for satelite broadband services
• Outside cities the network infrastructure is not satisfactory
• Accros Europe: increase the Broadband penetration; „Internet for
  everyone“; goal is to reach a penetration of 99%!
• E.g. Germany Government strategy to have 50MBit/s for ¾ of the
  population by 2014
Broadband availability Germany
                                             Governmental measures


• Introduction of Broadband cartography, for having transparency, showing
  the white spots
• Definition of Broadband: double ISDN 128Kbit/s, or six times ISDN, or
  more?
• Today for broadband applications the minimum is: 1MBit/s
• For the landline areas 20-30 customers are enough to have an
                              30
  acceptable business model; SME should be the focus
• But: each countryside needs a different approach
• The Government needs open and transparent information policy for
  cities, counties, villages and companies
• Help for local organisations
• Build up ductwork for cables, reduce administration and bureaucracy
• Help cooperation between Telcos
• Use EU subsidies
• But: Broadband is still not part of the Universal Service
                                                             Competitors


• IP-TV Model
• T-Home Model using:
  •   Video on demand
  •   Interactive TV
  •   Dedicated TV Spots
• Mobile Models
  •   Mobile TV
  •   Location Based Services (Google example for Iphones)
  •   Mobile Advertisement
  •   Mobile Personal services
  •   Mobile Payment Models
  •   „Avatar Case“
                                                                                    Broadband services




                                     Voice telefony
Sensivity against packet loss




                                Standard services /
                                                             Online console
                                lower network capacity       games
                                                                                Complex services /
                                                                                higher network capacity
                                              Simple games




                                                                    Bandwidth demand
                                                                                    The content value chain –
                                                                                  we sell and deliver content!!




              Applicatio                                                      Access,                                    Commerci
                  n                                                          Transport      Virtual      Technical           al
  Content         &              Payment                        ISPs          & Core                      Service         Service       Cus-
 Providers     Support                          Portals                       Network     Operators                      Providers,    tomer
                                Operators                                    Operators                   Providers
              Providers                                                                                                  Distributor
                                                                                                                              s




Content-                   Managers of                    Provider of               Manage/own a
oriented                   Electronic                     Internet                  small subset of                  Distributors of
companies                  Commerce and                   Connectivity,             networks to                      standards
                           Payment                        Assignment of IP          deliver similar                  terminals,
                           Transactions;                  Addresses,                services to                      products and
                           Focus on security              Authentication            Network                          services
                                                          Management                Operators




       Providers of IT                  Providers of                    Provider of                   Bundling network
       Infrastructure                   Content                         Network                       services and
       (Servers,                        Marketing,                      connectivity                  offering
       Security,                        Animated                        and bandwidth                 wholesale
       Management                       Content and                                                   management
       Applications) and                General                                                       services
       Content Brokers                  Promotions
                                                                     Revenue Sources are
                                                                             changing …

     CONTENT                   PORTAL                 ACCESS               ENABLERS

 APPLICA-                SPECIALISE                                                 DEVICE
             CONTENT &                GENERALIST               NETWORK   DISTRI-
   TIONS                     D                      ISP                            MANUFAC-
             COMMERCE                   PORTAL                  ACCESS   BUTION
& ENABLERS                 PORTAL                                                   TURERS



 0-5%...                 0-5%...                   90-95%...             0%
                         Advertising                                                     CIRCUIT BASED
 Services generated                                Access
                         Tenancy/Links                                                        REVENUE
 by the operator                                   Traffic                                    SOURCES
                         Commission




 10-20%...               30-40%...                 40-60%...             0-5%                       IP
 Services generated      Advertising               Access                margin               REVENUE
 by the operator         Tenancy/Links             Traffic                                    SOURCES
                         Commission



                         15-20%
                                Problem statement – why is charging so
                                                              critical ?

• The charging environment turns the potential value of network capabilities and
business models into real revenues

•To extract this value, it must evolve from a passive ‘collect and rate’ workflow to
an active and intelligent environment, able to
  • Increase profitability, penetration and usage by charging on value rather than
     cost
  • Enhance customer experience and operator control through an increased
     realtime design of processes
  • Place the end-user at the centre of the design in a convergent approach
                     user
  • Interface with a multitude of in-house and external applications simultaneously
                                     house
     in an open,secure and controlled manner
                                                         Perceived value vs cost of transport


Operators must find the right balance between pricing sophistication and
implementation constraints in a given competitive market




                             The Media Co.                          The Telco

     Charge for Value
                                                                            Cover Costs

 e.g.                                                         e.g.
 - You can charge more for the latest track by Britney        - Data traffic across the Network can be
 Spears rather than one that is 6 months old                  charged by the byte
 - You can charge more to watch a replay of a goal in         - Storage can be charged by the byte
 the first 30 mins after it was scored

Pros:       - Increased profits                              Pros:  - Revenue based on costs, low risk
            - Matches with perceived value                          - Simple charging model
Cons:       - Higher risk of not covering costs              Cons: - Lower profits (becomes a
            - More complex charging model                    commodity)
                                                                    - Customer does not understand value
                                               Various Business Models
                                                         for Broadband

• Full model (end-to-end)
• Sales partner model („outsource“ sales
                                   sales)
• Reseller model (outsource sales & customer management)
• Access Carrier model (keep only the access network – MVNO like)
• Consortium model (co-operate with the other carriers)
• Sublicence/frequency selling model (do not use at all the licence, e.g. for
  WIMAX, lease model)
                                               Business and technical Constrains


• DSL established technology
• 3G/HSPA
• Cable
• WIMAX Reduction of the bandwidth with increase of user numbers
• Flat rate dilemma
• Price pressure
• High Investments in white spots within the broadband cartography (fixed
  WIMAX?)
• Substitution effects (e.g. Between mobile WiMAX and UMTS):
  •   Areal-regional advantages
  •   Quality advantages (better bandwidths)
  •   Pricing advantages
• Available equipment
• Standardization
                                                                     Hypercycle for Broadband
                                                                                  technologies




Awareness /
Expectations




                                                      Operational        Productivity   Market maturity
               Trigger    Euphory      Disillusion    experiencies       plateau



               Source: Gartner ; with modifications

								
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