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Key Themes from Point Topic Tim Johnson point-topic

Key Themes from Point Topic Tim Johnson www.point-topic.com Barriers to Broadband Workshop 1 February 2005. 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

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Key Themes from Point Topic Tim Johnson point-topic

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  1. Key Themes from Point Topic Tim Johnsonwww.point-topic.com Barriers to Broadband Workshop1 February 2005

  2. 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 www.point-topic.com

  3. Broadband stays on course

  4. 136m broadband lines worldwide at 30 September 2004 Million lines Source: Point Topic Q3 2004 www.point-topic.com

  5. Broadband lines worldwide www.point-topic.com

  6. Broadband lines in Western Europe www.point-topic.com

  7. Broadband lines in the UK www.point-topic.com

  8. Broadband penetration levels still vary widely www.point-topic.com

  9. Penetration levels in major countries are converging www.point-topic.com

  10. Share of broadband lines by technology Q3 2004 Source: Point Topic Q3 2004 www.point-topic.com

  11. Share of broadband lines by technology Q2 2004 Source: Point Topic Q1 2004 www.point-topic.com

  12. Broadband is growing faster than mobile did (World) Source: Informa, Ovum, Point Topic, H1 2004 www.point-topic.com

  13. Broadband is growing faster than mobile did (UK) Source: Informa, Ovum, Point Topic, H1 2004 www.point-topic.com

  14. A good year for the UK

  15. Top Ten broadband countries by number of lines: Q204 - Q304 Source: Point Topic Q3 2004 www.point-topic.com

  16. Top Ten broadband countries by penetration Q3 2004 Source: Point Topic Q3 2004, countries with at least 500,000 population www.point-topic.com

  17. Second Ten broadband countries by penetration Q3 2004 Source: Point Topic Q3 2004, countries with at least 500,000 population www.point-topic.com

  18. The UK has been growing faster than Western Europe Source: Point Topic, H1 2004 www.point-topic.com

  19. UK fourth in DSL, but gaining www.point-topic.com

  20. UK third in broadband, and also gaining www.point-topic.com

  21. UK second in broadband penetration; first in 2005? www.point-topic.com

  22. BT has the smallest share of the retail broadband market in the EU Source: ECTA, Point Topic www.point-topic.com

  23. A tale of two telcos: DSL competition in France and UK Source: ECTA www.point-topic.com

  24. Bridging the gaps

  25. 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 www.point-topic.com

  26. 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 www.point-topic.com

  27. UK broadband has been growing fast so far Source: Informa, Ovum, Point Topic, H1 2004 www.point-topic.com

  28. UK broadband could crash into the ceiling soon www.point-topic.com

  29. 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 www.point-topic.com

  30. 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 www.point-topic.com

  31. Workplace-based views show much lower levels of take-up Source: Point Topic estimates www.point-topic.com

  32. Business-quality DSL is growing only slowly Source: Point Topic www.point-topic.com

  33. After years of stagnation, Internet trading is growing Source: DTI International Benchmarking Study 2004 www.point-topic.com

  34. Triple-play trailblazers

  35. ISP Country Value-added offering Bell Canada Canada Security services for residential and business customers Catch Communications Norway Business-focused ISP that aims to make VPNs cheaper and simpler FastWeb Italy Strong video and TV element in a triple-play bundle Free France Voice-over-IP as part of residential triple-play bundles SingTel Singapore Turbo button to boost download speeds Sprint USA Bundled DSL, telephone and mobile offering to retain customers and maintain revenue Trailblazer ISPs www.point-topic.com

  36. 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 www.point-topic.com

  37. How much contribution is broadband video making? www.point-topic.com

  38. 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? www.point-topic.com

  39. Some major VoIP players were well established by mid-2004 Source: Point Topic; figures mid-2004 www.point-topic.com

  40. 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 www.point-topic.com

  41. Technology options

  42. Contents • VDSL and VDSL2 • ADSL2+ • Symmetric DSL www.point-topic.com

  43. 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 www.point-topic.com

  44. 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? www.point-topic.com

  45. 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 www.point-topic.com

  46. 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 www.point-topic.com

  47. 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? www.point-topic.com

  48. 1.2m Symmetric DSL lines worldwide by end-2004 Source: Point Topic www.point-topic.com

  49. 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 www.point-topic.com

  50. Tim Johnson www.point-topic.com tim@point-topic.com+44 (0) 20 7551 9260 www.point-topic.com

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