Broadband may rescue incumbents from voice decline - IDC
Total Telecom - 06 March 2002
Western European incumbents must transform themselves and grow new revenue streams to offset the continuing decline in voice revenue, a new report from research and consulting company IDC warns.
"As far as traditional voice services and revenues go, the overall trend is certainly downwards," Hamish Mackenzie, senior research analyst at IDC's European telecoms services program, told Total Telecom. "Some markets have already started to shrink - more and more are going to do so."
According to the report, Western European Voice Telephony Services, 2000-2005, voice call tariffs will continue to fall faster than traffic increases. So relying on voice telephony alone will prove a dead-end for European telcos.
"It is beholden particularly on incumbent telcos to start looking for other ways of providing revenues and generating growth," Mackenzie added. The answer lies in broadband, where incumbents already have a head start, and value-added services for corporates.
"There are opportunities still for incumbents to grow and evolve and become successful businesses," he said, if they can cut back their debt and grow beyond mere telephony provision. "They have to accept the fact that they need to change and at a far faster pace. Those which are able to will go on to see better days."
"Broadband is a huge part of it," he added. Regulatory inefficiencies have enabled incumbents to steal a march on the competition in the local loop, and they should aim to capitalize on this lead. However, broadband success requires development into new areas where PTOs are inexperienced and reluctant to venture, such as digital TV and multimedia.
BT's new chairman, Christopher Bland, hinted at a move into broadcast at the beginning of the year, but the investor reaction was negative and Bland was quick to qualify his remarks. In Mackenzie's view, it is "inevitable" that BT will eventually move into broadcast, as this is the only way to challenge the U.K. dominance of the cable operators.
The "triple play" of fast Internet access, digital TV and telephony offered by cable companies is "quite a powerful proposition," he said, particularly for the residential market. Their only handicap is their lack of coverage in comparison with BT.
Mackenzie believes the U.K. incumbent has made great strides - sorting out its debt, spinning off the mobile business, pulling out of overseas ventures and sorting out its customer service problems. There are "real signs they are moving in the right direction," he said. "I am impressed with the way BT is developing and changing."
However, the company has a long way to go before it catches up with its dominant rivals France Telecom and Deutsche Telekom, mainly due to its slow progress in broadband. He praises DT for "the way it has attacked the DSL market and established itself there." Despite allegations of anticompetitive behavior, the German incumbent is in a "very, very strong position."
France Telecom also leads BT in the broadband area and has a strong mobile business through Orange. It also has an investment in cable operator NTL. So from a "variety of services and presence point of view," it leaves BT trailing. |
