Monetising VDSL vectoring: an assessment of retail vectoring offers

Transcription

1 Research Viewpoint Monetising VDSL vectoring: an assessment of retail vectoring offers January 15 Stephen Wilson Analysys Mason Limited 14

2 2 About this report This report analyses the nature of operator retail offers including VDSL vectoring-based broadband access (Belgacom, Eircom, KPN, Swisscom, Telekom Austria (A1) and Telekom Deutschland). It examines the following variables: maximum download and upload speeds offered by VDSL vectoring coverage improvements for different bitrates operator pricing strategies following the launch of vectoring operator marketing of VDSL vectoring such as whether any distinction is made in retail offers between vectored VDSL and FTTH. The report also provides recommendations for operators intending to launch vectoring and those seeking to develop the most attractive retail portfolios. This report is based on several sources: Analysys Mason s analysis of operator tariffs and retail portfolios following the launch of vectoring Analysys Mason s examination of how the retail portfolios of those operators that have launched vectoring compare with competitors, notably cable operators. Figure 1: Summary of report coverage [Source: Analysys Mason, 15] Market Companies covered Austria Telekom Austria (A1) UPC Austria Belgium Belgacom Telenet Ireland Eircom UPC Ireland Germany Telekom Deutschland Unitymedia KabelBW 1&1 Internet Telefónica Germany (O2) Vodafone Germany Netherlands KPN Ziggo Switzerland Swisscom UPC Cablecom

3 Maximum upload speed (Mbps) Maximum download speed (Mbps) Monetising vectoring: an assessment of retail vectoring offers 7 Vectoring has allowed operators to make significant increases to downstream and upstream maximum speeds The commercial reality of vectoring launches has lived up to vendor promises in the sense that Eircom, KPN, Swisscom and Telekom Deutschland have all launched vectored VDSL with Mbps download speeds. Maximum downstream bandwidth gains have even stretched to % for both Swisscom and Telekom Deutschland. This is important to customers for psychological reasons because it provides a memorable number. It is also important to politicians for meeting EU Digital Agenda targets, which entail at least 50% of households subscribing to Mbps services by. Of the operators in this report, only A1 and Belgacom are yet to offer Mbps downstream vectoring speeds. The speeds Belgacom markets do not include bandwidth allocated to IPTV services. Belgacom intends to launch Mbps access with vectored VDSL in 15 after introducing dynamic line management for the technology. A1 initially used vectoring for reach improvements but as of September 14 intended to launch a 50Mbps offering in the near future. The picture on upload speeds is more mixed. Eircom has not increased its maximum upload speed following the introduction of vectoring, leaving the figure at Mbps. The situation is very different for Telekom Deutschland, which has quadrupled its maximum marketable upstream speeds with VDSL from 10Mbps to 40Mbps, an impressive gain of 0%. Figure 2: Maximum FTTC-VDSL download speeds before and after introduction of vectoring, selected operators [Source: Analysys Mason, 15] Belgacom Eircom KPN Swisscom Telekom Telekom Austria (A1) Deutschland Before vectoring Figure 3: Maximum FTTC-VDSL upload speeds before and after introduction of vectoring, selected operators [Source: Analysys Mason, 15] After vectoring Belgacom Eircom KPN Swisscom Telekom Telekom Austria (A1) Deutschland Before vectoring 6 After vectoring

4 Switzerland Netherlands Ireland Germany Belgium Austria Monetising vectoring: an assessment of retail vectoring offers 8 Cable operators still hold a significant maximum download speed advantage over incumbent operators using vectoring Vectoring has not allowed incumbent operators to hold a lead in terms of maximum download speed offered in any market covered in this report. Each of the major cable competitors in markets with vectoring are offering maximum download speeds well above Mbps. The slight caveat is that Kabel Deutschland in Germany only launched 0Mbps speeds in November 14 and aims for coverage of 1.8 million homes, only 12% of the total footprint, by March 15. The higher maximum download speeds offered by cable reflect the possibilities of gains with DOCSIS 3.0 through increasing the maximum bonding group size. The advantage of cable does not destroy the argument for vectoring, since incumbents have been able to significantly improve their retail propositions. Part of the argument for vectoring is that maximum speeds will become less important as Mbps offerings, which appear to meet current servicebased usage case scenarios, become the norm. Nevertheless, some form of response to cable s higher speeds, as opposed to not increasing bandwidth at all, is increasingly necessary in some markets. One indication of this is in Germany, where Kabel Deutschland notes that approximately 50% of new customers are taking the company s Mbps offer. Figure 4: Maximum vectoring download speeds versus maximum download speeds from main cable competitor, December 14 [Source: Analysys Mason, 15] Telekom Austria (A1) UPC Austria Belgacom Telenet Telekom Deutschland Kabel Deutschland Eircom UPC Ireland KPN Ziggo Swisscom UPC Cablecom Maximum download speed (Mbps)

5 26 About the author Stephen Wilson (Senior Analyst) contributes research to our Fixed Networks research programme. He joined Analysys Mason as a Senior Analyst in November 12, having previously worked for Informa Telecoms & Media. Stephen has more than 5 years of experience covering the telecoms industry and specialises in analysing fixed broadband access technologies and strategies, as well as developments in European telecoms markets across fixed and mobile sectors. He has produced reports on DSL acceleration technologies as well as regular updates on European markets, notably in Central and Eastern Europe. Stephen is a graduate in Politics, Philosophy and Economics from St Catherine s College, Oxford University.

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