Home Telecom Spending to Fall

The convergence of fixed line and mobile telecommunication services has offers potentially severe repercussions for the European market

March 30, 2006

2 Min Read

LONDON -- The convergence of fixed line and mobile telecommunication services has this year begun in earnest with potentially severe repercussions for the European Telecom Services market, says the fifth annual research report, ‘Facing Off on Convergence’, from Exane BNP Paribas and Arthur D little.

The 104 page report, developed from 72 interviews with senior operational managers at fixed and mobile operators, equipment manufacturers and Internet services providers in 11 European countries, garnered significant agreementon:

  • further rate cuts on mobile services driven by the imminentarrivalof mobile-WiFi hybrid offers and, ultimately, of future broadband mobile technologies

  • ongoing mobile traffic growth (fixed-mobile substitution)boosted bythese rate cuts. Fixed line revenues – already falling- continue to do so, mobile revenues follow

  • accelerated development of mobile broadband sustaining growth inmobile market, but high level of market sharing with internet services and content providers.

The arrival of hybrid handsets connecting to fixed, mobile and WiFi is driving the blurring and ultimately complete disappearance of traditional borders between fixed and mobile networks. Longer term, new technologies such as F-OFDM and WiMax will compound this situation whilst expanding the market. Antoine Pradayrol, head of the Telecom Operators Team at Exane BNP Paribas commented that, “Many fixed line operators will make the most of these opportunities to enter the mobile market, mainly via voice over IP, but the mobile operators will use 3G to extend their lead, not only on voice, but also on broadband data services. This augurs for a proliferation of offers and therefore stiffer competition in coming years.”

In bottom line terms the report forecasts, during the 2005-2010 period, the average growth in European telecom services to fall 0.8% pa, of which+3.1%pa on mobile and –1.3 pa on fixed line. This corresponds to a significant slowdown in mobile growth that currently stands at +8% pa (2002-2005) and deterioration in fixed line revenues that have remained flat in the same period. Thus, the share of household spending on telecom services will shrink.

Arthur D. Little

BNP Paribas

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like