A new report from Arthur D. Little (ADL) consulting firm predicts that the global broadband market is set to more t...
November 13, 2003
A new report from Arthur D. Little (ADL) consulting firm predicts that the global broadband market is set to more than double in size from US$30 billion to US$80 billion within the next five years, with a compound annual growth rate (CAGR) of 22 per cent.
According to the report, there are currently 57 million broadband subscriptions worldwide.
North America remains the biggest broadband market, amounting to 45 per cent of revenues, followed by Europe and Asia with 20 per cent each. While the growth rate for broadband varies from region to region, this market has still managed to outperform the global telecommunications industry by a factor of12 during the period from 2000 to 2003.
Today, the Average Revenue Per User (ARPU) in broadband is based largely on access fees for a basic service. In 2003, access fees are expected to account for about 85 per cent of total revenues earned from broadband users.
The reliance on access revenues presents a number of significant challenges for operators, says Nick George, the firm’s head of media.
"A reduction in the price of bandwidth is anticipated in virtually all markets between 2003 and 2008. Declining access prices combined with increasing penetration make it difficult for operators to recoup the cost of customer acquisition, especially since consumers continue to display a demand for higher bandwidth applications like video, games and music file-sharing. These require operators to continue to invest in upgrading their networks to maintain reasonable service levels."
George warns that non-telco aligned ISPs could be the big broadband losers unless they adopt a more pre-emptive stance.
"At present, non-telco aligned ISPs have struggled to capture customers in sufficient volumes. To survive in the future, they need to push national and international regulators strongly for broader or cheaper wholesale access.
"They must develop smart pricing strategies and exploit new revenue sources, in particular variable pricing or quality of service premiums. Other opportunities are bundling services such as IP telephony, home networking and security services."