Tiscali 2001 Annual Report Download - page 25

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17
Report on Operating Performance
Western Europe Connections
(in million)
Dial-up is still the most commonly used access method in Europe and around the world,
accounting for about 88% of all Internet connections in Europe. Most users still consider
this system the most convenient, as it offers a satisfactory quality standard at affordable
prices.
The percentage is estimated to stand at 70% in 2005, confirming that the narrow band
access market still has considerable potential.
During 2001 many new dial-up services appeared on the market. These included pre-paid
packages, where users purchase a set number of hours of connectivity at a discounted rate
as well as, unmetered access offers, in which users pay a fixed monthly subscription in
return for unlimited useage.
Pre-paid offers have been successfully launched in France while unlimited access, also
known as FRIACO (Flat Rate Internet Access Call Origination) has been well received in the
UK where ISPs benefit from a fixed cost structure for access to the incumbent-owned local
loop. This cost structure will also soon be introduced in Italy.
Although broadband technologies (in particular XDSL) have created strong interest among
intensive Internet users, they have not become as widespread as expected.
The limited broadband take-up is certainly due almost solely to excessively high
interconnection costs resulting from the fact that, the former incumbents hold a monopoly
on access to the "last mile". This forces alternative providers to operate with reduced profit
margins and high sale prices, which effectively limits market competition.
Europe's national telecommunications regulators have recently taken measures to promote
effective competition in the broadband market and encourage user take-up. It is expected
that the ADSL market will pick up significantly in 2002 and to gain momentum in the
following years. This should bring new and better growth opportunities for independent
providers like Tiscali.
Revenues from portal services (chiefly on-line advertising and e-commerce) were largely
Source: IDC