Tiscali 2007 Annual Report Download - page 27

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The broadband market in Europe
The strong broadband market has transformed Internet access
into a mass consumption commodity. A dynamic market fea-
turing growing competition has, in fact, forced the operators
to extend their range of products/services, offering a wider port-
folio of services, featuring numerous Internet access, VoIP
(Voice on IP), and audiovisual content combinations in order
to attract and retain customers.
The increased demand for services and contents leads to a ris-
ing need for band availability for the end customer. Competition
between the various telephone operators leads to the search for
increasingly efficient and economic methods for providing IP
services, also as an alternative to the unbundled DSL services.
Considering the enormous scale of the copper connections (250
million lines alone in Europe5), the research for improving the
DSL performance is ongoing and already today products exist
which guarantee speeds greater than 10 Mbit/s if the end user
is located within 2km of the telephone exchange. In light of the
band requirements for the current services offered and the eco-
nomic convenience of the DSL overhauls (mostly
software
), the
unfurling of alternative technologies on a large scale aimed at
creating new generation network or replacing the copper line with
fibre optic network infrastructures which reach the telephone
exchange or the end user, appear to be far from effectively imple-
mented under the current state of play.
83% of the broadband connections in Europe take place by means
of ADSL technology, the rest via cable. The figure has risen signif-
icantly since 2004, when ADSL technology represented 75% of
Broadband connections6.
It is envisaged7that by the end of 2010,
broadband connections in Europe will reach 66% of households,
corresponding to 86% of those who have
personal computers;
ADSL
will continue to represent the most widely used technology.
Furthermore, following the distribution of multimedia services
and contents (including IPTV), the western European broad-
band market saw the average band per user increase, which
from 2.5 Mbps at the end of 2005 is estimated to exceed 9
Mbps by 20108.
When compared with the Wholesale method and faced with
the higher investments in infrastructures, direct ULL
(unbundling) access makes it possible to increase the oper-
ating profitability, greater flexibility in differentiating its prod-
uct range and to increase the commercial ability of retaining
the customer, an extremely significant factor especially when
said operators offer services which are supplementary to
access, such as voice on Internet protocol (VoIP), or multi-
media contents.
Market developments have also seen the continual erosion of
the market share of the
incumbent operators
, against growth
in
unbundling
services which should rise from the current 15%
to 25% of the
Wholesale
market by the end of 20109.
In Western Europe in the period 2005-2010, rapid growth is
expected in the number of broadband voice connections. They
will increase from 7.2 million in 2005 to 14.7 million in 2006
and almost 50 million in 2010 (IDC forecasts).
The broadband market in Italy and the UK
The incidence of DSL technology in Italy comes to around 96%
of total connections, while in the UK DSL represents approxi-
mately 75% of the connections, followed by around 20% of
the connections via traditional analogical transmission. The
forecast trend in broadband connections within the markets
on which the Tiscali Group operates is presented below.
REPORT ON OPERATIONS
26
WESTERN EUROPE: BROADBAND CONNECTIONS AND PENETRATION OF
VOBB, 2005-2010
SOURCE: IDC, 2006
BROADBAND FIXED TELEPHONY - VOICE
24.0
21.0
18.0
15.0
12.0
9.0
6.0
3.0
0.0
2006 2007A 2008A 2009A 2010A 2011A
21,6
16,9
4,7
21,2
15,6
5,6
20,7
14,4
6,3
19,9
13,1
6,8
19,0
11,8
7,2
18
10,5
7,5
UK - FIXED TELEPHONY MARKET (IN BILLIONS OF USD)
SOURCE: TISCALI PROCESSING
9%
10%
BROADBAND (M) VOBB (M) VOBB PENETRATION (%)
50%
40%
20%
10%
0%
2005 2006 2007 2008 2009 2010
(ml)
120
100
80
60
40
20
0
30%
5. - 6. - 7. - 8. - 9. TISCALI PROCESSING