Provide good value broadband, analysts tell emerging carriers

Stephen Withers
Thursday, 22 January 2009 10:29

IT Industry - Strategy

Fixed broadband providers in emerging markets should stick to their knitting, according to a telecommunications analyst firm. Following their peers in developed markets and introducing IPTV could be a bad move.

ICT analyst firm Ovum notes that while IPTV and triple-play (voice, Internet, TV) services may help operators in developed markets to reduce churn, defend market share and find new revenue, that doesn't mean it's a sensible strategy in developing markets.

The problem, according to Ovum analysts Jonathan Doran and Michael Philpott, is that affordability is a greater concern in such countries.

That means margins are likely to be low, and IPTV may not be the cheapest way of bundling TV with other services. A deal with a satellite or digital terrestrial operator may be more viable in the short to medium term.

What such operators should do to stave off attacks from mobile services, Doran and Philpott advise, is concentrate more on the basic broadband service.

"There is a lot of evidence to suggest that in many situations a basic, but good value, broadband access proposition can have bigger marketing power than more complicated triple-play services.

"Ovum's research also shows that basic broadband access is a very sticky service, and so driving wireline broadband penetration will not only help drive revenues but will also defend against further FMS [fixed mobile substitution]."

The reasoning is that it makes more sense for a fixed operator to gain economies of scale in its broadband market (the Australian experience seems to be that wireless broadband is very much second-best to fixed line apart from the ease of moving to different premises), and then wait for market conditions to be right to add other services such as TV or video.