fixed mobile convergence: a retail · pdf filedifferent convergence-related strategies have...

Vietnam Telecoms Summit 2016: building blocks for successful operator strategies

© Analysys Mason Limited 2016

VIETNAM TELECOMS SUMMIT 2016:

BUILDING BLOCKS FOR SUCCESSFUL OPERATOR

STRATEGIES

FIXED–MOBILE CONVERGENCE: A

RETAIL PERSPECTIVE

STEPHEN WILSON

OCTOBER 2016



Different convergence-related strategies have been adopted

across all regions

2

Selected fixed–mobile convergence transactions by region

Region Action Date

Central and Eastern Europe

(CEE)

Telemach buys Tušmobil

Rostelecom and Tele2 Russia

2015

2014

Developed Asia–Pacific (DVAP) KDDI Corporation buys J:COM 2014

Emerging Asia–Pacific (EMAP) Telekom Malaysia buys P1 (Packet One

Networks)

Vodafone buys YOU Broadband

2014

2016

Latin America (LATAM) Digicel builds FTTH 2015

North America (NA) Shaw Communications buys Wind Mobile 2016

Western Europe (WE) BT buys EE

Telenet buys BASE

Vodafone buys Kabel Deutschland

Vodafone-ESB FTTH build in Ireland

ZON and Optimus (NOS)

Vodafone and Ziggo

2015

2015

2013

2014

2013

2016

Fixed player

buys mobile

business

Mobile player

buys or builds

fixed network

Merger or

joint venture

Key



An increasing number of CSPs believe that their future growth

will be stronger if they provide both fixed and mobile services

3

Year-on-year change in mobile service revenue by

region, 2012–2015

Peak mobile revenue

In Europe, there was a sense that

mobile revenue had peaked under

existing business models.

Competition

• CSPs’ need to compete with

integrated players with high fixed–

mobile bundle take-up has led to

fixed–mobile consolidation.

Traffic trends

• Increasing fixed-line traffic has

secured the case for fixed

broadband versus cellular.

Drivers of fixed–mobile convergence



Fixed service revenue has the potential to grow significantly

over the next few years in emerging Asia–Pacific

Total fixed service revenue and fixed broadband retail revenue, emerging Asia–Pacific, 2015–2020



Network-related drivers will act as a further spur towards

convergence

5

Cost and lifespan of operator’s asset layers



Standalone fixed wireless access can successfully compete

against low speed wireline offers

Globe Telecom in the Philippines is an

example of a successful fixed wireless

player in EMAP.

Globe Telecom has grown its fixed

wireless base without significantly

undercutting incumbent PLDT’s prices.

Globe Telecom has the advantages of

owning abundant spectrum in higher

frequency bands and of offering TD-

LTE.

The business case for new fixed

wireless entrants is very challenging.

Net additions to DSL and fixed wireless subscribers,

Globe Telecom and PLDT, 1Q 2015–1Q 2016



Traffic trends will encourage operators to deploy fixed access

infrastructure in the longer term

Fixed wireless players will need to cope

with high levels of traffic. Some EMAP

operators have fixed wireless traffic of

60GB per month in 2016 (compared to

an average of just over 90GB per

month for all broadband connections).

Using LTE for home broadband in areas

with fixed competition will be more

difficult in the long term.

Deploying cellular routers that are also

optical network terminals (ONTs) can

remove the need to deploy two boxes

and can decrease costs.

5G fixed wireless is attracting

increasing interest in Europe and the

USA, but less in EMAP.

Monthly average Internet data traffic per fixed broadband

connection, EMAP and worldwide, 2013–2021



Hybrid LTE and fixed-line access could help differentiate

converged operators

Hybrid LTE and fixed-line access can

differentiate converged operators.

Hybrid LTE and fixed-line packages can

be differentiated from standalone LTE

tariffs, because they can offer

genuinely unlimited data allowances.

Deutsche Telekom launched its hybrid

DSL–LTE packages in Germany in

March 2015 and take-up is growing.

Prices are the same as for non-hybrid

packages, but Deutsche Telekom

charges a monthly rental of EUR9.95

for the hybrid device.

Deutsche Telekom’s hybrid DSL–LTE subscribers,

Germany, 2Q 2015–2Q 2016



A very high percentage of fixed broadband subscriptions are

attached to converged bundles in some markets

9

Proximus’ annualised churn by number of services,

2Q 2016

Fixed–mobile bundle subscribers as a percentage of

total fixed broadband subscribers, end 2015

Source: Analysys Mason



Relatively few converged operators offer fixed–mobile

bundles in emerging markets

10

Mobile network operators (MNOs) in

some emerging markets have rolled

out fibre networks, but do not offer

fixed–mobile bundles.

However, fixed–mobile bundles could

be used to drive postpaid penetration

in emerging markets.

Fixed-line offers both enable MNOs to

risk offering postpaid subscriptions

and allow them to offer handset

subsidies.

Converged operators have payment

history details for existing fixed line

subscribers, and knowing a customer’s

address makes debt recovery easier in

the case of non-payment.

Ratio of fixed broadband household penetration to

postpaid share of mobile subscribers, 2015



Operators have successfully attached additional SIMs to

converged bundles

11

Impact on the mobile market of fixed–mobile convergence offers



KPN in the Netherlands emphasises the benefits of bundling

services beyond discounts in order to encourage convergence

12

KPN Compleet’s benefit structure, 2015



Operators have added a wide range of services to converged

bundles

13

Features (beyond core services) that are added to converged bundles



Key takeaways

14

1Fixed–mobile convergence has been driven by a number of factors.

These include evidence that mobile revenue in many markets has

peaked, as well as network-related trends favouring ownership of

both fixed and mobile assets.

2Fixed and mobile networks could be used together to suit customers’ needs.

Fixed wireless offers could be used to build up a customer base

before making investments in FTTH. Hybrid fixed and mobile access

could be a differentiator compared to standalone fixed broadband.

3Fixed–mobile bundles could be used to drive postpaid mobile penetration.

Selling postpaid mobile subscriptions as part of integrated fixed–

mobile bundles will increase operators’ postpaid share of mobile

subscribers, and thus revenue.



Contact details

15

Cambridge

Tel: +44 (0)1223 460600

[email protected]

Milan

Tel: +39 02 76 31 88 34

[email protected]

Dubai

Tel: +971 (0)4 446 7473

[email protected]

New Delhi

Tel: +91 124 4501860

[email protected]

Dublin

Tel: +353 (0)1 602 4755

[email protected]

Paris

Tel: +33 (0)1 72 71 96 96

[email protected]

London

Tel: +44 (0)20 7395 9000

[email protected]

Singapore

Tel: +65 6493 6038

[email protected]

Madrid

Tel: +34 91 399 5016

[email protected]

Manchester

Tel: +44 (0)161 877 7808

[email protected]

@AnalysysMason linkedin.com/company/analysys-mason youtube.com/AnalysysMason analysysmason.com/RSS

Stephen Wilson

Principal Analyst

[email protected]

Boston

Tel: +1 202 331 3080

[email protected]

Hong Kong

Tel: +852 3669 7090

[email protected]

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