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FTTx Services and Pricing

  • May 2014
  • -
  • IDATE

The speed race has not yet reached the finish line

Over the past few months, many operators have announced the launch of new offerings with even higher speeds, thanks to their FTTH/B networks. In the space of six months, no fewer than five operators in Europe have launched 1 Gbps offerings! Up until then, 100 Mbps was considered the norm for ultra-fast broadband (UFB), but now there are many offerings with 300, 400 or 500 Mbps speeds. These are not always very visible and are sometimes not even available as part of a bundle (this is the case with Verizon's 500 Mbps offering, which is only available as a stand-alone service). However, this strategy allows telecom operators using FTTH to differentiate themselves better from cable operators whose peak speeds are normally around 150 to 200 Mbps.

Segmentation of services: speeds and TV/video services prioritised

UFB players do not always go for strong segmentation based on available speeds. As a general rule, plans are built around 3 to 4 speeds, but for some, the offering is limited to 1 or 2 speeds, continuing on from the positioning they adopted in the traditional broadband market. As for TV and video services, segmentation is sometimes stronger due to providing customers with themed packages (sports, movies, kids), especially for players from English-speaking countries. Generally speaking, telecom and cable operators from English-speaking countries have a very specific approach because they mainly promote video services and TV channels. Speed is only a secondary selling point. Their offerings are characterised by an increasing number of plans available with the ability to customise bundles (or, for more pragmatic players, to help select a pre-configured bundle). In other regions, the approach seems more pragmatic, with fewer bundles and a more limited choice for end users.

With a lack of innovative services, prices are remaining stable

None of the players studied here offers a particularly innovative service. Most bundle add-ons, such as new set-top box features, cloud-based storage, antivirus, etc., are systematically added to the basic offering. Therefore, operators are unable to differentiate themselves from each other. A very small number of players, such as Altibox in Norway and HKBN in Hong Kong, are exploiting the technical characteristics of FTTH networks to offer genuinely differentiated services with symmetric upload/download speeds. In the short term, it seems very likely that speed (including symmetry, guarantees, faster speeds) will remain the main area to exploit for UFB operators. This should impact prices offered, which have remained relatively stable in each of the major regions over the past year.

Table Of Contents

FTTx Services and Pricing
1. Key findings 5
2. Methodology 6
2.1. General methodology of IDATE's reports 6
2.2. Methodology specific to this report 7
3. Different approaches depending on region 8
3.1. Higher speeds in Asia-Pacific, gradual upgrading in Europe 9
3.2. Bundles becoming increasingly widespread 10
3.3. Pricing differences remain between regions 11
4. The main differentiation criteria of FTTx offerings 12
4.1. Speed is still one of the key selling points for UFB players 12
4.1.1. Range of speeds offered varies from one region to another 12
4.1.2. The specifics of speeds offered differs between operators 15
4.2. Innovative services and bundles: complementary business strategies 16
4.2.1. Video offering segmentation: a major focus for operators in English-speaking countries 16
4.2.2. Bundles are mainly based around video services 19
4.3. Stable prices, but still large discrepancies between regions 23

Tables and Figures

Table 1: Range of UFB speeds, UFB architecture and level of segmentation, in April 2014 13
Table 2: Comparison of broadband/UFB offerings and differentiation between technologies, in April 2014 . 14
Table 3: Change in speeds offered, March-April 2014 / mid-2013 15
Table 4: Symmetric and/or guaranteed speeds, in April 2014 16
Table 5: Triple play contents, in April 2014 20

Figure 1: Geographical variations in FTTx speeds offered 9
Figure 2: Geographical variations in FTTx bundles offered 10
Figure 3: Average monthly price for triple play via FTTx at 100 Mbps, in April 2014 11
Figure 4: Themed packages from BT, Verizon, ATandT and Comcast 17
Figure 5: Virgin Media: 7 questions to help users find the package best suited to their needs 21
Figure 6: Examples of bundle customisation tools 22
Figure 7: Operators' pricing strategy and speeds 23
Figure 8: Pricing strategy and size of TV offering 24

Companies covered in the report

Altibox
ATandT
BT
Claro (America Movil)
Comcast
Etisalat
HKBN
KT
NTT
Orange
Portugal Telecom
Telefonica
Verizon
Virgin Media (Liberty Global Group)
Vodafone

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