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This report covers developments in Europe’s mobile data market, providing key analyses on emerging technologies and the growing consumer use of services.
The countries covered in this report include: Albania, Austria, Belarus, Belgium, Bosnia-Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Kosovo, Latvia, Lithuania, Luxembourg, Macedonia, Malta, Moldova, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, Russia, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Ukraine , United Kingdom.
Europe’s fibre infrastructure gaining pace through investment stimuli
During the last few years Europe has made considerable progress towards building national Next Generation Networks based on fibre infrastructure. The timetable for this exercise differs between countries, but most will have completed the migration from legacy copper networks to an All-IP architecture by 2020.
There are a number of stimuli which have encouraged investments in NGNs. The European Union’s programme that member states provide 30Mb/s broadband to all citizens by 2013, and 50Mb/s services by 2020, has provided the impetus and momentum for regional infrastructure upgrades. It has also given the impetus for the numerous spectrum auctions, in several bands, which are needed to realise the 2020 targets. These auctions may generate up to €20 billion for European governments to 2015.
In addition, all operators have been encouraged to build out networks through encouragement from governments keen to exploit the internet as a vehicle for socio-economic development, while competitive pressure from altnets has pushed some incumbents to invest in their networks at a faster pace than they may otherwise have chosen.
Regulatory aspects will also prove crucial to the sector’s development in coming years. The global economic crash which began in late 2008 and has since morphed into an ongoing regional Eurozone crisis looks set to continue into 2015 at least. The GFC initially encouraged governments to undertake considerable public investments in telecom infrastructure under the guise of stimulus packages. Yet existing constraints on public finances have now placed greater emphasis on the private sector for future infrastructure development. To this end, the onus has shifted to regulators’ abilities to develop measures which encourage investment while providing unhindered and fair access to new fibre networks. As such, much attention has been focussed on issues relating to access (for FttX as well as VDSL networks), RoI and maintaining competition,
An additional pressure on telecoms infrastructure during the next decade will emerge from national requirements to reduce carbon emissions, requiring more intelligent electricity grids managed through upgraded telecom networks: governments are committed to generating at least 20% of electricity from renewable energy sources by 2020. In conjunction with the energy sector, the concept of trans-sector synergies have also come into play, with governments being among the principal beneficiaries by utilising telecoms infrastructure to deliver services. Principally, these include various health, education and transport services, as well as a wide range of socially-inclusive enterprises.
NGNs are also addressing the continuing decline in revenue from traditional fixed telephony and mobile voice services. This decline will continue inexorable as a greater proportion of calls are made through VoIP and mobile VoIP. In addition, revenue basic from SMS services are being affected by online and alternative messaging services fostered by community portals and emerging platforms. Given these pressures, future revenue growth will come from high-end data services which require more capable networks offering higher bandwidth. Most mobile data is sent through fixed-line IP backhaul from the work or home environments, further enforcing the need for network upgrades as operators concentrate on their mobile divisions.
Investments in fibre networks are migrating from FttC to FttH in most markets, though a number of operators, particularly Belgacom and Telekom Deutschland, are exploiting the potential of copper technologies such as VDSL vectoring to deliver sufficient services to meet their governments’ broadband targets. However, these are short-term solutions which are not a substitute FttH, which will require subsequent investment: the timeline among different operators is largely determined by the capex potential based on declining revenue and by concerns for shareholder compliance. These considerations partly explain a slow initial take-up in some markets, though more rapid take-up is expected during the next few years, with the result that the DSL sector, which has already begun to decline in some of the more fibred countries, will wither further as customers are migrated to new FttH networks.
The cable sector, which is expected to be consolidated further in 2013, is likely to hold its own during the next few years as customers begin to be provided with services of up to 200Mb/s or higher. However, some small players are beginning to build FttH networks directly rather than investing in further DOCSIS3.0 upgrades or in the potential of DOCSIS3.1