June 28, 2006

Making Broadband Triple Play Profitable: UK

This is the ninth document in the "Making Broadband Triple Play Profitable" series.

by Lizet Menke , Lars Godell

with Ellen Daley, Andrew Parker, Andrea Carini

Executive Summary (This is a document excerpt)

UK consumers have the highest triple-play adoption in Europe, but those who don't have it show limited interest in broadband triple play — and there aren't many service bundles to choose from. However, the xDSL-based triple-play market will soon see a lot more activity. But that doesn't mean that incumbent telco BT will make money on its triple-play offering. Forrester's new, detailed, bottom-up P&L model looks at the profit potential from 15 main revenue categories across 17 countries and shows that the vendor-recommended technical solution of an extensive fiber deployment would be financial suicide for BT — if BT were to follow this strategy. Limited consumer interest and intense competition seal the poor deal — we predict a cumulative per-subscriber loss of €4,418 in year 10, thanks to low revenue growth and massive backhaul costs. The two key problems are that UK consumers have many other digital TV options and they don't want to pay enough for TV services — thereby limiting revenue growth. What can BT expect if it continues down this path? High investment costs and lots of price and content competition for TV subscribers.

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