August 30, 2006

Making Broadband Triple Play Profitable: Norway

This is the 10th document in the "Making Broadband Triple Play Profitable" series.

by Lars Godell

with Michelle de Lussanet, Lizet Menke

Executive Summary (This is a document excerpt)

Norwegian consumers haven't shown much interest in cable- and xDSL-based triple play so far and they do not want to pay a lot for it. This means that the very dominant incumbent telco Telenor will struggle to make money on xDSL-based triple play, once — and if — it gets over its internal profit cannibalization fears and launches xDSL-based triple play. 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 solution that requires significant deep fiber investments would be financial suicide for Telenor — if Telenor were to follow this strategy. We predict a cumulative per-subscriber loss of €3,690 in year 10, thanks to low revenue growth and massive backhaul costs. In addition to limited price tolerance from Norwegian consumers, xDSL-based triple play is also up against well-financed, high-end FTTH-based competition from utilities, relatively cheap cable TV offerings, and cheap DTT services, thereby limiting revenue growth. What can Telenor expect if it takes this path? High investment costs and lots of price and content competition for TV subscribers.

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