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June 9, 2006 Incumbents' Triple-Play Profitability CrunchHybrid IPTV/DTT Strategies Are European Incumbent Telcos' Best Hopeby Lars Godell with Andrew Parker, Lizet Menke, Andrea Carini, Michelle de Lussanet, Paul Jackson |
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Executive Summary
Western European consumers are slowly warming up to the idea of broadband triple play. Meanwhile, facing combined competitive pressure and massive vendor hype, several incumbent telcos have launched their own first-generation triple-play services. Forrester thinks all incumbents need to take a deep breath before proceeding further down the IPTV path, as the odds are stacked against telco success with TV services. Telcos should see TV services as purely defensive and forget about any potential revenue and profit uplift. 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 would be financial suicide. On average across Western Europe, we predict a cumulative subscriber loss of €3,742 in year 10, thanks to low revenue growth and massive backhaul costs. The only way to improve the P&L is to bet on a hybrid DTT and IPTV strategy that keeps DSLAMs centralized and copper loops at today's lengths.
TABLE OF CONTENTS
- Europe Warms Up To Broadband Triple Play
- Incumbent Telco Success With Triple Play Would Be Against The Odds
- The Triple-Play Business Case Looks Like Suicide For Operators
RECOMMENDATIONS
- Incumbents Should Bet On Hybrid DTT/IPTV And Centralized DSLAMS
ALTERNATIVE VIEW
- Even With Fantasy Assumptions, The Business Case Remains Bad
- Supplemental Material
- Related Research Documents
Features
Model: Western Europe: Triple Play Generates Losses Of €3,742 Per Subscriber
Model: Western Europe: Low Revenue Growth Undermines The Triple-Play Business Case
Model: Western Europe: Key Triple-Play Cost And Revenue Assumptions
Model: Western Europe: High Backhaul Costs Kill The Triple-Play Business Case
Model: Western Europe: The Cumulative Triple-Play P&L Varies A Lot Across Countries
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