Today, Forrester Research, Inc. (NASDAQ: FORR), reports that broadband adoption in Italy more than doubled last year, to reach almost 20% of all Italian households ¿ on a par with the Western European average. With that, Italy¿s days as a broadband laggard are officially over.
In its just published report, ¿Innovation And Investments Boost Italian Broadband,¿ Forrester sets out the key characteristics for the Italian broadband market (and its broadband users) and identifies the drivers for broadband adoption growth in Italy.
Lars Godell, Principal Analyst, Telecom Markets at Forrester Research says: ¿The combination of innovation around access pricing and service bundling, billions in planned broadband investments from Telecom Italia (TI), the regional service provider FASTWEB, and the Italian government are the key drivers of widespread broadband adoption in Italy. The result: 40% of all Italian households will have broadband by the end of the decade. ADSL will continue to dominate the Italian market, with a 94% share in 2010.¿
Key Characteristics Of The Italian Broadband Market
According to Forrester Research, Italy is a special market when it comes to broadband. The main competitive focus has been innovation in access pricing and service bundling, without the price cuts and speed increases seen elsewhere in Europe. Thanks partly to the introduction of popular broadband prepay and pay-as-you-go options, consumer broadband adoption grew 113% in Italy last year, compared with the European average of 60%. Other key characteristics are:
- Loyal consumers. Telecom Italia (TI) is so dominant in the market that few Italians consider switching their ISP. The last time Forrester polled Italian Internet users, only 13% of online Italians were considering switching their ISP in the next six months.
- An overwhelming incumbent. With a 70% retail market share, TI has a firm grip on the broadband market. Alternative ISPs resell only 16% of TI¿s broadband lines; compare this with the UK, where alternative ISPs resell around 40% of BT¿s broadband lines.
- Struggling competition ¿ with one exception. The only service provider that has managed to stay in TI¿s wake is FASTWEB. The No. 2 broadband provider in Italy has managed to secure 12% of the market, even though its network covers just 18% of Italy.
- Slowly declining retail prices. With TI¿s dominance and FASTWEB¿s focus on innovative service bundles, competition has until recently focused less on price reductions and speed increases and more on innovative pricing models like pure prepay, pay-as-you-go, and semi-flat- and flat-rate services.
- Innovative services. FASTWEB, the world pioneer in offering true triple-play services (the bundling of voice, video, and data), now has more than 150,000 video subscribers. But TI has also moved beyond innovative pricing structures and is one of the most aggressive (and successful) incumbents in Europe in fighting fixed-mobile substitution.
The Playful Italian Broadband User
So what characterizes the ¿Italian broadband user¿? Forrester¿s Consumer Technographics European Studies show that Italian broadband users: are predominantly young males; fit the early-adopter profile; are on average 37 years old; have a higher income than non-broadband users; and are entertainment-focused.
Godell explains: ¿Only one in 10 Italian broadband customers bank online, compared with the European average of 36% ¿ Italians love cash and worry about the security risks of online banking. And just as in the rest of Europe, very few Italian broadband consumers have ever paid for online content. What do Italians do with their broadband connection instead? Some 45% regularly download music and 35% go online to find information on their favorite sports.¿
The research mentioned in this release, “Innovation And Investments Boost Italian Broadband“, is available to Forrester WholeView 2¿ clients.