Sunday, April 04, 2004
Broadband Enters Presidential Race With Bush Call for Universal Access
President Bush injected universal broadband into the presidential campaign last week, as on March 26 he said, “We ought to have universal, affordable access to broadband technology by the year 2007. … And then we ought to make sure that as soon as possible thereafter consumers have plenty of choices…” The details of such a plan, as well as the definition of what constitutes universal affordable access, have not been disclosed. If the plan involves greater government support for broadband, that could be a positive for the sector, though it remains to be seen who will benefit. It should be noted that Sen. Kerry has made similar comments and we note that The Wall Street Journal has recently been critical of the Bush administration for, among other things, allegedly not being engaged enough on telecom issues. Campaign rhetoric tends to be fairly vague so it could be that this does not have any great significance. But if the media or others start to press Mr. Bush and Mr. Kerry for specifics, and if that leads to a broadband “bidding war” among the candidates, it should be generally good news for the sector. FCC Chairman Michael Powell hailed the president’s “bold vision” and said he would work to deliver on the promise.
President Bush injected universal broadband into the presidential campaign last week, as on March 26 he said, “We ought to have universal, affordable access to broadband technology by the year 2007. … And then we ought to make sure that as soon as possible thereafter consumers have plenty of choices…” The details of such a plan, as well as the definition of what constitutes universal affordable access, have not been disclosed. If the plan involves greater government support for broadband, that could be a positive for the sector, though it remains to be seen who will benefit. It should be noted that Sen. Kerry has made similar comments and we note that The Wall Street Journal has recently been critical of the Bush administration for, among other things, allegedly not being engaged enough on telecom issues. Campaign rhetoric tends to be fairly vague so it could be that this does not have any great significance. But if the media or others start to press Mr. Bush and Mr. Kerry for specifics, and if that leads to a broadband “bidding war” among the candidates, it should be generally good news for the sector. FCC Chairman Michael Powell hailed the president’s “bold vision” and said he would work to deliver on the promise.
e.Biscom - broadband market in Italy, April 2004
e.Biscom is the biggest broadband competitor to Telecom Italia (market share of around 13%). Wind has approximately 6% and Tiscali 5% of the market. Telecom Italia should be able to maintain leadership in the broadband market, not least due to the fact that e.Biscom is only focused on a limited number of cities (only 14% population coverage at the moment). e.Biscom targets 27% pop coverage in 2006 and 45% by 2010,and is looking for >800k subs in 2006 (from 331k at the end of 2003).
e.Biscom’s business model is different to that of a standard DSL reseller or a company exploiting shared−access ULL in that it has its own fiber−to−the−home network and also uses fully−unbundled lines to offer DSL−based services. Initially, given the lower speeds available over DSL, this was seen as a ’fill−in’ technology, although management now sees it as a viable alternative to fiber services as the company can now achieve up to 6 Mbit/sec over DSL, which effectively allows for an equivalent service offering compared to the 10Mbit/sec over fiber. 48% of e.Biscom’s subscribers now take their services on fiber, 52% on DSL. By taking the fully−unbundled product from Telecom Italia and installing its own DSLAMs in the Telecom Italia exchanges, e.Biscom is able to differentiate its DSL−based broadband offering in terms of speed. Telecom Italia’s ’Alice Mega’ service, for example, provides 1.2 Mbit/sec downstream capacity, compared to up to 6 Mbit/sec available from e.Biscom.
Going forward, management expects that the majority of net adds will be on the DSL service, even though it will continue to build out fiber−to−the− home for residential cusomters within business districts. Nonetheless, the company will remain focused on areas with high population density due to better economics and return on investment. Although offering a range of different packages, the most popular costs EUR85/month and includes unlimited broadband internet, unlimited national landline calls and access to the TV services. Management believes that this ’all−in’ pricing structure makes the company more resilient to the threat of VoIP as there is no explicit cost for the telephony element and unlimited national calls are already included as standard. Furthermore, the bundled cost of a ’triple−play’ package from e.Biscom looks to compare well against a package of unlimited internet and national calls from Telecom Italia, which could cost as much as EUR120 for the 1.2 Mbit/sec DSL option. e.Biscom’s annual ARPU stood at EUR894 in 4Q, showing strong momentum driven by the introduction of premium pay−TV content in 3Q (which e.Biscom can access on a wholesale basis from Sky Italia under a regulatory ruling); video ARPU contributed nearly 10% of the total ARPU (EUR91) in 4Q. This is expected to be a key driver for ARPU growth going forward given that only 110k of e.Biscom’s 280k residential clients currently take a TV service. Having said this, the company is looking for a ’flat’ ARPU profile in the future.
e.Biscom is the biggest broadband competitor to Telecom Italia (market share of around 13%). Wind has approximately 6% and Tiscali 5% of the market. Telecom Italia should be able to maintain leadership in the broadband market, not least due to the fact that e.Biscom is only focused on a limited number of cities (only 14% population coverage at the moment). e.Biscom targets 27% pop coverage in 2006 and 45% by 2010,and is looking for >800k subs in 2006 (from 331k at the end of 2003).
e.Biscom’s business model is different to that of a standard DSL reseller or a company exploiting shared−access ULL in that it has its own fiber−to−the−home network and also uses fully−unbundled lines to offer DSL−based services. Initially, given the lower speeds available over DSL, this was seen as a ’fill−in’ technology, although management now sees it as a viable alternative to fiber services as the company can now achieve up to 6 Mbit/sec over DSL, which effectively allows for an equivalent service offering compared to the 10Mbit/sec over fiber. 48% of e.Biscom’s subscribers now take their services on fiber, 52% on DSL. By taking the fully−unbundled product from Telecom Italia and installing its own DSLAMs in the Telecom Italia exchanges, e.Biscom is able to differentiate its DSL−based broadband offering in terms of speed. Telecom Italia’s ’Alice Mega’ service, for example, provides 1.2 Mbit/sec downstream capacity, compared to up to 6 Mbit/sec available from e.Biscom.
Going forward, management expects that the majority of net adds will be on the DSL service, even though it will continue to build out fiber−to−the− home for residential cusomters within business districts. Nonetheless, the company will remain focused on areas with high population density due to better economics and return on investment. Although offering a range of different packages, the most popular costs EUR85/month and includes unlimited broadband internet, unlimited national landline calls and access to the TV services. Management believes that this ’all−in’ pricing structure makes the company more resilient to the threat of VoIP as there is no explicit cost for the telephony element and unlimited national calls are already included as standard. Furthermore, the bundled cost of a ’triple−play’ package from e.Biscom looks to compare well against a package of unlimited internet and national calls from Telecom Italia, which could cost as much as EUR120 for the 1.2 Mbit/sec DSL option. e.Biscom’s annual ARPU stood at EUR894 in 4Q, showing strong momentum driven by the introduction of premium pay−TV content in 3Q (which e.Biscom can access on a wholesale basis from Sky Italia under a regulatory ruling); video ARPU contributed nearly 10% of the total ARPU (EUR91) in 4Q. This is expected to be a key driver for ARPU growth going forward given that only 110k of e.Biscom’s 280k residential clients currently take a TV service. Having said this, the company is looking for a ’flat’ ARPU profile in the future.
LCD TV pricing
It is to be expected that LCD panel prices will drop significantly starting in Q2’04 and the more so for larger size panels. This bodes well for LCD-TV prices at least from a consumer perspective. Without drastic panel cuts, prices have already dropped substantially in the past couple of months. Check Dell, Gateway and Best Buy’s website for pricing trends, and mid-sized TFT-LCD-TV prices have clearly fallen in the past few months. You can now find a Gateway 30” LCD TV from US$2,500, down US$1,000 from November. For the same price you could also get a 42” PDP and for US$500 more, a 42” DLP TV.
It is to be expected that LCD panel prices will drop significantly starting in Q2’04 and the more so for larger size panels. This bodes well for LCD-TV prices at least from a consumer perspective. Without drastic panel cuts, prices have already dropped substantially in the past couple of months. Check Dell, Gateway and Best Buy’s website for pricing trends, and mid-sized TFT-LCD-TV prices have clearly fallen in the past few months. You can now find a Gateway 30” LCD TV from US$2,500, down US$1,000 from November. For the same price you could also get a 42” PDP and for US$500 more, a 42” DLP TV.
March 2004 Japan figures
VOIP in Japan
Voice over IP continues to make inroads in Japan. Approximately 94% of Softbank (Yahoo! BB) customers have signed up for VoIP service. The company maintains 3.8 million ADSL customers and targets 4.0 million by its fiscal year-end in March and 6.0 million by September 2005
Broadband in Japan - ADSL
Japan recently passed the 10 million mark for total ADSL subscribers, and Japan remains the number one ADSL market in the world. Both NTT and Softbank maintain approximately a 37% share of the market.
Broadband in Japan - Cable
Cable television broadband subscribers have grown less rapidly, currently numbering 2.5 million. However, fibre to the home (FTTH) has become an increasingly large focus, with total subscribers passing the 900,000 mark (75% of which are with NTT). People are estimating NTT FTTH subscribers will reach 1 million by fiscal year 2004 (ending March) and double to 2 million by fiscal year 2005.
ADSL vs FTTH pricing
In terms of price, ADSL continues to be priced at approximately ¥4,000, or US$40 per month across a variety of different customers versus ¥5,000-7,000, or US$50-70 per month for FTTH. Typical DSL speeds are 12 Mbps but users can receive up to 42 Mbps. FTTH speeds are generally 100 Mbps. In terms of content, both KDDI and NTT have been looking at television broadcasting tie-ins with a FTTH service. Softbank subsidiary Yahoo! Cable TV has been trialling video over DSL for more than a year with 1,000-2,000 trial subscribers. The service permits better-than-DVD quality video with just 2 Mbps over DSL. Softbank has been holding off on a commercial launch until sufficient content is in place (number of channels and video on demand library).
VOIP in Japan
Voice over IP continues to make inroads in Japan. Approximately 94% of Softbank (Yahoo! BB) customers have signed up for VoIP service. The company maintains 3.8 million ADSL customers and targets 4.0 million by its fiscal year-end in March and 6.0 million by September 2005
Broadband in Japan - ADSL
Japan recently passed the 10 million mark for total ADSL subscribers, and Japan remains the number one ADSL market in the world. Both NTT and Softbank maintain approximately a 37% share of the market.
Broadband in Japan - Cable
Cable television broadband subscribers have grown less rapidly, currently numbering 2.5 million. However, fibre to the home (FTTH) has become an increasingly large focus, with total subscribers passing the 900,000 mark (75% of which are with NTT). People are estimating NTT FTTH subscribers will reach 1 million by fiscal year 2004 (ending March) and double to 2 million by fiscal year 2005.
ADSL vs FTTH pricing
In terms of price, ADSL continues to be priced at approximately ¥4,000, or US$40 per month across a variety of different customers versus ¥5,000-7,000, or US$50-70 per month for FTTH. Typical DSL speeds are 12 Mbps but users can receive up to 42 Mbps. FTTH speeds are generally 100 Mbps. In terms of content, both KDDI and NTT have been looking at television broadcasting tie-ins with a FTTH service. Softbank subsidiary Yahoo! Cable TV has been trialling video over DSL for more than a year with 1,000-2,000 trial subscribers. The service permits better-than-DVD quality video with just 2 Mbps over DSL. Softbank has been holding off on a commercial launch until sufficient content is in place (number of channels and video on demand library).
AT&T Rolls CallVantage VoIP Service in Two Markets
AT&T has launched the first phase of its residential Voice over Internet Protocol (VoIP) phone service, called AT&T CallVantage(SM) Service, for the residents in northern and central New Jersey and in Dallas, Austin and Houston, Texas. The company's commitment is to expand AT&T CallVantage Service to 100 major markets by year-end 2004. AT&T expects to sign up 1 million business and consumer customers by year-end 2005, representing roughly 3% of its customers today.
AT&T CallVantage Service requires a customer to have a high-speed Internet connection to the home. AT&T CallVantage Service works with most cable modems or DSL broadband connections. Since the adapter can be used from almost any location where there is a telephone and a broadband connection, customers have the ability to take their telephone numbers with them wherever they travel.
AT&T is offering a special introductory rate of $19.99 a month for six months to those who subscribe by May 31, 2004. This promotional rate includes a complete calling solution that provides unlimited local and longdistance domestic calling, including calls to Puerto Rico and the U.S. Virgin Islands, discount rates for international calling, and a suite of advanced features. As a special incentive, the company also offers AT&T CallVantage customers one month of free service (maximum of 12 months) for each referral and sale made through its "Refer-a-Friend" program. AT&T CallVantage costs $39.99 a month after the promotion ends. We note Cablevision charges $34.95 per month for its VoIP offering, while Time
Warner Cable charges $39.95 for its VoIP offering.
AT&T has launched the first phase of its residential Voice over Internet Protocol (VoIP) phone service, called AT&T CallVantage(SM) Service, for the residents in northern and central New Jersey and in Dallas, Austin and Houston, Texas. The company's commitment is to expand AT&T CallVantage Service to 100 major markets by year-end 2004. AT&T expects to sign up 1 million business and consumer customers by year-end 2005, representing roughly 3% of its customers today.
AT&T CallVantage Service requires a customer to have a high-speed Internet connection to the home. AT&T CallVantage Service works with most cable modems or DSL broadband connections. Since the adapter can be used from almost any location where there is a telephone and a broadband connection, customers have the ability to take their telephone numbers with them wherever they travel.
AT&T is offering a special introductory rate of $19.99 a month for six months to those who subscribe by May 31, 2004. This promotional rate includes a complete calling solution that provides unlimited local and longdistance domestic calling, including calls to Puerto Rico and the U.S. Virgin Islands, discount rates for international calling, and a suite of advanced features. As a special incentive, the company also offers AT&T CallVantage customers one month of free service (maximum of 12 months) for each referral and sale made through its "Refer-a-Friend" program. AT&T CallVantage costs $39.99 a month after the promotion ends. We note Cablevision charges $34.95 per month for its VoIP offering, while Time
Warner Cable charges $39.95 for its VoIP offering.
