IT MUST BE BOTH EXHILARATING and frightening for Canadian telcos to witness what’s happening in the consumer markets overseas.
Since the North American industry agrees that Europe – especially the U.K. – are a few years ahead of us when it comes to wireless penetration and usage, market conditions there are seen as frightening in terms of what’s happening to the shrinking land line business – and exhilarating because of the growth in wireless and broadband.
Ofcom, the U.K.’s Office of Communications, last week published its annual report on the state of the media and telecom industry (not unlike our own Commission’s reports) and it said that 31% of all call minutes in the U.K. were wireless in 2005 – up from just 20% in 2001.
Those using mobiles exclusively with no tethered line at all are now at 10% of the population there – the same number that say they have only a wired phone.
"Some 31% of consumers surveyed now consider their mobile to be their main telephone, up from 21% in 2004," says the Ofcom release. "For the first time, none of those surveyed said they relied on public payphones for their main means of making and receiving calls, compared to 2% of consumers surveyed in 2004," meaning the phone booth or payphone looks to go the way of the phonograph.
Mobile industry revenues grew by 9.7% year on year to £13.1 billion, while traditional landline revenue fell by 7.5% to £10.1 billion between 2004 and 2005. That’s $27.6 billion and $21.2 billion, respectively, in Canadian dollars.
Competition, not surprisingly, has driven much of the change there. "Consumers are increasingly willing to switch phone companies," says Ofcom. "(N)early 34% of consumers now use a phone company other than (incumbent former monopoly British Telecom) for some or all of their landline services. As of March 2006 6.1 million lines used a carrier pre-selection provider (third party voice) for their calls (up from 4.9 million in March 2005). Of these, 2.9 million were wholesale line rental customers (up from 1 million in March 2005) who no longer have a billing relationship with BT but instead pay an alternative provider for both line rental and calls. Additionally 4.5 million consumers use cable networks for their phone services."
To mitigate their wireline losses, U.K. telcos, like North American telcos, are pushing broadband as well as wireless, and are taking square aim at IPTV – which will be terribly complicated to launch, said Ofcom.
"DSL subscribers, in particular, may suffer in an IPTV world from a capacity bottleneck between the local exchange and the home. Current DSL technology typically allows for data to be delivered downstream at between 512kbit/s (for premises situated over 10km from the exchange) up to as much as 24Mbit/s (for premises with less than 1km or so of copper wire between them and a suitably-equipped exchange). The average connection speed is now around 2Mbit/s, with 8Mbit/s becoming increasingly common. For cable subscribers, 10Mbit/s is becoming a standard connection speed, requiring relatively modest network upgrade, and some analysts estimate that as much as 100Mbit/s could be achievable following the deployment of new network equipment," reads the report.
"Given that standard TV-quality video requires a constant 3Mbit/s per channel, and HDTV requires over 6Mbit/s (using MPEG-4 encryption), it is clear that the constraints of the local loop might prove a barrier to the widespread rollout of IPTV, particularly in HDTV format. However, as DSL technology improves, and as compression technology further reduces the bandwidth requirements of streaming TV, this may become less of an issue in the future. However, a further (and, as yet, lesser-known) issue may have an important impact on the commercial viability of mass-market IPTV. This issue is called contention – a measure of how many users are simultaneously sharing the same bandwidth. Operators are likely to invest in improving contention ratios as and when demand for high-bandwidth streaming services such as IPTV increases."
It all sounds very familiar to those in telecom on this side of the Atlantic.
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