Bad news for fixed line in 2009

Fixed line service providers face a bleak future, as broadband levels in Western Europe reach saturation point, according to research published this week.

Industry analyst Analysys Mason expects that the three main retail lines of business of fixed telcos face problems, which will only be exacerbated by the economic downturn.

Broadband service revenue is slowing to low single-digit growth, at the same time as the sector faces the need to invest to differentiate itself from mobile propositions, making funding harder to justify, the analyst reckons.

Meanwhile, legacy voice, which has been in trouble for years will see revenue decline even faster relative to mobile as the economic crisis tightens its grip. Analysys predicts that unemployment and lower incomes will accelerate households’ decisions to give up fixed voice services for good.

Enterprise telecoms revenues will also decline as the economic downturn continues, although the analyst anticipates that, unlike in the main consumer areas, this will pick up again with an economic upturn.

Rupert Wood, principal analyst, for Analysis, forecasts a CAGR of -5.8 per cent for the retail fixed/broadband sector as a whole between 2008 and 2014, compared with -3.3 per cent for 2007-2008. In the traditional voice sector, retail revenue is expected to decline by more than 50 per cent by 2014.

“There aren’t many bright spots,” said Wood. “But having said that, paradoxically, more wireless services mean some very good network and wholesale service opportunities for fixed operators. Ultimately, though, fixed operators need to adapt to their gradually changing role in the converged telecoms value-chain, and focus their growth plans on monetising those non-substitutable areas of their assets: core and metro networks, IT and managed service provision. So as convergence kicks in, we should be hearing less of separate fixed-line operators, and more of integrated fixed-line operations.”