Fixed broadband: down but not out

Michael Philpott/Ovum
09 Aug 2010

Ovum’s new broadband forecast shows an increase in growth rate for mobile broadband subscriptions – good news certainly for mobile operators. By the end of 2015 mobile broadband will swamp fixed broadband subscriptions by more than 300%. A startling statistic, but not one that should overly concern fixed broadband operators. Fixed broadband is not as susceptible to fixed-to-mobile substitution as fixed voice was, and growth opportunities are still possible in the fixed broadband market.

By 2015 there will be approximately 3.2 billion mobile broadband subscriptions worldwide, a huge figure when compared to the 785 million fixed broadband subscriptions at the same point in time. Although such significant growth cannot fail to impact the fixed broadband market, this should certainly not be seen as a doom scenario. During the next five years the global fixed broadband market will continue to grow by a compound annual growth rate of 7%. By 2015, on a worldwide basis, 36% of homes will have a fixed broadband subscription.

Around 25% of these homes will be served by optical fiber technology and a further 18% by hybrid-fiber coax (HFC). HFC networks are increasingly being upgraded to DOCSIS 3.0 technology, and thus an increasing portion of such customers will also be able to receive advanced, high-bandwidth services into the home. By 2015 most developed countries will see fixed broadband household penetration of over 60%, and the vast majority will not see any decline due to mobile substitution during this time period.

Emerging markets are more susceptible to mobile broadband substitution. However, on the whole this is not existing fixed broadband customers migrating to mobile broadband services, but people who have never had a fixed broadband connection moving straight to mobile broadband. At least from a digital inclusion point of view, this trend should be viewed as a positive, as mobile broadband is enabling more people to get online for the first time.

From a fixed broadband perspective, this does stem potential growth. In emerging markets, fixed broadband household penetration is on average more likely to be below 30% by 2015, compared to being above 60% for the more developed markets. In countries such as India it will be below 10%. However, even for fixed broadband operators such countries still represent good growth potential. Regions such as South and Central America, Eastern Europe, and Middle East and Africa all have a greater CAGR over the next five years than developed markets, which have now largely reached saturation point.

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