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  Broadband Business Models 2.0
Beyond Bundling: Growth Strategies for Fixed and Mobile Broadband
Publication Date: January 2008
Broadband Business Models 2.0 examines future business models for what we refer to as ‘Broadband Service Providers’ (‘BSPs’). By this we mean any fixed or mobile operator offering high speed packet data services. This includes - but is not limited to - providing Internet access.
The study is our attempt to chart the next 10 years for fixed and mobile telecoms network operators, as they strive to adapt to new technologies, increased competition, and falling prices. We interviewed industry leaders from the around the world and carried out a major survey of over 800 experts in order to draw quantitative conclusions on the future of the industry, and most importantly, its business model. The answers are both unsettling, and fascinating, touching on the future of core Voice & Messaging revenues, Video Distribution, P2P technologies, the Next Generation Network, E-commerce Value Added Services, and more.
As usual, this Telco 2.0™ report includes extensive case studies from telecoms, the Internet, and some surprising other industries, as well as dozens of analytical charts and interviews.
This study is supported by BT, GSM Association, the Broadband Stakeholder Group, the TeleManagement Forum, and Telecom TV.
This report uniquely answers 3 key questions:
1 - "What are the business models for fixed and mobile broadband voice, video and data access over the next 5-10 years" - how will these revenue streams evolve for telcos and cablecos?
2 - "What are the future wholesale and retail business models" - managing costs and revenues by learning from outside the telecoms industry
3 - "How to rejuvenate broadband growth strategies" – what are the new propositions, channels and partners for telco operators, cablecos, ISPs, NEPs, Device Manufacturers, Investors, and Public Policy bodies.
Background Context
The chart below shows how the telecoms industry today offers two dominant types of distribution systems for content and services:
- Vertically integrated networks, like the Public Switched Telephony Network, its mobile equivalent, Next Generation Network replacements for these, and SMS messaging ("PSTN & SMSC"). Here, a dedicated network integrates connectivity, service and payment.
- Internet access, where connectivity, services and payment are all separate ("Broadband Internet").
Our hypothesis is that in future there will be a wide range of new business and payment models which assemble devices, applications, content and connectivity in new technical and economic ways ("Other"). Wholesale markets will evolve greatly to support this.
This study looks at the impact of this change on the business models of those in the broadband value chain. (You can read more about our thinking behind this research project here.)
Key Questions Answered
This report seeks to help operators and vendors maximise future opportunities from broadband-based services by answering the following questions, in addition to those above:
- What are the key pain points and problems in the current Broadband Service Provider (BSP) business model?
- What are the limitations of reliance on voice and video cross-subsidy?
- What are new potential upstream and downstream revenue models?
- Who puts money into BSPs today, and how does it gets re-allocated?
- Who makes the margins today and why?
- What are the drivers of economic activity inside and outside the network?
- What are the competing fixed and mobile distribution systems and their relationship to services?
- What lessons about wholesale/network business models can we learn from outside of telecoms?
- How long are vertically-integrated service models likely to survive? What are the opportunities for new entrants?
- What are the most successful players doing to combine multiple distribution systems to support the customer experience?
- What are the lessons from dead or dying distribution systems (ATM, ISDN, MMS)
- How much value will flow through new broadband distribution channels?
- How to improve core Voice and Video services?
- Which network ownership models will be most effective?
- What are the economics of QoS, and how to create better alternatives?
- What are the trends in traffic shaping and throttling?
- What is the potential for new wholesale intermediaries to grow beyond providing backbone and interconnect peering for access networks?
- What are the practical issues in taking new business models to market in a highly regulated and politicised industry?
Contents
Introduction
Executive summary
Background to this Telco 2.0 research project
Part 1: The business model
- A framework for business model innovation
- Business model change in the airline industry
- Applying the framework to telecoms business models
Part 2: Broadband service provider industry review
- ISP industry
- Entertainment market
- Voice and messaging
- Business model issues
Part 3: Wholesale and network business models beyond telecoms
- Container shipping
- Automatic teller machines in the UK
- Power and energy distribution
Part 4: Competing distribution systems – theory and practice
- Broadband as a distribution system
- Drivers of vertical integration
Part 5: Emerging and declining distribution systems
- CDNs: A freight service for the digital world
- Vertical distribution systems
- Hybrid distribution system case studies
- Lessons from other delivery systems
- Conclusions
Part 6: Survey results
- Broadband video – is internet video a threat or an opportunity?
- Broadband voice – which companies will prevail?
- The network – what does the internet carry today?
- E-Commerce value-added services
- The wholesale market
- The retail market
- Case studies
- Winners and losers
Part 7: Future broadband revenue models and scenarios
- BSP market sizing
- Wholesale market opportunity
Part 8: Conclusions
- Beyond bundling: the quest for a new business model
- Respondent views
- Recommendations
Appendices
- Research methodology and respondent profile
- Glossary
Pricing and Payment Options
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For information about purchasing and payments, please contact us at contact@telco2.net or call + 44 (0) 20 3239 7530.
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Updated 28 March 2008
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