Fibre broadband is helping to drive up revenues for operators. It commands a price premium of around 30% over non-fibre broadband and there is a strong market demand with customers willing to pay this premium. Add in government subsidies and assistance to make sure that high-speed connectivity is available to all and investors lining up to fund network roll-outs, then it’s no real surprise that the words fibre and gold rush are so often used in the same sentence.
For the last couple of years, we’ve seen existing telecom operators and new alternative operators roll out fibre networks. Some of these are strictly wholesale providers, some provide both retail and wholesale, some are only retail and then you’ve also got ISPs who act as resellers to the wholesalers. There are a lot of new players in this market with different business models all hoping to strike gold.
We are now at the stage where, according to the European Commission, 97% of EU households (185M) have access to fixed broadband and 73% of EU households have access to Gigabit (GB) speed networks. Add into this mix the results of a survey* of over 7000 European consumers that showed that 42% of European consumers are considering switching their broadband provider and of this number, nearly 40% of them plan to make this transition within the next 12 months. Of the consumers who don’t have access to fibre broadband most of them (over 60% in Spain, Italy and France) will move to a new operator who will be able to provide GB speed fibre broadband. There doesn’t seem to be a high degree of loyalty in this market.
Speed, it seems, is the main differentiator and one that consumers are willing to pay a premium for and will quickly ditch their existing operator for someone else who can offer a faster network.
But what happens when all operators can offer GB speeds to the vast majority of customers? How are they going to differentiate? We’re already starting to see market consolidation as some of the newer alternative operators decide to pool resources as going it alone wouldn’t make financial sense. Some operators have already started to look at price cuts.
Fibre operators have a tremendous opportunity to grow their business. But they cannot rely on just the availability of high-speed networks as a differentiator. The time is right to change focus from growing their networks to growing their business. This means attracting new customers, keeping them and growing revenues, by widening their portfolios to provide a range of 3rd party offers. These can be anything from mobile services, to digital health, to content, to insurance, and many others. The key is to focus on providing the best experiences possible for customers, build trust and make it easy for them to engage with their broadband provider.
There are many new broadband business models as well as changes in IT and operations that fibre operators can review in order to grow their business. These are discussed in the Qvantel white paper: Building a Gigabit-Speed Business – From a Focus on Growing the Network to a Focus on Growing the Business.
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*source: Oliver Wyman Global Consumer Survey 2023, Telecoms Operators: Mobile and Fixed Connectivity (October 2023)