fixed mobile convergence: a retail perspective · fixed–mobile convergence: a retail perspective...

Thailand Telecoms Summit 2016: building blocks for successful operator strategies

© Analysys Mason Limited 2016

THAILAND TELECOMS SUMMIT 2016:

BUILDING BLOCKS FOR SUCCESSFUL OPERATOR

STRATEGIES

FIXED–MOBILE CONVERGENCE: A

RETAIL PERSPECTIVE

STEPHEN WILSON

OCTOBER 2016



Different convergence-related strategies have been adopted

across all regions

2

Selected fixed–mobile convergence transactions by region

Region Action Date

Central and Eastern Europe

(CEE)

Telemach buys Tušmobil

Rostelecom and Tele2 Russia

2015

2014

Developed Asia–Pacific (DVAP) KDDI Corporation buys J:COM 2014

Emerging Asia–Pacific (EMAP) Telekom Malaysia buys P1 (Packet One

Networks)

Vodafone buys YOU Broadband

2014

2016

Latin America (LATAM) Digicel builds FTTH 2015

North America (NA) Shaw Communications buys Wind Mobile 2016

Western Europe (WE) BT buys EE

Telenet buys BASE

Vodafone buys Kabel Deutschland

Vodafone-ESB FTTH build in Ireland

ZON and Optimus (NOS)

Vodafone and Ziggo

2015

2015

2013

2014

2013

2016

Fixed player

buys mobile

business

Mobile player

buys or builds

fixed network

Merger or

joint venture

Key



An increasing number of CSPs believe that their future growth

will be stronger if they provide both fixed and mobile services

3

Year-on-year change in mobile service revenue by

region, 2012–2015

Peak mobile revenue

In Europe, there was a sense that

mobile revenue had peaked under

existing business models.

Competition

• CSPs’ need to compete with

integrated players with high fixed–

mobile bundle take-up has led to

fixed–mobile consolidation.

Traffic trends

• Increasing fixed-line traffic has

secured the case for fixed

broadband versus cellular.

Drivers of fixed–mobile convergence



Fixed service revenue has the potential to grow significantly

over the next few years in emerging Asia–Pacific

Total fixed service revenue and fixed broadband retail revenue, emerging Asia–Pacific, 2015–2020



Network-related drivers will act as a further spur towards

convergence

5

Cost and lifespan of operator’s asset layers



Operators have various options for aggregating LTE and Wi-Fi

and boosting Wi-Fi hotspot peak speeds and capacity

6

Operators can boost the appeal of Wi-

Fi hotspots by providing higher speeds

and capacity through LTE/Wi-Fi

aggregation.

LWA has been standardised in 3GPP

release 13 and Korean mobile network

operators (MNOs) have used MP-TCP

based systems.

Korea Telecom brands its LTE/Wi-Fi

aggregation service as GiGA LTE.

GiGA LTE is only free to those

subscribing to more expensive LTE

packages with larger data quotas.

Customers must physically activate the

service on their device. An icon on the

phone then shows that the service is

active.

Korea Telecom GiGA LTE maximum theoretical

download speeds by technology



Korean LTE/Wi-Fi aggregation rollouts have coincided with

an improvement in public Wi-Fi data traffic growth rates

7

The downward trend in Korean public

Wi-Fi data traffic growth reversed in 2Q

2015. This coincided with the launch

of LTE/Wi-Fi aggregation by all three

Korean MNOs in June 2015.

The growth rate also increased

significantly year-on-year in May 2015,

before these services were officially

launched.

Initial interest in LTE/Wi-Fi aggregation

appears to have been strong in Korea.

600 000 subscribers were using KT’s

GiGA LTE service by October 2015,

which is equivalent to 5% of the

operator’s total LTE subscriber base.

Korean public Wi-Fi data traffic year-on-year growth

rates, 1Q 2014–2Q 2016



Hybrid LTE and fixed-line access could help differentiate

converged operators

Hybrid LTE and fixed-line access can

differentiate converged operators.

Hybrid LTE and fixed-line packages can

be differentiated from standalone LTE

tariffs, because they can offer

genuinely unlimited data allowances.

Deutsche Telekom launched its hybrid

DSL–LTE packages in Germany in

March 2015 and take-up is growing.

Prices are the same as for non-hybrid

packages, but Deutsche Telekom

charges a monthly rental of EUR9.95

for the hybrid device.

Deutsche Telekom’s hybrid DSL–LTE subscribers,

Germany, 2Q 2015–2Q 2016



Standalone fixed wireless access can compete with low

speed wireline and can serve as a precursor to fibre rollout

Globe Telecom in the Philippines is an

example of a successful fixed wireless

player in EMAP. It enjoys advantages

that other EMAP MNOs may not

possess.

Globe Telecom has grown its fixed

wireless base without significantly

undercutting incumbent PLDT’s prices.

Using LTE for home broadband in areas

with fixed competition will be more

difficult with strong growth in fixed-line

data traffic.

Deploying cellular routers that are also

optical network terminals (ONTs) can

remove the need to deploy two boxes

and can decrease costs.

Globe Telecom and PLDT Philippines, fixed wireless

subscribers and wireline subscriber net additions, 1Q

2015–1Q 2016



A very high percentage of fixed broadband subscriptions are

attached to converged bundles in some markets

10

Proximus’ annualised churn by number of services,

2Q 2016

Fixed–mobile bundle subscribers as a percentage of

total fixed broadband subscribers, end 2015



Operators have successfully attached additional SIMs to

converged bundles

11

Impact on the mobile market of fixed–mobile convergence offers



KPN in the Netherlands emphasises the benefits of bundling

services beyond discounts in order to encourage convergence

12

KPN Compleet’s benefit structure, 2015



Operators have added a wide range of services to converged

bundles

13

Features (beyond core services) that are added to converged bundles



Operators may raise prices and will aim to boost mobile data

consumption in order to increase ARPU for converged bundles

14

ARPU and quarterly churn for Movistar Fusion bundles,

1Q 2014–4Q 2015

Boost mobile data consumption

This strategy can be supported by

offering pay TV in converged

bundles, and by including a multi-

screen component in the service.

Increase prices

Evidence from Movistar suggests

that raising prices can be

successful.

Implementing price rises alongside

an improvement in service features

appears to be a sensible strategy.

Ways to grow converged bundle ARPU Strategies for increasing

converged bundle ARPU



Key takeaways

15

1Fixed–mobile convergence has been driven by a number of factors.

These include evidence that mobile revenue in many markets has

peaked, as well as network-related trends favouring ownership of

both fixed and mobile assets.

2Fixed and mobile networks could be used together to suit customers’ needs.

Fixed wireless offers could be used to build up a customer base

before making investments in FTTH. Hybrid fixed and mobile access

could be a differentiator compared to standalone fixed broadband.

3Fixed–mobile bundles could be used to drive postpaid mobile penetration.

Selling postpaid mobile subscriptions as part of integrated fixed–

mobile bundles will increase operators’ postpaid share of mobile

subscribers, and thus revenue.



Contact details

16

Cambridge

Tel: +44 (0)1223 460600

[email protected]

Milan

Tel: +39 02 76 31 88 34

[email protected]

Dubai

Tel: +971 (0)4 446 7473

[email protected]

New Delhi

Tel: +91 124 4501860

[email protected]

Dublin

Tel: +353 (0)1 602 4755

[email protected]

Paris

Tel: +33 (0)1 72 71 96 96

[email protected]

London

Tel: +44 (0)20 7395 9000

[email protected]

Singapore

Tel: +65 6493 6038

[email protected]

Madrid

Tel: +34 91 399 5016

[email protected]

Manchester

Tel: +44 (0)161 877 7808

[email protected]

@AnalysysMason linkedin.com/company/analysys-mason youtube.com/AnalysysMason analysysmason.com/RSS

Stephen Wilson

Principal Analyst

[email protected]

Boston

Tel: +1 202 331 3080

[email protected]

Hong Kong

Tel: +852 3669 7090

[email protected]

fixed mobile convergence: a retail perspective · fixed–mobile convergence: a retail perspective...

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