Retail telecoms revenue in Western Europe will continue to decrease – by 5% between 2010 and 2015, according to the latest report from global telecoms, media and IT adviser Analysys Mason. However, the report offers some optimism, stating that operators can strengthen their position by focusing on two main growth areas: mobile broadband, and mobile handset content and data services.
“The party is well and truly over; there is no overall growth left in Western European retail telecoms services,” explains Rupert Wood, Principal Analyst at Analysys Mason and co-author of The Western European telecoms market: trends and forecasts 2010–2015.
“Averaged out, end users show no willingness to pay operators more per month. Even if they are prepared to pay more for their total communications experience – and the jury is still out on whether they are – an increasing proportion of that total spend will go to other parties, primarily device vendors, but also ‘over-the-top’ players.”
According to the report, fundamental changes in the cost base of providing telecoms services have brought this about. The widespread adoption of flat-rate pricing models has led consumers to expect that their bills will not rise, and has created a climate in which it is increasingly difficult for operators to derive more value from new services than they lose from legacy ones.
According to report co-author Yanli Suo-Saunders, Senior Analyst and leader of Analysys Mason’s Mobile Broadband research programme, mobile operators should strengthen their position in the two main growth areas: mobile broadband, and mobile handset content and data services.
“Demand for these services will grow as a result of increased service adoption and usage, as content and handset functionality improve. Tiered-pricing structures will enable operators to monetise the higher-end smartphone users while also encouraging entry-level service adoption,” Suo-Sanders explains.
Co-author Wood adds, “The best way to defend fixed retail revenue in the long term is to position broadband at the centre of the consumer proposition. Keeping voice charges artificially high or separate from broadband charges has only a short-term revenue benefit, and encourages abandonment of fixed-line services in the long term.”
The report states that the overriding focus for this decade should be on efficiency: network sharing, risk sharing, consolidation, convergence and outsourcing will be the key principles for operators’ strategies.
Few important new revenue streams have appeared as yet, but customer loyalty and trust, and the use of vastly more customer data, will be at the centre of those that do emerge, says the report.