The next billion: markets and technologies that will drive broadband in the next decade

Point Topic produced global fixed broadband take-up forecasts by technology covering projections for DSL, fibre, cable and other technologies

The current trends of fibre boom and of developing markets offering the highest broadband growth potential are confirmed by forecasts of broadband take-up in the next few years.

The current trends of fibre boom and of developing markets offering the highest broadband growth potential are confirmed by forecasts of broadband take-up in the next few years. Last month, Point Topic produced global fixed broadband take-up forecasts by technology for the first time. They cover projections of broadband take-up by DSL, FTTH/P/B, FTTC/VDSL, Cable and other technologies (mostly WiMAX, other wireless and satellite) for the period between Q3 2018 and Q4 2025.

The forecasts, which include data for the top 30 fixed broadband markets[1] and the Rest of the World (ROW), are based on Point Topic’s extensive historical data on fixed broadband take up, the trends in subscriber churn for various broadband technologies, the size of the addressable market at country level, and current and planned network upgrades.

Our forecasts predict that at the end of 2025 there will be 1.2 billion fixed broadband subscribers worldwide. Some 89 per cent of them will be in the top 30 broadband markets, ranked as such by the subscriber numbers recorded in Q2 2018.

Figure 1. Global fixed broadband subscriber forecast to 2025. Source – Point Topic

Between 2018 and 2025, fixed broadband take-up in the top 30 markets will grow by 22%. Global take-up, including rest of the world (ROW), is expected to grow by 24%.

In the same period, fibre-based connections (FTTH/P/B) are expected to grow by 51% and FTTC/VDSL to go up by 28%, while copper-based connections (ADSL) are forecast to drop by 39%.

Figure 2. Forecast of global churn in fixed broadband take-up by technology. Source: Point Topic.

We predict that by end-2025 some variant of fibre (FTTH/P/B) will be used by 59% of fixed broadband subscribers globally, compared to 48% currently. In the same period, the share of DSL (ADSL) based subscriptions will drop from 19% to 9%, while the shares of cable and FTTC/VDSL based connections will remain largely stable at 19% and 12% respectively, despite the increase in their actual take-up figures.

Figure 3. Change in broadband technology market shares between 2008 and 2025. Source – Point Topic.

It looks like direct fibre networks will attract the majority of new customers, both in developed and developing economies. We forecast ADSL figures to drop to hundreds or tens of thousands in most technologically advanced markets.

Figure 4. Top countries by growth rate in fibre (FTTH/P/B) take up between 2018 and 2025. Source – Point Topic

Figure 5. Bottom countries by churn in ADSL connections between 2018 and 2025. Source – Point Topic

Comparing the largest 30 broadband markets with ROW, the growth potential in smaller markets is even higher for almost all technologies.

Figure 6. Growth in broadband take up by technology across various markets between 2018 and 2025. Source – Point Topic

In terms of overall fixed broadband take-up, the developing economies will see the highest growth between 2018 and 2025.

Figure 7. Top countries by growth rate in fixed broadband take up between 2018 and 2025. Source – Point Topic.

Over the same period, well developed and saturated broadband markets will see sluggish growth if at all.

Figure 8. Bottom countries by growth rate in fixed broadband take up between 2018 and 2025. Source – Point Topic

The slowdown in growth and, in some markets, possible decline in fixed broadband subscribers will be impacted by the launch of superfast 5G services, which are already being trialled around the globe. We predict that the impact will be especially noticeable in more saturated fixed broadband markets where better off and more experienced broadband consumers are more likely to adopt new exciting technologies such as 5G. Having said that, one cannot discount 5G impact in countries like China where 4G penetration is already almost 3 times higher than that of fixed broadband.

Valuing a broadband market – headroom with tier pricing

Given current fixed broadband take up figures, which markets are most attractive in terms of the extra revenue potential? Point Topic has developed a model to assess this country by country. It is based on our Global broadband Statistics service in combination with Broadband Operators and Tariffs data as well as other demographic inputs.

The model assumes a split of broadband subscribers by tiers of tariffs they subscribe to (monthly subscriptions). The calculations are using Point Topic’s tariff and subscriber data as of Q3 2018. All tariffs used in this model are at USD$ PPP rates.

 

 

We assume that 10% of residential broadband subscribers take the most expensive services, 20% take the mid-price ones and 70% go for the lowest monthly subscriptions.

Assuming this tariff tier split, we can see that United States fixed broadband market revenue is currently about $10 billion (PPP) compared to UK’s $5 billion (PPP). However, the UK’s revenue potential (‘money still on the table’) is higher than that of the US ($413 million (PPP) versus $379 million (PPP)). Partly this could be explained by the fact that 96% of all US households covered by fixed broadband networks already signed up to broadband plans, while this figure in the UK is 92% (Q3 2018 data).

Figure 9. Current and potential fixed broadband subscriber revenue in the US and the UK (Q3 2018). Source – Point Topic.

On the other hand, revenue potential in the US is almost four times larger than in Canada, despite the fact that there are more households in Canada that are not subscribing to the fixed broadband service even though it is available to them.

Figure 10. Current and potential fixed broadband subscriber revenue in the US and Canada (Q3 2018). Source – Point Topic.

The US has higher revenue potential in absolute terms, partly due to the sheer size of the market. Also, broadband providers in the US are charging higher top tier tariffs than in Canada.

If we look at the fixed broadband revenue headroom as a proportion of the total possible revenue in selected markets, the picture is mixed with no clear-cut differences between developed and developing economies. (Having said that, Indonesia and Thailand are still at the top of the table.)

Figure 11. Fixed broadband revenue headroom as % of total addressable market, Q3 2018. Source – Point Topic

As mentioned earlier, what proportion of total revenue is still up for grabs in various markets depends both on pricing and on broadband penetration among households covered by broadband infrastructure. This is the current picture, however. The less saturated markets are still expanding broadband coverage, and they will have a lot more room for growing take up compared to the established markets in the developed economies.

On the other hand, providers in the mature fixed broadband markets are upgrading their broadband networks to more advanced superfast technologies (for example, gigabit capable networks). They will be able to charge premium prices for upgrading to higher speed services, thus mostly increasing their revenue potential through pricing rather than new customer figures. Having said that, 5G launch will inevitably take a bite out of fixed broadband revenues everywhere. Exciting times ahead.

Figure 12. 5G rollout status as of January 2019. Source – Point Topic. Access the interactive map here

Get access to full data

The data used in this report is available as part of Point Topic’s Global Broadband Statistics and Broadband Operators & Tariffs services. These services are also part of our Double Play and Triple Play bundles that deliver better value for money. Please phone +44 (0)20 3301 3303 or e-mail simona@point-topic.com for more details.


[1] The top 30 markets are: Argentina, Australia, Belgium, Brazil, Canada, China, Colombia, Egypt, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Netherlands, Romania, Russian Federation, South Africa, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, United Kingdom, United States, Vietnam
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