Belgian Cable Observatory. Brussels, 12 September 2017

Transcription

1 Belgian Cable Observatory Brussels, 12 September 217

2 Agenda Cable observatory Cable opening at a glance Context and status of Belgian broadband market - A well-developed market - Copper unbundling not a major success - Fresh momentum for a rigid broadband market Retail TV and bundled market Situation in retail standalone and bundled TV market - Market dynamics: market evolution and market shares - Consumer prices compared - Service quality compared Wholesale market Wholesale aspects: underlying market observations - Wholesale pricing approaches in Europe - Access prices for cable: - Quality of cable access: Cable KPIs and comparison with BRUO/BROBA

3 Belgium enjoys a well-developed broadband market A European leader in coverage as well as take-up of high-speed broadband NGA coverage (% of HH; FTTH, VDSL, DOCSIS 3.; June 216) Source: European Commission Share of NGA broadband in all broadband lines (% lines, December 216) NGA other 1% 75% 5% 25% % BE NL ES LU UK DE FR IT Source: European Commission, IDATE IDATE DigiWorld 216 p. 3

4 ... but competition is weak Opening of the copper infrastructure Copper unbundling failed in Belgium SOURCE: EC Implementation reports

5 intra-modal competition has run out of steam Competition essentially a duopoly between Proximus and local cable-co Fixed residential BB market shares (% of subscribers) Take-up of telco wholesale products Source: BIPT

6 Opening of cable may provide fresh momentum for rigid broadband market Importance of cable opening To create competition on the bundled offers, entrants need access to the different components of the bundled offers When a component is not easy to replicate, access needs to be imposed Economic literature shows that infrastructure-based competition is stronger and more sustainable than service-based competition Entrant which rely on regulated access need to invest But access is not easy to impose and requires a strong regulatory strategy Access prices Access quality Strong and quick regulator Good data and market monitoring

7 Situation in retail TV and bundle markets

8 Bundling is the name of the game Convergence is progressing rapidly Take-up of multi-play bundles (subscriptions; end 216) 2-play 3- play 4-play Source: IDATE based on BIPT IDATE DigiWorld 216 p. 8

9 TV remains popular especially if bundled with other services 3- and 4-play bundles make up almost 5% of TV market Cable analogue TV switch-off not completed (TV subscriptions) Quad-play 837 Other bundles with TV Standalone TV Internet+TV+fixed telephone Internet+TV Internet+TV+ mobile 261 analogue analogue and digital digital Source: BIPT

10 Market dynamics: new entrant s steady progress shows users appreciate choice Orange Belgium making healthy progress TV subscribers by operator 24 2 * S1 212 S2 212 S1 213 S2 213 S1 214 S2 214 S1 215 S2 215 Q1 216 Q2 216 Q3 216 Q4 216 Q1 217 Q2 217 Orange Telenet Proximus Voo & others *includes SFR subscribers Quarterly TV net adds (s) ,7 26, 27, 18, 14, 15,8 17, 16,4 14,5 17, 3, 5,2 7,1-4,1-13,7-8,4-11,1-21,2 Q1 216 Q2 216 Q3 216 Q4 216 Q1 217 Q2 217 Orange Telenet Proximus Source: Van Dijk, operator reports Voo: not available

11 However, Belgian users do not enjoy most favourable pricing conditions... International benchmarks show prices levels are elevated in Belgium 3-play subscription (EUR PPP/ month) 3-play subscription* (EUR PPP/ month) 7 Median offer (with line rental or cable TV subscription included) 68,19 BE 55,16 55,9 56,9 6 57,19 DE 59,6 53,19 47, FR 36,3 35,27 41, NL 52,98 53,62 54,3 1 UK 49,55 42,81 45,16 EU Source: European Commission, BIAC ** Source: IDATE based on BIPT 215*** 216*** * Weighted avg., incl. VAT; ** 3-6 Mbps, ***3 1 Mbps IDATE DigiWorld 216 p. 11

12 in particular the evolution of bundle prices may give rise to concerns Long-term upward price trend for service packages Evolution of communications price indices fixed telephony mobile telephony Internet access bundles 213 avg. = Source: Statistics Belgium IDATE DigiWorld 216 p. 12

13 No favourable trend for consumer - but competitive offer by cable entrant TV ,2 Retail price of standalone TV offer (EUR/month) 25,9 27, SFR TV Basic Telenet Digitale TV Voo Voocorder Evolution of retail price of standalone TV offer (EUR/month) S2 215 S1 216 S1 217 Q3 217 SFR Telenet Voo 6 Retail price of basic TV + Broadband offer (EUR) 6 Evolution of retail price of basic TV + Broadband offer (EUR) TV + BB , 53,7 47, 55, SFR Box white (5Mbps-15GB) + TV Telenet Basic Internet (5Mbps-15GB) + TV Digitale Voo Toudoo TV + Internet (75 Mbps-2GB) Proximus Pack Internet comfort (1 Mbps-illimité) + Proximus TV 5 4 S1 213 S2 213 S1 214 S2 214 S1 215 S2 215 S1 216 S1 217 Q3 217 SFR Telenet Voo Proximus 1 Retail price of basic TV + Broadband + Mobile (tel&bb) offer (EUR) 75 Evolution of retail price of TV + broadband + mobile offers (EUR/month) TV + BB + mobile 5 64, 71, 68,7 69, 71, Orange Love + Dolphin SFR Box white (5Mbps-15GB) + TV+Silver Telenet Basic Internet (3Mbps-15GB) + TV Digitale + King Voo Toudoo TV + Internet (75 Mbps-2GB) + VOOmobile Wahoo (3 min-2gb) Proximus Pack Internet comfort (1 Mbps-illimité) + Proximus TV S2 215 S1 216 S1 217 Q3 217 Orange SFR Telenet Voo Proximus Source: vandijk, IDATE based on operator web sites IDATE DigiWorld 216 p. 13

14 Quality of Service: no provider progressing on all aspects Some progress on disruptions but no so much on repair times 1% 8% 6% 4% 2% % Frequency of service disruptions on a monthly basis (in %) 8,3% 5,9% 2,8% 2,8% 6,6% 6,2% 5,8% 5,5% 8,9% 7,5% * Average time needed for solving disruptions of the internet service ( in hours, 95% of cases) * Improvements at first-time right, but three out of five players regress in respecting delivery dates 4,5% 4,% 3,5% 3,% 2,5% 2,% 1,5% 1,%,5%,% Complaints about initial functioning of service (% of installations) 4,% 3,9% 1,8% * 2,6% 2,% 2,7% 3,4% 1,8% 1,6% 1,5% 1% 8% Respect of arranged date for delivery of the internet service (% of cases) 99,8% 99,% 97,3% 96,6% 96,1% 95,5% 94,3% 94,4% 93,5% * 9,7% Source: BIPT * part of Telenet group IDATE DigiWorld 216 p. 14

15 Wholesale aspects

16 Setting wholesale tariffs a crucial challenge for NRAs, competitors and markets Cost-orientation is the most widely used approach in practice Several methods to regulate access prices Price cap Benchmarking: difficult to find correct benchmark Retail Minus and Economic Replicability: Complex calculation of minus factor Wholesale tariff dependent on retail price strategy, difficult to come with disruptive offer Difficult to account for promotions Cost orientation Should ensure access and cost orientation when costs are correctly calculated => Retail minus methodology was chosen by the Belgian Regulators Price control method used in 216 Source: BEREC

17 Wholesale prices Cost-orientation seems to offer more attractive conditions for challengers Monthly fees (EUR/access line; BE: bundles) Telenet Nethys (Voo) Proximus BROBA w/o voice Numéricable (FR) Standard -limited Standard - unlimited Boost - unlimited Source: BE: BIPT wholesale price calculator, reference offers

18 Quality of service: line activation Threshold values are not directly comparable, but cable KPIs do not seem more challening than Proximus BROBA and BRUO Line activation (working days) cable BROBA VDSL2 BRUO without visit with visit without visit with visit without visit with visit % 9% 1% 95% 99% 1% 95% 99% 1% Source: reference offers

19 Quality of service: Repair time Repair time (working hours*) cable BRUO/BROBA VDSL , ,5 17 8% 9% 95% 99% w/o splicing with splicing degradation interruption 9% 95% Source: reference offers; * assumption: working day = 8.5hrs

20 Conclusion of this edition it s too early to draw a conclusion! Opening of cable market is still very recent Encouraging start: more subscribers than any alternative operator s TV bundle ever before in the Belgian market But. No tangible impact on retail price evolution Only one single wholesale customer Regulatory framework evolving, impact remains to be seen For the observatory: need of more precise data on the investment in infrastructures, broken down by type of infrastructures

21 Q&A We re happy to take your questions here are ours Are the selected indicators relevant to assess the effects of cable opening? Do our data give the right picture of the market evolution? Could you provide us with more precise data on network investment?

22 Thank you!