The number of households with broadband access in Germany increased more than five-fold between 2001 and 2005, from almost 2 million to over 10 million, which represents around 30 % of all households. The most widespread form of access is DSL, which accounts for 97 % of connections. However, the market for broadband communication is still a long way away from being truly competitive. It would therefore be wise to promote both intermodal competition between the various forms of broadband technology, and competition on the market for DSL access (intramodal competition), thus enabling Germany to catch up with other countries in terms of broadband coverage.
Sectors: TRIPLE PLAY - Telecommunications new ploy
This is a fundamental precondition to facilitating the spread of Voice over Internet Protocol (VoIP). The increasing acceptance of VoIP will have a considerable impact on the development of innovative infrastructures and services, and will lead to radical changes in the telecommunications market. The main advantage of IP telephony is the huge increase in productivity for voice connections. It may therefore be expected that cost pressures will force most network operators to switch to IP technology over the next few years. Unbundling DSL and telephone connections will significantly boost VoIP market opportunities.
Converting network infrastructures to IP technology also allows customers to watch television via the internet (IPTV), which in turn enables the Triple Play business model for bundling voice and internet services along with television and video services over a single connection, although this requires considerable bandwidths with a high quality of service right down to the end customer. TV cable networks, traditional telephone networks and mobile communications networks all represent viable platforms for Triple Play. If they can offer appropriately up-to-date infrastructure - a process requiring billions of euros in investments - cable network operators and DSL providers in particular will become direct competitors in the battle for Triple Play customers. This competition is, however, unlikely to be particularly intense for the time being. In the medium to long term, established telecommunications groups will see their sales and earnings figures being increasingly affected by successful Triple Play marketing strategies.After all, the pressure on traditional fixed-line telephony is increasing - due in part to the cheaper VoIP offers, and also to competition from mobile communications.
Although the mobile communications market is still witnessing a clear growth trend, the sector will have to prepare for harder times in the next few years, for two reasons in particular: Firstly because prices for mobile communications services are facing increasing pressure from low-cost providers, and secondly because mobile communications companies are seeing dramatic declines in their profit margins due to the reduction of the fees payable by fixed-line providers for fixed-to-mobile calls, but also as a result of pressure from the European Commission to lower international roaming charges for consumers.
Faced with this predicament, the mobile communications sector is searching for new sources of revenue. Technical innovations are one option that are being considered in this respect. Whilst the mobile communications industry has concentrated predominantly on voice communication over the past few years, increasing attention is now being paid to the transmission of information in the form of text, images and multimedia. The bundling of mobile communications and television is also offering new prospects. On the basis of market research and experiences in other countries, we believe that a monthly surcharge of around EUR10 would be acceptable for television via cell phones. In addition to using supplementary services to increase revenues, mobile communications companies are also pinning their hopes on mobile communications replacing fixed lines. According to estimates, the proportion of all telephone calls attributable to mobile communications in Germany is set to more than double by the end of the decade, from the current 16 % to between 40 % and 50 %.
In an attempt to buck this trend, fixed-line operators are coming up with solutions to combine mobile and fixed-line communications. The aim of this fixed-mobile convergence (FMC) is to offer person-specific telecommunications services independent of network infrastructure. The integration and replacement of existing public telecommunications networks (fixed-line, mobile and data networks) using IP technology will play a key role in this process. This concept, known as next-generation network (NGN), will allow voice, data and multimedia services to be transmitted over a single network, thus rendering the current practice of separate networks redundant. This would open up substantial potential for network operators to cut costs.
Users would, above all, benefit from the increased application possibilities and convenience offered by NGN.
The convergence of different technologies, communication channels and media is prompting adjustments all along the telecommunications sector value chain, which will, ultimately, lead to a sea change on the market. Over the next few years, the structure of value creation, which at present is predominantly vertical and network-oriented, will gradually be superseded by a horizontally integrated architecture. The various stages of value creation will be isolated and services will no longer be provided via individual network-access technologies, but will instead be based on an integrated access platform. Competition on the telecommunications services market will thus heat up, as the barriers to market entry for alternative providers are lowered. The structure of value creation will also change as this convergence progresses. The value added by network activities will decline and the network operators' services will account for a much greater proportion of end-customer sales. The structural changes in the value chain will also cause the telecommunications market to become more fragmented. This will boost customer power, which means that content and customer benefit will take priority over technology.
In the long term, the trend towards convergence will also mean increasing assimilation between telecommunications and IT, the media, and consumer electronics (market convergence). In principle, this trend will lead to a new definition of electronic services and applications. It will in future be necessary to regard them increasingly as combinations of content production (music, film, and publishing), content processing (online, internet, and media services), content distribution (telecommunications), and content presentation (end device industry). This is why an increasing number of strategic partnerships between telecommunications and media companies, as well as with financial services providers, can be expected in the future. Consolidation within the telecommunications sector itself will also be sustained, because this is, ultimately, essential if economies of scale in the use and enhancement of the network infrastructure are to be achieved and standards set.