Fixed line operators in so-called emerging markets can face much tougher market conditions than those in more developed countries, say Jonathan Doran and Michael Philpott, analysts at Ovum. They point out that many operators in developed countries have turned to IPTV and triple-play services to counteract churn, defend traditional market shares and search out new revenues as their traditional markets slowed or declined. But given the tougher market conditions faced in emerging markets, is this still a viable course to take?
“It is often said that what is good for one is good for all, but this is certainly not the case when it comes to IPTV. There are currently only a handful of countries where IPTV could be considered a real success, and in each case there are a number of drivers that have led to that success. As so many factors (such as broadband penetration, status of the pay-TV market, popular culture and even the current political system) all influence IPTV, it is impossible for telecommunications providers in one country to simply copy the IPTV strategy of an operator in another market and hope for the same outcome.
“This is especially true of emerging markets, where the barriers to entry are so much larger. Each country is different, of course, but in many emerging markets the stakes for fixed line operators can also be much higher. They perhaps do not always face the same levels of direct competition, but competition from mobile can be immense, with fixed line penetration in some cases lower than 50%. If fixed line revenues are already in decline, due to increasing fixed-to-mobile substitution (FMS), then it can be tempting to follow developed markets and try to use IPTV and triple-play services to shore up the fixed line business.
“Although triple play can still be a helpful tool in emerging markets, affordability in general is an issue, and so service packages must provide good value to be attractive. This means margins will be low and so operators should look for the most cost-effective option, which for the TV portion of the package may not be IPTV. Partnerships with satellite or DTT platform operators, at least in the short to medium term, may be a better option.”
Recently Ovum has investigated three emerging broadband / IPTV markets in detail: Poland, Romania and Hungary. Reports on these markets will be published soon on the Telecoms Knowledge Center. Ovum will be extending this research to other emerging markets over 2009.
For further information on this report you can email Maria Di Martino at maria.dimartino@ovum.com
