Consumer Broadband Revenues Seen Doubling In One Year

LONDON — Consumer broadband service providers more than doubled their revenues during last year, from an annual rate of about $3.3 billion worldwide in early 2004 to be worth $6.9 billion by the end of December 2004.

The figures were revealed in a just released report from Point Topic, the London based market research group that tracks the broadband business worldwide.

"Most value-added services delivered over broadband increased in both users and total revenues. Services such as video over broadband, music and voice over IP (VoIP) all grew strongly" said John Bosnell, senior analyst at Point Topic and lead author of the report on the Consumer BVAS market.

According to the report the number of consumer broadband lines grew about 45 percent to 131 million, while consumer broadband access revenues increased by about 22 percent to $39 billion.

Price cuts by both DSL and cable operators were partly to blame for revenues growing slower than the number of lines.The report suggests that by early 2005, consumer value-added services were adding an extra 18 percent to access revenues compared with only 10 percent a year earlier. For 2004 as a whole, Point Topic estimates that consumer BVAS revenues were about $4.9 billion, while access revenues for the year were about $35 billion.

The main contributions to growth in value terms came from security, IP telephony and home networks. Bosnell notes that IP telephony as a substantial application is especially significant as it is a true application of broadband rather than a supporting tool.

The biggest percentage growth was in Internet voice (which Point Topic defines as a separate application from IP telephony), music downloads and video-over-broadband.

"Video-over-broadband increased subscriber numbers tenfold during 2004. After substantial investments, this is good news for many operators. But it should be noted that the average revenue per user (ARPU) has reduced since the beginning of the year, as many subscribers are relatively new and are using just the entry-level basic TV service" says Bosnell.

While operators have on average reduced broadband service charges, the ARPU for BVAS has increased, from a worldwide average rate of $37 per year at the beginning of 2004 to $52 by the beginning of 2005, a gain of 40 percent.0