"Rapidly saturating broadband means we are entering a new phase for fixed telecoms," argues lead author and principal analyst Rupert Wood. "The structural problems it faces are only exacerbated by the current economic downturn."
The Analysys Mason report indicates that all three of the main retail lines of business of fixed telcos face problems.
Broadband service revenue is slowing to low single-digit growth, and at the same time as the sector faces the need to invest to differentiate itself from an increasingly mobile Internet, funding will be harder to justify. New services may stabilise the average revenue per line, but this is unlikely to grow.
Legacy voice has been in trouble for years, but the effect of an economic downturn will be to make revenue decline even faster relative to mobile. Unemployment and income squeeze will accelerate households' decisions to give up fixed voice services for good.
Enterprise telecoms revenues will decline as the economic downturn continues, although the report anticipates that, unlike in the main consumer areas, this will pick up again with an economic upturn.
The report forecasts a CAGR of -5.8% for the retail fixed/broadband sector as a whole between 2008 and 2014, compared with -3.3% for 2007-2008. In the traditional voice sector the report forecasts that retail revenue will decline by more than 50% over the period.
"There aren't many bright spots," says Wood. "But having said that, paradoxically, more wireless services mean some very good network and wholesale service opportunities for fixed operators. Ultimately, though, fixed operators need to adapt to their gradually changing role in the converged telecoms value-chain, and focus their growth plans on monetising those non-substitutable areas of their assets: core and metro networks, IT and managed service provision. So as convergence kicks in, we should be hearing less of separate fixed-line operators, and more of integrated fixed-line operations."
The report analyses current trends and market developments in the Western European fixed market, and presents comprehensive forecasts for the region as a whole, as well as individually for Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the UK. It provides detailed forecasts of subscriber numbers, average spend per site and overall spend for the business and residential segments, as well as line data forecasts for seven narrowband and broadband access technologies, broken down by business and residential segments, and volume forecasts for PSTN and VoIP originated traffic.