The Competitive Dynamics of DSL in Western Europe: prospects for local loop unbundling & bitstream

Table of Contents

0. Summary

1. The Western European DSL market is maturing quickly

• 1.1 The Western European regulatory playing-field is not yet level
• 1.2 Take-up of LLUB has grown as prices have fallen
• 1.3 Regulators are acting to remove obstacles to LLUB
• 1.4 Many urban exchanges are now overcrowded

2. Unbundling makes commercial sense foremost alterative service providers

• 2.1 Further up the investment ladder, profit margins can be significantly higher
• 2.2 A number of factors affect which exchanges alternative operators should select for LLUB
• 2.3 Alternative operators from non-ISP backgrounds, such as mobile-only and DTH operators, must also consider LLUB
• 2.4 Shared LLUB will be an intermediate step on the way to full LLUB

3. Incumbents can stem the decline in bitstream access

• 3.1 Incumbents will maintain their market share of retail DSL
• 3.2 A bitstream product will maintain a strong share of the market
• 3.3 Bitstream must be expanded to include more significant service offers
• 3.4 Beyond 201O the removal of bitstream access is in many players' interests

4. Competition in the DSL market will be increasingly infrastructure driven

• 4.1 Western European DSL markets will vary based upon present penetration and broadband technology exposure

5. DSL market dynamics will never be simple

• 5.1 Deutsche Telekom' s VDSL network has raised the question of regulatory definitions
• 5.2 KPN' s cabinet-based strategy could leave alterative operators behind
• 5.3 New regulatory uncertainties about fiber are on the horizon

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List of Figures and Tables

• Figure 0.1: Western European broadband subscribers, 2005-10
• Figure 1.1: The alternative operator investment ladder
• Figure 1.2: Levels of interconnection within the DSL network
• Table 1.1: Western European wholesale access portfolio, October 2006
• Figure 1.3: The Western European DSL market by type of access, 2H 2003-1H 2006
• Figure 1.4: Monthly average total cost per shared unbundled local loop 4Q 2003-2Q
• Table 1.2: Prices for unbundled local loops and bitstream products in Belgium, 2005
• Figure 1.5: Number of active national, residentially focused unbundlers in Western Europe, October 2006
• Figure 2.1: Estimated direct costs and gross margin for different types of DSL access in the UK
• Figure 2.2: Approximate costs of full LLUB in the UK, by subscribers per exchange
• Figure 2.3: Potential LLUB population coverage dynamics
• Figure 2.4: LLUB population coverage, 2005-1O
• Figure 2.5: Full LLUB as a proportion of total LLUB in selected Western European countries 2005-10
• Figure 3.1: Incumbents' shares of retail DSL lines in Western Europe, 2005-1O
• Figure 3.2: Incumbents' market shares of retail DSL access revenues 2005-1O
• Figure 3.3: Proportion of wholesale connections supplied to third parties
• Figure 4.1: Revenue from broadband access in Western Europe, by access type, 2005-10
• Figure 4.2: Western European broadband subscribers, 2005-1O
• Figure 4.3: Change in key market metrics in France, 2Q 20064Q 201O
• Table 4.1: Key market metrics in France.201O
• Figure 4.2: Western European broadband subscribers, 2005-1O
• Figure 4.3: Change in key market metrics in France, 2Q 2006-4Q 201O
• Table 4.1: Key market metrics in France, 201O
• Figure 4.4: Change in key market metrics in Germany, 2Q 2006-4Q 201O
• Table 4.2: Key market metrics in Germany, 201O
• Figure 4.5: Change in key market metrics in Italy, 2Q 2006-4Q 201O
• Table 4.3: Key market metrics in Italy, 201O
• Figure 4.6: Change in key market metrics in Spain, 2Q 2006 - 4Q 201O
• Table 4.4: Key market metrics in Spain, 201O
• Figure 4.7: Change in key market metrics in the Netherlands, 2Q 2006-4Q 20
• Table 4.5: Key market metrics in the Netherlands, 201O
• Figure 4.8: Change in key market metrics in the UK, 2Q 2006-4Q 201O
• Table 4.6: Key market metrics in the UK, 201O
• Figure 5.1: Net work topologies for DSL deployment