BuddeBlog

KPN is one of the few incumbents to pursue FttH, though the decision to go full-steam for FttH rather than the cheaper solution of upgrading its copper network (FttC with VDSL2 in the last mile) took some time. The company initially considered that VDSL could compete effectively with DOCSIS3.0, and its latest data release shows that it still believes that copper at least in the medium term is still sufficient for most customers.

Nevertheless, at the end of 2009 the company announced that FttH was indubitably the superior technology, and that it would invest some €1.3 billion to expand the number of FttH-connected homes, essentially concentrating on FttH instead of expanding FttC. Despite this appropriate emphasis on FttH, the company is still struggling to convince most customers to sign up.

This is partly due to poor marketing, but also – and ironically – due to the success of its VDSL roll-out. VDSL serves the last mile, and large-scale roll-outs began in earnest from January 2008. The VDSL network is capable of providing up to 30Mb/s, and delivers IPTV to 80% of households and HDTV to 70%. The company plans to expand the VDSL footprint to ‘outer suburbs’ (completing this job by the end of 2011) and so increase IPTV coverage to 88% of households, but otherwise there will be no further roll-out of FttC.

In poorly marketing FttH, KPN targeted what it refers to as ‘sub-optima’ customers in its roll-out areas, or a demographic less interested in services delivered or less able to afford them. The pricing for bundled packages was also set too high, which has dissuaded many consumers from switching from their existing DSL service (considered by many to be acceptable for their needs). In reality, only about 9% of customers capable of receiving FttH sign up for the service, though this is an improvement on the 2.7% sign-up of the first quarter of 2009.

To address these poor figures, KPN has set in train a number of measures to reduce its pricing and improve the way it targets and sells to customers. It aims to reach a 60% sign-up rate of activated homes and at least 250,000 customers by 2012. Prices for its FttH tiers (from this month) have fallen by €10 per month. Yet the difference between VDSL and FttH offers, if anything, is less pronounced than before. In the pre-July pricing structure there was a €5 difference between a 20Mb/s Premium VDSL offer and a 50Mb/s Silver FttH offer. There is still a €5 difference between these two in the new pricing structure, but VDSL has been ramped up to 40Mb/s. The inclusion with FttH of an additional TV receiver, HD recording capability and more IPTV channels may be enough to tempt some customers, but KPN’s experience thus far is that the majority of customers, if they are happy enough with their service, will not switch. To address this, the company aims to improve it fibre delivery mechanism, shortening delivery times and improving its ‘first time right’ ratio. The company at least needs to convince customers that switching from copper to fibre is seamless, that there are real benefits for households’ use of IP-delivered services, and that it will not cost them more.

For more information on the Dutch broadband market, see:

Netherlands – Fibre-to-the-Home Developments;

Tweet This Post

Argentina’s two major associations of telecom cooperatives, Cooperativas de Telecomunicaciones (Fecotel) and Federación de Cooperativas del Sur (Fecosur) have decided to enter the mobile telephone market as Mobile Virtual Network Operators (MVNO), although Fecotel may still be interested in bidding for spectrum at the coming auction in the second half of 2010.

In May 2009, Fecosur signed a Mobile Virtual Network Operator (MVNO) agreement with Telecom Personal to offer services over the latter’s infrastructure. Pilot tests began in September 2009. That same month, Fecosur launched a new brand name, Nuestro, to market mobile services.

Under the MVNO agreement, Fecosur is in charge of managing the MVNO licence and the wholesale agreement with Personal. It also coordinates general affairs such as pricing, marketing, and the purchase of handsets and SIM cards. The local cooperatives serve as distribution channels.

Fecotel also undertook to sign an MVNO agreement with Personal, but negotiations took longer and have yet to be finalised.

Fecotel and Fecosur have been endeavouring to enter the mobile market since early 2004. For this purpose, they created a joint company in March 2004, Argentina Comunicaciones SA (ArcomSA), which received a mobile licence in November 2004 to take over Movistar’s excess spectrum as soon as it became available.

In March 2005, ArcomSA had its name changed to Comarcoop, after Fecosur and Fecotel learnt that the Arcom name had been registered by competitors. SeCom’s initial plan was to transfer Movistar’s returned frequencies directly to Comarcoop, free of charge. This idea met with objections from Claro, which pointed out that it had had to pay for its own licence, and that in any case Argentinean regulations required spectrum to be won through competitive auctions.

In accordance with government requirements, technical plans were submitted separately by Fecotel and Fecosur and were approved in July 2007. The regulator awarded Fecotel a mobile telephone licence, and Fecosur an all-inclusive licence, whereby it can offer any kind of telecom service. Since the government awarded the licences separately, the Comarcoop joint venture was abandoned.

To operate a mobile network, however, the cooperatives require at least 10MHz of spectrum, which they hoped to win when Movistar’s returned spectrum becomes available. Fecotel said it would deploy a nationwide backbone, after which each associated cooperative would be responsible for installing the infrastructure necessary to offer mobile telephony in its own area of operation. Fecotel would ensure interconnection and roaming among cooperatives and between the cooperatives and the country’s major mobile operators.

In 2009, tired of waiting for the delayed spectrum auction, Fecosur chose to take another avenue: rather than build its own network, it opted to become an MVNO.

See also:

Argentina – Mobile Market – Overview, Statistics & Forecasts

Argentina – Fixed-Line Market & Infrastructure – Overview, Statistics & Forecasts

Tweet This Post

Argentina has one of the most solid state-of-the-art telecom infrastructures in Latin America. In 2009, despite the economic downturn, telecom revenues were up by 11% year on year. Broadband revenues enjoyed the highest growth rate, followed by mobile telephony.

Argentina’s telecom market in 2010 is unlikely to behave very differently from 2009. The fixed-line market will doubtless continue to stagnate. The mobile market will probably continue to expand at a slightly lower rate than in 2009. Broadband will be Argentina’s fastest growing telecom sector. Demand for fixed broadband should remain strong – this market has much potential for growth, as has mobile broadband.

Argentina’s fixed-line teledensity is higher than in neighbouring Brazil and Chile – in fact, it is one of the highest in Latin America. Two regional incumbents, Telefónica de Argentina and Telecom Argentina, dominate the local fixed-line market despite liberalisation, but the long distance market is highly competitive and VoIP is well developed.

With penetration rates upward of 120%, Argentina is, together with Uruguay, the leader in South and Central America. And yet the Argentine mobile market continues to grow, as more and more users sign up for multiple mobile accounts. Three operators, Movistar, Claro, and Telecom Personal, run a close competition for market share.

All three mobile companies offer 3G services nationwide. Mobile broadband is becoming increasingly popular, driven by the shortage of fixed broadband accesses outside of the main urban centres and the expansion of 3G networks.

In terms of Internet user penetration, Argentina is the regional leader, with a rate more than twice as high as the world average. The broadband market is one of the most developed in Latin America, only second to Chile’s. ADSL is the main broadband technology, but cable modem occupies a significant place with about one-fourth of the subscriber base.

The market is divided fairly equally between Telefónica de Argentina, Telecom Argentina, and Grupo Clarín. All three companies offer broadband wholesale services, but continue to dominate the market. Argentina’s telecom law establishes that dominant operators must provide access to the local loop, but Local Loop Unbundling was never properly regulated and implemented.

Argentina’s pay television market is the most mature in Latin America. In fact, Argentina is a world leader in terms of cable TV penetration, with more than one home out of two being subscribed to cable TV services.

Market highlights

• Argentina’s economy is showing higher growth rates than originally forecast thanks to increased government spending ahead of the 2011 elections, robust consumer activity, bumper crops, and a strong rebound in neighbouring Brazil.
• The country’s regulatory framework encourages competition and the rise of smaller telecom players. However, Number Portability has been delayed for many years, with implementation now expected either before the end of 2010 or in 2011.
• Telecom Argentina has been under cross-holding scrutiny since rival operator Telefónica acquired a stake in its parent Telecom Italia. The government ordered Telecom Italia to sell its stake in Telecom Argentina, but this order was overturned by an Argentinean Court. The Italian telco remains locked in a legal battle with the Argentinean government.
• Mobile spectrum auctions are expected to take place in the second half of 2010 to reallocate Movistar’s 42.5MHz of returned spectrum.
• Together with the returned spectrum, the regulator reportedly plans to offer 90MHz of radio spectrum in the 1710MHz-1755MHz and 2110MHz-2155MHz frequency bands for the provision of 3G and 4G services such as Long Term Evolution (LTE).
• Both Telefónica de Argentina and Telecom Argentina undertook LTE tests in the first half of 2010, in partnership respectively with NEC Corporation and Ericsson.
• Argentinean telecom cooperative Fecosur has signed a Mobile Virtual Network Operator agreement with Telecom Personal to offer services over the latter’s infrastructure under the brand name Nuestro.
• A controversial new Audio-Visual Communications Law limits the number of television licences one company can own and allows telephone cooperatives into the pay TV sector.
• The Argentinean government has adopted the Brazilian version of the ISDB-T standard for the launch of digital terrestrial TV in Argentina.

Argentina Internet, broadband and telecoms statistics – 2007 – 2010

(Source: BuddeComm based on industry data)

For those needing an objective and high-level strategic analysis on Argentina, this report is essential reading and gives further information on:

• Telecom Argentina’s shareholder structure and cross-ownership issues.
• Mobile market outlook and developments, including company performance, ARPU, spectrum awards, and mobile data services.
• The development of 3G and mobile broadband services in Argentina.
• An analysis of Argentina’s broadband market, including ADSL, cable modem, WiFi, WiMAX, and Broadband Powerline (BPL).
• Regulatory issues surrounding the pay TV market and the repercussions of the new media law.
• How different scenarios are likely to affect the fixed-line, mobile, and broadband markets in the ten years to 2020.

For detailed information, table of contents and pricing for this new BuddeComm report see: Argentina – Telecoms, Mobile, Broadband and Forecasts

Tweet This Post