Value-added services generating $ 60 b

Tuesday, 6 December 2011 01:32 - - {{hitsCtrl.values.hits}}

According to leading broadband analyst firm, Point Topic, value-added services, such as security, Voice over IP (VoIP) and IPTV, added almost 37% to the basic broadband subscription during 2010. This means that Broadband Value-Added Services (BVAS) generated an extra $ 10.20 on top of the $ 28 monthly broadband subscription charge.

In aggregate terms, total broadband access revenues increased from a run rate of $ 129 billion at the end of 2009 to $ 157 billion at the end of 2010. This increase in total broadband access revenues of 14% is based on using a monthly broadband cost of $ 28 for a broadband subscription at the end of 2010.

John Bosnell, Senior Analyst at Point Topic, explains: “These results suggest a levelling in value-added services and demonstrate that broadband add-ons are not growing as fast as they were, despite continued growing revenues.”

During the same period, total value-added service revenues increased from a rate of $ 48.8 billion at the end of 2009 to $ 57.5 billion at the end of 2010.

“The trend we’ve observed since 2003 reflects the fact that more people are doing more things via their broadband connection. We estimate that at the end of 2010 each broadband line supported an average of 1.95 value-added services. That’s almost four times the average in 2003,” says Bosnell.

In terms of revenue earned, Point Topic estimates that VoIP is the most valuable service.

VoIP revenues (not including Skype) ran at a rate of just over $ 17 billion at the end of 2010, with 120 million VoIP subscribers. These revenues come from subscribers using ‘full service’ VoIP, with the IP service offering a substitution for PSTN.

“In contrast, Skype generated revenues 20 times smaller, with $ 859 million earned during 2010, although this is for a service that offers different features to the ‘full service’ VoIP, and which most users enjoy for free.”

This upward trend highlights the increasing penetration of value-added services, and also the fact that competition is reducing margins in the basic broadband business, so that BVAS revenues become proportionately more important.

“It remains to be seen how much, if at all, the figure for 2011 will go up after the slight slowdown in 2010. The pressures on household budgets have already seen some services decline in some markets but we expect such reductions to be limited and short term,” concludes Bosnell.