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Main figures of the fixed broadband market. Development forecast till 2025

February 2016

Analytical Report (full version)

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Analytical Report (full version)

Main figures of the fixed broadband market. Development forecast till 2025
Main figures of the fixed broadband market. Development forecast till 2025
February 2016

Main figures of the fixed broadband market. Development forecast till 2025

February 2016

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The company J'son & Partners Consulting presents brief results of its research of the Russian market of fixed broadband access among private users.

 

The Russian fixed broadband market takes 1st place in Europe and 4th place in the world in the number of fixed broadband users. Only China, USA and Japan have more fixed broadband users. If to talk about the technology penetration, Russia takes 8th place among the 10 world's largest fixed broadband markets, ahead of China and Brazil.

 

 

Key issues of the study

 

The aforementioned report analyzes the total market volume, its structure by technologies and the competitive situation; the report also provides forecasts for the further development of the market.

 

 

Practical value of the study

  • Estimation of the subscriber base and the fixed broadband market volume;
  • dynamics of the market structure by technologies and speeds of access (tariff plan);
  • overall forecast of the broadband market structure by types of fixed and mobile access;
  • prospects of the main market figures until 2025;
  • description and analysis of key legislative initiatives in the field of communication;
  • more than 40 profiles of regional operators with the assessment of their activity, strengths and weaknesses.

 

 

Target auditory

 

The study is intended for operators of fixed data transfer, working in Russia or intending to enter the Russian market of fixed broadband Internet access, investment companies, research agencies and other companies involved or potentially interested in participating in the broadband market in Russia.


 

Summary of the Study

 

Description of the fixed broadband market

 

The market of fixed broadband Internet access in Russia is at the saturation stage. The pace of the market growth continues to decline, and in the short term it will not exceed 1-2%.

 

According to preliminary estimates by J'son & Partners Consulting, in 2015 the number of users of fixed broadband access in Russia increased by 2%, to 30.3 million users.

 

Source: J’son & Partners Consulting

 

 

 

Estimation of the competitive situation

 

The total subscriber base of the top 5 players increased by 490 thousand subscribers, the growth was 2.5%. In 2015, "Rostelecom" and MTS showed a big growth — 284 and 147 thousand subscribers, respectively. Commenting this press release, "Rostelecom" notes that the high pace of network construction provides an increase in "optical" broadband subscribers at a rate higher than the average market pace of growth.

 

Leaders of the rating are still the companies "Rostelecom" and "Er-Telecom". In 2015, the rating of broadband operators changed. MTS entered the top-list and took third place in terms of the number of broadband subscribers, displacing "VimpelCom" from the third down to fourth position.

 

As "Er-Telecom" marks in their comments below, the company managed to meet the target figures for revenue and subscriber base due to organic growth and M & A transactions. At the end of 2015, the subscriber base of the broadband access service reached 2.8 million. TTK in its turn reported that its subscriber base grew faster than the market — 6% in 2015. NETBYNET reports that they managed to maintain the subscriber base in those regions where the company takes a leading position and build up the base in the growing markets. AKADO Telecom also comments that, despite the dumping of the key players, in 2015 the company managed to maintain its broadband customer base and increase the share of users of integrated services (Internet + digital TV).


 

The main trends in the Russian market for fixed broadband Internet access among individual users:

 

✓     The growth of high-speed tariff plans (100 Mbps and more)

Over the past 2 years, the percentage of users who chose tariff plans at 100 Mbps or more has doubled. Tariffs with speeds of 1 Mbps and lower almost disappeared, such speed is not more than 3% of all connections.

✓     The growth of connections in optical networks, including PON

The growth of video services on the Internet requires ever increasing bandwidth for comfortable use of broadband access. Thereby, there is an active extension of optical technologies used in the construction of data transmission networks (up to apartment FTTH, building FTTB, etc.). According to J'son & Partners Consulting, in 2015 the growth of FTTH / FTTB subscribers amounted to 12%. ADSL technology continues to lose its positions. So, in the second quarter of 2015, the predominance of "optical" users over "copper" users of "Rostelecom" became a significant event, which clearly shows the obsolescence of ADSL and the gradual withdrawal of this technology from the Russian broadband market.

✓     The increased penetration of devices with broadband access and their variety (Multiscreen)

In Russia a variety of access devices keeps on growing and the portable computers are gradually replacing desktop computers. According to J'son & Partners Consulting, in Russia in 2015 desktop PCs were used by 53% of families, while laptops — by 63%. In addition, over the past three years, the average retail price of a smartphone and a tablet PC has declined, even with the price increase in 2015. These devices have become available to people with almost any income level, and as a result the sales of such devices have increased significantly. Thus, different family members began to actively use broadband from different devices, and often they use several simultaneously.

 

 

Views of the industry representatives

 

While preparing the study, J'son & Partners Consulting specialists interviewed key players of the fixed broadband market and got their views on the main trends in the corporate market.

 

Artyom Cheremenin

PJSC«Rostelecom», head of the mass production department.

 

In 2015, “Rostelecom” continued the construction of optical access networks at a record pace for the company. Over 9 months of 2015, networks of up to 4 million households had been built and in December the total technical coverage reached 30 million households (our plan according to the strategy is 33 million households). Thus, “Rostelecom” will ensure the competitiveness of access networks for many years to come with the ability to provide any range of services. Such pace of construction provides an increase in the number of "optical" broadband subscribers at a rate higher than the market. At the same time, the number of broadband subscribers connected via “copper” continues to decline. In 2015, for the first time, the number of "optical" subscribers exceeded the number of "copper" subscribers: 52% versus 48%. This is a very important result for the company. Also, the active construction of optical networks stimulates the growth of the second main segment of the company - "Interactive TV", which subscriber base grows by 25% year-on-year.

 

In terms of product offers, the company promotes packet solutions (Internet + TV) as a priority. In the current difficult economic situation, we focus on price advantages. The main word for 2015 in this respect was "Forever": we developed and offered packages with profitable tariffs, which will never change. That is, tariffs will remain low forever, and not just for a certain period of time. In addition, if the subscriber at the same time uses a home telephone from “Rostelecom”, then additional preferences are also provided for him. Bundled offers provide loyalty of the subscriber base and reduce the outflow.

 

Andrey Chazov

«Dom.ru», marketing director

 

One of the main trends is the actualization of speed characteristics of tariffs: there are more and more offers with speeds above 100 Mbps.

 

The further increase in the number of devices that need Internet access, including wireless devices, affects the market significantly. Increased requirements for the quality and convenience of consumed services lead to increased demand for dual-band routers that operate at two frequencies: 2.4 and 5 GHz, and provide a stable Wi-Fi signal. There is a tendency to closing different torrent resources, which hinder the development of the industry. More and more users are beginning to consume licensed content.

 

The key to successfully attracting and retaining subscribers is the high quality of services: a stably high speed of Internet access with no gaps, high-quality picture and a large number of digital and HD channels, additional services, call center availability, responsiveness in solving any problem. Our company plans to continue to actively assemble the installed network capacity in all 56 cities of presence, implementing an effective package strategy and offering advantageous conditions when connecting mono services. We plan to develop OTT and other services that are on the periphery of two services: Internet access and digital TV. For example, more and more users want to watch video content from mobile devices at time convenient for them.

 

We have reached the target figures for revenue and subscriber base due to the organic growth and M & A transactions. At the end of 2015, the subscriber base of the broadband access reached 2.8 million people.

 

Maxim Chernov

«AKADO Telecom», Commercial vice-director

 

The main trend is the decline of the market growth due to the difficult economic situation in the country, the income decline of the population, the lack of import substitution for Internet equipment, the absence or reduction of investments in the construction of new networks and an increase in the cost of broadband access services. Therefore, the operators were focused at preserving their existing subscriber base: the companies increased their speeds, lowered tariffs, improved package offers, and refused promotional offers to stop the outflow of subscribers.

 

AKADO Telecom plans to launch such services as "Security Signaling", "Video Surveillance", "Home Automation" for users of home Internet on the basis of broadband Internet. We focus not only on providing high speed and reliability of channels, but also on creating high-speed and high-quality home Wi-Fi networks with use of modern additional equipment. In 2015, we significantly expanded the line of such equipment — premium Wi-Fi routers, Wi-Fi repeaters, PLC devices, which allow to connect any device in the house to the Internet without additional wires. In the near future, our company plans to introduce additional services for the customers’ computer equipment - "First Computer Aid".

 

As for the subscriber base, despite the dumping of the key players, in 2015 we managed to maintain the broadband customer base and increase the percentage of users of complex services (Internet + DTV).

 

Oleg Leonov

«ТТК», Sales and Service Department director

 

The main trend of 2015 is the saturation of the broadband access market and a slowdown in its growth. The subscriber base of "TTK" in 2015 grew faster than the market: the annual growth of subscribers of "TTK" was 6%.

 

On the background of the decline of the organic growth rate, there has appeared a trend towards the acquisition of smaller players by big companies, and we expect this trend to continue in 2016. The price competition has become more aggressive as users can now receive higher speed of access for less money.

 

For further successful development in the market, our company focuses on maintaining the high quality of the basic service — Internet access. As our practice proves, the quality of services is the main tool for attracting users.Without it any traditional loyalty programs do not work.

 

 

More detailed results of the research are presented in the full version of the report:

«Main figures of the fixed broadband market. Development forecast till 2025»

 

1. Summary

 

2. Introduction. Description and methodology

 

3. Russia in comparison with other markets of fixed broadband

3.1. The number of users and penetration rates, 2013-2015

3.2. Сomparison of tariff plans

3.3. Technological structure of the market

 

4. Description of the main parameters of the fixed broadband market in Russia, 2013-2025

4.1. General analysis of Russian households by type of access (mobile/fixed)

4.2. The number of subscribers and penetration rate of broadband services

4.3. The market volume in monetary terms and ARPU

4.4. Structure of users by speeds (tariff plans)

4.5. Technological structure of the market

4.6. The penetration rate of broadband access devices

4.7. Drivers and barriers of the market development

4.8. Competitive situation

 

5. Regulatory landscape of the market

5.1. Description and analysis of key Russian legislative initiatives in the field of communication

5.2. Structure of communication licensees

 

6. Conclusions

 

7. Appendix. Analysis of the regional players

→    Strengths and weaknesses

→    Observable factors of success/failure in the market in recent years

→    Analysis of geographical social marketing activity

→    Name of the operator

→    Brand

→    Legal name

→    VAT identification number

→    Taxpayer classification code

→    Logo

→    Geography

→    Web site

→    Year of Foundation

→    Technology used

→    Revenue, 2011-2014, mln rubles

→    Net income, 2011-2014, mln rubles

→    Main activities of the company

→    Assessment of the company activities

 

 

This information note is prepared by J’son & Partners Consulting, We strive to provide factual and prognostic data that fully reflect the situation and are available to us before issuing the material.

 

 

Copyright © 2016, J'son & Partners Consulting. The media can use any text, graphics and data contained in this market review, only using a link to the source of information - J'son & Partners Consulting or with an active link to the JSON.TV portal

™ J'son & Partners [registered trademark]

 

 

The company J'son & Partners Consulting presents brief results of its research of the Russian market of fixed broadband access among private users.

The Russian fixed broadband market takes 1st place in Europe and 4th place in the world in the number of fixed broadband users. Only China, USA and Japan have more fixed broadband users. If to talk about the technology penetration, Russia takes 8th place among the 10 world's largest fixed broadband markets, ahead of China and Brazil.