Skip to main content

Smart Pipes and Broadband Value-Added Services

More service providers are evolving their business model to include "Smart Pipe" offerings. The market for consumer Broadband Value-Added Services (BVAS) grew by 30 percent during 2009 based on revenue gains and by 13 percent in subscribers, according to the latest market study by Point Topic.

The run rate for consumer BVAS revenues went from $39.6 billion to $48.9 billion during 2009. This was a greater rate of increase than that for consumer broadband lines which grew 14 percent -- from 366 million to 417 million from Q408 to Q409.

For comparison plain broadband access subscription revenues increased from a run rate of $113 billion at the end of 2008 to $129 billion at the end of 2009. In that context, BVAS revenues contributed an extra 37.9 percent to standard access revenues by the end of 2009.

"Value added services, like VOIP, security and IPTV grew more quickly than the number of broadband lines in 2009. The operators and ISPs are starting to increase the proportion of their revenues that they generate selling add-on services for broadband and they are doing it successfully at least in revenue terms," says John Bosnell, Senior Analyst at Point Topic.

In terms of value, the leading services were IP Telephony, home security, online gaming, IPTV and online music. IP Telephony overtook security as the service earning the most revenue during 2006.

Telephony, frequently part of a triple or quad play bundle alongside broadband and TV, generates the most revenue. PSTN replacement services such as those provided by France Telecom or Vonage generate reliable subscription revenues, along the lines of the PSTN billing model.

Internet Telephony services -- such as Skype -- rely on individual payments to make or receive calls from the Internet cloud to the PSTN. The revenue generated is much smaller than for IP Telephony services. Skype is a disruptive technology and growing fast, and it is starting to account for a significant proportion of international minutes.

Services, like PC security, achieve high revenues because they have relatively high penetration. Even if a service has a low unit price and offers a low profit margin to the supplier it can be a success if it manages to appeal to enough service subscribers.

Margins for basic broadband access are reducing all the time. That, along with pressure from competitors, is driving operators to market enhanced service bundles. BVAS offerings help operators retain customers, cross-sell new benefits and thereby increase revenues or profit margins.

All broadband service providers can promote substantive market differentiation with Smart Pipe strategies -- if they so choose. They can attain a position further up the Internet offering value-chain by pursuing internal product development or in association with independent application developer partners.

Popular posts from this blog

Digital Transformation Investment at $3.4 Trillion

Business technology leadership matters. Across the globe, more leaders have been pursuing bold Digital Transformation (DX) initiatives with the goal of creating new sources of business value through digital products, services, and experiences. As an additional benefit, the COVID-19 pandemic revealed that digital transformation efforts improve an organization's resilience against global market disruptions. Global DX investment is forecast to reach $3.4 trillion in 2026 with a five-year compound annual growth rate (CAGR) of 16.3 percent, according to the latest worldwide market study by International Data Corporation (IDC). Digital Transformation Market Development "Despite strong headwinds from global supply chain constraints, soaring inflation, political uncertainty, and an impending recession, investment in digital transformation is expected to remain robust," said Craig Simpson, senior research manager at IDC . The benefits of investing in DX technology -- including aut

Artificial Intelligence for National Border Security

National border protection agencies are under pressure to provide the highest level of security in the face of growing threats, such as increasing illegal migration and international terrorism. Now, government agencies are embracing advanced border security technologies to aid in effectively and reliably securing national borders. These solutions look to detect and identify potential threats and prevent them from escalating to a point that may jeopardize security. Security Surveillance Market Development Traditional border security patrols and Closed-circuit Television (CCTV) surveillance systems aren't adequate protection, and agencies must increasingly deploy new solutions to stay ahead of criminals and other potential threats to ensure the safety of a country’s borders. According to the latest market study by Juniper Research, the value of the border security technology market will exceed $70 billion globally in 2027 -- that's rising from $48 billion in 2022. Growing by 47 p

Precision Medicine Spend to Reach $132.3 Billion

Precision Medicine uses molecular info to extract the optimum medical method from diagnostic protocols, by merging the impact of environmental and genetic factors. Data access is essential, with genetic metabolic and clinical data used to build a fuller picture of a patient's biology. Moreover, the primary aim of precision medicine is to design and optimize a pathway for diagnosis, therapeutic intervention, and prognosis, using large biological datasets. Personalized, evidence-based medicine uses stored health data, which includes patient diagnosis, laboratory work, insurance claims, and demographic information. The results enable healthcare providers to predict and prevent some illnesses. Precision Medicine Market Development According to the latest worldwide market study by Juniper Research, the total investment in precision medicine will reach $132.3 billion globally by 2027 -- that's increasing from only $35.7 billion in 2022. The significant market growth of 270 percent is