TECHNOLOGY PRESENTATION: Setting up realistic targets for triple play services take up in Europe
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A presentation on the UK market for Broadband as part of the Broadband and Triple Play Europe Conference at The Sheraton, Rome, Italy on 2nd-4th July 2003. This presentation provided a perspective of the UK broadband market and highlighted how ntl achieved market leadership despite covering only one-third of the UK. In addition, it provided a way forward based on more advanced markets.
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TECHNOLOGY PRESENTATION: Setting up realistic targets for triple play services take up in Europe
- 1. 1 Session: Setting Realistic Forecasts for Triple Play Services Take Up In Europe Focus on UK Market - Broadband: An ntl Perspective Dowshan Humzah Head of Product Management & Planning - ntl:home Internet 10.00am Wednesday 2nd July 2003 Rome
- 2. 2 Overview of the UK Market ntl Products and Pricing - Marketing Strategy ntl achieving market leadership Learnings from Advanced Countries Expected Market Development
- 3. 3 UK Internet market is expected to grow to 55% penetration of UK homes by 2007 2.1 9.3 8.4 4.7 11.5 14.7 0 5 10 15 20 25 30 2003 2007 No internet Dial-up Broadband 25.2m 25.5m Oftel Residential - 2003; National Statistics Office 2001; NTL analysis UK Internet penetration rises from 45% to 55% - vs. USA 65% today Key Drivers • Increasing PC ownership - falling prices • Ubiquity in schools and work - Government policy • Increased Broadband network coverage - DSL build • Greater Broadband uptake from new users - Oftel • Expected improved economic conditions post 2004 8.3% 36.5% 33.3% 18.4% -Early surge in UK Broadband has come from marketing triple play -Broadband will become the dominant mode of Internet access by 2005
- 4. 4 Key Competitors’ Strengths & Weaknesses Strengths: - dial-up leader - retail distribution - single product focus Weaknesses: - poor quality (payg) customer base - limited broadband product range - Broadband economics Strengths: - large customer base - marketing power - trusted brand Weaknesses: - regulatory pressure - limited product range - retail product economics - slow, bureaucratic Strengths: - brand - content - marketing budget Weaknesses: - no metered dial-up - beginner’s brand - Broadband economics Source: Oftel Internet/Residential Survey 2003
- 5. 5 Overview of the UK Market Products and Pricing - Marketing Strategy ntl achieving market leadership Learnings from Advanced Countries Expected Market Development
- 6. 6 Own a computer (53%)Don’t own a computer (47%) Dial-up Broadband Broadband TV ‘Pay as you go’ ‘Unlimited’ 150K 600K 1Mb £7.50 £17.99 £10 1ppm £24.99 £34.99 Growing customer usage and experience ntl:home has the widest range of Internet Products in the market catering to all types of users UK Homes
- 7. 7 ntl price advantage at each tier makes ntl the choice for Broadband upsellers or dialup switchers £- £5.00 £10.00 £15.00 £20.00 £25.00 £30.00 £35.00 £40.00 NTL Av. Comp. NTL Av. Comp. NTL Av. Comp. NTL Av. Comp. NTL Av. Comp. Metered Dialup Unmetered Dialup ‘Entry level’ Broadband Broadband ‘High speed’ Broadband ntl price Average major ISP competitor price Source: Pricing data of average competitors include BT, AOL, Freeserve Note: No other major DSL ISP offers1Mb service - though Bulldog offer faster services for off peak hours and only at 210 exchanges
- 8. 8 -PAYG -Local rate 150K £17.99 ‘Entry Level’ Broadband Unlimited £10/month Unmetered Dial-up PAYG 1ppm Metered Dial-up 1 Mb £34.99 ‘High Speed’ Broadband 600K £24.99 Standard Broadband -Home 500 -BT Broadband £27 -BT Openworld £29.99 ntl May 2003 BT May 2003 -Surf Time -’Part unmetered’ -£6.99/month -Anytime -£15.99/month Not Available -256K £tbc BT Q4 2003*? 1 Mb £tbc 128K Midband ISDN -£25.50 (tbc) As well as being price and choice leader, ntl pioneered Broadband tiering in the UK... ntl 600k product faster, better, cheaper ...a strategy being replicated *Source: BT Press Releases
- 9. 9 Supporting Components of Marketing Strategy • Owned base of existing dial up users to upsell – Pioneered free Internet access with ntlworld April 2000 to drive penetration – Competitive dial up product set to build internet market share • Focus on strong set of Internet products – continued improvement e.g. 512K to 600K (Sept 2002) • Bundling - Triple Play – Focused sales efforts - triple play and Broadband boosts sales – Promotions across products drive Internet growth: buy one get one free – DTV set top box has integrated cable modem • Targeted marketing efforts – understand consumer reasons to purchase: speed and value • Regional company – understand local network and local consumers • Improved service and customer experience – e.g. dedicated technical center and Broadjump installation experience • Leveraging recognition – winning many awards • Capitalised on BT’s sluggishness to get behind Broadband
- 10. 10 Overview of the UK Market Products and Pricing - Marketing Strategy ntl achieving market leadership Learnings from Advanced Countries Expected Market Development
- 11. 11 - 50 100 150 200 250 300 350 400 450 500 550 600 650 Broadband Customers Days Award-Winning Services ntl’s strong products and focused sales effort has helped to establish Broadband market leadership ntl broadband 37.7% Telewest Broadband 17.0% BT Openworld 15.3% BT Broadband 13.0% Business ADSL 8.4% Other ADSL 4.8% Freeserve Broadband 3.8% Leading Market Share - End Q1 2003 Accelerating Broadband Sales (time to acquire 100,000 broadband customers) Source: Competitor press releases, ntl data
- 12. 12 • Price: DSL Resellers have limited price flexibility » Low EBITDA margin • Range: DSL resellers have limited product range » Major UK ISPs provide 512K residential only » BT Midband: poorer features, higher price vs ntl 150K • Service: ntl provides consumer choice: support & channels » Assisting or automating installation » Maximising retail & online sales channels » Improving reliability and support • Features: ntl exceeds competitors in key areas » Web services (speed, email & webspace) » Consoles (xbox launched) An owned infrastructure strengthens ntl’s Broadband competitiveness
- 13. 13 Overview of the UK Market Products and Pricing - Marketing Strategy ntl achieving market leadership Learnings from Advanced Countries Expected Market Development
- 14. 14 ntl ranks highly vs US cable market leaders 30% 29% 28% 24% 19% 17% 13% 19% Rogers N TLCablevision Cox Com cast Charter Telew est Insight Source: Q1-result announcements. Penetration of Customer Base Penetration of Broadband Ready Homes 22% 22% 16% 13% 11% 8% 6% 13% RogersCablevision Cox Charter Com cast N TL Insight Telew est • There is still opportunity to grow penetration and market share in the UK • Much of USA’s growth came during strong economy/tech rise of 1998-2000 • Revenues still driven by access: premium content still to gain significant traction
- 15. 15 Countries in the launch phase can learn from those in more advanced phases • Launch: (UK coming out of this phase) • Attracted by high speed access - frustrated with dial up • Convenience of freeing their telephone line • Standard Broadband prices remain high • Incumbents delay move into Broadband • Expansion (USA , Sweden, Japan) • Always on and ‘school/work’ fuels demand • More mass consumer target audience • Infrastructure competition • Segmented offerings/pricing • Saturation (South Korea, Hong Kong) • Heavy social use of Internet • Strong government intervention/influence • Ubiquitous competing supply Source: International Market Share: Neilsen Netratings, Strategy Analytics; Mckinsey Quarterly Making Sense of Broadband (June 2002) 21.6% 35.0% 82.0% UK USA Hong Kong Broadband Share of Internet Users
- 16. 16 In more advanced expanding markets online behaviour changes with gaining high speed connection – Creators and managers of online content • 39% have created content for the web • 43% have shared files with other • 43% have displayed/developed photos online – Use their always on connections to satisfy queries • More frequent usage: Broadband 18 hours online/week vs unmetered dial up 13 hours • 43% have multiple online sessions vs 19% dial up • In line with calling for info on your mobile or checking Teletext for latest sport or weather – Eats into other media consumption • 37% stated it has decreased viewing of TV – Influences working habits • 33% have increased telecommuting Source: pewinternet.org 2002 - USA
- 17. 17 Overview of the UK Market Products and Pricing - Marketing Strategy ntl achieving market leadership Learnings from Advanced Countries Expected Market Development
- 18. 18 10 Thoughts on Expected Market Developments to 2007 1. Continued efforts to promote Broadband from incumbents and regulators 2. Focused Brand choice - consolidation as per dial up market 3. Access continues to be key ARPU driver future in majority of countries 4. Declining standard access pricing 5. ARPU can be made up by upselling to faster speeds - via incentives/promotions 6. High Speed users drive more in both directions of the super highway (up & down) 7. Strength and appeal of shared entertainment will drive content 8. Devices will boost broadband penetration (Console gaming and home wi-fi) 9. Mobile Telephony and TV continue to be primary voice and entertainment choices 10. Plan for the long term!
- 19. 19 Expected Market Developments to 2007 “People are overestimating the impact of the Internet over the next 5 years, and underestimating its impact over the next 20 years” Bill Gates
Editor's Notes
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