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Earlier this year, Dialogic investigated the developments in the Dutch telecom market in the period 2014-2018, and the consequences this will have for the market shares of various market parties. As part of the research, Dialogic spoke with a large number of (existing and emerging) market parties, end-users, and experts. Ultimately, a model was developed to forecast the number of connections for different connection types, infrastructures, and providers. The assignment was carried out on behalf of ACM, the authority in the Netherlands responsible for regulating the telecom market.
Forecast internet access
The deployment speed of VDSL will determine the future distribution of market shares in the internet access segment. Looking at internet access in the coming years, we see a decline in the number of connections on copper infrastructure. However, further VDSL deployment can prevent a larger decrease in DSL connections. The number of connections on cable is slightly increasing. Cable providers benefit the most from market growth but also continue to face competition from DSL due to further VDSL and fibre rollout.
The number of connections on fibre optics will increase significantly. We expect the new fibre rollout by Reggefiber to level off. At the same time, we anticipate an increase in penetration rates on existing networks and increased fibre rollout speed by other parties (especially in rural areas).
We anticipate minimal shifts in market shares among different parties. KPN remains the largest player, followed by Ziggo and UPC. Together, these parties hold a large portion of the market. The gap between these parties and the fourth-ranking player seems to be widening.
Forecast fixed telephony
The total number of fixed telephony connections is expected to decrease slightly until 2018. We expect a minor impact from substitution by mobile services. Hosted Voice has a significant impact on the business market but is small in terms of total connection numbers.
Within the fixed telephony segment, the dynamics can be summarised as a migration from old to new types of connections. This migration in the consumer market is driven by bundling of fixed telephony in multi-play bundles. In the business market, the replacement of private telephony infrastructure (PABX) plays a significant role, with IP-based telephony platforms leading to a migration to VoB or Hosted Voice. Despite this migration, both the consumer and business markets are expected to retain a group of PSTN and ISDN users. This group includes users who are unwilling to switch to a newer alternative (especially in the consumer market) and users who cannot switch due to legacy applications (particularly in the business market). This is expected to slow down the decline in PSTN and ISDN connections in the coming years.
We anticipate that market shares for PSTN will remain stable. Shifts in the consumer market will follow churn in internet access (resulting from multi-play bundles). Regarding business connections, we expect a significant decline in KPN's market share for two-line fixed telephony and an increase in Ziggo's market share. It should be noted that the volume in this category is decreasing significantly, leading to a high degree of uncertainty in the forecasted market shares. For multi-line fixed telephony, we expect a substantial decrease in KPN's market share, in favour of Tele2, Ziggo, and Vodafone.
Forecast network services
We anticipate the slight volume decline in the business network services segment observed over the past three years to continue. Growth opportunities in this segment are limited, with a shift from data communication services (IP and E-VPN) to Internet-VPNs taking place. The volume of leased lines will decrease linearly over the next four years, reaching a few thousand connections in 2018. The growth of Dark Fiber is expected to continue at the same pace as seen in the past three years.
At the provider level, we see that market shares are unlikely to deviate significantly due to market inertia and slow shifts between different types of services. For leased lines, the decreasing number of connections is expected to cause significant fluctuations in the relative market shares of different providers.