Broadband service revenue to climb to $251 billion by 2018, says ABI Research

Consumers continue to enjoy their broadband connection, a fact that ABI Research says will drive revenue growth in that market through 2018.

In 2012, the global wireline broadband market revenues from DSL, cable and Fiber to the Home (FTTH) rose 7 percent year-over-year to $188 billion. By the year 2018, the analyst firm forecasts that wireline broadband service will grow to $251 billion.

A key highlight of 2012 broadband revenue growth was FTTH.

Driven by Verizon (NYSE: VZ) and other international providers, FTTH revenue grew 24 percent, while DSL and cable broadband grew only 2 and 6 percent respectively. FTTH revenue is forecast to reach $81.6 billion by 2018.

Despite the growth of broadband, global broadband ARPU has declined on cable, DSL and fiber broadband in recent years.

"The trend is expected to endure as the majority of operators are trying to offer lower prices to capture a larger market share," said Jake Saunders, VP and practice director of core forecasting for ABI Research. "In some countries like Japan and South Korea, increasing competition from LTE services is expected to pressure fixed broadband operators to offer lower service pricing in the long-term."

Saunders' thesis was mirrored in a FierceBroadbandWireless reportwhich cited a blog post from Informa.  

Tony Brown, senior analyst with Informa Telecoms & Media, wrote on the company's blog that competition from LTE providers in Japan has "forced [companies] to slash their FTTH [fiber to the home] prices for new subscribers by an eye-watering 34 percent from ¥5,460 ($66.70) to ¥3,600 ($38.56) per month to try and re-ignite their subscriber growth and stop the outflow of subscribers to cheaper LTE mobile broadband services."

Although LTE does not offer the same speeds or consistency as a fixed FTTH connection, Brown said younger consumers are opting for the convenience of LTE as their main broadband connection.

On the other hand, the U.S. wireline broadband market remains strong, rising up to $43 billion in 2012 from $41 billion in 2011.

To date, FTTH represents only 7 percent of the United States' broadband revenue.

Despite being only a small part of the overall broadband market, Verizon reported that broadband revenue rose 3.1 percent due to increased adoption of its FiOS FTTH service. As of the end of 2012, Verizon's broadband connections rose 1.4 percent year-over-year to 8.8 million. Likewise, purchases of higher-speed FiOS services drove broadband revenue up to $3.5 billion for full-year 2012.

However, other analysts are skeptical about the FTTH opportunity. Ovum, for one, cites AT&T's (NYSE: T) Fiber to the Node (FTTN) U-verse effort, which is preparing to deliver speeds of between 45 to 100 Mbps, and says this represents the near-term broadband subscriber speed reality.

For more:
- see the release

Special report:  Wireline telecom earnings in the fourth quarter of 2012

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