Belgian broadband duopoly persists, apps the new challenger?

Monday 12 October 2015 | 14:34 CET | Background

The Belgian consumer market for fixed services was worth EUR 678 million in the second quarter of 2015. Flemish cable operator Telenet remained the largest provider, both in terms of revenues and broadband connections, according to Telecompaper's latest report on the Belgian fixed broadband market. 

Telenet led in revenues from fixed services (TV, internet, telephony) with a total EUR 290 million in the second quarter. Proximus (previously Belgacom) followed closely with total sales of EUR 277 million from fixed services. Telenet also had the most broadband connections at the end of June 2015, while Proximus was in second place with a total 1.34 million. The smaller cable operators Voo and Numericable followed at a distance.

Proximus takes 40% of fixed revenue

Proximus, including its subsidiary Scarlet, accounted for 40.4 percent of the total revenues in the fixed market in Q2. Telenet took an around 43 percent share, while Voo and Numericable together had a 12 percent market share in fixed service revenues in the consumer segment.

From broadband alone, Telenet generated EUR 135 million in quarterly sales, and Proximus was at almost EUR 112 million. This means Telenet generated almost half (47%) of its total fixed revenues from broadband internet services. Proximus was slightly lower, at 40 percent of fixed revenue from broadband. The two market leaders have both shown steady growth in broadband revenue, growing from EUR 210 million in sales in Q2 2013 to EUR 247 million in the latest quarter.

Telenet leads in consumer broadband connections

Telenet finished the second quarter with a total 1.47 million broadband subscribers, an increase of around 4 percent from a year earlier. This makes it the largest ISP in the consumer broadband market. Proximus grew a faster 8 percent in the past year, to reach 1.36 million subscribers at the end of Q2. Voo and Numericable accounted together for around 12 percent of broadband subscribers at the end of the period.

Snow disappears, Mobistar still holding on

The end of Q2 saw the disappearance of Snow, Base's fixed broadband brand, from the market. Base decided in December 2014 to phase out the fixed services, saying the costs were too high to reach the required scale for making the business profitable. It also noted the difficulties for consumers to switch broadband provider.

While Mobistar earlier made a similar decision to stop selling DSL services, the company still serves a small customer base, with 28,000 consumer broadband connections at the end of Q2. Mobistar is preparing to re-enter the market on cable networks. It's already testing the services and should see progress following the Belgian regulator's recent decision to lower wholesale rates for access to cable networks. Mobistar is likely preparing to migrate its remaining broadband customers to the cable networks once it launches a commercial offer.

Marketing focuses on multi-play, TV services

Proximus' latest figures show the incumbent continues to grow in the quad-play market, adding 11,000 subscribers in the second quarter for a total 509,000. The number of triple-play customers also increased, from 649,000 in Q1 to 652,000 at the end of June. It should be noted that these figures also include some small business customers in the SoHo segment after Proximus reorganised at the start of this year. 

The cable operators also continue to target the multi-play market with a range of promotions. Telenet is focusing on its Whoppa offer, and a large part of Voo's marketing budget goes to pushing its triple- and quad-play offers. Notably the operators are also focusing more on the TV elements of their offers, including Voo's new Evasion box launched in September, Telenet's coverage of sporting events and Proximus' addition of the free TV Replay service.

Medialaan prepares TV challenge

The commercial broadcaster Medialaan, owner of the channels VTM and 2Be, has also launched a free version of its Stievie app. The earlier launched paid version costs EUR 10 per month for a basic package of TV channels plus on-demand access to catch-up TV. The free version includes only five linear channels and catch-up TV and users cannot skip ads.

Medialaan said it plans to add more channels to the paid subscription in future. This may present an alternative for consumers with only a broadband subscription and interested in a low-cost TV service, particularly given the relatively high cost of most Belgian multi-play packages. Market leaders Proximus and Telenet already offer their own TV apps for watching live and catch-up TV on smaller screens, but these are only available to existing subscribers for their digital TV services. If Stievie or similar services prove popular, the operators could consider selling their TV app services separately to consumers, as operators such as KPN are already planning. 

OTT market wide open

Other OTT services are still thin on the ground in Belgium. Stievie has the advantage of an established parent company, which already has rights to a range of programming for its TV channels, but third parties or newcomers to the market may find it more difficult. The start-up Bhaalu did not do so well, after broadcasters successfully fought lawsuits to force the company to shut down over copyright issues. Bhaalu said in March that it plans a comeback, but has yet to announce anything new. 

Roku is reportedly planning to launch in France in October, and this could mean a quick expansion to Belgium, or at least its French-speaking regions. The need to serve two languages - Dutch and French - with both sufficient programming and customer service is a barrier to entry for all new players though in Belgium. This may prove less difficult for a company like Apple, which could open up the market with its new TV box and app store. This could provide a platform for apps like Stievie and help open up the OTT market in Belgium. Telenet and Proximus would also be unlikely to sit still and may be prompted to introduce their own OTT TV services.  

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