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Preview 2017: Dutch telecom market set for dramatic changes

Tuesday 27 December 2016 | 12:58 CET | Market Commentary
The Dutch telecom landscape is set for dramatic changes in 2017. Ziggo and Vodafone Netherlands will merge, while T-Mobile and Youfone are entering the fixed market, alongside newcomer NLEx. Amazon and Wuaki will try to build a position on the streaming video market, and YouTube could launch its ad-free Red service in the Netherlands. In communication services, Facebook is leading the OTT segment, alongside Snap and to a lesser extent Google. Mobile networks will start the path to 5G with further fibre roll-out and densification. Converting the fixed network to fibre is already in full swing and may get a further impulse from the continued one-upmanship between copper and cable. In terms of content, Netflix and Amazon are the most important investors the world over, and more locally, KPN's dipping its toe into production with a number of new TV series.

Corporate

At the corporate level, it will become clear in 2017 what the joint venture between Liberty Global and Vodafone will mean for the market. After a clean-up of their various sub-brands (Esprit, Zoranet, Horizon, MyPrime, BelCompany, MiX, Vodafone Thuis), the main brands Ziggo and Vodafone are expected to remain. The coming months should bring more clarity on other organisational issues, such as where the new company's head office will be. 

T-Mobile is returning to the fixed-line market with the takeover of Vodafone Thuis. Customers will not see anything change for the moment, but that's not always positive, as innovations such as Vodafone's TV Hub in Portugal won't come to the Dutch market. T-Mobile will need to turn to its German parent for support. Tele2 has written down the value of its Dutch operations, raising the question whether the Swedish parent is willing to settle for remaining number four in the Netherlands. It could push for a merger with T-Mobile, which given the recent sacrifice of its margin to market share appears to be still up for sale.

For the current top five operators it's clearly not good news that a number of new players are entering the market. Delta is being sold, and the new owners may push for market consolidation, for example by buying Caiway. Energy seller NLEx recently launched is own fixed services, and MVNO Youfone will follow in 2017. Given the growing focus on the household, started first by cable and now followed by others, adding energy to the package of fixed and mobile services is a logical next step.

OTT video

The streaming video segment counts a growing number of providers. In addition to Netflix and the operators' TVE apps, Pathe Thuis and Wuaki from Rakuten are both offering TVOD services. Amazon has just launched its Prime Video service worldwide, and YouTube Red (ad-free paid subscription) could come to the Netherlands. Ziggo/Vodafone may also launch a standalone video app, similar to Play from KPN, Knippr from T-Mobile and the OTT apps started by Lyca (LycaTV) and Youfone (to launch in 2017). The next question is which operator will partner with Amazon to sell Prime Video.

Traditional services

In terms of services, a few trends are expected to continue: simplification, bundling and the IoT. On the mobile market we've already seen the first unlimited data plans, and this could be expanded in 2017. Another interesting new service to follow is Digits from T-Mobile US: "send and receive voice, video and messaging across multiple devices using a single number and assign multiple numbers to a single device", as vendor Mitel, which co-developed the service, described it to Telecompaper. In addition, the EU will adopt fully roam-like-home.

Infrastructure

On the mobile market, operators will continue to improve coverage and fibre backhaul, in anticipation of 5G. Ziggo is planning to start with Docsis 3.1, but we can't rule out that it may just skip this technology step, as Altice USA recently decided. Ziggo's sister company in the UK, Virgin Media is already rolling out FTTP to new sites. Belgium's Telenet could choose the same roadmap, after Proximus announced plans for a big investment in fibre in the race with cable. Proximus has long been a leader in the latest advances in copper technology, especially VDSL2. It's decision to embrace fibre will likely be followed closely by other operators, such as KPN and Deutsche Telekom. This could be the first sign of a renewed interest in FTTP. 

Content

A great deal of attention at the moment is going to content, both the big spending by newcomers such as Netflix and Amazon and consolidation, via deals such as AT&T buying Time Warner, 21st Century Fox bidding for the rest of Sky, speculation about a takeover of ITV, Orange's reported interest in Canal Plus and Vivendi surveying TIM, Mediaset and Ubisoft. KPN is following this scene with interest as well and there could be a chance for a new combination with CanalDigitaal or a broadcaster like SBS. CanalDigitaal could also fall prey to a bigger player like Sky. KPN's content strategy is currently limited to alliances and co-productions for new series. 



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