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Friday, March 26, 2010

Non-user revenue models for broadband - excellent example from Vodafone

One of the major themes I explore in the new Telco 2.0 / Disruptive Analysis report on broadband is that of "non-user revenues", otherwise known as two-sided business models.

The basic concept behind a 2SBM is for an operator (fixed or mobile) to use its network and IT platform to derive revenues directly from end-users, and also from various "upstream" companies like advertisers, governments, content providers, application developers and so on.

The idea is that retail broadband revenues will start to flatten - and must be incremented with new advanced wholesale propositions. Some of these will be evolutions of current telco-to-telco wholesale (roaming, interconnect, MVNOs, dark fibre and so on), while others will evolve sale of broadband capacity to "non-users". The Amazon Kindle is a good example of this - it's Amazon paying for the connectivity for book downloads, not the end user through a separate subscription.

One particular opportunity identified in the report is for governments to pay for broadband services (either outright, or for specific capacity / capabilities) on behalf of their citizens. It might be that data connections are bundled into an e-Healthcare service, or perhaps in the context of Smart Grids.

Or, as Vodafone has illustrated this morning, a government agency like a local council or development authority might choose to sponsor fixed or mobile broadband connections for those beyond the "digital divide". In this example, it's unclear whether Voda is providing fully "open Internet" broadband, or a more restricted service just providing access to educational websites. Either way, it's a perfect example of "non-user revenue streams" and highlights the power of two-sided models to add incremental opportunities to an operator's existing maturing propositions.

This type of sponsored broadband is just one of a class of "new wholesale" approaches to selling access. Telco 2.0 / Disruptive Analysis has developed a unique forecast model which suggests that these types of innovative propositions could ultimately account for over 15% of the total broadband access market value globally.

The full dataset, analysis and modelling methodology is featured in the new Fixed & Mobile Broadband Business Models Report, which is now available for purchase.

To inquire, please contact please contact Disruptive Analysis

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