Broadband: Clear Benefits. Prospects and possible ways of developing broadband Internet services in russia Broadband Internet access services market

February 2015

Analytical Report (full version)

February 2015

Market Review

February 2015

J’son & Partners Consulting presents brief preliminary results of a study of the Russian market for fixed (wired) broadband Internet access in the segment of private users.

Market Review

The Russian market of fixed broadband access in the segment of private users dates back to 2002, when there were only a few thousand subscribers in this segment. In 2007, the market moved into a stage of active growth, and now, after another 7 years in 2014, we can already note the transition to the stage of maturity and gradual saturation of demand.

According to preliminary estimates by J’son & Partners Consulting, the number of Russian households with fixed broadband Internet access in 2014 amounted to 29.7 million, an increase in relation to 2013 by 5%. Service penetration reached 53.6%. According to preliminary results of J’son & Partners Consulting, the volume of the Russian broadband access market in the segment of private users in 2014 grew by 4% and amounted to almost 110 billion rubles.

Further market growth will occur due to the following factors:

Extensive increase in geographic coverage and development of data transmission networks;
... an increase in the number of devices and their diversity (PCs, laptops, netbooks, tablets, set-top-boxes) in the home segment, as a result of an increase in the required bandwidth per household;
... increasing the attractiveness of tariff plans, due to complex tariffs (bundled offers).

The main market factors that will ensure the growth in the number of subscribers is the extensive growth in the coverage of small settlements communication networks of medium and large Internet providers. In this regard, the revival of satellite broadband providers is possible.

SpaceX and Virgin Galactic plan to build a network of 4,000 microsatellites to provide broadband internet access around the world. This method will cover those parts of the planet where the terrestrial network infrastructure is poorly developed, but there is a need for Internet access services. Nowadays, advanced satellite technologies have significantly reduced the cost of deployment, and small microsatellites can be launched in dozens at the same time.

The increase in the number of devices in the family and their diversity require more and more bandwidth for comfortable use of the broadband access service. In this regard, there is an active spread of optical technologies in the construction of data transmission networks (up to FTTH apartments, FTTB buildings, etc.). However, progress continues in improving copper wire access technologies.

In 2014, several companies presented their designs to increase DSL speed up to 1 gigabit per second. Among them are Broadcom, the Chinese company Triductor Technology and the Israeli startup Sckipio. These developments on the development of DSL technology are positioned under the general name G.Fast and will extend the "life of a copper pair".

It should be noted that the development of networks mobile communications LTE technology does not yet have a significant impact on the development of fixed Internet access, this technology distributed mainly in regional centers and rather complements the need for fast Internet outside the home.

The average income per subscriber (ARPU) of broadband access will stabilize in the future, now providers are guided by the principle of "more Internet for the same money", within which there is no longer a question of reducing the cost of tariffs as such, instead, operators increase the speed of access. The operators' tariff policy will continue to focus on Special offers on tariffs and package offers, which actually reduce the cost of services separately, but retain total income operator. As a result, the average income from one broadband subscriber by 2016 will decrease to 310 rubles per month. Thus, annual growth in the number of home broadband connections will be the main driver of market growth.

According to J "son & Partners Consulting's forecasts, in the next 2 years, the growth of fixed broadband subscribers will be at the level of 2-3% per year. By 2016, the number of subscribers will be 31.4 million. The market volume will also continue to grow by 2-3% due to increase in subscribers with a stable ARPU of 310 rubles per month.

Despite the stabilization of the quantitative indicators of the market, qualitative changes continue. The growth in the number of devices and their diversity, cloud services require more and more bandwidth of access channels. At the same time, tariff plans begin to include more and more services and services, giving a total reduction in their cost.

The beginning of competition between wired broadband access and fourth generation mobile communications (LTE) and satellite communications in small towns and remote areas is not ruled out. In such areas, the tariffs for satellite two-way Internet are already approaching the tariffs for wired broadband access. For example, in the Kamchatka Territory, they are already at the same level in terms of the subscription fee and access speed.

Competitive situation

In total, the five leaders account for two thirds of the market, both in terms of subscribers (66.2%) and income from broadband access services (69.0%). Rostelecom remains the undisputed leader with 35.1% and 38.7% market shares in terms of subscribers and revenues, respectively. The share of other players is gradually decreasing. The three leaders in terms of the number of subscribers are closed by Er-Telecom (9.7%) and Vimpelcom (8.5%). By the volume of income from the provision of home broadband access services, Er-Telecom (10.6%) took the second place at the end of 2014, and Vimpelcom took the third place with a share of 8.8%. There were no structural changes in the ranking in 2014.

It is worth noting that VimpelCom's subscriber base showed growth in 2014, despite the fact that the data does not include cities in which the company stopped providing wired broadband services in 2014.

Rostelecom also took the leading position in terms of the absolute growth of the subscriber base. In total, in 2014, the company increased the number of subscribers by 610 thousand. TransTeleCom and MTS took the second and third places in this category, increasing the subscriber base by 170 thousand and 160 thousand subscribers, respectively.

Main trends of the broadband access market in the medium term:

• Growth in the share of package offers among new connections of telecom operators. The broadband access market increasingly began to overlap with adjacent markets (pay TV, telephony). At this point in time, operators are trying to provide a subscriber with complex offers: they create package offers to better meet the needs of subscribers, as well as to increase operators' profits from one client.

With the growing share of bundled offers in operators' sales, the question of how operators take into account revenues from such contracts becomes more and more urgent. A survey of the top 5 operators, conducted by J "son & Partners Consulting, showed that now operators do not have a unified accounting scheme for packaged tariff plans. Providers use the following accounting options:

 Direct division of the cost of services, which is also indicated in the contract with the subscriber
 Proportional division of the package cost by the cost of mono services
 Separation of cost based on billing and financial accounting

• Operators prioritize service quality and increase subscriber loyalty.

In the European market, there is a tendency to increase loyalty due to the free provision of additional services. Deutsche Telekom and BT offer parental control services and cloud storage for free when ordering bundles. In Russia, such services are mostly paid, even when ordering package tariff plans. In addition, tariff contracts abroad have a subscription for 12 or more months, which is also aimed at reducing subscriber churn.

• It is expected to develop services such as "triple play" and "quadro play" (Internet, TV, telephony and cellular communications) and the development of a single bill for all services, which will cover several devices.

Industry Opinions:

As part of the study preparation, J "son & Partners Consulting specialists interviewed the top 5 players in the Russian fixed broadband Internet access market and found out their opinions on the main trends in the coming years.

- What are the main threads that will take place on Russian market fixed broadband access in 2015-2016?

Maria Florentieva

Rostelecom, Vice President for Strategy, M&A and IR

“In the next two years, the market saturation in large and medium-sized cities will continue in the fixed broadband segment. Small cities that are not yet fully covered by fixed access will become the growth driver. At the same time, the project to eliminate the digital inequality, implemented with the support of the state, will make it possible to cover remote and sparsely populated areas with optics, which will increase the level of penetration of broadband Internet access in the country as a whole. In addition, there will be an active growth in digital consumption: an increase in the required speed of Internet access, an increase in service consumption, an expansion of the list of consumed services and additional services. The adjacent segments of OTT and IPTV will be growing rapidly, since the massive construction of optical access networks and the reduction in the cost of HDTV-ready and Smart TV TVs will make it possible to provide TV services in HD quality and in an interactive format ”.

Andrey Chazov
Er-Telecom, Director of Product "Dom.ru"

“The growth in the number of devices that need access to the Internet continues to have a significant impact on the market. In addition to PCs, families are increasingly using laptops, tablets and smartphones, as well as Smart TVs TV. Subscribers are increasingly consuming innovative services - interactive TV, multiscreen, OTT services. Subscribers are increasingly accessing the network using wireless access, which entails an increase in the number of Wi-Fi spots.

The constant growth of heavy content in the total traffic volume makes new requirements for the operator's network, quality and continuity, for the comfort of service consumption. Providing such access, further growth of speeds, improving the quality of service and maintenance are becoming one of the key tasks of providers.

Thus, operators need to invest in network upgrades, including Wi-Fi, to develop Additional services and services, focus on customer service. But the crisis will restrain these plans, force them to save money, recalculate the payback of projects. "

Svetlana Shamzon
Company TTK, Vice-President of TTK - head of the "Access" block

“Small towns of Russia today really remain points of growth for operators of wire broadband access, however, against the background of a significant increase in the cost of investment projects resulting from the currency crisis and higher borrowing costs, the speed of construction of broadband networks in the regions is likely to slow down. We can expect a redistribution of the regional market in favor of large federal players and the gradual withdrawal from it of small operators of local house networks.

Despite the temporary stabilization of ARPU, we believe that revenue per user in the broadband segment will grow in the medium term. This is facilitated by an increase in the cost of broadband services (growth utility bills, the cost of equipment), as well as a significant lag in the average ARPU level in Russia in comparison with the European markets, to which our country is largely oriented. Today, the cost of broadband access services in Europe starts at an average of 20 euros per month, while in Russia this figure does not exceed 5 euros. "
 

This newsletter has been prepared by J "son & Partners Consulting. We make every effort to provide factual and forecast data that fully reflect the situation and are available at the time of publication of the material.

J "son & Partners Consulting reserves the right to revise the data after the publication of new official information by individual players.

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Contents of the full version of the Report: "Prospects for the Russian market of broadband Internet access. Comparison with the foreign market. Preliminary results of 2014"

1. Summary
2. Introduction. Study description and methodology
3. The market of wired broadband access in Russia
3.1. The number of subscribers in the private and corporate segments
3.2. Penetration of broadband access in the private and corporate segments
3.3. Market size in monetary terms in the private and corporate segments
3.4. Average revenue per user (ARPU) in the private and corporate segments
3.5. Market structure by access technologies in the private and corporate segments
4. Competitive situation on the market of broadband network operators in Russia in the private segment
4.1. Description of Top 5 Leading Providers in Russia
4.2. Technologies used by providers and plans for their modernization
4.3. Dynamics of the number of subscribers of leading providers
4.4. Tariff policy of leading providers

4.5. Research of opinions of broadband access users from leading operators, advantages and disadvantages of operators, according to broadband users
5. Traffic in broadband access networks
5.1. The volume of consumed traffic in broadband access networks by federal district
5.2. Share of traffic consumed by xDSL channels by federal district
5.3. Traffic consumption forecast
6. Analysis of the market of broadband access networks by the type of Russian cities in the private segment, 2Q. 2014
6.1. Millions of cities
6.1.1. Description of the largest operators of broadband access networks. Geography of presence
6.1.2. Coverage of households of leading operators with broadband access networks
6.1.3. Number of households connected to broadband access networks
6.2. Cities with populations from 500 thousand to 1 million
6.2.1. Description of the largest operators of broadband access networks. Geography of presence
6.2.2. Coverage of households of leading operators with broadband access networks
6.2.3. Number of households connected to broadband access networks
6.3. Cities with populations from 100 to 500 thousand
6.3.1. Description of the largest operators of broadband access networks. Geography of presence
6.3.2. Coverage of households of leading operators with broadband access networks
6.3.3. Number of households connected to broadband access networks
7. Analysis of GPON technology in Russia as the most promising
7.1. Dynamics of the number of users connected via GPON technology
7.2. Operators providing GPON technology
7.2.1. Number of users
7.2.2. Tariff policy
7.2.3. Players' plans for the development of GPON networks
8. Foreign market of wired broadband access
8.1. The number of broadband subscribers in the world
8.2. Market structure by access technologies
8.3. Countries with the highest penetration of optical technologies
8.4. Top 10 countries of wired broadband access in the private segment
8.5. Top 10 countries in terms of penetration of broadband connections per 100 inhabitants
8.6. Tariff policy of foreign GPON operators
9. Conclusion

With the development of the Internet for the governments of many countries, it becomes more and more obvious positive influence high-speed networks on commercial companies, public organizations and ordinary citizens. Broadband networks have long been an integral part of the infrastructure of the global information community. They provide users with continuous high-speed access to a variety of web services, content and software.

Over the past decade, many success stories and research has been published on the benefits of broadband, including new business opportunities and technology innovation, increased sales and productivity, cost savings, job creation and foreign investment. Recent studies have shown that the availability of reliable broadband networks drives industrial GDP growth. developed countries and could provide similar benefits to emerging market economies.

While the economic benefits of high-speed networks are clear to both developed and developing countries, the latter sometimes have different infrastructure, regulatory frameworks and a much more pronounced rural-urban boundary. They also have other factors influencing broadband penetration. The specificity of countries with economies in transition does not force them to abandon the deployment of broadband networks, but forces them to use the most efficient practical methods for the quick and cost-effective organization of the introduction of high-speed access channels, as well as for the development of other information and communication technologies and services.

Modem connections have lost their meaning

Compared to dial-up dial-up broadband networks have a higher bandwidth. High-speed network subscribers receive the following benefits:

• connectivity anywhere and anytime - broadband networks are available wherever there is an appropriate infrastructure;
• advanced capabilities of work in multimedia applications: high throughput broadband access networks allows you to comfortably play network video content and use other multimedia resources;
• cost reduction - web surfing, processing e-mail and other office applications that use a broadband Internet connection are even faster, increasing productivity and reducing the cost of analyzing marketing information;
• new communication opportunities - broadband networks allow real-time communication over e-mail, in instant messaging programs, in applications with support for the VoIP protocol, making it easier for entrepreneurs to connect with suppliers, customers and partners around the world.

The impact of broadband on the economy

The developed countries

Research from industrialized countries has confirmed that broadband networks can boost economies and social spheres like healthcare and education.

Accenture calculated in 2003 that deploying broadband across the United States could increase US GDP by $ 500 billion and European GDP by $ 400 billion.

Broadband networks primarily contribute to the development of public organizations and private companies, for which a positive impact has been noted in the form of increased productivity and creation of new jobs. Another study proved that with an increase in the number of users of broadband networks by 1%, the number of jobs will grow by 0.2-0.3% per year. Another study found that between 1998 and 2002, the United States, which was actively introducing new communications technologies, saw many new job vacancies and an increase in the number of companies employed in the IT sector.

The widespread adoption of Internet-connected business applications has saved US companies $ 155 billion. In turn, the profits of entrepreneurs in France, Germany and the UK grew by $ 79 billion.

Countries with economies in transition

More than 30% of the population of industrialized countries has access to broadband communication channels, while in most developing countries, high-speed Internet access services are not actually provided or are so expensive that they are practically inaccessible to corporate and private users. Developing countries have about 1% of all broadband subscribers. In 2007, there were no more than 5% of the total population of the planet, of which 1% was in the African continent, up to 10% in North and South America, and up to 16% in Europe.

Due to the insignificant spread of broadband access networks in developing countries, their socio-economic benefits have hardly been studied. Nevertheless, according to preliminary estimates, the introduction of high-speed communication channels will provide such states with a wide range of opportunities, including GDP growth, increased competitiveness and attraction of foreign investment. While these gains are difficult to quantify in specific numbers, a recent publication noted that developing countries with better telecommunications infrastructure are attracting more offshore services, outsourcing companies and foreign investment.

Economic conditions are similar in most developing countries, and ubiquitous broadband will be extremely beneficial there. For example, the bulk of the population in such countries, and therefore a small and medium business are located outside of major cities. The development of broadband networks in suburban areas will create new jobs, increase profitability and labor productivity and generate additional profit from the non-agricultural sector of the economy, while increasing the profitability of agricultural enterprises. With access to new technologies, rural residents will be able to better prepare for a possible move to the city or, conversely, change their minds to change their place of residence.

The development of high-speed networks will help attract citizens and entrepreneurs from agrarian or hard-to-reach areas to the development of the national economy and provide the state with new opportunities for the development of infrastructure (transport networks, educational and medical institutions) in rural areas. The deployment of broadband networks in out-of-city areas contributes to the development interactive form communication between the authorities and society - e-government... And students even from remote villages will have access to educational resources from which they learn about the technologies needed to successful life in the XXI century.

Broadband for everyone

Once upon a time, the benefits of high-speed networks were not available to the citizens of most transition economies. This was especially true of the population living in rural areas and in remote areas, where the laying of digital subscriber lines (DSL) and leased cable channels is too expensive or difficult. Fortunately, with advances in technology, broadband networks have become more affordable, reliable, cheaper, and easier to implement. Modern high-speed networks can be organized in remote regions, combining backbone lines with solutions " last mile". Affordable backbones include wired and satellite links, and point-to-point wireless IP connections.

For segments of the "last mile" in rural areas, WiMAX and Wi-Fi technologies are suitable (in areas where signal strength restrictions do not reduce the coverage area). These wireless systems are suitable for remote areas and are faster and cheaper to deploy than wired lines. In addition, wireless users are more mobile, and the network infrastructure can be expanded incrementally in response to demand and without major costly upgrades.

A beneficial solution for the "last mile" will be WiMAX technology, which provides high-speed and low-cost wireless Internet access. WiMAX access points have a large coverage area and are therefore suitable for hard-to-reach and rural areas. Deploying WiMAX networks with IEEE 802.16e support will cost less than modern cabling. WiMAX technology provides access to both fixed and mobile services, so it is suitable for use in both urban and rural areas. It supports voice and data communications, providing additional savings and making communications services more affordable.

Urbanization and broadband

The outflow of the population from rural areas to cities, caused by the search for work and more comfortable living conditions, is characteristic of all developing countries.

The consequences of urbanization can be seen on the example of China, 55% of whose population lives outside of large cities (for comparison, in the United States, no more than 20% of the population lives in rural areas). Mass migration of the population to cities will lead to the fact that by 2025 their electricity consumption will more than double, and water consumption will increase by 70-100%. By that time, clinics and hospitals will not be able to cope with the flow of patients, and schools and universities will not cope with everyone who wants to study. In addition, the decline in arable land and the growing need for natural resources will have a detrimental effect on the environment.

The development of broadband networks will help mitigate negative consequences urbanization, namely:

• reduce the desire of the rural population to move to the city - affordable services broadband contribute to the economic development of rural areas, an increase in the income of the population, an increase in living standards and a decrease in the need and desire to move to the city;
• to raise the level of education of the population - residents of agricultural and hard-to-reach regions will receive new educational opportunities and an understanding of modern information and communication technologies, which in the future will allow them to find more profitable work in the city and reduce the burden on city social services;
• improve urban living - sharing broadband and other technologies enables workflows that do not need to be concentrated in one city. This increases labor productivity, reduces the load on the power grid, reduces the noise level in the city and helps to reduce other factors of harmful impact on the environmental situation.

Key Principles for Successful Broadband Deployment

The key to successful broadband adoption is an enabling environment, for which five main principles can be identified.

Development of regulatory legal acts stimulating the attraction of investments to new markets

Rapid adoption of broadband networks in most developing countries requires the adoption of new regulations that meet the market requirements. In one of the reports presented at the world summit on the problems of the information community, it was noted: "To obtain maximum benefits in the social, economic and environmental spheres, it is extremely important to create a reliable, transparent and equal regulatory environment for all ..."

Management reforms will help create favorable conditions for the introduction of new technologies. Hundreds of countries have government regulatory agencies. Privatization and liberalization of markets will attract private sector investment and create healthy competition. A transparent legal environment will provide confidence to investors and encourage sharing of infrastructure.

Lacking economic incentives, telecom operators will move away from broadband deployments in rural areas, where the bulk of the population in developing countries nonetheless lives. Therefore, a variety of incentive measures, such as tax breaks, are recommended to attract telecommunications service providers.

Reforming public policies will have a massive impact on the development of information and telecommunication technologies, in particular broadband networks. More and more countries are changing the rules for using the Universal Service Fund, directing these funds to the development of not only telephone lines, but also high-speed networks. As a result, even in such dissimilar countries as Pakistan, Chile, India and Malaysia, voice and data services over the Internet are widely adopted, including in hard-to-reach areas.

Investments in key infrastructure components and innovative technologies

In an article published in The Economist, it was noted that "broadband services will not be in demand in regions where there are problems with electricity supply and computers are a luxury for the population." Therefore, in countries with economies in transition, it is first of all necessary to invest in basic IT infrastructure facilities, including software and computers. Such investments will contribute to the successful introduction of new telecommunication services.

World Bank analysts believe that if in an industrialized country, science-intensive technologies occupy 5% of the market, then the likelihood of expanding their niche to 50% is very high. However, in countries with economies in transition, only six out of 67 technologies, which occupy 5% of the market, are capable of reaching the 50% level. This is mainly due to the lack of development of intermediate technologies, which are necessary for the implementation of advanced ideas.

Governments in developing countries planning to introduce broadband services should focus on critical infrastructure such as reliable power lines and transport networks. Over time, all infrastructure investments and IT initiatives will create an enabling environment for the deployment of high-speed links.

Allocation of radio frequency spectrum for broadband access networks

The allocation of the radio frequency spectrum for wireless networks is undoubtedly beneficial: the state, for a certain fee, provides the frequency range for private companies that operate in it, attracting new industries and technologies. Answering the question when to select the spectrum - now or later, we argue that the time has already come.

Delays in competitive allocation of radio spectrum may be due to concerns about the risks of under-revenue, as well as pressure from some officials lobbying for the monopolization of this industry segment. Of course, this creates obstacles for the introduction of innovations and the organization of affordable broadband communication services, and the state does not profit from the lease of the frequency range.

As soon as the sale of licenses for the use of the spectrum of frequencies begins, there will appear those wishing to invest in wireless technologies and new communication services will appear on the market. Consequently, the allocation of radio frequencies on a competitive basis allows for additional benefits on a national scale. Nevertheless, it is necessary to understand that it is not so much the rental income that is important as the implementation of the conditions that ensure the long-term lease of the spectrum. And subscribers benefit from mobile broadband services up to 18 times the actual costs.

The allocation of radio frequency spectrum will stimulate competition and, therefore, contribute to the development of the economy. Broadband wireless networks are convenient for subscribers, stimulate innovation and ultimately increase GDP.

Encouraging competition

After reforming the legal sphere, it is necessary to focus on the development of competition, since it is this that ensures the development of markets in 80% of the countries of the world. Transparent government policies and relevant legislation stimulate competition that attracts investors, ensures affordable prices for goods and services, and makes network deployment across the country more cost-effective.

To develop competitive environment not so easy. Innovation driven by broadband and the digital economy can disrupt a country's foundations, forcing some politicians to isolate certain economic segments. Even well-meaning government officials sometimes uphold or enact regulations that hinder competition and thereby inhibit broadband adoption. Such measures will be more likely to be harmful to society than useful to the person for whose interests they are introduced.

So the strategy economic development must protect consumer rights without creating harsh market conditions or defending the interests of individual officials whose aspirations may be too disadvantageous for the whole of society.

Development of mutually beneficial cooperation between the public and private sectors of the economy

The successful development of broadband access in any country requires state support, which will ensure the interaction of government bodies, industrial branches and private entrepreneurs.

The standard approach involves government leadership and upfront investment from the budget. In turn, telecom operators should develop special tariff plans that will ensure profit and at the same time will not be burdensome for subscribers. These tariff plans are sold bundled with personal computer on affordable price... Financing of telecom operators can be carried out not only from state, but also from private funds, stimulating the demand for new services.

Only joint work at all levels will help telcos successfully roll out broadband networks and meet the national challenge. At the same time, business will receive additional profit, and ordinary citizens will gain access to technologies that cannot be dispensed with in the modern information society.

conclusions

Broadband networks are an integral part of the global information community, provide stimulation of the state economy, create new jobs, develop innovations and increase the competitiveness of goods and services. These and many other benefits of new communication technologies will become available to countries with economies in transition, which need to provide suitable conditions for the long-term and cost-effective use of broadband networks.

On January 21, 2015, a World Bank study was published, which positively assesses the current level of development of the broadband access (BBA) market in Russian Federation and the prospects for infrastructural development of communication networks for the coming years.

According to the study, Russia is currently not only implementing an ambitious plan for the development of broadband access services, but also ranks among the world and European leaders in terms of a number of indicators of accessibility and quality of services. (Source: minsvyaz.ru)

Experts of the World Bank recognized the highest dynamics of replacing obsolete copper wires with fiber-optic communication channels as one of the most important positive factors influencing the development of communication infrastructure in Russia. According to this indicator, in 2012 Russia became the absolute leader in Europe, having connected 2.2 million subscribers of fixed broadband access networks via fiber - more than all EU countries combined. At the end of 2013, more than half of Russian communication networks were fiber-optic, which allowed Russia to overtake countries such as the USA, France and Italy in the share of high-speed subscriber connections to fiber-optic communication networks.

Along with the development of the availability of broadband access services, their quality is also growing in Russia. So, as of the end of 2013, the average connection speed in our country was 7.45 Mbit / s, more than double the world average of 3.82 Mbit / s. Russia has become one of the 24 countries in the world with the highest-speed Internet access, which is especially impressive given the geographical extent of our country. In terms of the share of subscribers connected at speeds above 10 Mbit / s, Russia is ahead of Germany and France, approaching Canada and Great Britain. At the same time, the researchers give estimates American company Cisco, which predicts that by 2018 the average subscriber connection speed in Russia will reach 44 Mbps.

Against the background of high dynamics of development and improvement of the quality of services in the fixed broadband access market, Russia, according to the World Bank, maintains one of the lowest levels of prices for Internet access services in the world. For a number of indicators, Russia is among the world leaders in terms of the availability of broadband access services. So, the cost unlimited connection to the Internet in Russia at a speed of 5 Mbps does not exceed 5% of monthly income for 90% of households. According to the methodology of the International Telecommunication Union, in 2014 this allowed Russia to stand on one place with Switzerland.

The study also says about a high level of penetration of mobile broadband access services, which on average in Russia exceeds 60%. Thus, even in the Russian provinces, the level of mobile Internet accessibility is comparable to that of residents of developed countries of the world. At the same time, representatives of the World Bank note that only about 40% of mobile subscribers use these technical capabilities in Russia. In this respect, Russia is closest to Italy.

“The World Bank study fully confirms the high commitment of the leadership of our country to the active development of the communications infrastructure and the significant contribution of this process to the economic success of our country in the world,” says Nikolai Nikiforov, head of the Russian Ministry of Telecom and Mass Communications. - Currently, there is an active construction of fiber-optic communication channels throughout Russia as part of the reform of universal communication services, which will increase the availability of broadband services for the population to 97% by 2018. The World Bank's positive assessment of the market conditions in which this reform is currently taking place allows us to assess its prospects with optimism. "

In this context, an interesting interview on the organization of modern TV services with minimal investment for broadband access providers gave the correspondent of "Standard" Dmitry Petrovsky general manager LLC "My TV" ( trademark MOYO TV) Andrey Kholodny.

Let us remind you that My TV is a subsidiary operator of SmartLabs, a domestic developer of IPTV solutions.

- What exactly did your company offer to the market?

- We have developed a comprehensive service for small operators of broadband Internet access (BBA), which allows you to launch IPTV service in a short time. The business model does not require the partner to make initial investments in the network, TV platform, or content. The solution allows you to aggregate TV content and content from online cinemas based on a set-top box that can be easily connected by the subscriber. Thus, small operators, for whom additional investments in network development are difficult, are able to start providing IPTV services without costs.

- What is the real commercial benefit of a small operator company when working with MOYO TV?

- Small broadband providers face stiff competition from large players offering a wide range of modern services, including television. They need to keep their brand in the full sense of the word, to keep the subscriber tempted from all sides by tempting offers with 100-200 high-quality TV channels.

So far, small players are solving this problem in different ways: competing in the price of access, offering various on-net services, sometimes even not entirely legal TV content. Naturally, this does not come from a good life. Building an antenna post, a TV platform, buying legal content is an expensive pleasure. And investments begin to pay off in three to four years if there are at least 300 thousand subscribers in the network. The company "Moe TV" has opened new business, carried out according to the revenue sharing model. The benefits of increasing the APRU of a broadband subscriber by 30-50 rubles are quite obvious.

- How do you assess the potential market for your product?

- According to statistics, more than 56% of households in the country already have access to high-speed Internet. About 65% of the broadband market is shared by the largest players, including Rostelecom, VimpelCom, MTS, ER-Telecom and others. The remaining share belongs to medium and small providers: 20% are cable TV operators, another 15% are Ethernet network operators, mostly based on FTTH. About 1,000 providers throughout Russia serving 3-3.5 million households are our potential market.

- But many small providers are leaving, they are being absorbed by large players. So the MOYO TV market is shrinking?

- Against. Mergers and acquisitions in the Russian operator market are almost complete. This leaves a lot of small and medium independent and active operators. The trend has changed. Technologies and market demands are now working for smaller players. It has become much cheaper to build and develop gigabit infrastructure, a sophisticated subscriber requires close attention and an individual approach. Our goal is to help small providers develop their business by giving them the opportunity to retain and develop their subscriber base through a variety of television services, combinations of Video on Demand (VoD) and linear TV broadcasting. Today it is an expanding market.

- But at the same time it is very competitive. What are the benefits of MOYO TV?

- There are a number of offers on the market for small broadband operators. But we have vast experience in the development and implementation of IPTV platforms on our side. The company "Moe TV" has existed since 2012, and until the beginning of 2014 it promoted MOYO TV as a B2C product. The IPTV solution SmartTube SDP from SmartLabs, which underlies the MOYO TV technology, is used by Rostelecom, MTS, MGTS, NTV-Plus to provide TV services to more than 3 million Russian households. We offer set-top boxes to small broadband providers own production competitively priced, easily connected via Ethernet and Wi-Fi. It is important that with MOYO TV, access to popular free TV services becomes possible with a TV receiver without a smart function. That is, the service is interesting to the widest possible range of users. In addition to diverse and completely legal content, a member of the MOYO TV network receives advanced technological, service and marketing support.

- Why, having started in the B2C segment, the company switched to the B2B model?

- The market itself showed us the way to the new model. More precisely, a completely real case. At the end of 2013, we noticed that in the city of Pereslavl-Zalessky, a large number of MOYO TV set-top boxes were purchased at once. It turned out that the local small but enterprising operator began independently and quite successfully to promote them to its subscribers, organizing a new TV service on its broadband network. This gave us an idea, we analyzed the market, calculated cases and opened a new B2B business.

- What commercial terms of cooperation does MOYO TV offer small operators?

- "Moe TV" develops its own national IPTV broadcasting network, acts as a licensed provider of cable TV broadcasting services, leasing a TV network to partners. Partners become our agents selling TV box and packages. In addition to the margin from the sale of subscriber equipment, they acquire the opportunity to receive a part of the profit from TV services for an infinitely long time. We provide partners technological support and service, we solve all the issues of selection and legalization of content, we organize various options for accepting payments from the subscriber.
The business model will be presented in detail to our potential partners during the January CSTB 2015 exhibition. It is very attractive and absolutely transparent.

- TV service is new and difficult even for a large operator. Will a very small, inexperienced provider be able to effectively promote it?

- The MOYO TV team includes people who are familiar with the Pay TV market firsthand - specialists with extensive experience in selling services from the country's largest operators. We know better than most that selling a valuable TV product, even one that doesn't require investment, is difficult. And favorable commercial terms are not a guarantee of success in this market. Despite the prevalence and development of Pay TV in Russia, a large experience of working with a mass subscriber, the average domestic provider has not yet learned how to sell a TV service. Broadband access providers mainly carry out up-sales at the direct request of subscribers. This is understandable. The small operator has a lot of other concerns. He does not have the opportunity to develop his own call center, marketing programs etc. The idea of ​​"My TV" in the B2B market is to develop the partner's ability to communicate with the subscriber, advise him on technical issues and motivate him to choose a TV service.

- How can a partner assess the benefits and effectiveness of such cooperation?

- Having worked in leading positions in the two largest providers of IPTV services in the country, I made sure that only systemic and competent work with a subscriber increases sales by 40% or more. At My TV, we have developed a typical business case that clearly shows that under different conditions, the churn of subscribers in a small broadband network can be reduced by 35-75%. The spread is due to quality basic service Broadband access. Alas, if the base product is of poor quality, it is more difficult to retain the client.

- What content does MOYO TV offer partners?

- There are more than 120 TV channels, including in HD quality. The user can pause and rewind the broadcast for a period of up to 10 days. The parental control function is available. A smart and informative guide with the ability to add reminders of future programs, view short descriptions programs, put "likes". The recommendation system offers content based on the personal preferences of the subscriber. In addition, MOYO TV is integrated with free online cinemas ivi, Tvigle and Megogo, and these are thousands of popular films. There is also additional paid content. Selection and search filters are built into the interface for quick access. MOYO TV interfaces are intuitive and take into account the requirements of the Russian consumer.
MOYO TV can also be watched on iPad.

- Does the company offer standard packaging or does it reserve the right to form packages for a specific partner who knows the preferences of their audience?

- We offer the simplest packaging: free, basic and premium HD package. As a proponent of thematic packaging, I am sure this is the right decision as it makes it easier for the partner to sell. new service which is of particular importance when entering a business. It is important here that the MOYO TV service, combining linear and VoD broadcasting, allows you to fully cover the needs of customers in media content. Thanks to the capabilities of the MOYO TV set-top box, we know what a particular subscriber prefers, and we recommend him best content different categories. So with a partner-operator, we get the opportunity to grow together, developing the consumer and the market.

According to preliminary estimates of TMT Consulting, at the end of 2017, the volume of the Russian market of broadband Internet access (BBA) in the B2C segment amounted to 130.1 billion rubles, and the number of broadband subscribers was 32.6 million people. PJSC Rostelecom became the leader in the absolute growth of the subscriber base, having increased the number of its broadband access users by almost 400 thousand (or 3.4%) compared to 2016.

As Irina Yakimenko, analyst of TMT Consulting, noted in a conversation with a ComNews reporter, the broadband access market in the B2C segment is saturated, so it is more difficult for operators to attract new subscribers. "The growth of the subscriber base in 2017 continued due to the connections of new housing stock, as well as connections in small towns," she said.

According to Irina Yakimenko, M&A activity has increased on the broadband access market in recent years. "This is due to the fact that the process of migration of subscribers from operator to operator does not bring long-term benefits to companies, and the opportunities for organic growth in the markets of large and medium-sized cities have already been exhausted," said an analyst at TMT Consulting. In addition, among the tendencies of the last year, Irina Yakimenko named an increase in the penetration of package services. "This year, all the leading operators have continued to develop converged offerings that combine fixed and mobile services," she added.

Another trend is the migration of subscribers to higher-speed tariff plans as the demand for heavy content, including online video, grows and the number of smartphones, tablets and other mobile devices connected via Wi-Fi increases. "Providers are also increasing the speed of access in their tariff proposals - for example, the leading Moscow provider MGTS (PJSC" Moscow City Telephone Network ") has excluded Internet tariffs at speeds less than 100 Mbps from its lineup," Irina Yakimenko told ComNews.

According to preliminary estimates of TMT Consulting, at the end of 2017 the number of broadband subscribers in the B2C segment in Russia reached 32.6 million (31.3 million in 2016), penetration - 58%. The market volume amounted to 130.1 billion rubles, which is 3.7% more than in 2016. ARPU at the end of last year amounted to 339 rubles. According to the analytical agency, the top 5 Internet providers by the end of 2017 form 69% of the BBA subscriber base in the B2C segment in Russia.

According to the forecast of TMT Consulting, no significant changes in ARPU are expected in the near future. On the one hand, the popularity of converged offerings continues to grow, eroding revenue between Internet access, Pay TV, telephony and mobile services. On the other hand, due to the migration of subscribers to higher-speed tariff plans, a noticeable decrease in ARPU is also not expected.

In particular, as noted by analysts, Rostelecom remained the leader in the absolute growth of the subscriber base. The operator has increased the number of broadband users by almost 400 thousand (or 3.4%) compared to 2016. Now the provider has about 12 million broadband subscribers in the B2C segment. Rostelecom is the largest operator on the Russian fixed Internet access market and serves 37% of subscribers - individuals... The company accounts for about 40% of revenues in this market segment. The operator's growth driver remains the construction and modernization of networks - the transition to FTTB and PON-access technology, at the same time, the company is actively updating tariff and package lines. In 2017, the operator increased the number of its subscribers both in the regions and in the saturated Moscow market, "TMT Consulting said.

The press service of Rostelecom, commenting on the results of the rating, noted that officially the operator can still operate on data only for nine months of 2017, but expects the outlined trends to continue. "Over the past six years, the coverage of Rostelecom's optics has doubled - from 16.4 million to 32.7 million households. This has created the technical basis for the active growth of the subscriber base," the company noted.

As for the broadband access segment, the provider's press service considers it important not only to increase the overall subscriber base, but also to dynamically increase the number of households connected to optical access networks. In 2018, the operator will continue to strengthen the direction of work with developers and comprehensive provision of modern digital services to both residents of new buildings and management companies.

According to the study, ER-Telecom Holding JSC (Dom.ru brand) took the second place in absolute growth of the subscriber base with a result of 386 thousand new customers. "In relative terms, the operator's growth rate was the highest among the top 5 and amounted to 12.4%. ER-Telecom currently has 3.5 million broadband subscribers in the B2C segment. A significant part of new subscribers was brought by the acquired companies - LLC Novotelecom (Electronic City brand), Akado Group of Companies (Komkor OJSC) in St. Petersburg and Sverdlovsk region, LLC "Columbia Telecom" in Volgograd ", - said in a study of the analytical agency." TMT Consulting "added that, in addition to issues of extensive development, in 2017," ER-Telecom "implemented a project to modernize and expand the network.

MTS (Mobile TeleSystems PJSC) took the third place in terms of subscriber base growth - an increase in comparison with 2016 by 218 thousand subscribers, up to 3.1 million people. "Unlike its closest competitors, the growth of the provider's subscriber base in 2017 was only organic. The growth in the number of MTS users took place both at the expense of MGTS and at the expense of the regions. - commented in "TMT Consulting", adding that in the Moscow market MGTS occupies a leading position (serves about 33% of broadband subscribers). At the end of 2017, MGTS continued to strengthen its positions in the Moscow market, demonstrating growth by 91 thousand users compared to 2016.

"Thanks to the increased marketing activity of VimpelCom PJSC (Beeline brand), for the first time in the past few years, it was possible to stop the decline in the fixed broadband subscriber base and increase the number of service users by 3.2%, to 2.24 million people, compared to 2016. . ", - commented in" TMT Consulting "the fourth position of the company in the rating. The analytical agency noted that the main successes of the company in the fixed broadband access market are associated with the development of a converged All-in-One offer. At the end of 2017, the offer was used by about 39% of the company's broadband access subscribers (or 870 thousand).

"A significant increase in users of converged tariffs, which increase subscribers' interest in broadband Internet access services, as well as successful marketing activities have allowed us to increase the broadband access base for the first time in several years. Development of fixed-line communications is one of the strategic priorities of VimpelCom, to which we will pay great attention this year, "the company told ComNews.

The fifth position was taken by JSC "Company TransTeleCom" (TTK): the growth of the operator's subscriber base last year amounted to 134 thousand subscribers (or 8.8%). According to the analytical agency, the operator now has 1.66 million broadband subscribers. "This year, the operator focused on the introduction of new services: it began to develop IPTV services, and also launched its own OTT service, TV without Borders," analysts from TMT Consulting noted.

TTC recalled that in 2017 the company actively introduced new services and services in order to provide subscribers with a full range of telecommunications services. In the spring, the operator launched the Interactive TV service, in the summer - the OTT service “TV without Borders.” In the fall, the company offered subscribers the mobile application “TTK TV”, and currently the adaptation of the “TTK TV” product for Smart TV platforms is being prepared. last year it entered the mobile communications market by launching a virtual operator TTK Mobile on the networks of its technological partner Tele2 (T2 Mobile LLC).

As noted in TMT Consulting, “the structure of the Russian broadband access market has not undergone significant changes compared to 2016. Due to active M&A activities, the ER-Telecom operator strengthened its position: its share of subscribers increased by 1 percentage point. P". "The shares of other operators from the top 5 remained practically at the level of 2016," the agency concluded.

In a conversation with a ComNews correspondent, Irina Yakimenko clarified that NetByNet (NetBy Net Holding LLC, 100% subsidiary of MegaFon PJSC "), Akado-Telecom, PJSC Tattelecom, JSC Ufanet and JSC SMK Siberian Networks.

 

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