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ADSL2+ is receiving increased attention from German telcos, like T-Com, Debitel, QSC, Versatel and Tropolys who have all signaled their intention to offer services over ADSL2+. The technology is seen as an important means of differentiation, not only through the higher speeds it offers, but also in the value-added services (VAS) it enables. Although Pyramid Research expects ADSL2+ to have a positive impact on ARPU, it will not play a major role in raising Germany’s broadband household penetration – currently the lowest in Western Europe.
ADSL2+ is a much faster version of ADSL, offering downlink speeds of up to 24 Mbps. Offering ADSL2+ provides telcos with a greater scope for differentiation, both in speed and service. In addition to raw broadband speed, ADSL2+ can be used to deliver high-bandwidth applications like TVoDSL, which can be bundled in a triple play package. Although TVoDSL can be delivered over Deutsche Telekom’s current broadband infrastructure, as proven by T-Online’s T-Vision IPTV and VoD (video on demand) service, the bandwidth of ADSL2+ will allow several different high-bandwidth applications to run at the same time, such as online gaming, VoD and video telephony. Looking forward, we expect the first ADSL2+ value-added services (aside from increased bandwidth) to emerge in 2006.
ADSL2+ will positively impact ARPUs as ISPs charge a premium for broadband speed and subscribers adopt broadband applications. TVoDSL especially will provide ISPs with the means to capture pay-TV revenue that traditionally goes to Germany’s numerous cable operators. Additionally, as described in the Pyramid Research report, Demystifying Triple Play, we believe VoD opens the door for ISPs to capture revenue the end-user spends on renting DVDs or going to the movies.
ADSL2+ alone will not significantly increase broadband penetration. At this stage, those Germans who are most likely to find ADSL2+’s bandwidth – and the applications that can be run over it – appealing are those Germans who have already made the transition to broadband and are accustomed to it. People who have not adopted broadband are unlikely to enter the broadband arena by jumping into the deep-end with ADSL2+. The 6 Mbps service being rolled-out by ISPs across Germany should suffice for most basic broadband needs.
The full text of this article is available as part of Pyramid Research’s Europe Perspective publication available in our online store.
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