Fixed Broadband Market Spotlight
Spain has one of the largest telecommunications market in Europe, a country with a population of 46.7 million. Fixed broadband coverage reaches about 96% of the population but challenges remain in rural areas. In 2018 the Digital Economy and Society Index (DESI) for Spain reported that up to 85% of the households have access to fast broadband with speeds at least 30 Mbps. The Spanish fibre network has the second highest household reach in the EU. However, fixed broadband take up is still below the EU average, it is notable that one fifth of Spanish citizens are not online. The availability of fast and high speed broadband has been costly to the network providers, and even with the financial support of the Spanish government, with programs like the ‘Programme for the extension of next-generation broadband networks’ (Programa de Extensión de la Banda Ancha de Nueva Generación, PEBA-NGA), these expansions have been expensive. Fixed broadband prices are high in Spain, and the main reason for this has been the aggressive move by the operators to push for multiplay services. This has been led by Movistar, but was quickly followed by the other main providers, resulting in a highly converged market where providers need to recoup the cost of the network expansion.
Tariffs
Spanish fixed service providers offer their fixed broadband mostly bundled with fixed voice, TV or mobile voice and data.
From the latest OECD Fixed Broadband Price Benchmarking service we have captured a graph showing the cheapest option available per EU country for a tariff of 30 Mbps speeds and above; the graph also includes EU average. When comparing Spain to other EU countries offering speeds of 30Mbps and above, Spain is second most expensive. However, there is a feature in the system where users can normalise the price per 1024 kb/s, this is not actual cost but derived cost per bitrate – and this is what we are showing in the second graph. When this is applied Spain’s position is significantly improved among the EU, with Spain sitting exactly in the middle.
This trend does not change much when looking at data for tariffs with speeds of 100 Mbps and over. Spain’s position improves slightly and moves up to 5th place from the bottom in the cheapest offering graph, but again right in the middle of the normalised graph.
In terms of Spain compared to the EU average it falls well below the EU average when comparing the cheapest offering for 30 Mbps and over. Spain’s position improves slightly when reviewing offerings with speeds of 100 Mbps and over, and Spain is much closer to the EU average in the higher speed basket. Furthermore, when reviewing its place in the normalised graph Spain is considerably cheaper than the EU average.
Teligen Comment
Over the past few years, Spain has been consistently one of the most expensive EU countries for both the 30 Mbps and the 100 Mbps baskets. Spain’s fixed providers have pushed their multiplay offerings aggressively, and Strategy Analytics has observed this as far back as 2012 starting with Movistar in 2012 leading the market in the push for the quad and quintuple play packages in particular. Movistar‘s initial charge was closely followed by the two other main providers Orange and Vodafone in the following two years. The impact of this has been dramatic, as evidenced by the high number of housedholds that have a quad play subscription. Additionally, according to the Spanish regulator in 2017 out of 6.9 million Pay TV subscribers nearly 86% were subscribed to quintuple play, and it would seem highly likely that this number has gone up rather than down since then. Furthermore, the Spanish telecoms market is highly converged, with most subscriptions – 87% in total - held by just three providers. In 2018 Movistar had 40% market share, Orange 26% and Vodafone 21%. This market dominance has provided favourable conditions for the three main providers in driving consumers towards multiplay services. Another important element of note is the expansion of the next generation network in Spain, which on the one hand has positioned Spain well with regards to household access to fast and high speed internet access. However, in spite of governmental support, the providers have had to relay the cost to their customers and therefore consumers have been on the receiving end with high prices for multiplay offers and lack of standalone offerings.
Teligen will be watching closely what happens with the advent of 5G and if that will affect consumers and the prices they pay for fixed broadband services. A Spanish national plan for 5G was launched in December 2017 with a roadmap covering 2018-2020, including the auction of the core L band. As it stands Vodafone has already launched 5G tariffs. Movistar announced earlier this year that it would roll out 5G in 2019 and 2020, with 2020 looking more likely. Orange is hanging back and aiming to launch at the earliest at the beginning of 2020. Already customers in Spanish cities enjoy very high fixed broadband speeds but a crucial factor in how the market for fixed broadband evolves will be how mobile providers price 5G tariffs and how they set the corresponding data allowances, especially as Movistar, Orange and Vodafone are also the largest providers of Mobile Voice and Data services in Spain.
For more information on OECD Fixed Broadband Price Benchmarking and for a trial please contact jhelgadottir@strategyanalytics.com
Jóhanna K. Helgadóttir - jhelgadottir@strategyanalytics.com
Sources:
OECD Fixed Broadband Price Benchmarking Q3 2019 – https://www.strategyanalytics.com/access-services/service-providers/tariffs---mobile-and-fixed/broadband/oecd-fixed-broadband/market-data/report-detail/oecd-fixed-broadband-price-benchmarking-q3-2019
Digital Economy and Society Index 2018 Report; Spain – https://ec.europa.eu/digital-single-market/en/news/digital-economy-and-society-index-2018-report
CNMC DATA – www.data.cnmc.es/datagraph/jsp/inf_anual.jsp