Within Europe there are two contrasting scenarios. Whilst the majority of Europe has fixed broadband penetration at an average of 27.7 per cent, in the Commonwealth of Independent States (CIS), it sits at just 14.3 per cent. With the CIS having a staggering 140 per cent mobile penetration, the region has one of the largest gaps between mobile and fixed penetration in the world. This high level of mobile penetration has resulted in mobile networks playing a critical role in the socioeconomic development within CIS and in Eastern Europe in general. However, with the mobile market experiencing near saturation, operators need to look to alternative business models to create new, monetisable services and secure the future revenues of their business.
Unified communications opportunity
Despite the dominance of mobile, providing fixed connectivity to the unconnected population in Eastern Europe presents operators with huge opportunities for growth. In Western Europe, fixed connectivity has become increasingly important to a growing number of operators as they look to generate new revenue opportunities by offering bundled tariff packages. These bundled packages, where operators provide mobile and fixed internet services under a single bill, have undoubtedly gained rapid momentum in recent years, with a unified communications approach becoming central to operators’ business models. In their 2014 annual statement, for example, Vodafone commented that they have seen “more and more businesses and individual consumers seeking unified communications, or converged fixed and mobile services.” For Vodafone, the advantages of adopting the approach are clear, with the report stating that “mobile customer churn is typically three times higher than that of customers taking combined fixed and mobile services.” This sentiment is echoed by Dutch operator KPN, who noted that “bundled services are at the heart of our strategy,” as a unified approach will enable them to “reduce churn and optimise customer lifetime value."
The shift towards a unified communication strategy is starting to be seen in several Eastern European nations. However, the lack of fixed infrastructure in the region severely hinders operator’s ability to profit from this opportunity. The high infrastructure costs needed to roll out fixed networks to address this have often led to operators struggling to make the business case for investment. This has meant that whilst operators across Western European profit from bundled packages, many across Eastern Europe are not afforded the same opportunity.