Fixed-Mobile Substitution in Western Europe: Causes and Effects

• What is the real extent of FMS in individual Western European markets, in terms of the displacement of fixed voice lines and in terms of fixed and mobile networks’ respective share of total voice traffic and revenue?
• What are the reasons for the substantial differences in the extent of FMS in different markets across Western Europe?
• What are the key factors that dictate the extent and speed of FMS in a particular market? What is the impact of absolute price levels, the relative pricing of fixed and mobile services, and the proportion of customers with prepaid tariffs?
• Is FMS good or bad for mobile operators?
• What actions can mobile, fixed and integrated network operators take to speed up or slow down FMS and to maximise their revenue from voice services in the context of FMS?

Executive summary

Introduction

The status of FMS in Western Europe

Factors that influence the extent and rate of FMS

Implications of FMS and recommendations for operators

Individual country assessments

Actions

Figures and tables

Figure 1: Fixed and mobile connections in Western Europe, March 2004-March 2006

Figure 2: Proportion of households in Western Europe that were mobile-only, December 2003-December 2005

Figure 3: Proportion of voice traffic in Western Europe that was mobile-originated, 1Q 2004-1Q 2006

Figure 4: Volume of fixed-originated and mobile-originated voice traffic in Western Europe, 1Q 2004-1Q 2006

Figure 5: Volume of fixed and mobile voice traffic in Western Europe, 1Q 2004-1Q 2006

Figure 6: Spend on fixed and mobile voice services in Western Europe, 1Q 2004-1Q 2006

Figure 7: Average spend per minute on fixed and mobile voice services in Western Europe, 1Q 2004-1Q 2006

Figure 8: Breakdown of spend on fixed voice services in Western Europe, 1Q 2004 and 1Q 2006

Figure 9: Proportion of households in Western Europe that were mobile-only, by country, December 2003-December 2005

Figure 10: Proportion of voice traffic in Western Europe that was mobile-originated, by country, 1Q 2004-1Q 2006

Figure 11: Change in overall voice usage and spend in Western Europe, by country, 1Q 2004-1Q 2006

Figure 12: Change in fixed voice usage and spend in Western Europe, by country, 1Q 2004-1Q 2006

Figure 13: Relationship between the proportion of voice traffic that was mobile-originated and average mobile voice spend per minute in Western Europe, by country, 1Q 2006

Figure 14: Relationship between the proportion of voice traffic that was mobile-originated and the mobile price premium in Western Europe, by country, 1Q 2006

Figure 15: Relationship between the proportion of households that were mobile-only and the mobile price premium in Western Europe, by country, 1Q 2006

Figure 16: Growth in Internet penetration in selected Western European countries, December 2001-December 2006

Figure 17: Relationship between mobile voice usage and the proportion of contract customers in Spain, 1Q 2004-1Q 2006

Figure 18: Growth in the proportion of households that were mobile-only in selected Western European countries, December 2001-December 2005

Figure 19: Relationship between GDP per capita and the proportion of households that were mobile-only in Western Europe and CEE, by country, December 2005

Figure 20: Relationship between the average number of people per household and the proportion of households that were mobile-only in Western Europe, by country, December 2005

Figure 21: Relationship between the average annual temperature and the proportion of voice traffic that was mobile-originated in Western Europe, by country, 1Q 2006

Figure 22: Relationship between mobile voice spend per capita and the proportion of households that were mobile-only in Western Europe, by country, December 2005

Figure 23: Relationship between mobile voice spend per capita and the proportion of voice traffic that was mobile-originated in Western Europe, by country, 1Q 2006

Figure 24: Changes in average spend per minute, voice usage and ASPU for mobile voice services in selected Western European countries, 1Q 2004-1Q 2006

Figure 25: Relationship between the proportion of households that were mobile-only and the proportion of voice traffic that was mobile-originated in Western Europe, by country, 1Q 2006

Figure 26: Spend per capita on fixed and mobile voice services in selected Western European countries, 1Q 2006

Figure 27: Average spend per minute, voice usage and ASPU for mobile voice services in Western Europe, by country, 1Q 2006

Figure 28: Volume of fixed voice calls in Western Europe, by type of call, 1Q 2004-1Q 2006

Figure 29: Spend on fixed voice calls in Western Europe, by type of call, 1Q 2004-1Q 2006

Figure 30: Fixed and mobile voice usage per capita in Western Europe, by country, 1Q 2006

Figure 31: Changes in fixed voice usage and spend in selected Western European countries, 1Q 2004-1Q 2006

Table 1: Factors influencing the extent and rate of FMS in Western Europe

Table 2: Comparison of mobile voice pricing and FMS in three types of Western European market

Table 3: FMS metrics for Western Europe, 1Q 2004-1Q 2006

Table 4: FMS metrics for Austria, 1Q 2004-1Q 2006

Table 5: FMS metrics for Belgium, 1Q 2004-1Q 2006

Table 6: FMS metrics for Denmark, 1Q 2004-1Q 2006

Table 7: FMS metrics for Finland, 1Q 2004-1Q 2006

Table 8: FMS metrics for France, 1Q 2004-1Q 2006

Table 9: FMS metrics for Germany, 1Q 2004-1Q 2006

Table 10: FMS metrics for Greece, 1Q 2004-1Q 2006

Table 11: FMS metrics for Ireland, 1Q 2004-1Q 2006

Table 12: FMS metrics for Italy, 1Q 2004-1Q 2006

Table 13: FMS metrics for the Netherlands, 1Q 2004-1Q 2006

Table 14: FMS metrics for Norway, 1Q 2004-1Q 2006

Table 15: FMS metrics for Portugal, 1Q 2004-1Q 2006

Table 16: FMS metrics for Spain, 1Q 2004-1Q 2006

Table 17: FMS metrics for Sweden, 1Q 2004-1Q 2006

Table 18: FMS metrics for Switzerland, 1Q 2004-1Q 2006

Table 19: FMS metrics for the UK, 1Q 2004-1Q 2006