European data services 'stagnating'

The Western European data services market is "stagnating" in the slow lane with growth rates hardly reaching two per cent, Yankee Group reported today.

In contrast, the analyst firm noted that broadband access is growing in importance, increasing to half the total corporate data revenue.

The report assessed how service providers are navigating between the dangers and opportunities of the European corporate data market across Belgium, Denmark, France, Germany, Italy, The Netherlands, Spain, Sweden, Switzerland and the UK.

Yankee Group predicted that business DSL will account for 46 per cent of Western European enterprise data revenue by 2009, defined as the aggregate of corporate data and business broadband.

Revenue from IP VPN and Ethernet services is expected to account for 56 per cent of corporate data revenue by 2009.

In 2007, the transition to non-traditional-based services will be complete in seven out of Europe's top 10 economies.

"Broadband, Ethernet and IP VPN should be the focus for service providers within the corporate data market, but they will attract the highest competition, " said Tony Marson, Yankee Group senior analyst for telecommunication strategies Europe.

"To compete successfully, service providers need to clearly define customer requirements through deep segmentation, develop innovative data products to increase revenue and margins, and focus on up-selling to the current customer base prior to new customer acquisition."

Yankee Group believes that the crossover point, in terms of the non-traditional services becoming the dominant revenue type, will be sometime in 2006.

This is true for all of the top countries in EMEA with the exception of Sweden and the UK where non-traditional data networking revenue is already dominant.

For the UK, the analyst expects the crossover point to be this year, while in Sweden, non-traditional services were the dominant revenue stream since 2004 onward, further emphasising the maturity of the non-traditional data services market.

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