Consumers plug into broadband services

The market for consumer broadband value-added (BVA) services surged by 81 per cent during 2006, according to new research.

With over $16bn in revenues, consumer BVA services became "increasingly essential" to the financial success of broadband services, the report from Point Topic argues.

The analyst firm estimates that consumer BVA services brought in more than 25 per cent as much revenue as basic broadband access during 2006. VoIP, IPTV and online gaming all did well.

Consumer BVA services revenues jumped from $11.9bn at the start of 2006 to $21.6bn at the end of the year.

This was steeper than the growth rate for the number of consumer broadband lines (34 per cent to 246 million) or the run-rate of broadband access revenues (32 per cent to $71bn) during 2006.

Report author John Bosnell, a senior analyst at Point Topic, said: " Value-added services are making an increasingly valuable contribution to overall broadband revenues.

"Our research shows that BVA services were contributing an extra 30 per cent to basic access revenues by the end of 2006."

In value terms, the top five contributing services in 2006 were security, IP telephony, online gaming, home networks and music.

IP telephony, defined as full-service phone-over-broadband offerings, had overtaken security by August 2007 to become the value added service that generates the greatest revenue.

In some markets, such as France, Japan and the US, IP telephony has won a significant share of the telephone market, accounting for around a quarter of all telephony traffic in France by the end of 2006, for example.

Even with tariffs that are lower than traditional PSTN charges, the growing size of the IP telephony subscriber base means significant revenue.

"Taken together, just two services, IP telephony and security, account for 56 per cent of total consumer BVA services revenues. That shows how important it is for ISPs to have a strong position in these areas," concluded Bosnell.