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Competition between internet providers has shifted to all-in-one packages

Of the seven million internet connections in the Netherlands, six million are part of a package with multiple telecommunication services in one. Most consumers opt for packages that combine television services, broadband access, and fixed telephony. Packages that, in addition to these three services, also include mobile telephony are called quad-play packages (4-in-1), and their number has doubled over the past year. These are some of the key findings of the Telecom Monitor of the Netherlands Authority for Consumers and Markets (ACM). Henk Don, Member of the Board of ACM, explains: “Consumers often choose packages over individual contracts. Competition thus increasingly shifts to these all-in-one packages.”

Copper and fiber networks are growing

The broadband market is dynamic at the moment. For the first time in years, the number of connections over the copper network of Dutch telecom company KPN has increased again. Fiber continues to post solid growth rates, although the total number of connections is still relatively low. The number of cable subscribers has slightly decreased. Mr. Don continues: “Even though the total number of broadband connections has increased only modestly, the market as a whole is very much alive. Competing providers try to impress consumers by increasing their download speeds.”

Number of broadband retail connections for fiber, cable, and DSL from the fourth quarter of 2013 through the first quarter of 2015. The figures are in thousands.

Faster and faster

A large group of consumers demand very high download speeds of 100 Mbit/s or higher. Therefore, they increasingly opt for fiber connections. Sixty-thousand connections were added to the fiber network in the first quarter this year. Half of them opted for 100 Mbit/s or faster. Such fast connections allow multiple members in a household to browse the web and watch television at the same time. The number of internet connections with slightly lower download speeds continues to grow, too. By now, 62 percent of all Dutch households have an internet connection with a download speed of at least 30 Mbit/s. This has been the result of providers such as KPN and Ziggo having increased their download speeds. ACM expects download speeds to increase even further over the next few quarters, since KPN is currently investing heavily in upgrades to its copper network. New technologies will allow download speeds of over 100 Mbit/s on its copper network. The Netherlands is well on track to meet the European broadband targets. By 2020, all households in Europe must have access to internet connections with download speeds of at least 30 Mbit/s.

Examining the Netflix conflict

Today, the consultation about the study into IP interconnection has been launched. ACM carried out this study, commissioned by the Dutch Ministry of Economic Affairs. In order to transmit content from one network to the other and back again, network operators make arrangements with each other about connections (interconnection). Network operators can be providers of broadband access, but they can also be providers of content or specialized providers of connections. Arrangements can vary from verbal agreements with paper transactions to detailed contracts with financial compensations.

A dispute between Netflix and cable company Comcast about connections occurred in 2013 in the U.S. A lot of Netflix content went to Comcast customers, which meant more capacity was needed in order to stream television series. Comcast demanded compensation, which Netflix refused to pay. Consumers suffered from this conflict because capacity was not increased, and Comcast customers were only able to watch Netflix content in much lower quality or with lags due to ‘limited capacity.’

ACM has examined whether this type of problem could also occur in the Netherlands. The Dutch market does not give any reason to expect this. Competition in the broadband market stimulates providers to offer high-quality connections. And if such conflicts were to occur, ACM expects it would be able to deal with them.