Skip to main content

Consumer BVAS revenues up 81% in 2006

With over $16 billion in revenues, consumer BVAS became increasingly essential to the financial success of broadband services.

Altogether, consumer BVAS brought in more than 25% as much revenue as basic broadband access during 2006. Telephone (Voice over IP, VoIP) and TV services (IPTV) and online gaming all did well.

The run-rate for consumer BVAS revenues increased by almost 81% during 2006, from $11.9 billion at the start of the year to $21.6 billion at the end of the year. This was steeper than the growth rate for the number of consumer broadband lines (34% to 246 million) or the run-rate of broadband access revenues (32% to $71 billion) during 2006.

The results are from the fourth edition of Point Topic’s report ‘The consumer BVAS market’, part of the Broadband Money Makers service. These reports are all based on a consistent research methodology This means that we can compare the results for the end of 2006 with those for end-2003 and end-2004.

Report author John Bosnell, Senior Analyst at Point Topic, said ‘Value added services are making an increasingly valuable contribution to overall broadband revenues. Our research shows that broadband value-added services were contributing an extra 30% to basic access revenues by the end of 2006.’

That figure compares with a contribution of 22% at the beginning of the year, 18% at the start of 2005 and 10% at the start of 2004. For the year of 2006 as a whole, Point Topic estimates that consumer BVAS revenues were $16.3 billion, with access revenues of $62 billion.

In value terms, the top five contributing services in 2006 were, in order, security, IP telephony, gaming online, home networks and music. IP Telephony, defined as full-service phone-over-broadband offerings, has now (August 2007) overtaken security to be the value added service that generates the greatest revenue.

In some markets, such as France, Japan and the USA, IP telephony has won a significant share of the telephone market. It accounted 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.

This is reflected in the growth of IP Telephony revenues in percentage terms, with a 188% increase. The other variant of VoIP, Internet voice services such as Skype – offering a best-efforts level of service - had a similar rate of revenue growth (180%), but much lower actual revenues ($173 million at the end of 2006).

Bosnell commented: ‘Taken together, just two services, IP Telephony and Security, account for 56% of total consumer BVAS revenues. That shows how important it is for ISPs to have a strong position in these areas.’

BVAS Average Revenue Per User (ARPU) went from $65 per user per year at the beginning of 2006 to $88 at the end of the year. This mainly reflects the fact that consumers are using more services. Most BVAS charges are the same as or slightly less than the previous year. Value-added services therefore contributed an additional 25.5% to broadband access revenues during 2006.

Excluding security, there were 307 million BVAS accounts at end-2006, an average of 1.25 per broadband line. That compares to 0.75 per line at end-2005, 0.59 per line at end-2004 and 0.53 at end-2003.

Désiré has been musing and writing about technology during a career spanning four decades. He dabbled in website building and web hosting when DHTML and frames were en vogue and started writing about the impact of technology on society just before the start of the Y2K hysteria at the turn of the last millennium. Following an eight-year stint at where he discovered the joys of global tech-fests, Désiré now heads up TechRadar Pro. Previously he was a freelance technology journalist at Incisive Media, Breakthrough Publishing and Vnunet, and Business Magazine. He also launched and hosted the first Tech Radio Show on Radio Plus.