Irish incumbent telco Eircom is launching a long-awaited challenge to incumbent pay TV operators UPC and Sky with a new quadruple-play service, dubbed eVision.
The service is to be delivered through Eircom's fibre broadband service eFibre. Consumers currently without an Eircom broadband subscription are being targeted with bundled offerings. The launched bundles offer mobile minutes in addition to fixed telephony/broadband and TV. Eircom was assisted in the development of eVision by consultancy group 3Vision.
Adopting a similar strategy to that seen in the UK IPTV market, Eircom will give away set-top boxes free with a relatively inexpensive basic TV package. The basic eVision Essential Pack consists of 34 channels available for €10 per month, with an eVision+ PVR supplied and installed at no extra cost. Eircom is currently offering this service free for the first six months of subscription if a customer takes an 18-month contract. In addition to the basic package, customers can upgrade to an extended basic 'Experience' pack consisting of 20 extra channels, or opt for Sky Sports, Sky Movies and BT Sport packages. Eircom's triple play bundle with uncapped broadband, eFibre Unlimited, currently stands at €50 per month, to be increased to €60 after the six-month promotional period. The same package with a 30GB download limit, eFibre Advanced, costs €55 per month (€45 for the first six months).
The launch of eVision has already prompted a defensive move from Ireland's largest cable operator UPC, which has announced the introduction of lower priced double and triple play bundles. The 'UPC Basics Collection' triple-play bundle is to be sold at an equivalent price to eVision's full price offering. However, the corresponding double-play packages to be launched by UPC will be cheaper than both Eircom and Sky, at €30 per month for broadband and telephony and €36 per month for TV and telephony. UPC Basics Collection offers 50 digital TV channels, including a number of basic tier Sky channels not carried by eVision, such as Sky 1 and Sky News.
Eircom currently has a limited target base for its eVision service, which together with UPC's swift retaliatory move means that Eircom faces a significant challenge in growing its TV subscriber base.
Eircom has suffered from a declining broadband base in the past three years, entering into administration in Q2 2012. The move to provide TV services is likely to have been to protect its underlying broadband base, incentivising uptake of fibre broadband services. BT implemented a similar strategy in the UK, using premium sports content to drive broadband services. However, no significant impact on fibre uptake as a result of this strategy has yet been seen.
The leading pay TV service in Ireland, Sky TV, entered inthe broadband market in Ireland in January 2013, increasing competition with its ability to offer triple play services. Prior to this, an oligopoly existed in the market between Eircom and UPC; a lack of competition led to relatively high consumer prices and impacted quality of service.
Geographic issues are an ongoing issue in Ireland. Due to the distribution of households across rural towns and villages less well served by ISPs, growth in broadband uptake has been hampered. Though cable internet is growing, DSL remains the most prominent technology used by consumers, with average speeds typically less than a third of that offered by cable. But this is slowly changing. In the past two years, DSL has lost subscribers to cable broadband from UPC which has provided strong competition to Eircom with its DOCSIS broadband and triple-play services (although its digital TV subscriptions have suffered from competition with content gatekeeper Sky).
IHS estimates that less than five per cent of Eircom's retail broadband base are using VDSL technology, thus eligible for the eVision TV service. This represents a little over 1% of Irish households, despite the fibre broadband network reaching 500,000 households. As a result of limited reach, we do not expect eVision to see huge success in the pay TV market, or (as a consequence of the relatively weak content offer) act as a successful churn reduction mechanism in the broadband sector. IPTV has been unsuccessful in the past in Ireland due to limitations in broadband reach, with growth having stagnated since 2007. This resulted in then main-proponent Magnet Entertainment shifting its focus onto OTT TV services with the launch of AerTV in 2011.
IHS believes satellite and cable TV services will remain the key pay TV platforms in Ireland. Though Eircom TV is being pushed as a low-cost alternative to Sky and UPC, the requirement of a fibre connection elevates the price up to levels which are not likely to be attractive enough for consumers. Uncapped triple-play from Eircom costs €60 per month (after the promotional period). By comparison, Sky Ireland offers access to TV services with a superior array of channels for €67 a month bundled with its Broadband Unlimited service. Sky has continued to see solid growth in digital TV uptake, in recent periods, despite the downturn, and the latest developments are unlikely to cause major shifts in its strategy or market position.