Ono, Wanadoo, and T-Online Will Use Unbundled DSL Service to Capture Market Share from the Spanish Incumbent

The broadband market in Spain has received a competitive boost, according to the latest Broadband Media & Communications service research from Strategy Analytics, "Competitors Converge on Telefonica in Spain's Booming Broadband Market," which notes that the pending merger between cable operators, Auna and Ono, puts further pressure on Spain's Telefonica to capture new broadband subscribers. The Spanish incumbent - already strained by competing with fellow DSL operators Wanadoo and T-Online - will now likely fall short of its target of 50 percent market share target by 2008. For these competitors, unbundled DSL service will be a critical factor in determining market success or failure, as the ability to differentiate and leverage economies of scale will become increasingly important in the years to come.

"Spain's cable industry is a key factor in the continued growth of broadband in the region," said Martin Olausson, Senior Analyst at Strategy Analytics. "With the market consolidating into four strong broadband service providers the stage is set for an all-out marketing war and fierce competition in the years to come."

The report also predicts that by 2010, 60 percent of Spanish homes will use broadband and have the option to receive a full range of Internet, TV and communications services from leading broadband service providers.

"To remain competitive, Telefonica now has to leverage its national reach and head start in the rollout of advanced broadband services such as IPTV," said Olausson.

Broadband Homes in Spain, End of Year 2004, 2005, and 2010

	2004	2005	2010
Total Broadband Homes (Millions)	3.32	4.51	7.86
Share of total Households (%)	26%	35%	60%
Share of Internet Households (%)	59%	75%	99%

Source: Strategy Analytics, 2005

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