Ovum’s latest analysis of the European wholesale market estimates that it was worth $46.5 billion (€33.6 billion) in 2010, down 2.1% on the previous year. Although wholesale revenues in national and international wholesale markets declined year-on-year, growth in sales of non-voice services significantly reduced the impact of falling voice revenues.

 

Our two recently published reports “European Wholesale Market Share 2009–10: The Big Picture” and “European Wholesale Market Share 2009–10: The Detail” present our estimates of the market shares of 24 leading wholesalers based on their latest annual results.

 

They demonstrate that while voice sales continued their downward slide in carrier’s national and international markets, increases in sales of non-voice services (such as access, backhaul, managed services, content distribution, and hosting) softened the overall effect of the decline, but were not sufficient to fully compensate for it. In European international wholesale markets, diversification away from commodity services almost balanced the fall in voice revenues.

 

Although European wholesale revenues of the 24 leading market players declined between 2009 and 2010, the 2.1% fall was significantly less than the 3.7% slide in their retail revenues. Hence, these carriers are increasing their dependence on revenues from the wholesale channel after a period in which service commoditization and migration from access resale to LLU have squeezed wholesale revenues.

 

The wholesale channel presents valuable opportunities for carriers to earn additional revenues. By carrying additional wholesale traffic carriers can improve their economies of scale and returns on investment. Retail business lost to competitors can still bring in revenue by providing wholesale services to retail service providers. The top five wholesalers in the European market earned $26.7 billion from sales of wholesale services in 2010.

 

Over the years since our first analysis of the size of the European wholesale market, voice revenues have declined from 63% of the total in 2003 to just 42% in 2010. [The] fall is most pronounced in carrier’s national wholesale markets, where sales of voice services have fallen to less than a third of the total. [The decline] is a direct consequence of increased competitive pressure on voice prices and successful diversification of non-voice service portfolios into value-added bundles and solutions.