United Kingdom - Telecoms, IP Networks, Digital Media and Forecasts

UK's superfast’ broadband delivery on rack, but insufficient

BuddeComm's half-yearly publication, UK - Telecoms, IP Networks and Digital Media, provides a comprehensive overview of the trends and developments in the telecommunications and digital media sectors in this key European market, including the regulator’s market data to 2011, telcos’ financial and operating data to June 2012 and market developments to mid-2012.

Economic background

The UK has suffered from lower economic output for three of the last five years. Economic data in the second quarter of 2012 showed the economy was sliding into a significant double-dip recession, with GDP likely to reach only 0.2% for 2012. With a stalled construction industry, a 1.2% fall in industrial production between the first and second quarters of 2012, and a 1.4% fall in manufacturing, the economic output is now almost 5% lower than in early 2008. This is having a dire effect on consumer spend in all sectors.

Telecom market overview

The UK’s telecom market has not been unscathed by the global economic downturn. Total telecom revenue fell in 2011 for the third successive year. A slight climb in retail revenue in the broadband, mobile data and corporate sectors was offset by larger falls in from fixed calls and access. The TV market shows the greater promise for revenue growth in 2013, though overall telecom revenue during the next two years will be stagnant. This will challenge operators financing network upgrades.

Mobile market

The mobile phone sector is one of the key drivers in the UK’s telecoms market. Mobile data use now accounts for only a small fraction of IP traffic but this will grow rapidly in coming years through the combination of upgraded networks making data more readily accessible, the proliferation of cheaper data plans and the wider availability of more capable handsets. The sector accounts for about 50% of total telecom revenue, and this may reach 55% for 2012.

UK 's; Key telecom parameters – 2010; 2012
Sector | 2010 | 2012 (e)

Subscribers to telecoms services (million):

Fixed broadband | 19.1 | 21.2
Fixed lines | 33.4 | 33.0
Mobile telephony | 81.1 | 83.3

Penetration of telecoms services:

Fixed-line telephony | 54% | 51%
Fixed-line broadband | 31.9% | 34.2%
SIM (population) | 134% | 141%
(Source: BuddeComm)

Market Highlights

By mid-2012 there were more than 100 fibre projects in the UK, from the big players including BT and the Fujitsu/Virgin Media partnership to small scale builder-owner projects such as B4RN. Together, these are deploying large-scale FttH networks, though the emphasis from BT remains with FttC.

Recent network sharing deals between O2 and Vodafone match the T-Mobile and Orange tie-up as Everything Everywhere. The development means that the UK’s emerging LTE infrastructure is likely to be provided by only two groupings of operators. This will lower infrastructure costs and support wider geographic coverage in the long-term.

The auction for 4G spectrum, delayed to early 2013, may mean that the UK as no commercial LTE service until at least 2014, far later than many other European markets.

DTTV is nearly complete, with London the most recent region to end analogue transmissions. The availability of sub-GHz spectrum for other uses may also include the 700MH band.

This report is essential reading for those needing high level strategic information and objective analysis on the telecom sector in the UK.

It provides further information on:

Market liberalisation and regulatory issues;
The impact of the global economic crisis;
Telecoms operators – privatisation, acquisitions, new licences;
Mobile data market developments in coming years in light of spectrum auctions and new license awards;
3G developments, regulatory issues and technologies including HSPA and LTE;
Broadband migration to an FttH architecture;
Historical and current subscriber statistics and forecasts;
ARPU statistics and forecasts.

Data in this report is the latest available at the time of preparation and may not be for the current year.