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


Attention: There is an updated edition available for this report.

This report provides a comprehensive overview of trends and developments in the UK’s telecoms market, with full analyses of the mobile, Internet, broadband, digital TV and converging media sectors. Subjects include:

  • Market and industry analyses, trends and developments;
  • Facts, figures and statistics;
  • Industry and regulatory issues;
  • Infrastructure;
  • Major Players, Revenues, Subscribers, ARPU, MoU;
  • Internet, VoIP, IPTV;
  • Mobile Voice and Data Markets;
  • Broadband (FttH, DSL, cable TV, wireless);
  • Convergence and Digital Media;
  • 3G subscriber and mobile ARPU forecasts to 2015;
  • Broadband market forecasts for selective years to 2020.


UK’s regulated fibre sector shifts emphasis to FttHBuddeComm’s annual publication, UK - Telecoms, IP Networks, Digital Media and Forecasts, provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in UK.

The UK’s telecom market has not been unscathed by the global economic downturn, which has pushed the economy into one of the deepest recessions experienced by any European country. Whereas GDP growth was above 5% throughout 2007 and the first three quarters of 2008, it has since plummeted to barely 0.5% in the six quarters to June 2010. Overall revenues in the telecom sector fell 2.3% year-on-year in 2009. Competition continued to drive down prices, but the effect on real monthly household spend on telecom services is negligible: according to the regulator, monthly spend on communications accounted for 4.4% of total household spend in 2009, compared to 4.5% in 2003.

Investment in the telecom sector has also been affected by the economic climate, as declining revenue for telcos combines with a liquidity market which is expected to remain problematic into 2011. This will dampened their ability to fund network investment during the next two years, leading them concentrating their efforts in core areas: upgrading cable and fibre networks, and widening software upgrades on mobile networks for LTE and HSPA+ technologies. In the face of diminishing mobile voice revenue, mobile network operators (MNOs) are united in promoting technologies to stimulate and support high-end mobile data use among consumers.

Fixed-line penetration is being buoyed by consumer adoption of VoIP services, generally offered as a bundle, while mobile penetration has increased to the extent that by mid-2010 about 18% of households relied on mobile-only access, compared with only 6% in 2001. Average residential broadband speeds exceeded 8Mb/s in 2010, though achieved speeds are commonly only 40% of advertised speeds. There remain numerous areas unserved by cable and where DSL is impractical due to the distance from exchanges. To this end the UK’s 2010 Digital Economy Act has set in train a number of policies and objectives to secure a minimum broadband service nationally by 2015.

The mobile market in mid-2010 underwent one of the more significant shifts in recent years with the merger of T-Mobile and Orange as the joint venture (JV) Everything Everywhere. Hitherto, four of the five MNOs enjoyed similar market shares while H3 has been rapidly catching up in terms of subscriber numbers. The new JV has created a single player holding 42% share of subscribers compared to 27% for its nearest rival O2 and 23% for Vodafone. Given Orange’s existing broadband and fixed-line services interests, the JV will thus be well placed in coming years to develop and promote quad-play services. It is anticipated to be a licensee of 2.6GHz and 800MHz spectrum, and so from early 2012 will be well placed to gear up its mobile broadband offerings based on LTE technology.

The digital TV market remains among the most competitive in Europe, with both free and pay satellite services competing against a range of platforms providing IPTV and VoD services. New developments such as Project Canvas have incorporated the talents and programming from the main broadcasters. By mid-2010, digital TV was adopted by 92% of households, while analogue switch-over (ASO) is on schedule for early 2012.

UK - Key telecom parameters - 2009 - 2011
Sector 2009 2011 (e)
Broadband:
Fixed broadband subscribers (million) 18.1 20.2
Fixed broadband penetration rate 29% 34%
Mobile broadband subscribers (million) 9.6 17.6
Subscribers to telecoms services:
Fixed-line telephony (million) 32.1 32.1
Mobile phone (million) 80.0 86.0
Mobile penetration (population) 131% 137%
(Source: BuddeComm based on industry data)
Market highlights:LLU on copper networks has continued to grown steadily, and by August 2010 there were 6.9 million unbundled lines. The need for scale among LLU operators has led to a number of mergers, leaving three operators commanding 75% of all broadband lines. The economics of scale will enable them to reduce access prices further in coming years as they face increasing competition from the mobile network operators. About 89% of all UK households are connected to an unbundled exchange, compared to 40% at the beginning of 2006. About 75% of exchanges will be equipped to provide ADSL2+ by early 2011. Competition in urban areas is intense, leading to some of the lowest broadband prices in Europe.The 2010 Digital Economy Act committed the government to provide a minimum 2Mb/s service nationally. Part funded by the public purse, it relies on mobile broadband using both sub-GHz and 2.6GHz spectrum to extend the reach to 10% of the population in rural areas. Regulation measures adopted in mid-2010 are geared towards sharing ducts and infrastructure such as electricity poles to lower build-cost and extend the reach of fibre more quickly.LTE trials have kept pace with developments elsewhere in Europe, led by O2 which envisages providing data at 140Mb/s, or ten times the speed currently available. The success of LTE will be much needed after 2012 when MNOs are granted new spectrum licences to help develop rural broadband access as well as provide a platform for them to develop their mobile data services.In the cable sector, Virgin Media has concentrated on boosting its broadband speeds, providing 50Mb/s during 2009 and 100Mb/s during 2010, with plans to extend the faster service across its network by mid-2011. The company has also trialled a 200Mb/s service and in mid-2010 began preparing for modems to handle 400Mb/s, though a potential commercial launch is dependent on consumer need for this level of bandwidth.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:

The digital media market where the UK has the highest level of digital TV penetration in Europe, with a substantial multichannel environment;
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 anticipated spectrum auctions and new license awards in 2012;
3G developments, regulatory issues and technologies including HSPA and LTE;
Mobile market consolidation and competitive pressures obliging operators to concentrate on packaging service bundles and promoting applications such as mobile searching and advertising facilities;
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.

1. Key Statistics
2. Telecommunications Market
2.1 Overview of the UK’s telecom market
3. Regulatory Environment
3.1 History
3.2 Regulatory authority
3.2.1 Office of Communications (Ofcom)
3.2.2 Ofcom’s strategic review
3.2.3 Digital Economy Act 2010
3.3 BT’s structural separation
3.3.1 Openreach
3.4 Telecom sector liberalisation in the UK
3.4.1 Privatisation of British Telecom
3.4.2 Interconnect
3.4.3 Access
3.4.4 Number Portability (NP)
3.4.5 Carrier PreSelection (CPS)
3.4.6 Wholesale Line Rental (WLR)
4. Fixed Network Market
4.1 New regulations
4.2 Fixed network operators
4.2.1 British Telecom
4.2.2 Kcom
4.2.3 Cable & Wireless (C&W)
4.2.4 Virgin Media
4.2.5 COLT Telecom
4.2.6 Carphone Warehouse
4.2.7 Orange
4.2.8 BSkyB
5. Telecommunications Infrastructure
5.1 National telecom network
5.2 Next Generation Networks
5.2.1 BT’s 21CN
5.3 International
5.3.1 Submarine cable networks
5.3.2 Satellite networks
6. Broadband Market
6.1 Overview
6.1.1 Broadband statistics
6.2 Emerging trends
6.3 Government support
6.3.1 Digital Britain
6.3.2 Wholesale broadband
6.3.3 Access to cable networks
6.4 Cable modems
6.5 Asymmetrical Digital Subscriber Line (ADSL)
6.5.1 DSL providers
6.5.2 ADSL2+
6.5.3 SDSL
6.5.4 Very High Data Rate DSL (VDSL)
6.6 Fibre-to-the-Home (FttH) networks
6.6.1 Costing fibre
6.7 Broadband Powerline (BPL)
6.8 Wireless broadband
6.8.1 Regulatory environment
6.8.2 Spectrum auctions
6.8.3 WLAN/WiFi
6.8.4 WiMAX
6.8.5 Mobile broadband
6.8.6 Internet via satellite
7. Convergence
7.1 Overview of media convergence
7.2 Key general trends
7.3 Digital media
7.3.1 Business models - bundled offers
7.4 Regulatory issues
7.4.1 Ofcom
7.4.2 Digital Dividend Review
7.4.3 Digital switchover licensing
7.5 Digital TV (DTV)
7.5.1 Broadband TV (IPTV)
7.5.2 Cable TV
7.5.3 Satellite TV
7.5.4 Digital Terrestrial TV
7.5.5 Video-on-Demand (VoD)
7.6 VoIP
8. Mobile Communications
8.1 Overview of the UK’s mobile market
8.1.1 Mobile statistics
8.1.2 Operator market shares
8.2 Regulatory issues
8.2.1 Spectrum regulations and spectrum auctions
8.2.2 Roaming
8.2.3 Number portability
8.2.4 Mobile termination rates (MTRs)
8.3 Major mobile operators
8.3.1 Hutchison 3
8.3.2 O2
8.3.3 Vodafone
8.3.4 T-Mobile
8.3.5 Orange
8.3.6 Mobile Virtual Network Operators (MVNOs)
8.4 Mobile voice services
8.4.1 Prepaid cards
8.5 Mobile broadband
8.5.1 Overview
8.5.2 Spectrum
8.6 Third Generation (3G)
8.6.1 3G statistics
8.6.2 Licensing
8.6.3 Network sharing
8.6.4 Operator services - 3G
8.7 Mobile Messaging
8.7.1 Short Message Service (SMS)
8.7.2 Multimedia Messaging Service (MMS)
8.8 Mobile data services
8.8.1 Consumer use of multimedia services
8.8.2 Mobile applications
8.8.3 Application stores
8.9 High-Speed Packet Access (HSPA)
8.10 Long-term evolution (LTE)
8.11 Mobile TV
8.11.1 Spectrum issues
9. Forecasts
9.1 Forecasts - broadband subscribers - 2007 - 2012; 2020
9.1.1 Scenario 1 - higher broadband subscriber growth
9.1.2 Scenario 2 - lower broadband subscriber growth
9.2 Forecasts - mobile ARPU - 2007 - 2010; 2015
9.3 Forecasts - UMTS - 2007-2010; 2015
10. Glossary of Abbreviations
List of tables, charts and exhibis
Table 1 - Country statistics UK - 2010
Table 2 - Telecom revenue and investment statistics - 2009
Table 3 - Telephone network statistics - June 2010
Table 4 - Internet user statistics - June 2010
Table 5 - Broadband statistics - June 2010
Table 6 - Mobile statistics - March 2010
Table 7 - National telecommunications authority
Table 8 - Telecom sector investment - 2007 - 2011
Table 9 - Share of fixed-line and mobile connections by operator - 2006 - 2009
Table 10 - Communications retail revenue by sector - 2003 - 2009
Table 11 - Retail voice and data revenue - 2003 - 2009
Table 12 - Household spend on telecoms services - 2004 - 2009
Table 40 - Virgin Media subscribers by sector - 2007 - 2010
Table 41 - COLT financial data - 2006 - 2010
Table 42 - Carphone Warehouse Group revenue, profit - 2007 - 2010
Table 43 - TalkTalk financial data - 2007 - 2010
Table 44 - Orange voice and Internet customers - 2004 - 2010
Table 45 - BSkyB voice customers - 2006 - 2010
Table 46 - Fixed lines in service and teledensity - 1995; 1997; 1999 - 2011
Table 47 - Forecast NGA coverage - 2009 - 2012
Table 48 - Broadband connections by type - 2002 - 2009
Table 49 - Internet connections by consumer group - 2003 - 2009
Table 50 - Market share of broadband subscribers by type - 2002 - 2009
Table 51 - Broadband availability by households - 2000 - 2010
Table 52 - Share of fixed and mobile broadband subscribers by provider - 2005 - 2009
Table 53 - Broadband penetration by technology - 2004 - 2011
Table 54 - Cable and DSL broadband subscribers - 2004 - 2011
Table 55 - Dial-up Internet subscribers - 2004 - 2011
Table 56 - Broadband subscribers by type - incumbent or other provider - 2007 - 2010
Table 57 - Percentage Internet access by dial-up and broadband - 2000 - 2010
Table 58 - PC, broadband and Internet household penetration - 2000 - 2011
Table 59 - Broadband household penetration by platform - 2007 - 2011
Table 60 - Value of e-commerce sales - 2007 - 2012
Table 61 - Internet daily traffic - 2005 - 2010
Table 62 - Advertised and average realised broadband speed - May 2010
Table 63 - Consumer broadband download speed by market share - 2005 - 2009
Table 64 - BT Openreach WRL lines - 2007 - 2010
Table 65 - Virgin Media subscribers by sector - 2007 - 2010
Table 66 - Virgin Media ARPU - 2007 - 2010
Table 67 - Virgin Media proportion of broadband subscribers by speed of service - 2008 - 2009
Table 68 - Virgin Media financial data - 2007 - 2010
Table 69 - Virgin Media revenue growth by sector - Q2 2009 - Q2 2010
Table 70 - xDSL subscribers - 2000 - 2011
Table 71 - BT retail and wholesale broadband subscribers - 2004 - 2010
Table 72 - BT retail and wholesale revenue - 2009 - 2010
Table 73 - Estimated cost of fibre by deployment technology - 2010
Table 74 - Mobile broadband use by population (active users) - 2008 - 2011
Table 75 - Mobile broadband users by device - 2009
Table 76 - Mobile broadband subscribers - 2008 - 2011
Table 77 - Availability of digital services (UK) - 2008 - 2010
Table 78 - Adoption of services - Q1 2009 - Q1 2010
Table 79 - Broadcast HD homes by provider - 2006 - 2010
Table 80 - Proportion of bundled services by type - 2007 - 2010
Table 81 - Proportion of homes with bundled services by type - March 2010
Table 82 - Virgin Media proportion of bundled subscribers by type - 2007 - 2010
Table 83 - Virgin Media bundled services subscribers by type - 2007 - 2010
Table 84 - Statistical overview of the digital TV market - 2006 - 2010
Table 85 - Market share of TV homes by platform (primary sets) - 2005 - 2010
Table 86 - Digital TV uptake, share of main TV sets - 2006 - 2010
Table 87 - HD broadcast homes - 2006 - 2010
Table 88 - Reach of catch-up IPTV platforms - 2008 - 2010
Table 89 - Online TV revenue - 2005 - 2009
Table 90 - BT Vision subscribers - 2007 - 2010
Table 91 - Virgin Media subscribers by sector - 2007 - 2010
Table 92 - Virgin Media ARPU - 2007 - 2010
Table 93 - Virgin Media revenue by sector - 2005 - 2009
Table 94 - Free-to-view satellite households - 2003 - 2010
Table 95 - BSkyB subscriber statistics - 2006 - 2010
Table 96 - BSkyB revenue by sector - 2008 - 2009
Table 97 - BSkyB annualised ARPU - 2005 - 2010
Table 98 - BSkyB revenue, operating profit and annual change - 2007 - 2010
Table 99 - DTTV equipment sales - 2005 - 2010
Table 100 - Cumulative DTTV equipment sales - 2006 - 2010
Table 101 - Online TV revenue by sector - 2004 - 2009
Table 102 - Virgin Media VoD use - 2007 - 2010
Table 103 - Virgin Media V+ base - 2008 - 2009
Table 104 - VoIP users as percentage of total Internet subscribers - 2005 - 2010
Table 105 - Mobile and fixed-line voice traffic and total traffic in minutes - 2004 - 2011
Table 106 - Mobile call revenue by operator - 2002 - 2009
Table 107 - Mobile retail revenue by service - 2002 - 2011
Table 108 - Mobile revenue as proportion of total - 2002 - 2011
Table 109 - Mobile handset sales - 2005 - 2011
Table 110 - Mobile operator and subscribers - March 2010
Table 111 - Mobile subscribers and SIM penetration rate - 1995; 1997; 1999 - 2011
Table 112 - Percentages of mobile and fixed phones in homes - 2000 - 2009
Table 113 - Mobile subscribers by operator - 2000 - 2009
Table 114 - Mobile retail revenue by operator - 2000 - 2009
Table 115 - Mobile ARPU by sector - 2003 - 2009
Table 116 - Mobile retail revenue by sector - 2003 - 2009
Table 117 - Average retail revenue by subscribers, operator - Q4 2008 - Q4 2009
Table 118 - Mobile market share by operator - 2004 - 2010
Table 119 - Market share of mobile subscribers, 2G and 3G - 2004 - 2009
Table 120 - European roaming charges - 2007 - 2011
Table 121 - MTRs by operator - 2009 - 2010
Table 122 - Proposed MTRs by operator (pence per minute) - 2010 - 2015
Table 123 - 3 UK subscribers by sector - 2008 - 2010
Table 124 - 3 UK revenue by sector - 2008 - 2010
Table 125 - 3 UK ARPU by sector - 2009 - 2010
Table 126 - O2 financial data -2007 - 2010
Table 127 - O2 quarterly ARPU - blended, contract, prepaid and data - 2006 - 2010
Table 128 - O2 subscribers, prepaid and contract - 2005 - 2010
Table 129 - Vodafone ARPU - blended, contract and prepaid - 2005 - 2010
Table 130 - Vodafone mobile non-voice as proportion of service revenue - 2005 - 2010
Table 131 - Vodafone (UK) subscribers and proportion prepaid - 2001 - 2010
Table 132 - Vodafone (UK) financial data - 2008 - 2010
Table 133 - Vodafone Group revenue by sector - 2007 - 2010
Table 134 - Vodafone UK service revenue by sector - 2009 - 2010
Table 135 - Vodafone mobile customer retention cost - 2007 - 2010
Table 136 - T-Mobile financial data - 2005 - 2010
Table 137 - T-Mobile subscribers - 2005 - 2010
Table 138 - Orange subscribers, contract and prepaid - 2006 - 2010
Table 139 - Orange subscribers by type, 3G, MVNO - 2007 - 2010
Table 140 - Orange revenue - 2005 - 2010
Table 141 - Orange data revenue as proportion of total - 2007 - 2009
Table 142 - Orange annualised ARPU by category - 2006 - 2010
Table 143 - Orange mobile customer acquisition and retention cost - 2007 - 2009
Table 144 - MNO and MVNO share of subscribers - 2004 - 2010
Table 145 - Virgin Mobile subscribers - 2005 - 2010
Table 146 - Virgin Mobile financial data - 2007 - 2010
Table 147 - Prepaid and contract subscribers - 2002 - 2009
Table 148 - ARPU by subscription type - 2002 - 2010
Table 149 - 3G subscribers - 2003 - 2011
Table 150 - 3G subscriber penetration rate - 2003 - 2011
Table 151 - Market share of mobile subscribers, 2G and 3G - 2004 - 2009
Table 152 - 3G licence results - April 2000
Table 153 - 3G subscribers by operator - 2005 - 2009
Table 154 - 3 UK subscribers by sector - 2008 - 2010
Table 155 - 3 UK revenue by sector - 2008 - 2010
Table 156 - 3 UK ARPU by sector (£/month) - 2009 - 2010
Table 157 - O2 financial data -2007 - 2010
Table 158 - O2 subscribers, prepaid and contract - 2005 - 2010
Table 159 - Vodafone mobile non-voice as proportion of service revenue - 2005 - 2010
Table 160 - Vodafone (UK) subscribers and proportion prepaid - 2001 - 2010
Table 161 - Vodafone (UK) financial data - 2008 - 2010
Table 162 - T-Mobile financial data - 2005 - 2010
Table 163 - T-Mobile subscribers - 2005 - 2010
Table 164 - Orange 3G subscribers - 2007 - 2010
Table 165 - Orange revenue - 2005 - 2010
Table 166 - Orange data revenue as proportion of total - 2007 - 2009
Table 167 - SMS messages sent - 2004- 2009
Table 168 - Average SMS and MMS sent per month - 2003 - 2009
Table 169 - SMS and MMS revenue by operator - 2006 - 2009
Table 170 - SMS and MMS volumes by operator - 2006 - 2009
Table 171 - MMS messages sent - 2004- 2009
Table 172 - Mobile data traffic and revenue increase- 2007 - 2010
Table 173 - Average ARPU per data service - 2009
Table 174 - Mobile data revenue by service - 2009
Table 175 - UK mobile advertising spend - 2005 - 2011
Table 176 - Mobile Internet traffic by operating system - 2010
Table 177 - Smartphone use and penetration - 2007 - 2010
Table 178 - Forecast broadband subscribers - higher market growth scenario - 2007 - 2012; 2020
Table 179 - Forecast broadband subscribers - lower market growth scenario - 2007 - 2012; 2020
Table 180 - Forecast mobile ARPU - 2007 - 2010; 2015
Table 181 - Forecast UMTS subscribers - 2007 - 2010; 2015
Chart SEQ Chart 1 - Broadband retail revenue - 2003 - 2011
Exhibit 1 - EU - The New Regulatory Framework (NRF)
Exhibit 2 - Principal submarine cables from the UK - 2010
Exhibit 3 - Wireless opportunities using technology and frequencies
Exhibit 4 - Spectrum auction results 10GHz - February 2008
Exhibit 5 - WLAN operator business models - 2010
Exhibit 6 - Overview of media convergence
Exhibit 7 - Operators’ service bundling offers - 2010
Exhibit 8 - Technology developments in bundled services - 2010
Exhibit 9 - Snapshot of digital TV services and providers - 2010
Exhibit 10 - Digital broadcasting switchover timetable - 2008 - 2012
Exhibit 11 - Popular VoIP providers - 2010
Exhibit 12 - Spectrum available for mobile services

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