2014 United Kingdom - Telecoms, IP Networks, Digital Media and Forecasts

Fast broadband services influencing home-buying across the UK

The UK has one of the largest telecom markets in Europe. The market enjoys high mobile and broadband penetration and excellent competition. It is also characterised by an innovative broadcast sector which has pioneered business models for distributing digital content. As a consequence, digital TV uptake has reached about 95% of the population. Consumer prices across the board have fallen steadily, while network capabilities have been greatly expanded following recent investments by British Telecom and Virgin Media.

The broadband market enjoys effective cross-platform competition, with comprehensive DSL coverage complemented by cable networks which reach about half of all premises. The DSL network has been upgraded during the last few years as a result of BT’s migration to its new 21CN, while investment is ongoing in vectoring and G.fast technologies. Virgin Media, owned by Liberty Global, has emerged as the best provider in terms of realised speeds – the company has rolled out a 120Mb/s service across much of its footprint. In addition, BT’s FttC/VDSL service should cover 66% of the population by 2015. The market remains fiercely competitive as a result of regulatory measures to provide competitor access to BT’s exchanges, while similar measures have been undertaken to ensure equal access on fibre networks.

Wireless broadband has seen moderate growth in the UK in recent years. Many WiFi and WiMAX deployments have been instigated by municipalities, while the major wireless operators have expanded their networks and concentrated on sharing hotspots. Wireless broadband on mobile networks has shown phenomenal growth since 2010 as consumers exploit the wider availability of more capable networks. From late 2013 high-end mobile data has been stimulated by the availability of greater network capacity through LTE operating on spectrum auctioned in early 2013.

The UK remains at the forefront of media convergence. The digital broadcasting industry, including satellite, digital cable, digital terrestrial and IPTV services, is well established – the UK has the highest digital TV penetration in Europe, with a substantial multichannel environment.

The UK also has one of the largest mobile markets in Europe, both in revenue and in the number of subscribers. It is served by four major providers, which have all launched LTE services, as well as by a growing number of low-cost MVNOs. The market can expect considerable changes during the next two years as operators prepare their business plans to accommodate spectrum acquisitions and to adjust to the refarming of 2G spectrum for 3G and 4G use.

This report analyses the key aspects of the UK’s telecom market, presenting statistics on the fixed network services sector and an overview of the key regulatory issues including the status of interconnection, local loop unbundling, and carrier preselection. The report reviews the major fixed network telcos, examines the status of fixed-line voice services following the deregulation of the retail call market sector, and assesses the success and market impact of BT Openreach. The report also profiles the broadband market, covering technologies and including the latest statistics, an update on recent commercial initiatives, an assessment of Next Generation Access, and forecasts to 2020. It reviews the markets for bundled and convergent services, including developments in Video-on-Demand, IPTV and VoIP, and assesses the broadcasting sector including statistics and analysis on ASO. The mobile voice and data markets are covered with overview of statistics, regulatory issues and technologies, and an assessment of emerging mobile data possibilities in coming years in the wake of the fast-growing deployment of LTE.

Key developments:

• Ofcom reassesses 900MHz and 1800MHz annual licence fees;
• O2 closes O2 Wallet service; government updates on release of 500MHz spectrum;
• UK and German governments sign on to cooperate in 5G research;
• EE’s LTE network reaches 70% population coverage;
• EE and H3 sign passive LTE network sharing deal; Vodafone sells stake in Verizon Wireless for £84 billion;
• broadband availability influencing home buying habits;
• government commits £150 million to its Mobile Infrastructure Project to improve rural mobile coverage;
• 53% of households receive bundled services; Liberty Global buys Virgin Media for US$23.3 billion;
• average mobile broadband speeds reach only 1.5Mb/s;
• BSkyB offers free WiFi access to its broadband subscribers; regulator’s market data reports;
• operator data to Q1 2014;
• market developments to April 2014.

Companies covered in this report include:

H3 UK, O2, Vodafone, Virgin Mobile, UK Broadband, (EE, incorporating the former T-Mobile UK and Orange UK), Tesco Mobile, British Telecom, BSkyB, Freeview, BBC, Tiscali, Thrive Telecom, Libera, The Cloud. Virgin Media, Kcom, Cable & Wireless, COLT Telecom, Carphone Warehouse.

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