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Fixing an allocation quirk at BT pushed UK broadband revenue back into growth in Q1, albeit a very modest 0.8%, thanks to continued altnet growth and a very weak underlying market.
Broadband pricing is dipping down overall, but there is not yet evidence of pricing cuts targeted in altnet areas, a massive missed opportunity in our view.
The market will remain under pressure in the short term, but in the longer term altnet pressure will fall under all realistic consolidation scenarios.
“Consistency is incredibly important to investors and Ofcom has largely been consistent,” says Karen Egan, head of telecoms at Enders Analysis.
Openreach hosted internet service providers including Sky, TalkTalk and BT’s own retail units on its network, which comprised about 80 per cent of the market by 2016, according to Enders Analysis.
Others see it differently. Although the altnet drive had been crucial, the UK’s meteoric rollout is largely owed to Ofcom’s decision to guarantee Openreach its fair bet, argues Egan.
“I just don’t think that you can [say] to your board and to your shareholders, ‘We’re rolling this out because the government’s kind of really leaning on us to do so,’” Egan says. “I think it was more about the fair bet from Ofcom.”
Defined roles within the advertising ecosystem are a thing of the past: everyone is adapting by building out functionality to claim share as the constants underpinning advertising—attribution, discoverability, and regulation—change.
There is a new wave of M&A, partnerships and developments from agencies, adtech, and big tech in data and AI, as all sides position themselves to reshape the terms of online advertising at a time of maximum uncertainty.
Big tech platforms are leveraging their scale and AI investments in attempts to reset broad swathes of the market. Publishers are exposed; their way forward relies on asserting their value through direct audiences and collaboration on sector-wide innovations
Tom Harrington, a broadcast expert at the research firm Enders Analysis, says of YouTubing: “You’re completely at the whims of a platform, an algorithm that can change any time. If you do well, you do very, very well. And if you do badly, you do very, very badly, and no one ever sees your content. There’s incredible risk being on that platform and having your entire existence on that platform.”
Harrington thinks that many presenters would prefer the old, risk-free broadcast system, where they would accept payments upfront for commissions, rather than YouTube’s “performance-based” model. He adds: “It’s kind of precarious even for someone like him.”
“It’s a generational shift — text is less important [to young people] than video and audio,” says Douglas McCabe, chief executive and director of publishing at Enders Analysis.
Tech is also a problem for parents, says Douglas. “They are not modelling great reading habits because they’re always on their phones. They are also more likely to put kids on a device. There is a decline in parents reading to children.”
"This could attract new people who could then subscribe to the League's channel," explains François Godard, an analyst at Enders Analysis. "This would be a good thing for the League, which needs to reconnect with the population."
In a soft market for both consumer and B2B, service revenue trends continue to be dominated by in-contract price increase dynamics.
VodafoneThree’s launch signalled a cautious tone about prospects for mobile growth, presumably allowing for a degree of integration disruption.
VodafoneThree and VMO2 traded 79 MHz of usable spectrum, leaving VodafoneThree in a strong position spectrum-wise, albeit with some challenges given that its merger conditions reduce flexibility in its coverage approach.
An analyst note from media research service Enders Analysis suggests that, “Having turned Sky Deutschland around, this divestment allows Sky to be much more focused on core regions with more diversified businesses.”
Gill Hind, of Enders Analysis, said: “A lot of the news out in the US is very, very biased. And for people that are interested in what’s happening, not just in the US but globally, there’ll be a lot of news on the BBC that you wouldn’t get on things such as Fox.
“So if you actually want to have a greater understanding of what’s happening on the world scene and also how the US has been seen by others, then actually something like the BBC is the most obvious channel to go towards.”