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Kangaroo, the BBC/ITV/Channel 4 VOD project, looks unlikely to see the light of day any time soon, based on the Competition Commission’s (CC) provisional findings announced on 3rd December

This is the third, after France and The Netherlands, of our reports on NGA in the continent. Deutsche Telekom’s NGA extends fibre to the cabinet, with VDSL for the last mile, to cover 25% of the country’s 37 million homes by end 2008. In our view, DTAG’s strategic rationale on NGA is to develop the IPTV proposition to better counter the competitive challenge on broadband and telephony, in core urban areas, of a resurgent cable. DTAG has already lost considerable double play market share to the altnets, and market positioning is key given the sizeable upside left in the German broadband market

In the attached report, we present an analysis of UK handset sales over the online channel, using data sourced from Mobileshop.com, an online comparison handset sales site. Mobileshop.com presents offers from all major online mobile shops, including those from the operators and the major independent retailers, covering handsets, datacards and SIM-only offerings, across prepay and contract connections. In this, our first report, we have focused on issues relating to the market structure and broad market share figures, and our future quarterly updates will focus more on emerging trends

This report on next generation access in The Netherlands is the second, after France, of our reports on NGA in the continent. KPN’s NGA was initially focused on FTTC+VDSL deployment, to cover 15% of the country’s 6 million homes by end 2009. Since May 2008, KPN has moved aggressively on FTTH, establishing a joint venture with Reggefiber, the country’s leading local ‘open’ network operator. Regulatory approval is pending for the end of 2008. The JV’s coverage could eventually reach 70% of homes, making The Netherlands the leading market for FTTH in Europe.

The final Ofcom statement on the future of PSB advocates fixing the commercial PSB crisis by designating Channel 4 as the core alternative provider of public service programming to the BBC, and freeing up ITV and Five commercially by means of considerably lightened PSB obligations

The fundamental issue of the Channel 4 (or any other) solution is funding the new commercial PSB model. Eyes are now being set on a Channel 4 partnership with BBC Worldwide, centred on its UK assets as the marriage made in heaven

Another major recommendation of the Ofcom PSB proposal is the abolition of the national Channel 3 breakfast time licence, currently held by GMTV, which is running a viable business with its own sales force. This recommendation appears at odds with Ofcom’s commitment to plurality in news provision and its statutory duties to encourage competition in the communications industries

Our current forecast of UK advertising revenues in 2009 is a decline of 12.2% across all the display media, led by a steep fall of 19% in newspapers, a result of the double whammy of the migration of classified advertising to the internet and the economic crisis

Visibility is poor for TV advertising spend beyond January and February, which we expect to be down 10-15%. Although the influence of the internet on TV has been less severe than on the press, our initial forecast for the full year is of a 10% decline, due to the recession and deflationary pressures

We expect internet advertising to continue growing through the recession, but at vastly lower levels – we project only 2.1% growth in 2009, a sharp deceleration from 20% in 2008, and growth will be driven entirely by search, as both online classified and display spend are falling as advertisers in key categories cut back

Carphone Warehouse’s distribution business felt the recessionary chill for the first time in the December quarter, but its like-for-like organic growth of -1% was still far better than other consumer electronics retailers have fared

The market outlook is unfortunately still worsening. While we still expect Carphone Warehouse to outperform its competitors, its results are likely to get worse before they get better

In fixed line, net broadband additions were reasonable at TalkTalk but negative again at AOL. We are sceptical of the prospects for subscriber growth at AOL, and earlier guidance of 200-250k broadband net adds for the year to March now looks unlikely to be met

Major record labels will allow iTunes to sell all its music stripped of digital rights management (DRM), removing a barrier to digital music buying, while iTunes will introduce in April the tiered pricing the industry wants

We expect no real bounce in demand, however, as Apple’s DRM was not a restriction for iTunes customers as most owned iPods, the dominant music player in a market which is almost fully matured – we expect few iPod customers to pay to upgrade their libraries to DRM-free

News of peace breaking out between iTunes and the recorded music industry was overshadowed by reports of the continued steep decline in CD volumes sold in the US market, down almost by one fifth in 2008 from 2007, with digital increases again failing to offset the decline

Ending a simmering commercial dispute, Vivendi’s Canal+ has agreed to distribute its packages to France Télécom’s Orange TV satellite customers, allowing Orange to relaunch its DTH platform (targeting 4 million customers off the DSL TV footprint) after its dismal ‘do-it-alone’ first six months

Canal+ recruitments will benefit from the resumption of active marketing for its packages over Orange TV platforms, after a poor year for subscriber growth

Canal+ catch-up TV will now be available to all Orange Canal+ DSL TV subscribers, as it is to those on Free, where it is very popular, plus Orange satellite subscribers, thus giving Orange back the leadership position on IPTV in France