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This report looks at whether the extraordinary investment in Korean digital infrastructure has changed consumer behaviour. A combination of the Korean government and the large conglomerates have provided almost universal broadband access, the world’s most advanced 2.5G networks and are just beginning the process of providing ubiquitous digital TV. Alongside the growth in infrastructure, a small number of businesses have begun to develop substantial revenue streams from content. Of particular interest is the growth of multiplayer online games, in which Korea has a world lead.

Music publishing revenues are composed of multiple streams arising from almost all uses of music – radio, TV, live performance, sale of physical formats, use in film/TV soundtracks, sale of printed music etc. Of these, only the publishing revenues derived from the sale of physical formats are in decline. Otherwise, the industry is buoyant as music becomes yet more ubiquitous in everyday life. The latest version of Grand Auto Theft has 80 music tracks on it from major stars, an example of the spread of music into every corner of life.

Vodafone Live represents an attempt to claw back some of the initiative from handset manufacturers, and to offer product and services that add to revenue. We look at the early evidence from the UK about the design of this package, its consumer appeal and the likely impact on ARPU. Vodafone is launching this new campaign with a Java-enabled camera phone from Sharp. It is putting tens of millions of pounds behind Live, apparently targeting the product at young urban males, a demographic group that has become very loyal to Nokia. The first phone is attractive and well featured, but we question whether it is of sufficiently general appeal significantly to influence overall ARPU in European markets, particularly in light of the low levels of interest we are finding in our consumer research on camera phones.

Our most recent survey of handset purchase intentions shows a dramatic increase in interest in buying a new phone among UK adults. 39% of handset owners claim an intention to purchase in the next year, compared to about 30% in the last three bi-monthly surveys.

This is the third of our regular reports on UK TV viewing. The report contains details to support the following assertions

The operators were hoping that the CC would soften Oftel's seemingly tough proposals (RPI-12% price cap); it seems most likely now that they will actually toughen them, incorporating a one-off cut in the new regime, which we estimate would negatively impact industry EBITDA by just over 10%. The process will, however, be far from over: we predict at least one legal challenge ahead, possibly several, delaying the implementation for many months into next year (EC legislation comes into force on the 24th July 2003 which may delay matters even further).

What prompted EMI to spend about £60 million to acquire Robbie’s next two records and to buy options on the next four? Even for an artist as successful as Robbie Williams, the numbers do not add up. Having sold less than 6 million units of his last album, EMI appears to be gambling that his next two records will sell more than 8 million units each, of which 2 million need to be in the US.

Last week Nokia launched its first 3G handset, the 6650. Or did it? Although the size, weight and price initially looked impressive, the handset has not really been launched (not until H1 2003), and technically it is not really 3G (the data rates are too slow). By the time the handset is actually widely available to consumers, GSM-only handsets will have a much better feature/price combination, with a 3G handset only appealing to laptop users who would probably prefer a data card anyway. This is good news for the operators - they can comfortably delay potentially expensive 3G roll-outs safe in the knowledge that competitors will not gain any advantage by being first to market with the current generation of handsets.

This note looks at what has happened to NTL in the past year, and the prospects for 2003-2004. It emerges from a period of introspection to face stronger competition than ever. Sky has won the battle for digital TV. Although NTL has been successful in broadband this year, BT has serious plans for this market.

This note reports on our third bi-monthly survey of handset replacement intentions in the UK. Purchase intentions have weakened slightly in the last four months, suggesting a further lengthening in the average replacement cycle. Interest in replacing phones to acquire new handset features remains low. Awareness of camera phones is extremely high, but the most recent survey shows a decline in the level of interest in purchasing, probably as the prices of these devices has become more widely known. Nokia remains the overwhelmingly dominant choice for consumers’ next brand of phone. No other manufacturer has more than a tiny prospective share.

We think that TPS can probably just survive the prospective loss of football to Canal Satellite. Paradoxically, this may not be an ideal result for TF1, because it will not be able to argue that a merger of the two satellite platforms is justified on 'failing firm' grounds. Competition regulators will sometimes allow a merger on the grounds that the weaker company is bound to fail. This does not seem to be likely to be the case in French pay-TV, though TPS's subscriber numbers will be dented by the loss of the best football.

Wanadoo's results for the first half of 2002, detailed in the attached note, show that the company is well on track to make its target of positive EBITDA as the loss margin has been cut by half on the Internet side of the business. The targeted revenue increase of 30% also looks plausible as Internet access revenues have done well in France due to migration of the subscriber base to higher priced broadband packages. Wanadoo hopes to have 1 million broadband subscribers by the end of the year, and is counting on the rollout of a new lower speed (128k) and lower-priced broadband package in mid-October. The French Competition Commission has also permitted the company to again market its broadband packs in FT's network of shops, cutting customer acquisition costs. Margins will improve in mid-October due to wholesale broadband price declines mandated by the regulator ART.

We think that the business is worth about €6bn, rather less than the €7-9bn that the investment banks are projecting. The difference arises because we think that they over-estimate the value of Universal’s music publishing business and expect a faster upturn in recorded music sales. But Universal is clearly strongest of the major music companies and we do expect the company’s margins to recover from the low levels seen this year.

This note shows the mixed evidence on household penetration. Most surveys report a distinct plateau in subscribing household numbers in the UK, particularly compared to France and Germany, where numbers are still growing. Other surveys show a continuing rise in individual users. On balance, we think the data does point to a clear deceleration in the growth in subscribing households. Current penetration is just over 10m homes, or 40% of the UK total.

In this short note we look at three data product offerings recently launched by the operators: Vodafone Live!, the Orange SPV and Vodafone Mobile Office laptop card service. Vodafone Live! follows a sensible strategy of having the operator define the user interface to help drive revenues, and is launched with two new light and compact handset models. However, the service has many glitches, with only the camera function working as well as it should, and very few of its target market will be likely to be able to afford the handsets. The SPV and laptop cards, being aimed at business users, stand a much better chance of being affordable to their target market, but we wait to see if those products are marketed and executed well.