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This report examines Ofcom's proposal that independently funded news consortia (IFNCs) assume the provision of regional TV news, occupying the regional news time slots vacated by the Channel 3 licensees

IFNCs are to be composed of commercial news organisations (television producers, newspaper groups, radio stations or websites), and will operate as private commercial/publicly funded hybrid models of regional news gathering and provision, alongside the BBC and commercial news organisations

DCMS has invited tenders for three IFNC pilots covering Channel 3 regions in Northern England and the Borders, Scotland and Wales, to be awarded in May 2010 with operations to commence by summer 2010.

Overall revenue growth in the top five markets dipped yet again in the September quarter, to -3.5% from -2.0% in the previous quarter

However, the good news is that this particular dip was entirely due to the regulatory-induced effect of accelerated termination rate cuts, caused by the reintroduction of cuts in the UK and France. Underlying growth was -0.7%, which was flat on the previous quarter

This is the first time that underlying growth has not dropped since March 2008 –when underlying growth was at a much healthier 5.3%, a full 6 percentage points better

Fixed line revenue growth continued to decline excluding the impact of Tiscali UK, but at a manageable rate, and profitability continued to improve strongly. TalkTalk Group is performing well in the run-up to demerger, and management is sounding very confident. But there are some clouds on the horizon, not least the relaunch of Tesco Telecom

Sky+ HD is now manifestly the centre point of a three-pronged operational strategy that focuses on driving customer growth, selling more products into the customer base and seeking efficiencies in fixed costs

Sky 3D, due for residential launch in H2 2010, fits in well with the core Sky+ HD proposition and the satellite operator looks well placed to combat growing retail competition from other platforms, assuming Ofcom implements its wholesale pay-TV proposals for Sky premium subscription films and sports some time in spring 2010

O2’s plan to launch competitively-priced ‘home phone’ offers in March should help sustain its current growth in fixed broadband, but is unlikely on its own to transform O2 into a significant player in UK fixed telecoms

The company’s fixed line foray is unlikely to reduce its mobile churn significantly, but nor does it look likely to increase it, with any residual net effect muted by the relatively small scale of O2’s fixed business

Demand for residential fixed telephony is declining gradually, and O2’s play is likely to make life more difficult for some established players, notably TTG, which is relatively dependent on demand from more price-sensitive customers

Google this week launched the Nexus One, a high spec handset equipped with the latest Android software, customised by Google, branded with Google and sold exclusively through Google (but made by HTC)

In contrast to its usual cooperative self as regards mobile, the Google go-it-alone approach of the Nexus One is likely to irritate handset manufacturers, handset distributers and mobile operators alike

The very limited distribution and limited marketing is likely to limit Nexus One sales, despite the strong hardware and software. The prospects for the Android platform in general remain strong, particularly in mid-range handsets, especially if Google maintains a more cooperative approach than the Nexus One launch has signified

The BBC Trust has given its provisional approval to the BBC Executive’s proposals for Project Canvas, the JV between the BBC and five partners that aims to enable DTT homes with broadband connections to access IPTV content on their TV sets

Canvas promises to enrich greatly the DTT platform; however, it is likely to encounter fierce opposition during the coming consultation from equipment manufacturers and the pay-TV platform operators, Sky and Virgin Media, especially in relation to its attempts to prescribe the user experience (UX)

We think that the BBC Trust will give its final approval, subject to the conditions specified in its provisional statement, but further delays seem likely and we do not expect Canvas devices to appear in the shops before 2011

December 2009 showed exceptional year-on-year growth of around 10% in TV NAR (Net Advertising Revenue), causing the year to end down -11%/12% according to market estimates, which as recently as August were contemplating a decline of -15% or below

The December spike reflects various causes, including robust retail conditions in the last days of reduced VAT at 15%, strong likelihood of marketers releasing budgets held back earlier in the year due to uncertainties over the economy and record-breaking audiences for The X Factor

TV NAR in Q1 2010 is shaping to be up by 1% or 2% on Q1 2009, but cyclical economic, structural and other one-off considerations have caused us to put our central case TV NAR forecast for 2010 at -2.5% down on 2009, with a further fall of -2.5% anticipated in 2011 before recovery starts in 2012

At TalkTalk Group (TTG) net broadband additions were solid, possibly helped by stronger growth in total market demand; but churn at Tiscali UK appears to remain high

TTG revenue was heavily distorted by the Tiscali acquisition but appears to remain in gradual decline on a like-for-like basis, due to continuing decline in non-broadband customers

Carphone Warehouse’s like-for-like distribution revenue showed a firm pick-up in the quarter, with it likely enjoying the first quarter of significantly improving market growth since the recession started

Ofcom’s plan to review commercial airtime rules in 2010 with an emphasis on deregulation clashes with the Competition Commission’s provisional decision to retain the Contract Rights Renewal remedy (CRR) as it is, other than to extend the ITV1 definition to include staggercast and HD variants

The core issue is that it is impossible to address UK commercial airtime rules in isolation from CRR, which strongly motivates all parties to sell 100% of their commercial airtime inventories, and is seen by many as exerting a strong deflationary pressure on TV advertising spend

Even without CRR, the Ofcom aim of being in a position to effect change from the start of 2011 looks optimistic. Increasingly, it seems that meaningful relaxation of the existing rules will require primary legislation in order to circumvent the continuing competition issues that have led to CRR