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We note with interest the reported bids by various consortia for part or all of BT's fixed-line network.  According to press reports, the Earthlease consortium has offered £8bn for BT's local loop (i.e. the copper wire connecting individual telephones to the local exchange), while a WestLB led consortium is reported to be ready to offer £18bn for the entire network.  Note that each of these bids will be structured as asset purchases financed largely by debt. The plans are to provide wholesale access to the network to BT Retail and other telcos.

We try to assess the impact on the replacement cycle and network use, and hypothesise that these development are not likely, by themselves, to increase the current levels of replacement. Cameras and Multimedia Messaging Services look as though they may be an attractive combination, but we question whether the industry has yet managed to create true interoperability between phones for this type of function.

This note provides an update on UK Internet trends covering the post-Christmas period. It covers usage, shopping and other online activities of the 17.7 million connected adults. The note highlights the feminisation of the UK online population and its impact on shopping behaviour.

Broadband cable suffers from several technical performance problems, including installation, actual performance and the costs of providing content, in particular to gamers.

In Germany, less than 5% of cable homes have been upgraded to digital, suggesting that Deutsche Telekom’s DSL push has irresistible momentum.

In our recent report on the prospects for BT, we looked at the pressures on the company resulting from declining prices, static call volumes and increased competition from mobile.

In France, mass marketing by France Télécom and Wanadoo, lack of availability of unmetered, and ubiquitous self-installation have allowed DSL to increase its market share from circa 40% in mid-2001 to an estimated 70% by end 2001 (300,000 DSL connections plus). We expect cable operators’ market share of the broadband market to continue to decline to circa 15% by 2005. We assume that the current European Commission investigation into Wanadoo’s DSL pricing will lead to maintenance of current prices (circa €45/month) through 2003. In our opinion, lack of sustained price declines to €30/month or less will limit the French broadband market to 2.5 million connections by 2005 (25% penetration of Internet households).

This report looks at how consumers in the UK spend their money on TMT goods and services. It tracks changes in the portion of household expenditure going to TMT. It shows that expenditure patterns are very different in the lowest 40% of all households, with very little expenditure going on newer technologies. The greatest increase in TMT expenditures has been concentrated in the upper middle of the income range. The richest consumers have actually decreased the portion of their expenditure devoted to TMT in the last five years.

On the other hand, the published commentary failed to note that the new BARB panel will allow analysts to get more accurate figures for the actual watching of TV advertisements. This data, to be released in a couple of weeks, will provide important new information. We doubt whether the figures will make pleasant reading.

The most recent quarterly operating statistics for the UK pay-TV providers point to the continued rapid slow-down in consumer subscriptions. This short note analyses the figures and offers a forecast for subscriber numbers over the next decade.

Business mobile data may be different. Mobile professionals are not major users of SMS, and will be prepared to pay for mobile access to networks. But we still have trouble seeing data accounting for more than 25% of operators’ revenues by the last years of the decade. Much of this revenue will still be derived from plain vanilla SMS, provided the regulators don't sink their teeth into the networks first.

Yesterday's third quarter results were broadly in line with market expectations. Analysts have noted that subscriber numbers are stagnant and that ARPU for domestic subscribers was essentially flat, quarter-on-quarter. The growth in broadband subscribers has been a real achievement - but the revenue benefit of adding even 35,000 new subscribers is less than £10m a year. This does not go very far in paying back debts over a thousand times as large.

To the potential US investors in NTL's equity, such as AOL and Liberty, this number must seem absurdly low. Cable businesses of a roughly comparable size in the States are worth tens of billions. We point to the key difference between the US and the UK. Overall ARPU levels are roughly comparable in the States, and capex levels are similar. The crucial difference is probably the systematically higher gross margins on cable TV in the States. This seems to explain most of the difference in cash generating capacity. Can the cable guys from the US increase gross margins on TV programming to US levels and thus make the equity in NTL worth something? We think it is most unlikely - even Sky makes less than a 50% gross margin, far less than a US cable company.

The issues surrounding ITV Digital are complex and unclear. This report tries to unpick the tangled threads. It looks at the main financial issues and the manoeuvres with the BBC, the Office of Fair Trading and the set-top box manufacturers.

In this short note Chris Goodall looks at consumer payment technologies. He says that the banks and credit card companies are under no immediate threat from new technologies. Do not be confused by the wizard new technologies coming out of Nokia; technical advances are not going to change payment systems much in the next five years. Rather, he suggests, observers should focus on three interesting companies which use low technology solutions to solve particular payments problems. These companies support, rather than undermine, existing players in the consumer payments industry.

Microsoft XP has wider significance than most analysts appreciate. While the operating system is, in itself, not a huge advance on existing products - particularly Windows 2000 - its true significance lies in its value as a Trojan Horse for Microsoft .NET. As we indicated in the spring of this year, we think .NET moves Microsoft into direct competition with businesses as diverse as ISPs, mobile network operators and home electronics companies. Widespread adoption of XP makes the eventual success of .NET more secure