Ofcom, BT and the industry are getting closer to completing the Telecoms Strategic Review (TSR), currently in its Phase 3, and scheduled to complete in the Autumn. Ofcom's proposals and the supportive measures announced by BT offer some good news for virtually all players in the UK market, although clearly such judgements depend on what was expected prior to these announcements. We have always considered it unlikely that Ofcom would choose the option of investigating BT and possibly making a referral to the Competition Commission, which could have led to the break-up of BT. However the reaction of the financial markets suggests that at least some City analysts considered that BT has secured a major win by avoiding this outcome.

Strong growth in both online and mobile music revenues was not enough to compensate for the erosion of the core CD market

The competitive strength of Freeview is growing. Freeview is already in five million homes and increasing at the rate of about two million homes a year, far exceeding initial expectations at the time of its launch on 30th October 2002. At that time, there was muted demand for channel space on the digital terrestrial TV (DTT) platform carrying Freeview and no one except the BBC seemed to want to know. This was still the case a year later when Five sublet all its extra gifted capacity to the minipay service Top Up TV, which launched in April 2004.

Although Sky’s monopoly over UK Premier League football runs for only two more seasons, the jostling between other broadcasters eager to transmit top tier football matches has already begun. Persistent rumours suggest that broadcasters are trying to build a consortium to bid for Premier League matches. We believe, however, that such a consortium might well run foul of the competition law, and would in any case be fiercely resisted by the Premier League.

Although the service includes the latest features such as user-customisable channels and the ability to skip tracks, adoption will be limited by the widespread availability of cheap or free substitutes and the massive drain that it will place on the handset battery

In order to make the service affordable, data is priced at an effective 95% discount to current high-usage data tariffs, further highlighting operators’ difficulty in offering attractive data services at economic pricing levels

France has become the largest market for broadband in Europe (7.7 million connections at the end of Q1 2005) as a result of the aggressive price competition unleashed by local loop unbundling (LLU) since 2002. In addition, ADSL2+ line speeds have become standard in densely populated areas (where customers are within 2 kilometres of the exchange).

Digital TV growth trends following the record surge of Freeview homes in December 2005;

Financial assessment of Sky’s broadband/telephony strategy following the acquisition of Easynet;

ITV1 audience and advertising revenue prospects for 2006 in the wake of more than a 10% decline in commercial viewing share in 2005.

Ofcom will announce at the end of June the new terms for ITV to operate the analogue portion of its broadcast licence for ITV1. According to Ofcom's own statements, it is obliged to estimate the full value of ITV’s operation of the analogue ITV1 service and then extract all this value – bar some profit and other small allowances – in the form of annual licence payments. To do so, Ofcom has announced a methodology based on what the winning broadcaster would bid in a hypothetical competitive tender. In order to estimate the licence payments, analysts must grapple with the highly complex tasks of inferring the model from Ofcom's description and establishing the inputs.

An eventual merger is possible but difficult, especially given Hutchison Whampoa’s inflated view of H3G Italia’s value, considering it worth about the same as Wind itself, which is double the size and actually makes a profit (unlike H3G Italia)

Nonetheless, this does create a possible exit should H3G Italia’s planned Q1 2006 IPO fail, with the consolidation likely to benefit all players in the Italian market. H3G UK does not enjoy such an option, and is struggling more on a stand-alone basis to boot

The UK mobile market can give the unwary observer the impression of strong subscriber growth, dangerously high levels of competition for the incumbents, and high levels of consumer enthusiasm for both advanced handsets and advanced mobile data services. These impressions are however all incorrect or misleading, as our recent UK mobile user survey helps to show.

Broadband growth has been very strong in the UK, with 7 million businesses and households connecting to the Internet via a broadband cable or DSL connection at the end of Q1 2005. Driven by rapid migration of dial-up Internet users to broadband, we expect high levels of net adds to continue in 2005 and 2006, before declining steeply as the market approaches saturation.

The success of Freeview has ignited demand from channel operators to jump on board. The lure of Freeview is exemplified by this week's decision of Channel 4 to broadcast E4 free-to-air. The enticement is the advertising promise of such a large potential audience. But, how big an advertising opportunity is it really?

Digital terrestrial TV (DTT) launched in France on 31st March. We expect significant enthusiasm for the wider channel choice available to the 15 million French homes (62%) served only by analogue terrestrial feeds and the roughly 40% of homes that cannot receive a satellite feed. 14 channels were launched on a free-to-air (FTA) basis, and low prices of entry-level STBs have led to brisk sales.

As unbundlers in France increasingly look to migrate their customers from shared to full access – principally to sever the underlying telephony customer relationship with the incumbent and reduce churn – Fastweb in Italy has decided to go in the opposite direction.