Facebook's audience and consumption growth is now generating substantial and rising display advertising revenue, with consensus estimates of $2 billion in 2010, up 160% YoY, and it will overtake Google on this count this year

The social network's growing position as the centre of the internet experience is enabling it to become a platform for other services, such as e-commerce, making it an increasing strategic threat to Google, as well as other players in the digital media

More importantly, like Google before it, Facebook’s scale and function has the power to disrupt the digital e-commerce and marketing models built over the past decade

In Q1, Google’s UK gross revenue increased 13% YoY to £602 million (net of hedging gains), down from the 18% growth in the last quarter and in Q1 2010

Slowing growth appears to be due to the weak state of the UK economy, with consumers and advertisers alike holding back on online spending compared to previous years

We have downgraded our 2011 UK growth forecasts for Google and internet advertising spend to 12% and 9% YOY respectively; while search remains the main market driver, online display is increasingly the key battleground

Fujitsu UK’s announcement of plans to provide wholesale fibre-to-the-premise (FTTP) to five million premises potentially poses a significant threat to BT

However, deployment is contingent on the project attracting at least 60% of the available state funding and significant improvement by Openreach of its terms for Physical Infrastructure Access (PIA)

In addition, ISPs using Fujitsu’s network may find it difficult to attract retail market share from BT based on a high speed broadband proposition. However, should Fujitsu deploy at scale, the project could prove positive for Virgin Media

Some of Ofcom’s proposed wholesale charge controls for Openreach fixed access services sound stringent

However, we estimate that the overall financial impact on BT and other players is likely to be very small

We do not expect the proposals to result in changes to many retail prices, but they should tilt the playing field slightly in favour of BT Retail’s competitors, particularly smaller providers of broadband and business services

UK internet ad spend rose 13% YoY in 2010 to £4.1 billion; stripping out newly included formats such as mobile and Google hedging gains indicates actual growth was 15%

Growth in display, increasingly powered by Facebook and Google, continued to outpace that of search, with early signs that some brand advertising is shifting online

We have revised our growth forecast for 2011 to 10%, taking spend including mobile to £4,400 million, pushing the internet’s share of total advertising to 27%

European regulators are struggling to find the right balance between promoting the competitive impact of local loop unbundling (LLU) and encouraging investment in next generation access networks by incumbents and others

In continental Europe, regulators have tended to focus on the provision by incumbents to competing providers of access to physical infrastructure. This affords competing providers a high degree of product differentiation, but tends to be relatively uneconomic, to the detriment of unbundlers in markets where the cable operator is strong

In the UK, the regulator has tended to focus on the provision by BT Openreach of bitstream access at a price set by the market

European mobile revenue growth improved very slightly in Q4 2010, up by 0.1ppt in reported and 0.2ppts in underlying terms, but remained negative

While the improvement is welcome, growth remains very subdued compared to pre-recession levels, especially in Italy and Spain, which continue to lag the growth of the UK, Germany and France

The outlook for mobile revenue growth is bleak, with severe MTR cuts in Germany and the UK likely to drive growth down again over the next six months

In this short presentation we show our analysis of trends in UK broadband and telephony to December 2010, based on the published results of the major service providers. We include our own estimates where reported data is incomplete. This quarter’s edition includes a look at Ofcom’s recent research into broadband speeds and its response to the Advertising Standards Authority’s review of broadband advertising.

Last week Apple introduced a new subscription payment system for publishers using its devices, but also clamped down on publishers using their own payment systems, obliging them to offer Apple’s system (with a 30% commission) in parallel or leave the platform

For publishers selling their own content with no marginal cost, this is an extra cost that most will grudgingly accept. But aggregators obliged to pay rights-holders a fixed fee for each content sale, such as music or ebook vendors, face bigger problems: some will be forced off the platform

Apple is trying to strengthen its ecosystem, increasing the range and user-friendliness of apps and locking users in with content only usable on its devices. Yet it risks pushing some popular services off its platform entirely, increasing the appeal of the newly launched Android devices

TalkTalk Group (TTG) lost broadband customers for the first time in its history in the quarter to December due to dissatisfaction among former Tiscali customers, and to a lesser extent, at AOL UK

But gross additions appeared to remain healthy and ARPU growth was strong, holding group revenue flat

The group remains on track to make guidance for the financial year to March. Beyond that, we remain optimistic about the prospects for further cost reduction, but reducing churn remains a daunting prospect