UK broadband subscriber growth continued to decline in Q4 2008 year-on-year. We expect declining growth throughout 2009, with the growth rate remaining positive, but in single figures

Ofcom’s statement on Next Generation Access (NGA) gives BT the maximum possible incentive to invest by allowing a high degree of pricing freedom and some short cuts to reduce implementation costs

But Ofcom cannot guarantee that BT will make a return from NGA, only the existence of an opportunity to make one

Ofcom’s statement is certainly positive for BT, but we remain sceptical of the business case for BT NGA, particularly given the low price of all-copper based offers and Virgin Media’s roll-out of 50 Mbit/s broadband

Ofcom has come up with a new 900MHz spectrum refarming/redistribution proposal, in which only 5MHz of spectrum is taken from Vodafone and O2, as opposed to the 15MHz it previously proposed

We still think that disrupting the voice and text services of existing customers in order to extend the availability of little-used 3G data services makes little sense, and that rearranging a small amount of intensively used spectrum when a far larger amount of unused spectrum is about to become available makes even less sense

Should Vodafone and O2 continue to oppose having their spectrum taken away, as appears likely, the delays to new spectrum auctions are likely to continue

In Q4 2008 Iliad added 100,000 subscribers in a slowing French broadband market

A restructured 4th 3G licence call for tender is now expected in March, with a cost of €206 million for a 2x5MHz spectrum block, which Iliad is expected to bid for

We remain sceptical that Iliad will earn a return from this, with the 3G-only business model challenging even with a reduced licence cost and restricted network rollout

Carphone Warehouse’s distribution business felt the recessionary chill for the first time in the December quarter, but its like-for-like organic growth of -1% was still far better than other consumer electronics retailers have fared

The market outlook is unfortunately still worsening. While we still expect Carphone Warehouse to outperform its competitors, its results are likely to get worse before they get better

In fixed line, net broadband additions were reasonable at TalkTalk but negative again at AOL. We are sceptical of the prospects for subscriber growth at AOL, and earlier guidance of 200-250k broadband net adds for the year to March now looks unlikely to be met