There were approximately 18.4 million fixed broadband lines in the UK at the end of Q4 2009 including those used by small and medium enterprises (SMEs)

Subscriber growth over the past year has continued to drop but the rate of decline has slowed to the lowest ever. Year-on-year subscriber growth in Q4 was 5.7%, only slightly down on Q3

Looking at net additions, Q4 saw the strongest sequential growth in percentage terms since the early days of UK broadband, with growth of 54% compared to 10% in Q4 2008. The leap in Q4 2009 was from a relatively low base, but even in absolute terms, the sequential increase in net adds of 111k was the highest since Q3 2004

Vivendi’s pay-TV unit Canal+ posted flat revenues in 2009, as international growth balanced domestic erosion

Driven mainly by growth internationally, we anticipate recovery to annual revenue growth barely above 2% by 2012, with a slightly deteriorating EBITA margin

Canal+ could do better if it invests in the latest generation of set-tops and, possibly, free to air television

France Télécom’s forthcoming Chief Executive Officer, Stéphane Richard, is considering a radical shake up and potential U-turn of Orange’s TV ‘content’ strategy, initiated and driven by CEO Didier Lombard

Orange could withdraw entirely from supplying premium pay-TV channels (sports and film) and distribute only third party content, as has been the focus of other broadband suppliers

A retreat of Orange from TV content would enable a more active cooperation with the Canal+ Group, benefiting both partners, who have largely overlapping subscriber bases

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

This report contains the 2009 edition of our annual review of UK mobile user trends, based on a survey of 1,000 adults

We look at handset ownership, replacement trends, handset manufacturer choice, network operator choice, 3G handset ownership, usage of existing services such as photo-messaging and the mobile internet and, finally, interest in new services such as mobile TV, datacardsand femtocells

Vivendi’s Canal+ Group overshot its 2008 EBITA target, despite sluggish subscription growth, delivering to shareholders some of the promised post-merger gains from “synergies” with TPS

For 2009, Vivendi has issued cautious revenue and EBITA guidance that, on current trends, will easily be met. However, management has now recognised that initial targets for 2010 will be “hard to reach” – as we have already warned

In the medium term, a further downside risk for Canal+ Group is the likely loss of exclusivity for the distribution of themed channels, which could be the outcome of the anti-trust investigation of CanalSat, with a ruling expected in 2009

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

Ending a simmering commercial dispute, Vivendi’s Canal+ has agreed to distribute its packages to France Télécom’s Orange TV satellite customers, allowing Orange to relaunch its DTH platform (targeting 4 million customers off the DSL TV footprint) after its dismal ‘do-it-alone’ first six months

Canal+ recruitments will benefit from the resumption of active marketing for its packages over Orange TV platforms, after a poor year for subscriber growth

Canal+ catch-up TV will now be available to all Orange Canal+ DSL TV subscribers, as it is to those on Free, where it is very popular, plus Orange satellite subscribers, thus giving Orange back the leadership position on IPTV in France

This in-depth report on pay-TV in France charts the course of Canal Plus and its main, but much smaller, competitor, TPS, over the period 2004-06. We anticipate pay-TV penetration will rise from 35% in 2003 to 38.7% by 2006, driven mainly by aggressive competition between TPS and Canal Plus in an improving economic environment.